Dorris v. Chacon

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
LEOPOLDIO CHACON,
Debtor. 	No. 13-09-10449 SR
GLENNIS DORRIS, an individual,
Plaintiff, By and Through her
Guardian, LAVELYA DORRIS
v. 	Adv. No. 09-1068 S
LEOPOLDIO CHACON,
Defendant.
MEMORANDUM OPINION RELATING TO
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Plaintiff’s Motion for
Summary Judgment (“Motion”) and Memorandum in Support (docs 26,
27) on Plaintiff’s First Amended Complaint (doc 23) and
Defendant’s Partial Objection thereto with Memorandum in Support
(docs 31, 32) and Plaintiff’s Reply Memorandum (doc 38).
Plaintiff appears through her attorney F. Shaun Burns. 	Defendant
appears through his attorney Wesley O. Pool. 	This is a core
proceeding to determine the dischargeability of a debt. 	28
U.S.C. § 157(b)(2)(I). 	The Court will grant the Motion in part.
HISTORY
A brief history derived from the undisputed facts will
provide context for the following discussion. 	Plaintiff is a 61-
year-old female; she was 60 in June 2008 when Defendant sexually
assaulted her. 	Fact 2. 	Plaintiff has been mentally disabled
since birth and has the intelligence level of an 8-year old.
Fact 3. 	This disability makes her extremely vulnerable to force
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1Section 30-9-11 Criminal sexual penetration states, in
relevant part:
A. Criminal sexual penetration is the unlawful and
intentional causing of a person to engage in sexual
intercourse, cunnilingus, fellatio or anal intercourse
or the causing of penetration, to any extent and with
any object, of the genital or anal openings of another,
whether or not there is any emission.
...
F. Criminal sexual penetration in the third degree
consists of all criminal sexual penetration perpetrated
through the use of force or coercion not otherwise
specified in this section.
Whoever commits criminal sexual penetration in the
third degree is guilty of a third degree felony.
“Unlawful” is defined in New Mexico’s Uniform Jury
Instruction as:
For the act to have been unlawful it must have been
done [without consent and]
[with the intent to arouse or gratify sexual desire]
[or]
[to intrude upon the bodily integrity or personal
safety of (name of victim)]
[or]
(continued...)
Page -2-
and coercion. 	Id. 	In addition, Plaintiff has been physically
handicapped since birth and is unable to bathe herself. 	Fact 4.
Therefore she needs physical support and assistance in bathing
and personal hygiene. 	Id. 	In June 2008, when the sexual
assaults occurred, Defendant was employed by Interim Healthcare,
Inc. (“Interim”) to provide healthcare services to Plaintiff.
Fact 6. 	On August 29, 2008, the Curry County Deputy District
Attorney filed a two count criminal information against Defendant
charging two different instances of criminal sexual penetration
in the third degree contrary to Section 30-9-11(F) 1, NMSA 1978.
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1(...continued)
[other unlawful purpose].
NMRA, Crim. UJI 14-132. 	The “Use Notes” state that if the
“without consent” instruction is given, one of the three
alternatives that follows must be given. 	Or, one or more of the
three alternatives can be given without the “without consent”
instruction.
2Criminal sexual contact is addressed in Section 30-9-12,
NMSA 1978. 	That section provides:
A. Criminal sexual contact is the unlawful and
intentional touching of or application of force,
without consent, to the unclothed intimate parts of
another who has reached his eighteenth birthday, or
intentionally causing another who has reached his
eighteenth birthday to touch one's intimate parts.
The statute defines “Criminal sexual contact in the fourth
degree”, Section 30-9-12(C), but otherwise only states that
“Criminal sexual contact is a misdemeanor when perpetrated with
the use of force or coercion,” Section 30-9-12(D). It does not
define or even use the words “Criminal sexual contact in the
third degree.” 	Compare Section 30-9-13(C), NMSA 1978 (“Criminal
sexual contact of a minor in the third degree consists of all
criminal sexual contact of a minor perpetrated:...”) 	The only
reported New Mexico cases that discuss criminal sexual contact in
the third degree involve minors.
Page -3-
Fact 7; Doc 37-1. 	These actions constitute third degree
felonies. 	Id. 	On January 6, 2009, the State of New Mexico and
Defendant entered into a Plea and Disposition Agreement, pursuant
to which Defendant would plead guilty to one count of Criminal
Sexual Contact “in the third degree” contrary to Section 30-9-
11(F), NMSA 1978 [sic 2 ] in exchange for a sentence of three years
(to be suspended in favor of three years of supervised
probation), and a dismissal of the second count. 	Facts 8, 9; Doc
37-2. 	The State District Court Judge approved the Plea and
Disposition Agreement on March 10, 2009. 	Id. 	Also on March 10,
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Page -4-
2009, the State Court entered a “Judgment, Sentence and Order
Suspending Sentence” in conformity with the Plea and Disposition
Agreement. 	Doc 37-3. 	A certified transcript of the March 10,
2009 sentencing hearing is attached to the affidavit of the State
Court Reporter. 	Fact 11; Doc 29-1. 	In the hearing, the State
District Court Judge convicted Defendant of Criminal Sexual
Contact in the Third Degree, “reduced” from Criminal Sexual
Penetration a Third Degree felony. 	Id., pp. 5-6; Fact 16. 	After
questioning the Defendant about his history, educational
background and work history, the Judge commented:
This is an egregious act. 	It is a violation of a
person’s bodily sanctity. 	It is a betrayal. 	We have a
person who has special needs who has been placed in the
responsibility of someone who is giving her care and he
has betrayed that trust. 	That makes it particular[ly]
egregious.
