BANKRUPTCY CORNER
What is a Personal Injury Tort ?
JASON S . RIGOLI
Tort claims become entangled with bankruptcy cases on a regular basis and whether the parties to these claims are entitled to certain rights is dependent on whether the tort claim is in fact a “ personal injury ” claim . The Bankruptcy Code does not define “ personal injury claim ” or “ personal injury tort claim ” and the Eleventh Circuit has not opined either . Courts have divided into three groups : ( i ) the narrow approach ; ( ii ) the middle or hybrid approach , and ( iii ) the broad approach . Byrnes v . Byrnes ( In re Byrnes ), Case No . 20-1070 , 2022 Bankr . LEXIS 645 at * 6-7 , 2022 WL 773462 ( Bankr . D . N . M . March 11 , 2022 ) ( quoting In re Gawker Media LLC , 571 B . R . 612 , 620 ( Bankr . S . D . N . Y . 2017 )).
The Narrow Approach
The narrow approach for personal injury tort claims “ requires trauma or bodily injury , or a psychic injury beyond mere shame or humiliation …” Gawker , 571 B . R . at 620 .
The Middle or Hybrid Approach
The middle or hybrid approach includes “ nonphysical injuries but excludes business and financial torts under nonbankruptcy law .” Adams v . Adams ( In re
Adams ), 478 B . R . 476 , 486 ( Bankr . N . D . Ga . 2012 ) ( citing Adelson v . Smith ( In re Smith ), 389 B . R . 902 , 908 ( Bankr . D . Nev . 2008 )).
The Broad Approach
The broad approach “ which could include business and financial injuries if they are defined as personal injury torts under nonbankruptcy law .” Adams , 478 B . R . at 486 .
The Impact of the Approach Applied
Whether a potential claim is a personal injury tort claim can have implications on the venue and dischargeability in certain circumstances .
Where is the Claim Going to Be Liquidated ?
“ Bankruptcy courts have jurisdiction over all civil proceedings arising under , arising in or related to cases under the Bankruptcy Code . Gawker , 571 B . R . at 619 ( citing 28 U . S . C . § 1334 ( b )). “ However , bankruptcy courts exercise limited power to enter final orders and judgments with respect to matters that are not core .” Id . ( citations omitted ). 28 U . S . C . § 157 ( b )( 2 ) ( B ) makes clear that the “ liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution ” is not a core proceeding .
28 U . S . C . § 157 ( b )( 5 ) provides in part , “[ t ] he district court shall order that personal injury tort and wrongful death claims shall be tried in the district court in which the bankruptcy case is pending . . .” “ Although this provision does not deprive the bankruptcy court of jurisdiction to hear personal injury claims , see , e . g ., Stern v . Marshall , 564 U . S . 462 , 479 , 131 S . Ct . 2594 , 180 L . Ed . 2d 475 ( 2011 ) (§ 157 ( b )( 5 ) is not jurisdictional ); and In re Smith , 389 B . R . 902 , 913 ( Bankr . D . Nev . 2008 ) ( same ), it allocates jurisdiction between the district court and the bankruptcy court .” Byrnes , 2022 Bankr . LEXIS 645 at * 6 . “ As a result , ‘ the district court will almost always hear personal injury tort cases , especially if a timely request to do so it made .’” Id . ( quoting Smith , 389 B . R . at 913 ).
This issue can come up in numerous ways throughout a bankruptcy case : ( i ) through the claims process ; ( ii ) stay relief motions ; or ( iii ) motions to dismiss a bankruptcy case , among others .
Dischargeability of a Debt in Chapter 13
The discharge of debts in a Chapter 13 is broader than that of chapter 7 of chapter 11 bankruptcy and has its own exceptions which can be found in 11 U . S . C . § 1328 . One exception to discharge is
for restitution , or damages , awarded in a civil action against the debtor as a result of willful or malicious injury by the debtor that caused personal injury to an individual or the death of an individual . 11 U . S . C . § 1328 ( a )( 4 ). Which approach the Court adopts is a vital element to both the creditor and debtor litigating this discharge adversary . As counsel to either party is would be vital to address this issue in your pleading and not assume that any particular cause of action is a “ personal injury tor ” claim .
Conclusion
The issue of whether a particular claim is a personal injury can arise in various contexts within a bankruptcy . Each time counsel should address the causes of action at issue , which approach to apply , and how the cause of action fits into the approach being advocated for .
This article was submitted by Jason S . Rigoli , Furr and Cohen , P . A ., 2255 Glades Road , Suite 419A , Boca Raton , FL 33431 , jrigoli @ furrcohen . com
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