No Need to Bother the Bankruptcy Judge – Continuing a Personal Injur...

Bankruptcy Judge Lee of the Eastern District of California probably doesn’t think that it should be necessary to remind litigants that a personal injury plaintiff need not obtain relief from the post-discharge injunction in order to commence or continue a lawsuit against the debtor, so long as it is clear that the plaintiff will resort only to insurance coverage to pay the claim.

In re Zagala, 2007 WL 1772171(Bankr. E.D. Cal. June 19, 2007) is an unpublished Memorandum Decision on a motion to modify the post-discharge injunction to allow a peronal injury lawsuit to continue. Judge Lee ruled that the motion was “procedurally inappropriate and unnecessary.” The opinion cites an earlier BAP decision In re Beeney, 142 B.R. 360, 363-64 (Bankr. App. 9th Cir. 1992) in which the court ruled that a bankruptcy case need not be reopened, nor did the section 524 injunction need to be modified, for this purpose.

An interesting aspect of the ruling in Zagala is Judge Lee’s observation that “the bankruptcy court may enforce, or define the scope of the discharge injunction, but it may only do so through a declaratory judgment in a properly filed and served adversary proceeding.” I thought that at least the post-discharge injunction could be enforced via contempt proceedings. Question: In order to file such an adversary proceeding, must the underlying bankruptcy case be reopened? If so, then wouldn’t a contested matter in the reopened bankruptcy case be more efficient given the limited issues which are likely to be involved?

Copyright Dean T. Kirby 2007. All rights reserved.