DUI CLAIM IS NOT DISCHARGED IN BANKRUPTCY

If you drink, don’t drive. That’s good advice. Because if you are ‘driving under the influence’ of alchohol (DUI), the damage you cause is not discharged in bankruptcy. To illustrate, you have just been on a night out with friends and you drank too much. On the way home, you run over a pedestrian who dies on the spot. The pedestrian happens to be the owner of facebook, Mr. Zuckermann. His family then sues you for $100 billion. Since you don’t even have a billion of anything, not even sand or marbles, you decide to file for Chapter 7 relief. After the 341 meeting of creditors, you wait for 60 days to pass, hoping that the family of Zuckermann does not file an adversarial complaint during this period of time. After 60 days, there is no adversarial complaint asking that the $100 billion be deemed not dischargeable. You give a sigh of relief. You receive the discharge order after 3 weeks.  One month after you receive the discharge order, Zuckermann’s family continues their lawsuit against you in state court asking for your life or $100 billion. You then file an adversary proceeding in your bankruptcy alleging that the state court case against you for $100 billion cannot continue because the claim of $100 billion has been discharged as there was no adversarial case filed by the Zuckermanns in the 60 day period. Who is correct? Really, don’t be biased hoping to get some shares of facebook at $48 from the Zuckermanns before the IPO next month.

 In Re Bridges, the debtor filed for Chapter 7 relief in August 2006. He listed an undisputed debt of $35,000 owed to Grange Mutual Casualty Company arising out of a lawsuit for damages to Grange insured caused by the debtor while operating a car under the influence of alcohol or drugs. After the debtor received a discharge, Grange notified state authorities that the debtor had an outstanding unsatisfied civil judgment. The debtor’s driver’s license was suspended. He incurred attorney’s fees and costs in having his license reinstated. The debtor then filed his adversary proceeding asserting that there was no unsatisfied judgment against him because the debt was discharged. He asserted that the defendant’s actions violated the discharge injunction. The bankruptcy court granted the defendant’s motion for summary judgment. In other words, debtor lost on his adversary proceeding. The debtor did not ask the bankruptcy court to determine the dischargeability of the defendant’s claim before he received a discharge. The discharge order said that “debts from personal injuries or death caused by the debtor’s operation of a motor vehicle, vessel or aircraft while intoxicated” were not discharged. The court noted that the claim remained nondischargeable even though it was acquired by the defendant through contract by subrogation. The court said its ruling “supports the objectives of Congress in enacting 11 USC § 523(a)(9) as follows: 1) To deter drunk driving; 2) To ensure that those that cause injury by driving drunk do not escape civil liability through the bankruptcy laws; and 3) To protect victims of drunk driving.”

Therefore a creditor who does not file an adversary proceeding on a debt that is excepted from discharge by Section 523(a)(9) is not precluded from pursuing collection of the debt after the debtor receives a discharge.

 But let’s change the circumstances of the accident and see what happens. Let’s say that you were not drunk when you were driving. It started to rain. Because your tires were balding, your car skidded on the freeway causing a chain collision. One of the cars involved was driven by Mitt Romney who loses both his legs. Now Mitt has to be pushed around in a wheelchair while he campaigns against Obama. So Mitt now sues you for $50 billion per leg for a grand total of $100 billion. Will your chapter 7 discharge the $100 billion claim of Mitt Romney against you? Yes, it will because the cause of the accident was negligence and you were not drunk.

 Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years.  He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California.  He speaks Mandarin and Fujien and looks forward to discussing your case with you personally.  Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.