Shaw v. Osborne

Eatin

ee □□

(= i i a

SIGNED this 13 day of August, 2019. ay a I)

Qistries 7

Austin E. Carter

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

MIDDLE DISTRICT OF GEORGIA

MACON DIVISION

In re: )

) Case No. 17-51682-AEC

Debra Ann Osborne )

) Chapter 7

Debtor. )

Khalliah Monique Shaw, )

)

Plaintiff, )

) Adv. Proc. No. 17-05057

v. )

)

Debra Ann Osborne, )

)

Defendant/Debtor. )

MEMORANDUM OPINION

Before the Court is Defendant’s Motion for Summary Judgment (Doc. 17),

seeking a determination that Plaintiffs claim is dischargeable, and does not fall

within the ambit of either 11 U.S.C. § 523(a)(6) or (a)(2)(A), as alleged by Plaintiff.

This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)()).

Pursuant to Federal of Civil Procedure (“Rule”) 56(a), made applicable to this

adversary proceeding by Federal Rule of Bankruptcy Procedure (“Bankruptcy Rule”)

7056, the Court states on the record its reasons for this ruling on the Motion.

Having considered the respective pleadings of the parties1, the affidavits submitted,

and the remainder of the record in this case, the Court GRANTS IN PART and

DENIES IN PART the Defendant’s Motion.

I. Factual Background

Plaintiff Khalliah Monique Shaw (“Plaintiff” or “Shaw”) filed this adversary

proceeding to determine dischargeability of debt under 11 U.S.C. § 523(a)(6) and

(a)(2)(A).2 The alleged debt in question is a claim originally asserted in a state court

medical malpractice lawsuit in which the Debtor, Debra Ann Osborne (the “Debtor”

or “Dr. Osborne”), is a named defendant.

After filing and dismissing a lawsuit in state court, Plaintiff filed a second

action in the same court (the “State Court Action”) in 2017, asserting negligence

and medical malpractice in connection with the provision of medical services at

River Edge Behavioral Health Center (“River Edge”) (Doc. 1, Ex. A). The Debtor is

one of several defendants named in the State Court Action, based on her

supervisory role as a Medical Director, as well as supervising doctor and delegating

physician at River Edge (Doc. 1, Ex. A).3 Plaintiff in the State Court Action alleges

four (4) counts: (1) negligence and malpractice, (2) breach of contract, (3) negligence

per se, (4) attorneys’ fees, expenses, and punitive damages (Doc. 1, Ex. A).

Plaintiff’s injury for which the State Court Action seeks redress arose from a

medication prescription written by Julie Sanders (“Sanders”), a nurse practitioner

employed at a River Edge facility in Milledgeville, Georgia. (See Doc. 1). The

1 Included in the pleadings considered is Plaintiff’s Sur-Reply Opposing Summary Judgment

(Doc. 27). Plaintiff filed a Motion requesting that the Court allow the filing of the Sur-Reply (Doc.

25). The Court’s local rules do not preclude a party’s filing of a Sur-Reply, but they do not explicitly

allow such a filing either. To avoid confusion, the Court advises that it considers Plaintiff’s Motion

granted.

2 Unless otherwise indicated, all references herein to “section” or “§” refer to a corresponding

section of the Bankruptcy Code, and all references to the “Bankruptcy Code” or the “Code” refer to

Title 11 of the United States Code.

3 Other defendants named in the State Court Action include River Edge, pharmacist Linda

Smith, Affordable Business Solutions, LLC, DAJO, Inc., and John Does (Doc. 1, Ex. A).

prescription at the center of the controversy, lamotrigine, is used to treat epilepsy

and bipolar disorder. It carries a “black box” warning, indicating that an adverse

reaction may lead to death or serious injury. A “black box” warning is the most

serious warning required by the Food and Drug Administration. A known adverse

effect of lamotrigine is Stevens-Johnson Syndrome.

Sanders prescribed lamotrigine to Plaintiff in phases of escalating dosage

over the course of several weeks. The Debtor acknowledges that the dosage

exceeded the manufacturer’s warning. After several weeks of taking the

lamotrigine as prescribed, Plaintiff developed serious complications and was

subsequently hospitalized and diagnosed with Stevens-Johnson Syndrome and toxic

epidermal necrolysis (Doc. 1, Ex. A; Doc. 17).

At the time Plaintiff was treated by Sanders, the Debtor was the Medical

Director of River Edge and physically worked at the River Edge facility in Macon,

Georgia. (See Doc. 23 ¶ 9). As a Medical Director, the Debtor held a number of

responsibilities, including supervising up to ten physicians and four nurse

practitioners, including Sanders. The Debtor served as the delegating physician for

Sanders under the River Edge Nurse Protocol Agreement (“Protocol Agreement”),

which Agreement authorized Sanders to prescribe medication (See Doc. 1. Ex. B

and C; Doc. 6 ¶ 5). The Protocol Agreement lists the Debtor as the delegating

physician and Foster Brin (“Dr. Brin”) as the “Other Designated Physician.” (Doc. 1,

Ex. C).