Id., p. 11; Fact 18.
Defendant filed for Chapter 13 relief on February 9, 2009.
On March 10, 2009, Plaintiff, who had not yet received notice of
the bankruptcy, filed an eight count complaint in the Ninth
Judicial District Court, Curry County, New Mexico as case D-0905-
CV-02009-00152 (the “State Case.”) 	The State Case names
Defendant, Interim, and John Does and Jane Does 1-50 (doc 37-5).
Counts 1, 2, 3 and 4 are against the Defendant only and
allege, respectively, battery, assault, intentional infliction of
emotional distress and personal injury . 	Counts 5, 6, 7 and 8
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311 U.S.C. § 1328(a) provides, in part:
[A]s soon as practicable after completion by the debtor
of all payments under the plan, ... unless the court
approves a written waiver of discharge executed by the
debtor after the order for relief under this chapter,
the court shall grant the debtor a discharge of all
debts provided for by the plan or disallowed under
section 502 of this title, except any debt--
...
(4) for restitution, or damages, awarded in a civil
action against the debtor as a result of willful or
malicious injury by the debtor that caused personal
injury to an individual or the death of an individual.
428 U.S.C. § 157(b)(5) states:
The district court shall order that personal injury
tort and wrongful death claims shall be tried in the
district court in which the bankruptcy case is pending,
or in the district court in the district in which the
claim arose, as determined by the district court in
which the bankruptcy case is pending.
“Most courts interpret this provision to mean that all personal
injury tort claims are not within the subject matter jurisdiction
(continued...)
Page -5-
are against Interim only and allege, respectively, negligence,
negligent entrustment, negligence per se and gross negligence.
THE ADVERSARY PROCEEDING
Plaintiff’s First Amended Complaint filed in this adversary
proceeding (hereafter “Complaint”) contains four counts seeking
to declare nondischargeable under 11 U.S.C. § 1328(a)(4) 3 claims
for 1) Battery, 2) Assault, 3) Intentional Infliction of
Emotional Distress, and 4) [Willful and Malicious] Personal
Injury. 	It also seeks relief from the automatic stay to allow
Plaintiff to prove and liquidate her claims in state court.
Alternatively, it asks the Bankruptcy Court 4 to determine her
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4(...continued)
of a bankruptcy court and must be tried in the district court.”
Elkes Development, LLC v. Arnold (In re Arnold), 407 B.R. 849,
851 (Bankr. M.D. N.C. 2009)(Collecting cases.) 	This Court
agrees, and will therefore not try Plaintiff’s damage claims.
5“The generally applicable ‘American Rule’ is that absent a
contractual or statutory provision to the contrary, a prevailing
party is not entitled to recover attorney fees from the losing
party. [Sanner v. Poli (In re] Poli[)], 298 [B.R. 557,] at 563
[(Bankr. E.D. Va. 2003)]. 	See generally Buckhannon Bd. and Care
Home, Inc. v. West Virginia, 532 U.S. 598, 602 (2001).” 	McCabe
v. Harmes (In re Harmes), 423 B.R. 678, 682 n. 3 (Bankr. D. N.M.
2010). 	Plaintiff’s claim in this case is based on intentional
tort and Plaintiff has not cited any applicable statute or rule
that would allow an award of attorney’s fees.
6Defendant is obviously relying on 11 U.S.C. § 523(d) which
states:
If a creditor requests a determination of
dischargeability of a consumer debt under subsection
(a)(2) of this section, and such debt is discharged,
the court shall grant judgment in favor of the debtor
for the costs of, and a reasonable attorney’s fee for,
the proceeding if the court finds that the position of
the creditor was not substantially justified, except
that the court shall not award such costs and fees if
special circumstances would make the award unjust.
(continued...)
Page -6-
damages, including punitive and exemplary damages, costs of suit,
and attorney fees 5.
Defendant denied substantially every allegation in his
Answer. 	He admitted only: Plaintiff’s name, address and age, and
the address of her Guardian; his name and address, his former
employment with Interim, and the filing of a criminal case
against him. 	He also admitted filing his Chapter 13 case. 	In
his answer he also sought attorney fees, claiming that
Plaintiff’s case was not substantially justified 6.
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6(...continued)
Section 523(d)’s text limits relief to 523(a)(2) cases, however.
Chapter 13 contains no parallel provision that awards a debtor
costs and fees for a creditor’s unsuccessful challenge to
dischargeability of restitution or damages for personal injury
under 11 U.S.C. § 1328(a)(4). 	“[W]here Congress includes
particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate
inclusion or exclusion.” 	Russello v. United States, 464 U.S. 16,
23 (1983)(Citing United States v. Wong Kim Bo, 472 F.2d 720, 722
(5 th Cir. 1972).) 	The Court therefore presumes that Congress
intended that Section 1328(a)(4) would not contain a fee-shifting
remedy. 	Defendant’s claim for fees and costs must be denied.
