No Escape: Court Asked to Find TCPA Judgment Against Corporate Officer Non-Dischargeable In Bankruptcy

We’re still a month away from Halloween, but TCPAWorld has just become even scarier.

I have frequently remarked on the unfairness of individual corporate officers being held individually and personally liable for TCPA violations committed by corporate entities. That sometimes means liability well into the millions of dollars in personal exposure for individuals based upon actions taken by companies these individuals helped run. Well imagine, for a moment, if all that exposure were deemed non-dischargeable in bankruptcy. Horrifying right?

Well that is just the result a TCPA judgment-creditor is seeking in a bankruptcy proceeding involving a corporate officer who sought protection following entry of a default TCPA judgment against him. In re Kinikini, Case No. 19-00134-TLM, Adv. No. 19-06032-TLM, 2019 Bankr. LEXIS 2927 (D. Id. Bk. Sept. 20, 2019) the Plaintiff argued that a default judgment entered against the debtor was non-dischargeable as a “willful and malicious” injury under the bankruptcy code. The judgment in question had, apparently, concluded that the Defendant acted willfully under the TCPA, but does that mean that a TCPA judgment is per se non-dischargeable in BK where willfulness is found? Stated more precisely, are the findings required for a “willfulness” determination under the TCPA commiserate with those required for a “willful and malicious” injury rendering a claim non-dischargeable in bankruptcy? What a question!

Unfortunately we do not yet have an answer to it. In Kinikini the Plaintiff urged that the Defendant was prevented from disputing “willfulness”—by any standard—by defaulting in the underlying TCPA case. The Court analyzed that issue and concluded that allowing a default to be entered in federal court does not result in collateral estoppel in a related bankruptcy proceeding. That is to say, the debtor retains the right to argue he did not willfully injure the Plaintiff within the meaning of the bankruptcy code—but we still don’t (yet) know whether a willfulness TCPA finding suffices.

So there you go TCPAWorld—TCPA Plaintiffs are now arguing that not only are corporate officers liabile for bad actions by the corporate entities they oversee, resulting judgments cannot even be discharged in bankruptcy. Happy Monday.


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