Florida’s Second District Court of Appeal ruled that a bankruptcy court’s order effectively barring a car accident victim from seeking a personal liability judgment against the at-fault driver was erroneous as a matter of law.
In Whritenour v. Thompson, justices reversed the earlier summary judgment, based on a bankruptcy court’s ruling that the victim could only pursue damages against the at-fault party’s insurance company – not her personally.
Boca Raton car accident attorneys recognize this is an important ruling, as the justices noted the situation was “unprecedented.” The justices strove to find a balance between ensuring the protections of bankruptcy, while preserving the rights of the injured to be compensated for the negligent acts of another driver.
According to court records, the plaintiff filed a negligence action against the at-fault driver in January 2012, six months after a wreck that resulted in severe injuries to both herself and two minor sons.
The at-fault driver had bodily injury liability insurance coverage totaling $300,000. Her insurance company hired a defense lawyer who worked to defend the at-fault driver. That attorney advised her to file for Chapter 7 bankruptcy, which she did in September 2012. On her list of outstanding debts, she listed the personal injury claim against her, in excess of $1 million.
Pursuant to bankruptcy code, the bankruptcy court issued an automatic stay, barring anyone (plaintiff included) from continuing pursuit of damages until that stay was lifted.
The plaintiff responded the next month with an emergency motion for relief from the automatic stay so she could continue the pursuit of her personal injury claim. The bankruptcy court granted relief from the automatic stay – on the condition that the plaintiff not pursue personal liability action against the debtor. The court allowed the plaintiff to go after the debtor’s insurance carrier, but could not pursue damages against the debtor personally. If she wanted to proceed against the insurance company for an amount in excess of the $300,000 limit, the court ruled, she would have to file a separate motion for relief.
The negligence action continued until the at-fault driver sought a summary judgment, with her bankruptcy attorney arguing she had no personal liability. He further indicated the bankruptcy trustee had no desire to pursue a bad faith claim against the insurer.
The court granted the summary judgment to the defendant, awarding the plaintiff the full $300,000 in damages. The court indicated that she was not entitled to pursue a jury determination of negligence because she did not file a complaint for bad faith on behalf of the insurer prior to the bankruptcy discharge. Therefore, the court ruled, the policy limit was the maximum recovery amount.
An appeal from the plaintiff followed, and the appellate court reversed.
First, the court clarified that the pursuit of damages for negligence and the pursuit of damages for bad faith are two separate causes of action, and the trial court was wrong to lump the two together here. In order for a plaintiff to obtain a bad faith filing, there must first be a final judgment of negligence. A bankruptcy discharge wouldn’t change this, the court ruled, except that it would be the trustee – not the plaintiff – filing the bad faith claim.
If you have been injured in an accident in Boca Raton, contact the Hollander Law Firm at 888-751-7770 for a free and confidential consultation. There is no fee unless we win.
Whritenour v. Thompson, June 6, 2014, Florida’s Second District Court of Appeals
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“Fraud on Court” Ruling Against Car Accident Plaintiff Reversed, May 22, 2014, Boca Raton Car Accident Lawyer Blog