7This motion for summary judgment was filed before the
August 2, 2010 effective date for the new local rules. 	The Court
will apply the rule in force when the motion was filed. 	But, NM
LBR 7056-1 (2010) is substantively identical to the 1996 rule.
Page -7-
THE MOTION FOR SUMMARY JUDGMENT
Plaintiff’s Memorandum in Support contains a Statement of
Undisputed Facts, as required by NM LBR 7056-1 (1996) 7.
Defendant’s Partial Objection does not specifically contest any
proposed fact. 	Therefore, all material facts set forth in
Plaintiff’s statement are “deemed admitted.” 	NM LBR 7056-1
(1996).
Rather, Defendant’s partial objections go to the legal
theories behind Plaintiff’s complaint. 	On March 25, 2010 the
Court entered an Order resulting from pretrial conference
(“Order”) that established deadlines for filing Motions for
Summary Judgment (doc 25). 	It also ruled: “If the Bankruptcy
Court finds that any of Plaintiff’s claims against Defendant are
nondischargeable, the determination and liquidation of damages
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8Because Defendant admits that any claims based on battery,
assault, intentional infliction of emotional distress, or
personal injury would be nondischargeable, the Court will not
address those further.
Page -8-
shall be referred to the District Court for the Ninth Judicial
District, Curry County, New Mexico.”
Plaintiff’s Motion, (doc 26, p. 2) refers to the Order:
Pursuant to that Order, Plaintiff requests that this
Court find that all of Plaintiff’s claims against
CHACON are nondischargeable, and that the District
Court for the Ninth Judicial District shall have full
authority to liquidate, adjudicate, enforce and
otherwise deal with Plaintiff’s claims against CHACON
asserted in that court.
(Emphasis added.)
Defendant claims that Plaintiff’s Motion is overbroad in
that it seeks to hold all of Plaintiff’s claims against Defendant
nondischargeable (doc 31, ¶ 1). 	Specifically, he argues that the
State Case complaint refers four times to an alleged fiduciary
relationship between Plaintiff and Defendant and that it also
refers four times to Defendants allegedly “grossly negligent”
conduct. 	See Doc 31, ¶ 4. 	Defendant does not dispute that any
claims proven against him based on theories of battery, assault,
intentional infliction of emotional distress or willful or
malicious personal injury would be nondischargeable 8. 	Id., ¶ 3.
But he argues that any claims based on a breach of fiduciary duty
or negligence cannot be held nondischargeable under 11 U.S.C. §
1328(a)(4). 	As an initial note, the Court finds that Plaintiff
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911 U.S.C. § 523(a)(4) provides: “A discharge under section
727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not
discharge an individual debtor from any debt– ... for fraud or
defalcation while acting in a fiduciary capacity, embezzlement,
or larceny[.]” It does not apply in the instant case because
Defendant has not sought a “hardship discharge” under 1328(b)(8).
10 Compare 11 U.S.C. § 523(a)(6)(declaring debts for willful
and malicious injury by the debtor to an entity of an entity’s
property). 	This section does not apply in Chapter 13 cases.
One-on-One Fitness Personal Training Service, Inc. v. Reyes (In
re Reyes), 2010 WL 2757180 at *5 (Bankr. N.D. Ill. 2010).
11 Which Plaintiff, without more, currently cannot do. 	See
Fowler Bros. v. Young (In re Young), 91 F.3d 1367, 1371-72 (10 th
Cir. 1996):
The existence of a fiduciary relationship under §
523(a)(4) is determined under federal law. 	However,
state law is relevant to this inquiry. 	Under this
circuit's federal bankruptcy case law, to find that a
(continued...)
Page -9-
has four and only four counts against Defendant in the State
Case; she did not raise breach of fiduciary duty or negligence as
separate counts.
1. 	Breach of Fiduciary Duties
Defendant is correct that 11 U.S.C. § 1328(a)(4) does not
apply to the same situation as does § 523(a)(4) 9 either by
reference to it or by listing its elements. 	It holds
nondischargeable only restitution or debts from “willful or
malicious injury by the debtor that caused personal injury to an
individual or the death of an individual.” 	There is no exception
to Section 1328 that denies discharge of debts for a breach of
fiduciary duty 10 . 	Therefore, even if Plaintiff could establish a
breach of fiduciary duty claim on the above facts 11 in the State
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11 (...continued)
fiduciary relationship existed under § 523(a)(4), the
court must find that the money or property on which the
debt at issue was based was entrusted to the debtor.
Thus, an express or technical trust must be present for
a fiduciary relationship to exist under § 523(a)(4).
Neither a general fiduciary duty of confidence, trust,
loyalty, and good faith, nor an inequality between the
parties' knowledge or bargaining power, is sufficient
to establish a fiduciary relationship for purposes of
dischargeability. 	Further, the fiduciary relationship
must be shown to exist prior to the creation of the
debt in controversy.
