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Whritenour v. Thompson – Bankruptcy Discharge of Personal Injury Debts

A plaintiff in a Florida car accident case is entitled to a jury trial on the issues of negligence and damages, despite a trial court’s earlier ruling to the contrary. That’s per Florida’s Second District Court of Appeal in the case of Whritenour v. Thompson, where the strategic bankruptcy filing of a defendant threatened to derail the case.

Palm Beach County car accident lawyers know there are some personal injury debts that can be discharged in a bankruptcy filing. Where motor vehicle accidents are involved, the bankruptcy court excludes injuries caused by drunk drivers or those where the injuries were caused by willful or malicious intent.

Still, all others, considered “creditors” in the bankruptcy case, can file an “adversary proceeding,” requesting the court to set aside the automatic stay and discharge and force the debtor to pay.

Justices called the Whritenour case “unprecedented” for the fact that a summary judgment in the plaintiff’s favor essentially forced her to accept the defendant’s liability insurance policy limits as total satisfaction of the damages, barring her from further negligence action against the defendant. In doing this, the trial court effectively barred her from being able seek a jury verdict on the issue of damages because, presumably, she would not be able to prove bad faith on behalf of the defendant’s insurer.

This case stemmed from a car accident that happened in July 2011 involving the plaintiff’s son and the father of her son. She was appointed guardian of both for purposes of the lawsuit, in which she alleged serious injuries had been caused by the at-fault driver’s negligence.

The at-fault driver did have insurance, which was capped at $300,000 per accident. The defendant’s insurer hired counsel for her, and that attorney advised her to file for bankruptcy. She was then referred to a bankruptcy lawyer, who helped her file a Chapter 7 liquidation. On her listing of creditors, she named the plaintiff, indicating the claim had a value in excess of $1 million. The bank issued an automatic stay, barring creditors from taking any further action to collect from her. That meant the personal injury lawsuit effectively came to a halt.

Not long after, the plaintiff filed an emergency motion for relief from the automatic stay so that she could proceed with her negligence action. The bankruptcy court agreed, but stipulated that such action could only be taken for the purpose of securing claims against the defendant’s insurance carrier. The court went on to say that any attempt to secure excess judgment would require permission from the court.

The personal injury action continued, with the defendant filing a motion for summary judgment. At that hearing, the attorney representing her in the bankruptcy asserted she could not be held liable for any damages, and the maximum recovery from the insurer was $300,000. He further indicated the bankruptcy trustee did not plan to file a bad faith claim against the insurer, though he presented no proof.

The trial court granted summary judgment to the plaintiff for the $300,000 limit – but no more. The court indicated she could not pursue a negligence action against the defendant because she hadn’t filed a bad faith insurance claim against the defendant’s insurer prior to the bankruptcy filing.

The appellate court determined this reasoning was wrong because a claim for negligence and a claim for bad faith insurance are two totally separate issues. Therefore, the appellate court reversed and remanded the case back to trial court for determination on issues of negligence and damages.

Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights.

Additional Resources:
Whritenour v. Thompson, June 6, 2014, Florida’s Second District Court of Appeal

More Blog Entries:
Pralle v. Milwicz – Winning Accident Claim Requires Proof of Injury Cause, May 26, 2014, Palm Beach County Car Accident Lawyer Blog

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