505 B.R. 786
E.D. Tex.2013Background
- McClendon was president and sole shareholder of NIA Insurance Agency, Inc. and NIA Asset Protection Group, Inc.; Springfield served as CFO for NIA Insurance from 2003–2007.
- In December 2007, McClendon accused Springfield of theft and terminated Springfield’s employment.
- On January 10, 2008, NIA and McClendon sued Springfield in Texas state court alleging theft and conversion; Springfield counterclaimed for defamation.
- March 16, 2011 jury found McClendon made defamatory statements to third parties; statements deemed defamatory per se but privilege existed; privilege overcome by clear and convincing evidence of knowledge of falsity or reckless disregard.
- State court awarded Springfield $341,000 in actual damages plus prejudgment and post-judgment interest.
- May 11, 2011, McClendon filed a Chapter 11 petition; Springfield became a creditor; an adversary proceeding sought to declare the debt nondischargeable under 11 U.S.C. § 523(a)(6); plan confirmed January 30, 2012.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 523(a)(6) nondischargeability was properly found | Springfield argues statements caused willful, malicious harm with object. substantial certainty. | McClendon contends evidence insufficient to overcome qualified privilege and establish knowledge or recklessness. | Debt found nondischargeable. |
| Whether the permanent injunction affected the adversary | Plan injunction barred related actions against McClendon. | Plan injunction binds only plan terms; nondischargeability proceeding remains separate. | No injunction to bar the nondischargeability action; Springfield allowed to proceed. |
Key Cases Cited
- Miller v. J.D. Abrams Inc., 156 F.3d 598 (5th Cir.1998) (two-part test for willful and malicious injury)
- Vollbracht, 276 Fed.Appx. 360 (5th Cir.2007) (injury not dischargeable unless sufficiently justified)
- Kawaauhau v. Geiger, 523 U.S. 57 (Supreme Court 1998) (no discharge for negligent injuries)
- Grogan v. Garner, 498 U.S. 279 (Supreme Court 1991) (burden of proof is preponderance)
- In re Gupta, 394 F.3d 347 (5th Cir.2004) (allocation of damages to specific misconduct not required for non-dischargeability)
- Frakes v. Crete Carrier Corp., 579 F.3d 426 (5th Cir.2009) (qualified privilege defeats liability unless malice shown)
- In re Dennis, 330 F.3d 696 (5th Cir.2003) (credibility deference; clear error standard for factual findings)
- In re Greenway, 71 F.3d 1177 (5th Cir.1996) (preclusive effect of state court judgment reviewed de novo)
- In re Gerhardt, 348 F.3d 89 (5th Cir.2003) (dischargeability questions reviewed de novo)