As mentioned in an earlier post, the current deadline to object to dischargeability of certain debts in Curtis James Jackson, III’s bankruptcy (“50 Cent” or “Debtor”) pursuant to 11 U.S.C. 523 is October 5, 2015.
The filing of a Chapter 11 bankruptcy case does not automatically result in the discharge of the debts owed by the individual debtor for various reasons. Certain claims against a debtor are “non-dischargeable”. This means that the debt cannot be eliminated by bankruptcy process and the debtor will still owe these debts after his/her bankruptcy.
There are several categories of non-dischargeable debt for individuals in Chapter 11 and it is essential for creditors to know the nature of their claim against the debtor. These categories fall into two types of non-dischargeable claims: 1) claims that are exempt from discharge as a matter of law (i.e. student loans, criminal fines, certain taxes); and 2) claims which require a creditor to file an adversary proceeding in the debtor’s bankruptcy case for determination by the Bankruptcy Court that the claim is non-dischargeable. If a creditor fails to timely file an adversary proceeding by the Court scheduled deadline in a bankruptcy case, a discharge awarded to the debtor will also discharge the potentially non-dischargeable debt.
One category of claims that requires a creditor to file an adversary proceeding for determination of non-dischargeability, is for a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity” pursuant to 11 U.S.C. § 523(a)(6).
Recent news articles http://www.nbcnews.com/business/business-news/50-cent-sex-tape-case-jury-adds-2-million-punitive-n398926 about 50 Cent’s bankruptcy filing have focused on the New York jury verdicts for $5 million for compensatory damages and $2 million for punitive damages (“NY Litigation Debt”) in favor of Lastonia Levitson (“Levitson”). Levitson sued the Debtor for intentional infliction of emotional distress and violation of the New York Civil Rights Law related to Jackson’s release of a private, intimate video depicting Levitson having sex with her then boyfriend.
An interesting issue in 50 Cent’s bankruptcy case will be whether he can prevail against (or settle) any adversary proceeding by Leviston for determination that the NY Litigation Debt is non-dischargeable. The NY Litigation Debt, in part, was based on a finding that 50 Cent was liable to Leviston under her cause of action for intentional infliction of emotional distress.
The elements of a cause of action for the intentional infliction of emotional distress are: “(i) extreme and outrageous conduct; (ii) intent to cause, or disregard of a substantial probability of causing, severe emotional distress; (iii) a causal connection between the conduct and the injury; and (iv) severe emotional distress” (Howell v. New York Post Co., 81 N.Y.2d 115, 121  ).
Several courts have found that a claim for intentional infliction of emotional distress satisfies the “willful and malicious injury” standard under 11 U.S.C. § 523(a)(6), supporting non-dischargeability of these types of claims. See e.g. Mussilli v. Droomers (In re Musilli), 379 Fed.Appx. 494, 498 (6th Cir. 2010) (“This Court has created a non-exclusive list of the ‘types of misconduct [that] satisfy the willful and malicious injury standard: intentional infliction of emotional distress…’ “); Berrien v. Van Vuuren (In re Berrien), 280 Fed.Appx 762, 766 (10th Cir. 2008)(intentional infliction of emotional distress claim satisfies the “willful and malicious injury” standard). Collier on Bankruptcy § 523.12 (16th ed. 2012) (“Claims based on…intentional infliction of emotional distress…have typically been held nondischargeable”).
Perhaps some of these issues will be raised at the status hearing to be held in the Debtor’s bankruptcy case on August 26, 2015 at 2:00 p.m.
Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP. Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation. You can contact Heather at 561-804-4419 or email@example.com.