Bankruptcy for Smarties #4

One more second of Fame!

I’ve written before  here and on my FAVS page about my fifteen seconds of fame in the case I argued and lost in the United States Supreme Court-Geiger v. Kawaauhau 523 US 57 (1998) which  dealt with the definition of a “willful and malicious” injury which could be discharged, or in layman’s terms, forgiven in a bankruptcy case.

Kawaauhau was cited prominently  last week in the Bankruptcy Court’s ruling in Info Wars Alex Jones Chapter 11 case where Jones sought to get rid of the judgment against him for spreading lies about the Sandy Hook child murders.

Jones’ attorney tried to latch onto Kawaauhau that for a claim to be willful and malicious and NOT discharged in bankruptcy the actor must have intended not only the act, but the injury.  They argued that Jones obviously intended to say what he said but there was no evidence that he intended to hurt anyone only that he was arguably being reckless. The Supreme Court in Kawaauhau specifically stated that reckless behavior could be wiped out in bankruptcy.

The Bankruptcy Court, however, held that the state court judgments again Jones had already found that his actions were willful and malicious and were therefore binding on the Bankruptcy court.   The victims’ lawyers said that the rule of “collateral estoppel” prevented Jones from relitigating the issue in his bankruptcy.  However, Jones’ lawyers claimed that he did not have an opportunity to litigate the issue under the federal standard as opposed to state standard. 

I’m not sure this ruling will be held up on appeal for technical reasons.  It also shows that persons who are being sued on claims that might constitute willful and malicious injuries should probably file for bankruptcy relief before a state court judgment is entered against them to avoid the uncertainty of a lower standard being applied in state court and them being binding on the bankruptcy court