(Citations omitted; emphasis added.) 	Accord McDowell v. Stein
(In re McDowell), 415 B.R. 584, 595 (S.D. Fla. 2009)(“[T]he fact
that a relationship is fiduciary under state law does not
necessarily mean that it is a fiduciary relationship within the
meaning of § 523(a)(4).”) 	Actually, New Mexico courts frequently
find fiduciary relationships based on only equitable notions of
proper behavior in certain situations. 	See Moody v. Stribling,
1999-NMCA-094 at {27}, 127 N.M. 630, 638, 985 P.2d 1210, 1218
(Ct. App.), cert. denied, 127 N.M. 389, 981 P.2d 1207 (1999)(“A
fiduciary duty is a duty of loyalty.”)(citing In re Estate of
McKim, 111 N.M. 517, 522, 807 P.2d 215, 220 (1991) and Trujillo
v. Puro, 101 N.M. 408, 411, 683 P.2d 963, 966 (Ct. App.), cert.
denied, 101 N.M. 362, 683 P.2d 44 (1984)). 	And, the New Mexico
courts have used the term “fiduciary” to describe general
fiduciary duties of trust or responsibility. 	In Calahan v. New
Mexico Federation of Teachers-TVI, the New Mexico Supreme Court
admitted that its previous use of the term “fiduciary capacity”
in Jones v. Int’l Union of Operating Engineers, 72 N.M. 322, 329,
383 P.2d 571, 576 (1963) was really meant to refer only to a
union’s duty to represent union members under a collective
bargaining agreement, not to state that the union had any actual
recognized fiduciary duty. 	Calahan, 2006-NMSC-010 at {17}, 139
N.M. 201, 207, 131 P.3d 51, 57 (2006). 	“The intent in using such
language was and remains an explanation as to why we recognize a
cause of action by a union member against the union for breach of
the duty of fair representation.” 	Id. 	As a further example of
the distinction between state concepts of fiduciary duty and
bankruptcy fiduciary duty, compare Walta v. Gallegos Law Firm,
P.C., 2002-NMCA-015 at {38} n.2, 131 N.M. 544, 552 n.2, 40 P.3d
449, 457 n.2 (Ct. App. 2001), cert. denied, 131 N.M. 619, 41 P.3d
345 (2002)(In New Mexico, partners have both statutory and common
(continued...)
Page -10-
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11 (...continued)
law fiduciary duties to each other.) with Holaday v. Seay (In re
Seay), 215 B.R. 780, 787 (10 th Cir. BAP 1997)(“Even though the
Oklahoma state courts may approve of a general policy that
creates a fiduciary duty between joint venturers, this policy is
not sufficient to fulfill the Tenth Circuit's requirements of a
common law trust for purposes of § 523(a)(4).”) It thus should be
clear that what New Mexico courts are referring to when they find
“fiduciary duty” can often just be a heightened duty of good
faith.
Page -11-
Case, any damages would be discharged if Defendant were to
complete his Chapter 13 plan. 	Therefore Defendant argues that
this Court should order Plaintiff to refrain from referring to
any fiduciary type duties at trial in the State Case. 	The Court
declines to so order for the following reasons.
Plaintiff seeks punitive damages in the State Case. 	In
Green Tree Acceptance, Inc. v. Layton, 108 N.M. 171, 769 P.2d 84
(1989), the New Mexico Supreme Court discussed when punitive
damages are allowable.
Punitive damages may be awarded only when the
wrongdoer's conduct may be said to be “maliciously
intentional, fraudulent, oppressive, or committed
recklessly or with a wanton disregard of the
plaintiffs' rights.” 	Hood v. Fulkerson, 102 N.M. 677,
699 P.2d 608 (1985) (quoting Loucks v. Albuquerque
Nat'l Bank, 76 N.M. 735, 747, 418 P.2d 191, 199
(1966)). 	These words are to be taken as used in the
disjunctive. 	See Bank of New Mexico v. Rice, 78 N.M.
170, 180, 429 P.2d 368, 378 (1967), appeal after
remand, 79 N.M. 115, 440 P.2d 790 (1968); see also
Curtiss v. Aetna Life Ins. Co., 90 N.M. 105, 108, 560
P.2d 169, 172 (Ct. App.), cert. denied, 90 N.M. 7, 558
P.2d 619 (1976). 	Punitive damages are to be awarded
when actual or nominal damages are inadequate to
satisfy the wrong committed. 	Montoya v. Moore, 77 N.M.
326, 330-31, 422 P.2d 363, 366 (1967). 	Punitive
damages do not have to be in reasonable proportion to
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Page -12-
the actual damages, but they must not be so unrelated
to the injury as to plainly manifest passion and
prejudice rather than reason and justice. 	Faubion v.
Tucker, 58 N.M. 303, 307, 270 P.2d 713, 716 (1954).
Factors to be weighed in assessing punitive damages are
the enormity and nature of the wrong and any
aggravating circumstances. 	See Sweitzer v. Sanchez, 80
N.M. 408, 412, 456 P.2d 882, 886 (Ct. App. 1969).
Finally,
Where a party prays for an award of punitive
damages and the evidence is sufficient to permit
the issue of punitive damages to be considered by
the jury, the amount of such damages is left to
the sound discretion of the jury based on the
nature of the wrong, the circumstances of each
case, and any aggravating or mitigating
circumstances as may be shown.
