672 B.R. 717
Bankr. M.D. Tenn.2025Background
- Diana Mey, a consumer advocate, obtained a nearly $1.5 million default judgment against Judson Phillips and John Thompson, among others, for violating federal and West Virginia statutes (TCPA & WVCCPA) regulating telemarketing and robocalls.
- Defendants’ companies were found by the West Virginia court to be their alter egos and engaged in a joint enterprise.
- Defendants filed for Chapter 7 bankruptcy, prompting Mey to bring adversary proceedings seeking to have her judgment debt declared nondischargeable under § 523(a)(6) (“willful and malicious injury”) and also to deny the Defendants’ discharge under § 727(a)(4)(A) (false oaths in bankruptcy filings).
- Mey’s argument focused on intent to defraud and claimed robocall violations should constitute “willful and malicious injury,” even though actual monetary loss from fraud was not suffered.
- Extensive evidence was introduced regarding the nature of the calls, Defendants’ roles, and alleged business omissions in bankruptcy filings.
- The bankruptcy court denied Mey’s § 523(a)(6) claim and found mixed results on the § 727(a)(4)(A) claims: discharge denied as to Phillips but not Thompson.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nondischargeability under § 523(a)(6) | Judgment debt from TCPA/WVCCPA violations should be nondischargeable; acts were willful and malicious due to intent to commit fraud. | Violations were strict liability; no intent to cause injury, no willful/malicious intent proven. | Claim denied: § 523(a)(6) not met—no proof of intent to injure. |
| Willfulness/malice standard under § 523(a)(6) | Fraudulent intent behind calls meets standard for willful and malicious injury. | Statutes don’t require intent; any harm from calls was incidental, not specifically intended. | Court: Only intended injuries qualify; intent to defraud ≠ intent to injure via calls. |
| Application of alter ego findings to intent | Alter ego finding means intent of companies should be attributed to Defendants. | Even with alter ego status, intent to injure was not proven against individuals. | Court did not reach the alter ego imputation issue—lack of proof on willfulness/malice dispositive. |
| Denial of discharge under § 727(a)(4)(A) | Both Defendants knowingly and fraudulently omitted business interests in filings. | Any omissions were mistakes or oversights, not fraud or knowing falsehoods. | Phillips denied discharge (reckless indifference); Thompson not denied (honest mistake, prompt correction). |
Key Cases Cited
- Grogan v. Garner, 498 U.S. 279 (1991) (preponderance standard for discharge exceptions)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (defining willful and malicious injury under § 523(a)(6))
- Keeney v. Smith, 227 F.3d 679 (6th Cir. 2000) (burden and standard for denial of discharge under § 727(a)(4)(A))
- Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368 (2012) (TCPA legislative purpose)
- Wheeler v. Laudani, 783 F.2d 610 (6th Cir. 1986) (maliciousness in § 523(a)(6) context)