James Liukonen, 670 B.R. 335

Stephanie Johnson filed a civil action in federal district court alleging discrimination and intentional infliction of emotional distress by her landlord, James Liukonen.
Before trial, Liukonen filed for Chapter 13 bankruptcy, triggering the automatic stay under 11 U.S.C. §362(a).
Johnson then initiated an adversary proceeding in bankruptcy court, restating her claims and contending they should be excepted from discharge under §1328(a)(4) as claims for personal injury.
Johnson asked both courts to let her civil action proceed to judgment and for the district court to withdraw the reference from bankruptcy court; Liukonen moved to dismiss on dischargeability grounds.
The bankruptcy court considered issues: (1) relief from the automatic stay, (2) whether Johnson's claims could be nondischargeable under §1328(a)(4), (3) whether the adversary complaint should be dismissed, and (4) whether the reference should be withdrawn to the district court.
The court granted relief from stay for the civil action to proceed, denied dismissal of the adversary proceeding, stayed the adversary proceeding, and recommended the district court not withdraw the reference.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether claims for unliquidated damages can be excepted from Ch.13 discharge under §1328(a)(4) if awarded post-petition	Johnson argues that as long as the damages are awarded before discharge, they are excepted.	Liukonen argues only prepetition awards qualify as nondischargeable.	Court sides with Johnson: damages awarded before discharge (regardless of timing) can be excepted.
Whether “personal injury” includes emotional distress under §1328(a)(4)	Johnson claims her distress claims are “personal injury.”	Liukonen contends only physical injuries qualify.	Emotional (psychological) injuries can count as “personal injury” under §1328(a)(4).
Whether the stay should be lifted to allow the district court trial	Johnson asks to proceed with trial for possible nondischargeability.	Liukonen opposes as unnecessary.	Stay is lifted; district court may adjudicate the claims.
Whether the adversary proceeding should be dismissed	Johnson contends her claims may be excepted from discharge.	Liukonen says they are dischargeable as a matter of law.	Motion to dismiss denied; claims may be excepted if liquidated before discharge.
Whether the district court should withdraw the reference	Johnson seeks withdrawal for adjudication there.	(Not directly contested.)	Court recommends denying withdrawal; bankruptcy court will stay pending civil outcome.

Parsons v. Byrd (In re Byrd), 388 B.R. 875 (Bankr. C.D. Ill. 2007) (minority view that only prepetition awards are excepted from discharge under §1328(a)(4))
Waag v. Permann (In re Waag), 418 B.R. 373 (B.A.P. 9th Cir. 2009) (majority view: post-petition awards before discharge can also be excepted under §1328(a)(4))
Buckley v. Taylor (In re Taylor), 388 B.R. 115 (Bankr. M.D. Pa. 2008) (interpreting §1328(a)(4) to permit exception for damages awarded anytime before discharge)
First Weber Grp., Inc. v. Horsfall, 738 F.3d 767 (7th Cir. 2014) (interpretation of "injury" in the context of bankruptcy law)