Chavez-Rey v. Miller, 99 N.M. 377, 379, 658 P.2d 452,
454 (Ct. App. 1982), cert. denied, 99 N.M. 358, 658
P.2d 433 (1983).
Id. at 174, 769 P.2d at 87 (Emphasis added.)
In 2001, the New Mexico Court of Appeals revisited the issue
of punitive damages in Walta v. Gallegos Law Firm, P.C., 2002-
NMCA-015, 131 N.M. 554, 40 P.3d 449 (Ct. App. 2001), cert.
denied, 131 N.M. 619, 41 P.3d 345 (2002). 	That court stated that
“a finding of a culpable mental state is necessary in order to
impose punitive damages.” 	Id. at {55}, 131 N.M. at 556, 40 P.3d
at 461. 	Furthermore, “[t]here must be evidence of culpable
conduct beyond that necessary to establish the underlying cause
of action.” 	Id. at {56} (Citations omitted.) 	The court found
that culpability of a defendant can and should be measured on a
continuum of reasonableness imposed in light of the defendant’s
obligations. 	Id. at {57}. 	“The more stringent the standard of
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Page -13-
conduct the more likely that breach of the standard will
demonstrate a culpable mental state.” 	Id. (Citation omitted.)
New Mexico law is in accord with that in other
jurisdictions. 	See, Owens v. Watson, 806 S.W.2d 871, 875 (Ct.
App. Tex. 1991)(“Factors to be considered making this [punitive
damage] determination are: 1) the nature of the wrong; 2) the
character of the conduct involved; 3) the degree of culpability
of the wrongdoer; 4) the situation and sensitivities of the
parties involved; and 5) the extent to which the conduct offends
a public sense of justice and propriety.”)(Citation omitted.);
Paris v. Michael Kreitz, Jr. P.A., 75 N.C.App. 365, 373-74, 331
S.E.2d 234, 241 (Ct. App. 1985):
The established law in North Carolina regarding the
recovery of punitive damages in tort actions is that
“the tortious conduct must be accompanied by or partake
of some element of aggravation before punitive damages
will be allowed.” 	Newton v. Insurance Co., 291 N.C.
105, 112, 229 S.E.2d 297, 301 (1976). ... 	When the
tort necessarily involves intentional wrongdoing, as in
fraud, punitive damages are appropriate when the
actionable conduct is accompanied by “some element of
aggravation.” 	Newton, supra 291 N.C. at 112, 229
S.E.2d at 301. 	Aggravated conduct has been variously
defined but in the context of an intentional tort
usually consists of insult, indignity, malice,
oppression, or bad motive in addition to the tort.
Oestreicher v. Stores, 290 N.C. 118, 225 S.E.2d 797
(1976); Swinton v. Realty Co., 236 N.C. 723, 73 S.E.2d
785 (1953); Baker v. Winslow, 184 N.C. 1, 113 S.E. 570
(1922).
and Fowler v. Mantooth, 683 S.W.2d 250, 252-53 (Ky. 1984):
It is a rule of long standing in this Commonwealth
that exemplary or punitive damages may be recovered in
an assault and battery case in addition to punitive
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Page -14-
damages where the assault is willful, malicious and
without justification. 	Shields Adm'rs v. Rowland, 151
Ky. 136, 151 S.W. 408 (1912). ...
The threshold for the award of punitive damages is
misconduct involving something more than merely
commission of the tort. 	The “something more” necessary
in the present case was defined in the instructions as
a finding “that the assault was willful, malicious, and
without justification.” 	Malice may be implied from
outrageous conduct, and need not be express so long as
the conduct is sufficient to evidence conscious
wrongdoing. 	Hensley v. Paul Miller Ford, Inc., Ky.,
508 S.W.2d 759 (1974). 	Hensley cites Prosser, Law of
Torts § 2 (4th Ed. 1971), stating that punitive damages
are “permitted” “[w]here the defendant's wrongdoing has
been intentional and deliberate, and has the character
of outrage.” 	Id. at 762.
...
Section 908 of the Restatement sets out the
elements to be “properly” considered by “the trier of
fact” in assessing punitive damages as including “ the
character of the defendant's act, [as well as] the
nature and the extent of the harm to the plaintiff that
the defendant caused or intended to cause.”
Thus we recognize two elements involved in
assessing punitive damages: (1) the nature and extent
of the harm to the plaintiff, and (2) the character of
the defendant's act. ... [T]he character of the act is
a consideration of equal or greater importance [to the
nature and extent of plaintiff’s harm], depending on
the case, in assessing punitive damages. The factors
bearing on the character of the act include the degree
of outrageousness, the extent of culpability, the
motives of the wrongdoer, the relationship between the
parties and the existence or absence of provocation.
Restatement (Second) of Torts § 908 comment e (1977).
(Supreme Court holds that plaintiff’s humiliation in being
assaulted is a proper consideration in determining the character
of the defendant’s act.); Alyeska Pipeline Service Co. v.
