Flint v. West Virginia State Tax Department (In re Flint)
557 B.R. 461
Bankr. N.D.W. Va.2016Background
- Debtor Walter Flint filed chapter 7; scheduled prepetition state tax liabilities; WV Tax filed proofs of claim for secured (tax years 2002–2010) and unsecured amounts (later reduced).
- Debtor received a discharge on July 14, 2015; WV Tax was served notice of the discharge on July 16, 2015; case closed and later reopened after post-discharge communications.
- On November 11, 2015 (and again later), WV Tax mailed Statements of Account to Flint showing amounts due, pay-by dates, payment coupons, and levying language; the Statements did not mention the bankruptcy discharge or disclaim that they were not attempts to collect a discharged personal liability.
- Flint’s counsel contacted WV Tax; WV Tax said the Statements merely notified Flint that liens existed and that such Statements would continue; a second Statement was issued after counsel’s contact.
- Flint reopened the bankruptcy case and filed this adversary proceeding asserting WV Tax willfully violated the § 524(a)(2) discharge injunction; he seeks damages and fees. The court granted summary judgment for Flint, held WV Tax in civil contempt, enjoined further collection, and set a damages hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether WV Tax’s post-discharge Statements violated § 524(a)(2) discharge injunction | Statements were collection attempts — demanded payment, stated amounts due, pay-by dates, penalties, and included payment coupons; no bankruptcy disclaimer | Statements were informational notices about liens and not attempts to collect discharged personal liability | Court: Statements were primarily collection devices and violated § 524(a)(2) (willful violation) |
| Whether creditor’s in rem rights permit such communications | Flint: in rem rights do not authorize communications that attempt to collect personally discharged debt | WV Tax: liens survive bankruptcy; notices about liens are permissible and not per se violations | Court: lien enforcement is permitted, but communications that seek payment or lack disclaimers can violate § 524(a)(2) |
| Standard and burden for civil contempt based on § 524 violation | Flint: WV Tax had notice of discharge and acted to collect, so willfulness and contempt shown | WV Tax: injunction enforcement should be through contempt only and plaintiff must meet clear-and-convincing standard | Court: willfulness requires knowledge of discharge and an act to collect; elements proven by clear and convincing evidence here |
| Appropriate remedies for the violation | Flint: seeks damages for emotional distress, costs, and attorneys’ fees | WV Tax: sanctions should be limited to contempt remedies; emotional distress unavailable | Court: emotional distress awards not allowed in Fourth Circuit contempt actions; awarded recoverable costs (lost time, travel, incidental expenses) and attorneys’ fees subject to reasonableness; hearing set to determine amounts |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden on movant)
- ZiLOG, Inc. v. Coming (In re ZiLOG, Inc.), 450 F.3d 996 (violation of discharge injunction may be punished by contempt)
- Johnson v. Home State Bank, 501 U.S. 78 (liens pass through bankruptcy unaffected; discharge extinguishes in personam liability)
- Cen-Pep Corp. v. Hanson, 58 F.3d 89 (bankruptcy discharge generally leaves in rem claims intact)
- Ashcraft v. Conoco, Inc., 218 F.3d 288 (clear and convincing standard for contempt findings)