Estate representative may challenge discharge of wrongful death claim against bankruptcy debtor

Law Reporter, Feb 2000

Fezler v. Davis, 194 F.M 570 (5th Cir. 1999).

The Fifth Circuit Court of Appeals held that an estate representative-who is authorized by state law to bring a wrongful death claim against a debtor-is a "creditor" under 523(c) of the Bankruptcy Code and has standing to object to the discharge of the wrongful death claim in bankruptcy.

The debtor here shot and killed her husband. The decedent's daughter, who was appointed administrator of the estate, filed a wrongful death action against the debtor. The debtor then filed a Chapter 7 bankruptcy petition. The administrator objected under 523(a)(6) of the code to the discharge of the wrongful death claim, invoking an exception for debts arising from willful and malicious injuries. The debtor received a discharge of all debts. The trial court granted the debtor summary judgment, finding that the administrator lacked standing under the Bankruptcy Code to object to the discharge.

Reversing, the Fifth Circuit noted that the only requirement for bringing a nondischargeability action based on 523(a)(6) is that the action must be brought by a creditor. A creditor is "an entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." A claim is a "right to payment, whether or not such right is reduced to judgment." As administrator of the estate, plaintiff was granted a claim and the right to payment against the debtor by state law. Therefore, the court concluded that she was a creditor with standing to object to the discharge of the wrongful death claim.

The court noted that the U.S. Supreme Court has held that the National Labor Relations Board is a creditor within the meaning of the code and therefore has standing to bring a cause of action against a bankrupt employer for back pay owed employees. Further, bankruptcy courts have held that the Securities and Exchange Commission, as the agency chosen by Congress to enforce the securities laws, has standing as a creditor to bring actions under 523(c) to have judgments for securities violations declared nondischargeable. Under Texas law, the administrator is the judicially appointed officer authorized to enforce a claim and right to payment under the Texas wrongful death statute. Therefore, she has standing to have the wrongful death claim declared nondischargeable.

Plaintiff's Counsel: *Gerson D. Bloom, Galveston, Tex.