O’Kelley, 645 P.2d 767, 773-74 (Ak. 1982):
The mere fact that Alyeska may have committed an
intentional tort did not, standing alone, obligate the
trial court to give a punitive damages instruction. 	By
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Page -15-
their very nature, such damages turn on the wrongdoer's
motive, state of mind, and degree of culpability,
rather than the particular tort committed. K. Redden,
Punitive Damages s 4.2 (1980). 	In Bridges v. Alaska
Housing Authority, 375 P.2d 696 (Alaska 1962), we noted
that punitive or “exemplary damages are those awarded
in excess of actual loss where the wrongdoer's conduct
can be characterized as outrageous, such as acts done
with malice or bad motives or reckless indifference to
the interests of another.” 	Id. at 702. 	Malice need
not be express, but may be inferred from acts
evidencing a callous disregard for the rights of
others. 	Sturm, Ruger & Co., Inc. v. Day, 594 P.2d 38,
46 (Alaska 1979).
(Footnote omitted.); Shugar v. Guill, 51 N.C.App. 466, 472-73,
277 S.E.2d 126, 131 (Ct.App.), aff’d as modified, 304 N.C. 332,
283 S.E.2d 507 (1981):
Punitive damages, on the other hand, are not
awarded as compensation, but they are awarded above and
beyond actual damages in proper instances as punishment
when it appears that the wrongful act was done
maliciously, willfully, wantonly, or in reckless
disregard of the plaintiff's rights. 	Hardy v. Toler,
288 N.C. 303, 218 S.E.2d 342 (1975); Cavin's Inc. v.
Insurance Co., 27 N.C.App. 698, 220 S.E.2d 403 (1975).
Punitive damages arise out of the acts or intentions of
the tort-feasor which contain any of the elements of
aggravation. 	Punitive damages do not arise
automatically from the commission of the tort, but
rather they arise from one of the aggravating factors
extraneous to the tort. 	If facts merely necessary to
apprise the defendant of the wrongdoing with which the
plaintiff's complaint charges him are all that are
pleaded, this will not provide the defendant with the
notice to which he is entitled to prepare a responsive
pleading or prepare for trial on the issue of punitive
damages. 	Defendant is entitled to some notice from
plaintiff's complaint of the extraneous facts from
which plaintiff's claim for punitive damages arise.
Therefore, we think that under the present system of
“notice pleading” plaintiff must do more than make the
conclusory allegation that, “defendant, without just
cause, did intentionally, willfully and maliciously
assault and batter the plaintiff.” 	Plaintiff must
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Page -16-
allege some facts in his complaint tending to establish
one or more of the aggravating factors in order to
recover punitive damages.
and DiGiovanni v. Pessel, 55 N.J. 188, 191, 260 A.2d 510, 511-12
(1970)(“An act to give rise to punitive damages must be actuated
by (1) actual malice, which is nothing more or less than
intentional wrongdoing – an evil-minded act, or (2) an act
accompanied by wanton and wilful disregard of the rights of
another.”)(Citation and internal punctuation omitted.)
Finally, the Restatement (Second) of Torts § 908 (1979)
discusses the issue of punitive damages:
(1) Punitive damages are damages, other than
compensatory or nominal damages, awarded against a
person to punish him for his outrageous conduct and to
deter him and others like him from similar conduct in
the future.
(2) Punitive damages may be awarded for conduct that is
outrageous, because of the defendant's evil motive or
his reckless indifference to the rights of others. In
assessing punitive damages, the trier of fact can
properly consider the character of the defendant's act,
the nature and extent of the harm to the plaintiff that
the defendant caused or intended to cause and the
wealth of the defendant.
And see, id. cmt. b:
Character of defendant's conduct. 	Since the purpose of
punitive damages is not compensation of the plaintiff
but punishment of the defendant and deterrence, these
damages can be awarded only for conduct for which this
remedy is appropriate—which is to say, conduct
involving some element of outrage similar to that
usually found in crime. 	The conduct must be
outrageous, either because the defendant's acts are
done with an evil motive or because they are done with
reckless indifference to the rights of others. ...
Reckless indifference to the rights of others and
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12 The “instructions” contained in this memorandum opinion
are directed to the parties, and certainly not to the State Court
judge who will preside over the trial. 	That judge of course is
in charge of her or his own courtroom and the proceedings
therein.
Page -17-
conscious action in deliberate disregard of them (see §
500) may provide the necessary state of mind to justify
punitive damages.
The discussion above regarding punitive damages warrants a
few observations. 	To succeed in a punitive damage claim, a
plaintiff must prove more than just the tort; plaintiff must also
prove “something more” that demonstrates that the defendant acted
with an evil intent, malice, or a total disregard of the expected
impact of their actions. 	In other words, plaintiff must prove
aggravated circumstances. 	Under New Mexico law, one factor in
determining aggravating circumstances is the defendant’s duties
toward the plaintiff. 	Walta, 2002-NMCA-015 at {57}, 131 N.M. at
556, 40 P.3d at 461.
