Townsend v. Ganci

Case Type:
Case Status:
17-921-bk (2nd Circuit, Jun 11,2018) Not Published
Summary Order, WITH NO PRECEDENTIAL EFFECT. Debt arising from civil judgment based on Title VII hostile work environment claims following jury trial held non-dischargeable under section 523(a)(6) of the Bankruptcy Code.
Procedural context:
This was a pro se appeal by Debtor-Appellant of a District Court judgment which affirmed the Bankruptcy Court's grant of summary judgment to a judgment creditor who sought to have her judgment debt excepted from discharge pursuant to section 523(a)(6) of the Bankruptcy Code.
Plaintiff-Appellee Geralyn Ganci was an employee of U.S. Limousine Service, Ltd. Defendant-Appellant Raymond Townsend also worked for U.S. Limo and was Ms. Ganci's supervisor. In 2010, Ms. Ganci commenced an action against Mr. Townsend in the EDNY alleging claims for sexual harassment, intentional infliction of emotional distress, negligent infliction of emotional distress, hostile work environment and retaliation. In 2015, a judgment in the amount of $450,000 (plus $100,000 punitive damages) was entered based on a jury verdict against Mr. Townsend. The jury had found that Mr. Townsend had subjected Ms. Ganci to offensive acts or statements about sex that created a hostile and abusive work environment resulting in the constructive termination of Ms. Ganci. Following the entry of the judgment, Mr. Townsend filed a voluntary petition for relief under chapter 7 in the Bankruptcy Court for the EDNY. Ms. Ganci commenced an adversary proceeding in the bankruptcy case seeking a determination that the judgment was non-dischargeable pursuant to section 523(a)(6) and filed a motion for summary judgment arguing principally that Mr. Raymond was collaterally estopped from challenging the findings by the jury (which established the elements needed to provide willful and malicious injury under section 523(a)(6)). The Debtor opposed summary judgment and argued that the jury's findings were insufficient to establish the elements of willfulness and malice under section 523(a)(6). The Bankruptcy Court granted Ms. Ganci's motion for summary judgment and entered a judgment determining that the $400,000 prepetition federal judgment was non-dischargeable under section 523(a)(6). On appeal to the District Court, Mr. Townsend argued that the jury's finding that he created a hostile work environment does not per se lead to a finding of willfulness for purposes of section 523(a)(6). The District Court held the Bankruptcy Court properly concluded that because the jury in the civil case determined hat the Debtor had specifically directed discriminatory conduct in the form of sexual harassment at Ms. Ganci, and Ms. Ganci did not invite or solicit such conduct, those facts were sufficient to establish that Mr. Townsend acted with the intent to cause injury. Mr. Townsend also argued on appeal that because the jury indicated that Ganci had failed to prove intentional infliction of emotion distress (and Townsend was found not liable on this claim), it was established that he did not act willfully. The District Court determined that while it was not clear whether the jury determined that Townsend's conduct lacked willfulness, courts in the Second Circuit have repeatedly held that if a debtor believes that an injury is substantially certain to result from his conduct, the debtor will be found to have possessed the requisite intent to injure for section 523(a)(6). Accordingly, the District Court affirmed the Bankruptcy Court's conclusion that the civil judgment is non-dischargeable under section 523(a)(6). By summary order, the Second Circuit affirmed concluding that the District Court did not rely on any facts not found by the jury.
Cabranes, J.; Lynch, J.; Carney, J.

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