Section 523(a) of the Bankruptcy Code deals with various types of nondischargeable debt. On of the subsections of Section 523(a) addresses the matter of a debt for “death of personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.” 11 U.S.C. §523(a)(9). In other words, Section 523(a)(9) deals with certain types of debts arising from drunk driving. While this type of debt is not common, it is important to spot it when it does arise.
The intent behind Section 523(a)(9) was to allow victims (or their families) of drunk driving crimes to pursue wrongful death or other civil actions against persons who may have committed drunk driving offenses. Unlike some other nondischargeability provisions under Section 523(a), Section 523(a)(9) is “self-executing”, meaning that a victim creditor is not required to file an adversary proceeding to seek a determination of nondischargeability. There is no requirement that the debtor actually be convicted of a DUI or DWI offense in state or municipal court. A creditor seeking to use Section 523(a)(9) need only show that (1) the debtor was “intoxicated” within the meaning of state law; (2) the debtor was “operating” a motor vehicle or other type of vehicle while intoxicated; and (3) that the claim for personal injury or death resulted proximately from such conduct.
Despite the current climate of aggressive prosecution and enforcement of DUI and DWI offenses, the bankruptcy code construes exceptions to discharge strictly against creditors. In other words, there is a presumption that debts should be discharged, and that a creditor seeking prevent this will have an uphill battle. As far as Section 523(a)(9) is concerned, the burden is on the creditor to prove each and every element of nondischargeability by a “preponderance of the evidence.” This is not an easy matter. In Re Race, 198 B.R. 740 (W.D. Mo. 1996).
For the purposes of §523(a)(9), the most commonly encountered vehicle will of course be an automobile. But motor boats also fall under this section, as well as airplanes and even snowmobiles. In Re Race, 198 B.R. 740 (W.D. Mo 1996). Incredibly, a bankruptcy court had to rule on whether a “horse and buggy” was considered to be a vehicle under §523(a)(9). Not surprisingly, it ruled that it did not qualify as a vehicle. In Re Schumucker, 409 B.R. 477 (N.D. IN 2007).
How, then, does the bankruptcy court determine whether the debtor’s operation of the vehicle was in violation of Section 523(a)(9)? The court must apply state law, as a first matter. Every state has its own requirements for what constitutes intoxication, and the bankruptcy court will defer to these standards. In Re Spencer, 168 B.R. 142 (N.D. Tx, 1994). The bankruptcy court must be convinced that the debtor was legally “intoxicated” under state law, and that the liability for the personal injuries resulted from such conduct. If these state law issues have already been determined in another judicial proceeding, there is a good chance that the principles of res judicata and estoppel will preclude these issues from being tried over again. This can be a slippery matter, however, because frequently in state or municipal court, actual judicial determinations on DUI/DWI issues may not have been made.
It is important to note that Section 523(a)(9) only applies to damages traceable to “personal injuries.” In other words, drunk driving damages that may arise from damage to property, or from punitive damages awards, will not be covered under this section. Thus there can arise the situation where the property damage debt is discharged, but the personal injury debt is not. Regarding punitive civil damages, there are two different lines of reasoning that have developed. Some courts have held that Section 523(a)(9) was intended to apply to debts directly resulting from personal injury; therefore, punitive damages from drunk driving personal injury claims would be nondischargeable. In Re Dale, 199 B.R. 1014 (S.D. FL, 1995).
Other courts have ruled differently, holding that punitive damages do not have anything to do with personal injuries, and are therefore dischargeable. In the rare situation where this type of debt comes up in a case, it will be important to probe into the circumstances of the incident, and to examine the nature of the claim against the debtor. It is critical in these situations to examine in detail the nature of any civil judgment that may have been awarded against a bankruptcy debtor, in order to determine what (if anything) might be nondischargeable.
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