Therefore, for a jury to be able to make an informed
decision on punitive damage availability, it will need to know
the facts and circumstances surrounding Plaintiff’s relationship
with Defendant. 	The Court does not know if the New Mexico courts
would find a higher standard or even fiduciary duty running from
a home-healthcare worker to his patient, but Plaintiff should at
least be allowed to argue this issue in the State Case. 12
2. 	Gross Negligence
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Page -18-
The Defendant pled guilty to a crime that has intent as one
of its elements. 	“Criminal sexual contact is the unlawful and
intentional touching of or application of force, without consent,
to the unclothed intimate parts of another who has reached his
eighteenth birthday...” 	Section 30-9-12(A), NMSA 1978. 	A
conviction or plea to a crime of intent is preclusive of intent
in bankruptcy dischargeability proceedings. 	See T.K., a minor,
by D.M., as next friend v. Love (In re Love), 347 B.R. 362, 367
(Bankr. W.D. Mo. 2006)(“[I]ntent to harm is established as a
result of Debtor's conviction because, given the nature of the
crime, the conviction either establishes that the Debtor knew
that his conduct was certain or almost certain to cause harm or
permits the Court to infer harm as a matter of law.”)(Santa
Claus’s sexual misconduct with young girl.); Gray v. Gray (In re
Gray), 322 B.R. 682, 694 (Bankr. N.D. Ala. 2005)(“Because a
guilty plea is an admission of all the elements of the offense
charged, and Defendant's crime [second degree assault] requires
intent to cause serious physical injury, Defendant is estopped
from denying that he had specific intent to cause injury to his
daughter.”)(Citation and internal punctuation omitted.); American
National Bank and Trust Co. of Chicago v. Cooper (In re Cooper),
125 B.R. 777, 780 (Bankr. N.D. Ill. 1991)(Debtor’s guilty plea to
larceny resulted in nondischargeable debt.); Coleman v. Baker (In
re Baker), 108 B.R. 663, 665 (Bankr. S.D. Ill. 1990)(Debtor’s
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Page -19-
guilty plea to battery satisfied intent requirements of Section
523(a)(6).) 	See also, generally Restatement (Second) of
Judgments § 85 cmt. b (1982)(“A defendant who pleads guilty may
be held to be estopped in subsequent civil litigation from
contesting facts representing the elements of the offense.”)
Therefore, Defendant is precluded from arguing that his
actions were other than intentional. 	Defendant was not grossly
negligent. 	Therefore, it would not really be relevant if
Plaintiff mentioned gross negligence in the State Case. 	(Her
causes of action against co-defendant Interim are all based on
negligence.) 	The parties should just ensure that any jury
instructions in the State Case do not suggest the possibility of
a punitive damage award based on negligence. 	See NMRA, Civ. UJI
13-1827, Committee Commentary (“Following the decision in Paiz
[v. State Farm Fire & Casualty Co., 118 N.M. 203, 213, 880 P.2d
300, 310 (1994)], the committee recommended that gross negligence
be removed as a basis for punitive damages in both contract and
tort cases. 	This recommendation was adopted by the New Mexico
Supreme Court in 1998.” 	Therefore, the Uniform New Mexico jury
instruction for punitive damages does not refer to negligence.)
3. 	Stay Relief
Plaintiff requests that the automatic stay be modified to
allow her to proceed in the State Case. 	This was the result
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Page -20-
anticipated at the initial pretrial conference in this case, and
the Court will so order.
Two reasons dictate that decision. 	First, the State Court
is prepared to complete the litigation, and to do so at least as
quickly as it can be completed in this Court. 	Second, if a
federal court is to determine liability and damages on these
sexual assault claims (as opposed to the sole issue of
dischargeability), the adjudication must be by the United States
District Court rather than this Court.
The district court shall order that personal injury
tort and wrongful death claims shall be tried in the
district court in which the bankruptcy case is
pending....
28 U.S.C. § 157(b)(5). 	See, for example, Leatham v. Von Volkmar
(In re Von Valkmar), 217 B.R. 561, 565 (Bankr. N.D. Ill. 1998)
(in adversary proceeding concerning dischargeability of personal
injury claim, bankruptcy court had no jurisdiction to adjudicate
liability and liquidate damages); Schachter v. Fall (In re Fall),
192 B.R. 16, 18 (Bankr. D. N.H. 1995) (bankruptcy court took no
evidence concerning damages and adjudicated only the discharge
issue).
In fact, the request for stay relief in some ways is the
core of the matter in this Court. 	It is most often the case that
a dischargeability action is either brought to this Court after
the civil litigation has taken place in order for the Court to
adjudicate the dischargeability aspect of any judgment already
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13 See Grogan v. Garner,498 U.S. 279, 284 n. 11 (1991)
(doctrine of collateral estoppel or issue preclusion may be
invoked to eliminate need for retrial of merits in bankruptcy
court).
