In re: OFF-SPEC SOLUTIONS, LLC
- Summarized by Benjamin Fischer , Klehr Harrison Harvey Branzburg LLP
- 1 year 6 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- BAP No. ID-23-1020 (9th Circuit, Jul 06,2023) Published
- Tag(s):
-
- Ruling:
- The B.A.P. of the Ninth Circuit affirmed the bankruptcy court's dismissal. Relying on canons of statutory interpretation, the court interpreted § 1192 to reiterate § 523(a)’s application to debtors under subchapter V, and § 523(a) to limit its applicability to individuals. The court rejected the Fourth Circuit's reasoning in Cantwell-Cleary Co. v. Cleary Packaging, LLC (In re Cleary Packaging, LLC), 36 F.4th 509 (4th Cir. 2022), which read § 1192 to refer to the types of debts, not the types of debtors. The court reasoned that this would render § 523(a)'s reference to § 1192 surplasage
- Procedural context:
- Off-Spec Solutions, LLC filed for bankruptcy under subchapter V of chapter 11. A former employee of Off-Spec filed a proof of claim and an adversary complaint against the debtor, its owners, and its parent company, asserting a nondischargeable claim under § 523(a)(6). Off-Spec Solutions filed a motion to dismiss, arguing that 523(a) applies in subchapter V only to individual debtors. The Bankruptcy Court for the District of Idaho granted the motion and dismissed the complaint. The former employee appealed.
- Facts:
- Appellant was a former employee of the debtor, Off-Spec Solutions. Appellant alleged that, while employed by the debtor, she was sexually harassed and discriminated against by her manager. According to Appellant, despite notifying the debtor and its owners, they took no corrective action, and instead, retaliated by firing her. Appellant made a claim of discrimination to the Idaho Human Rights Commission (“IHRC”) and the Equal Employment Opportunity Commission. The IHRC found probable cause that Appellant suffered sexual harassment, discharge based on retaliation, and discharge based on sex. After Debtor filed its bankruptcy petition, the IHRC administratively dismissed the case and gave Appellant notice of her right to bring a private action against the defendants. After debtor filed for bankruptcy, Appellant filed a proof of claim and an adversary complaint against Debtor, its owners, and its parent company, asserting a nondischargeable claim under § 523(a)(6).
- Judge(s):
- GAN, CORBIT, and BRAND
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