A panel of the 10th Circuit U.S. Court of Appeals on June 4 affirmed a lower court’s ruling that a debtor’s obligation to creditors who had sued him for damages was nondischargeable because the debtor’s conduct satisfied the requirement for “willful and malicious injury” (Lizelle J. Van Vuuren, et al. v. William Daniel Thomas Berrien [In Re: William Daniel Thomas Berrien], No. 07-1294, Chapter 7, 10th Cir.; 2008 U.S. App. LEXIS 12004).
William Daniel Thomas Berrien filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the District of Colorado shortly before he and his wife, Joanne, were scheduled to go on trial in
Colorado state court on various charges stemming from a scheme they devised for financial gain by fabricating a hit-and-run accident.
After a long road of litigation in which the Berriens sued Lizelle J. Van Vuuren, falsely, for hitting Joanne in a parking lot and then leaving the scene, Van Vuuren was acquitted.
However, Van Vuuren, through her parents, Cedric G. Tyler and Veronica Van Vuuren Tyler, sued the Berriens for abuse of process, civil conspiracy to defraud, extreme and outrageous conduct and intentional infliction of emotional distress.
Tylers filed an adversary proceeding against Berrien seeking to establish the nondischargeability of Berrien’s debt for damages caused by the false accusation and the legal costs associated with defending those false claims.
The case wound its way to the 10th Circuit, where Berrien contended that the
Tylers could not recover the costs of defending Van Vuuren’s criminal charges because they were “merely volunteers” with no legal obligation whatsoever to pay for their 18-year-old’s legal expenses.
Furthermore, Berrien maintained that the
Tylers had not legally cognizable claim for which the Bankruptcy Court could have awarded them more than $96,000 in damages.
The panel held that the Tylers easily satisfied the “willful and malicious injury” requirement of 11 Code Section 523(a)(6).
Furthermore, under Colorado law, the
Tylers were entitled to compensatory and punitive damages for Berrien’s numerous torts, including damages for emotional distress, lost business opportunity and the costs of defending frivolous civil and criminal proceedings, the panel ruled.