542 B.R. 429
Bankr. N.D. Ill.2015Background
- 2007 contract between Linda Taylor and Snyder’s General Contractor to build an addition; four installments totaling about $33,281; payments made via cashier’s checks.
- Debtor began exterior work after September 2007 death of Ms. Taylor’s husband, delaying interior completion; ongoing payment disputes.
- December 2007: Debtor prepared and recorded a mechanics lien claiming full contract price despite incomplete work; lien described as completed September 22, 2007.
- December 2008 state court action: jury awarded Taylor breach of contract, slander of title, and punitive damages; attorney fees awarded for slander of title in 2012.
- February 2013: Debtor filed Chapter 7; Taylor seeks to except from discharge the state court judgment under 11 U.S.C. § 523(a)(6); bankruptcy trial held with post-trial briefs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether slander of title damages are non-dischargeable | Taylor seeks non-dischargeability for the slander of title judgment | Debtor contests applicability to § 523(a)(6) | Yes; slander of title damages are non-dischargeable under § 523(a)(6) |
| Whether breach of contract damages are non-dischargeable | Taylor argued breach of contract judgment falls under § 523(a)(6) | Geiger and related authorities require tort-like conduct for non-dischargeability | No; breach of contract alone not non-dischargeable under § 523(a)(6) |
| Whether attorneys’ fees and punitive damages linked to the slander of title are non-dischargeable | Fees and punitive award are derivative of the non-dischargeable tort judgment | Such awards are not independently non-dischargeable | Yes; fees and punitive damages tied to the slander of title are non-dischargeable under § 523(a)(6) |
| Whether Illinois collateral estoppel applies to bar relitigation of malice | State court malice finding should preclude re-litigation | Court should determine malice anew under federal standards | Collateral estoppel applies; Illinois malice determination supports § 523(a)(6) analysis |
Key Cases Cited
- Jendusa-Nicolai v. Larsen, 677 F.3d 320 (7th Cir. 2012) (defines willful and malicious injury; malice requires conscious disregard or improper motive)
- Gambino v. Koance, 757 F.3d 604 (7th Cir. 2014) (Illinois slander of title judgment may be non-dischargeable under § 523(a)(6) in some instances)
- Geiger v. Geiger, 523 U.S. 57 (1998) (separates willfulness from malice; requires tort-like conduct for discharge exception)
- First Weber Grp., Inc. v. Horsfall, 738 F.3d 767 (7th Cir. 2013) (narrow interpretation of § 523(a)(6); torts required for non-dischargeability; cautions against broad breaches-of-contract reach)
- Wish Acquisition, LLC v. Salvino, 373 B.R. 578 (Bankr.N.D. Ill. 2007) (discusses limits of § 523(a)(6) in context of contract breaches and deterrence)