Page -21-
entered in another forum 13 , or is brought originally in this
Court for a determination of nondischargeable liability and
damages. 	In this instance a personal injury tort action had been
initiated in State Court, was interrupted by the chapter 13
filing and is now followed by this nondischargeability adversary
proceeding. 	A number of courts have addressed this circumstance
and come up with the same solution: permit the liability and
damages issues to be determined either in the state court or the
U.S. district court, and then have the parties return to the
bankruptcy court as needed for an adjudication of the
dischargeability issue. 	E.g., Doe v. Martinez (In re Martinez),
2010 WL 3075282 (D.N.M.) at *3 (district court withdraws
reference to bankruptcy court and then stays action to permit
state court to adjudicate liability and damages on personal
injury claims, with matter later to be referred back to the
bankruptcy court for dischargeability adjudication); In re
Nifong, 2008 WL 2203149 (Bankr. M.D.N.C.) at *4 (stay modified to
permit adjudication of Duke University lacrosse player’s personal
injury claims against former prosecutor in U.S. district court;
dischargeability adversary proceeding stayed); Tidwell v. Smith
(In re Smith), 379 B.R. 315, 330-31 (Bankr. N.D. Ill. 2007)
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Page -22-
(plaintiffs to prosecute sexual assault claims in state court and
return to bankruptcy court for adjudication of dischargeability
issue); Rizzo v. Passialis (In re Passialis), 292 B.R. 346, 348
(Bankr. N.D. Ill. 2003) (in dischargeability action, plaintiff
permitted to move to withdraw the reference so district court
could adjudicate slander claim); Roberts v. Goidel (In re
Goidel), 150 B.R. 885, 888 (Bankr. S.D.N.Y. 1993) (in
dischargeability action, bankruptcy court abstained until state
court adjudicated defamation action). 	Therefore this Court will
modify the automatic stay so that the parties can complete the
adjudication of the liability and damages issues.
Because of the parties’ disputes about aspects of the State
Court case (detailed above), it is easily conceivable if not
likely that following the conclusion of the State Court case, at
least one of the parties will ask this Court to clarify further
what is dischargeable in the judgment and what is not. 	In order
to minimize that possibility, the Court suggests that the parties
attempt to ensure that any verdict is clear with respect to the
standards of nondischargeability. 	For example, they might
consider (subject of course to the discretion of the State Court
judge) special interrogatories to the jury, carefully crafted
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14 If a creditor’s claim for compensatory and punitive
damages both arise from a debtor’s willful and malicious conduct,
both are excepted from discharge.
The Plaintiffs State court judgment against the
Defendant can be divided into three parts: compensatory
damages, punitive damages, and attorneys' fees and
costs. 	The fact that the Plaintiffs compensatory
damages are nondischargeable is straightforward, since
they arise directly from a willful and malicious injury
caused the Debtor to another entity. 	See § 523(a)(6).
Punitive damages, theoretically, go beyond the injury
caused by the Debtor for his willful and malicious act.
See Ramsey v. Bernstein (In re Bernstein), 197 B.R. 475
(Bankr. D. Md. 1996). 	However, “when punitive damages
spring from the same conduct giving rise to
nondischargeable compensatory damages, such punitive
damages are also not dischargeable in bankruptcy.”
Id.; see also In re Miera, 926 F.2d 741, 745 (8th Cir.
1991); In re Adams, 761 F.2d 1422, 1427-28 (9th Cir.
1985). 	This is because “the punitive damages still
arise from the ‘willful and malicious injury by the
debtor to another entity.’ ” 	Ramsey v. Bernstein (In
re Bernstein), 197 B.R. 475 (Bankr. D. Md. 1996)(citing
11 U.S.C. § 523(a)(6).)
Merriex v. Beale (In re Beale), 253 B.R. 644, 651 (Bankr. D. Md.
2000). 	See also Britton v. Price (In re Britton), 950 F.2d 602,
606 (9 th Cir. 1991)(Punitive damages related to willful and
malicious injuries are nondischargeable under section 523(a)(6).)
Compare Cohen v. De La Cruz, 523 U.S. 213, 220 and 221 (1998)(The
term “debt for” is used throughout section 523 to mean “debt as a
result of,” “debt with respect to,” “debt by reason of,” and the
like, which connotes broadly any liability arising from the
specified object. 	Therefore, section 523(a)(2)(A) includes any
liability arising from a debtor’s fraudulent acquisition of money
or property including an award of treble damages.)
Page -23-
jury instructions on subjects such as “fiduciary”, and the
precise basis for the award of any punitive damages. 14
CONCLUSION
The Court finds that any damages (plus any related punitive
damages arising from the same actions complained of) awarded in
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Page -24-
Plaintiff’s State Case, counts 1 through 4, represent
nondischargeable debts under 11 U.S.C. § 1328(a)(4). 	Any damages
exclusively for breach of fiduciary duty or negligence awarded in
the State Case are dischargeable. 	The Court will not order
Plaintiff to refrain from using the term fiduciary duty or
negligence in the State Case, subject to the caution that an
injudicious use of that term could result in significantly more
litigation (and expense) in this Court. 	The Court also cautions
that the burden of proof is and will remain with the Plaintiff to
prove that any award is in fact nondischargeable if it is not
clear from the verdict. 	The automatic stay will be modified in
order to permit the State Case to go forward for a determination
of liability and damages. 	The Court will also enter a separate
order based on this memorandum.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	October 1, 2010
Copies to:
F Shaun Burns
Burns Law Firm, PC
3914 Murphy Canyon Road
Suite A-218
San Diego, CA 92123-4423
Wesley O Pool
PO Box 410
Clovis, NM 88102-0410
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