Stewart Tilghman Fox & Bianchi, P.A. v. Kane (In Re Kane), 470 B.R. 902

Kanes are Florida attorneys and partners in Kane & Kane; their firm and related PIP litigation teams pursued thousands of PIP claims against Progressive Insurance.
Plaintiffs Stewart Tilghman Fox & Bianchi etc. (PIP lawyers) aided in pursuing bad-faith and PIP claims; the two groups were closely intertwined in settlement and fee arrangements.
Plaintiffs and PIP Lawyers arranged a global, undifferentiated settlement with Progressive for $14.5 million, allocating most fees to the PIP claims, reducing Plaintiffs’ contingent-fee share.
The Secret Settlement disabled Plaintiffs from participating in negotiations and led to an Amended MOU allocating a small portion to Bad Faith Claims, with Plaintiffs alleging wrongdoing and unjust enrichment.
State Court awarded Plaintiffs $2 million for quantum meruit/unjust enrichment; Florida Bar issues and discovery disputes underscored the misconduct findings, later affirmed on appeal.
Bankruptcy filings followed in 2008, with dismissal of Kanes’ and Firm’s Chapter 11 cases and later Chapter 7 filings; Plaintiffs sought to recover fees and hold Defendants accountable.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Denial of discharge under 727(a)(2)	Plaintiffs allege intent to hinder, delay or defraud creditors.	Kanes contend no improper intent; transfers were partnership actions.	Court rejects willful intent to defraud; no evidence of insolvency required.
Denial of discharge under 727(a)(5)	Defendants failed to explain loss of assets to creditors.	Explanations were satisfactory given records and context.	Explanations satisfactory; §727(a)(5) not satisfied.
Denial of discharge under 727(a)(7)	Transfers to Defendants via Firm and tax payments show willful injury to creditors.	Transfers were Firm assets; Harley’s payments were separate acts.	Harley Kane denied under §727(a)(7); also §727(a)(6) denial based on court order violation.
Exception from discharge under 523(a)(4) (emebezzlement)	Rule 5-1.1(f) created a trust for Plaintiffs and funds misused.	Bar rules do not create private rights; no trust for Plaintiffs.	No embezzlement; Florida Bar rules do not create private right; relief denied.
Exception from discharge under 523(a)(6)	Defendants acted with willful and malicious intent to injure Plaintiffs by reducing fees.	No willful injury; actions were strategic/fee-related but not intentional harm to Plaintiffs.	State Court actions, including Secret Settlement, found willful and malicious injury; debt excepted from discharge.

Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (collateral estoppel and discharge standards guidance)
In re St. Laurent, 991 F.2d 672 (11th Cir. 1993) (Florida collateral estoppel applicability in discharge proceedings)
Kawaauhau v. Geiger, 523 U.S. 57 (U.S. 1998) (defines willful injury under 523(a)(6))
In re Walker, 48 F.3d 1161 (11th Cir. 1995) (willful injury requires intent or substantial certainty of injury)
In re Thomas, 288 Fed.Appx. 547 (11th Cir. 2008) (collateral estoppel and evidence standard in bankruptcy)