Plaintiff paid for her treatment at River Edge. (Doc. 20, ¶ 29).

Although River Edge and the Debtor apparently dispute whose responsibility

it was to procure medical malpractice insurance for the Debtor, there is no

malpractice coverage available for Plaintiff’s claim against the Debtor. (Doc. 15).

The Debtor filed her bankruptcy petition with this Court in August 2017.

Plaintiff subsequently filed her Complaint initiating this proceeding, in which she

alleges that her debt should be found non-dischargeable because it arose from the

Debtor’s willful and malicious injury and the fraudulent representations made by

the Debtor and Sanders as her agent. Plaintiff has not requested that this Court

liquidate her claim, nor has she requested relief from the automatic stay of § 362 to

continue to the State Court Action so as to liquidate the claim, although the stay

has now terminated under § 362(c)(2)(C) due to entry of the Debtor’s discharge.

The allegations Plaintiff makes in her Complaint go beyond those included in

the State Court Action. As in the State Court Action, Plaintiff alleges that the

Debtor, in her capacity as medical director, supervising doctor, and delegating

physician, had an obligation to provide services and oversight for the nurse

practitioners, including Sanders (Doc. 1). However, unlike in the State Court

Action, Plaintiff now contends that:

(1) The Debtor is responsible for Sanders’ alleged fraudulent

misrepresentation, namely that Sanders introduced herself to Plaintiff as “doctor”

and wrote the lamotrigine prescription as “doctor” (Doc. 1 ¶¶ 40, 41)4;

(2) The Debtor represented—through signing the Protocol Agreement—that

the Debtor would make certain that medical services (i.e., the writing of

prescriptions) rendered by Sanders were “[c]ommensurate with [her] education,

training, experience and competence” as well as ensure that Sanders “receive[d]

pharmacology training appropriate to the delegating physician’s scope of practice at

least annually” (Doc. 1, Ex. C);

(3) She relied on the Debtor’s representations and that the Debtor

intentionally failed to comply with the obligations and representations in the

Protocol Agreement (Doc. 1 ¶¶ 42, 43);

4 Sanders testified that she generally explains to patients that her reference to “doctor” is due

to her doctorate degree, and not because she is a physician. The parties dispute whether she so

explained this to Plaintiff.

(4) The Debtor’s representations to perform the duties and roles listed in both

her job description and in the Protocol Agreement were representations made to

both the Georgia Composite Medical Board and all patients, including but not

limited to Plaintiff (Doc. 1 ¶ 10);

(5) As a direct and proximate result of the Debtor’s intentional acts and

fraudulent misrepresentations, she incurred severe mental and physical injuries

and damages (Doc. 1 ¶ 44).

The Debtor acknowledges that the lamotrigine prescription given by Sanders

was inappropriate. (Doc. 23 ¶ 11). The Debtor testified in her Affidavits that (1) she

never spoke to or treated Plaintiff and was unaware of her injuries until she

received a copy of the initial medical malpractice lawsuit, and (2) until the incident

with Plaintiff, the Debtor had received no information related to instances of

Sanders’ deficient performance, including writing inappropriate prescriptions, and

was unaware that Sanders had ever represented herself as a “doctor.” (Doc. 13, ¶¶

6, 7; Doc. 24-1, ¶¶ 3, 4).

Plaintiff contends in Count I of the Complaint that Osborne’s behavior

constitutes willful and malicious conduct that should be nondischargeable under

§ 523(a)(6). Plaintiff avers that Osborne’s failure to perform the duties associated

with her roles as medical director, supervising doctor, and delegating physician

amounts to willful and malicious conduct.

With respect to dischargeability under § 523(a)(2)(A), Plaintiff asserts in

Count II that the Debtor, by virtue of her role as medical director and delegating

physician, represented that she would perform the obligations of such roles in good

faith. Further, Plaintiff contends she relied on these representations because had

the Debtor not made such representations, Sanders would have been unable to treat

patients, and more importantly would not have prescribed to Plaintiff the medicine

that caused her injuries. Plaintiff alleges that a principal-agent relationship

existed between the Debtor and Plaintiff and that, based on such relationship, the

Debtor is responsible for Sanders’ fraudulent representations.

The Debtor seeks summary judgment on the grounds that Plaintiff cannot

establish the elements necessary to establish nondischargeability under either

§ 523(a)(6) or 523(a)(2)(A). The Debtor denies that she willfully or maliciously

harmed Plaintiff or that she made any fraudulent or other misrepresentations to

Plaintiff, and argues that Plaintiff’s claims against her are more appropriately

considered medical negligence or recklessness claims.

II. Legal Analysis.

Under Rule 56, a party moving for summary judgment is entitled to prevail

on its motion if the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law as to such

claims, defenses, or parts thereof. Fed. R. Civ. P. 56(a). The movant bears the

initial burden to show from the record the absence of a genuine dispute as to

material facts. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Clark v. Coats &

Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). Once the moving party has met her

burden, the burden shifts to the nonmovant to point to specific parts of the record

that demonstrate a genuine dispute as to facts material to the claim, defense, or

part thereof, at issue. Dawkins v. Fulton Cty. Gov’t, 733 F.3d 1084, 1089 (11th Cir.

2013).

“The evidence of the nonmovant is to be believed, and all justifiable

inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 255 (1986). However, summary judgment remains appropriate when “it is

clear that there is no evidence in the record which can support the complaint . . . .”

Peoples State Bank v. Drenckhahn (In re Drenckhahn), 77 B.R. 697, 712 n.16

(Bankr. D. Minn. 1987) (citation omitted). Nevertheless, a court has discretion “to

deny even a well-supported motion for summary judgment, if it believes the case

would benefit from a full hearing.” U.S. v. Certain Real & Pers. Prop. Belonging to

Hayes, 943 F.2d 1292, 1297 (11th Cir. 1991); see also Liberty Lobby, 477 U.S. at 255.

Credibility determinations are to be reserved for trial. Liberty Lobby, 477

U.S. at 255. “Issues of intent are especially susceptible to this restriction”;

accordingly, where the Court’s ruling turns on such determinations, the defendant

should be given “the opportunity to . . . testify, at which time the Court [can]

observe his demeanor and assess credibility.” Sims v. Morris (In re Morris), 185 B.R.

939, 944-45 (Bankr. N.D. Ga. 1994); see also Bd. of Mgrs. of St. Tropez Condo. v.

Proof of the Pudding, Inc. (In re Proof of the Pudding, Inc.), 10 B.R. 459, 461 (Bankr.

S.D.N.Y. 1981).

The issue before the Court is whether the Debtor is entitled to judgment as a

matter of law regarding the nondischargeability of the debt pursuant to § 523(a)(6)

and 523(a)(2)(A).

Having carefully considered this matter, the Court finds that there are no

genuine issues of material fact related to the § 523(a)(6) claim and that the Debtor

is entitled to judgment as a matter of law as to Count I of the Complaint. However,

the Court finds that genuine issues of material fact exist as to nondischargeability

of the debt under § 523(a)(2)(A); therefore, summary judgment as to Count II of the

Complaint must be denied.

A. Nature of Claims in State Court Action.

The Debtor asserts that Plaintiff’s claims in the State Court Action are

garden-variety professional negligence claims and that, because the claims of willful

and malicious conduct and of fraudulent misrepresentation were not asserted in the

State Court Action, they should now be barred. The Debtor asserts that Plaintiff

recharacterized her claims under the parameters of § 523(a)(6) and (a)(2)(A) after

the Debtor filed this bankruptcy case. Plaintiff responds that she learned of the

facts supporting the allegations in her Complaint only after the State Court Action

was filed, and that she was prevented from filing an amended complaint in the

State Court Action by the Debtor’s filing of her bankruptcy case and the resulting

automatic stay.

The Debtor’s argument is not persuasive. A party is not barred from

asserting that a debtor’s conduct rises to the level of nondischargeability even

though the party did not raise that claim in the pre-petition state court action. See

Johnson v. Keller (In re Keller), 106 B.R. 639, 643 (B.A.P. 9th Cir. 1989) (holding

that claimant who obtained state court malpractice judgment based on negligence

was not barred from raising issues of dischargeability in bankruptcy adversary

proceeding).

B. Nondischargeability Standard under § 523(a).

The discharge in bankruptcy to an honest, but unfortunate, debtor is a

bedrock of our bankruptcy system. Therefore, exceptions to discharge should be

construed “liberally in favor of the debtor.” Equitable Bank v. Miller (In re Miller),

39 F.3d 301, 304 (11th Cir. 1994) (citation omitted); see also Hope v. Walker (In re

Walker), 48 F.3d 1161, 1164-65 (11th Cir. 1995) (court has “obligation to construe

strictly exceptions to discharge.”).

A creditor must prove his claim of nondischargeability under § 523(a) by a

preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 291 (1991).

Evaluating a complaint to determine the dischargeability of a debt involves

two steps. “The first step is to determine whether a debt exists. If the debtor owes

a debt to the plaintiff, the second step is to determine the nature of the debt—

whether it is dischargeable or non-dischargeable.” Worldwide Equip. of S.C., Inc. v.

Willoughby (In re Willoughby), No. 16-57059, Adv. No. 16-5164, 2017 WL 3741256,

at *3 (Bankr. N.D. Ga. Aug. 30, 2017). For purposes of this Motion, the Debtor does

not contest the first element, whether a debt exists, so the Court turns its attention

to whether the debt is dischargeable.

C. § 523(a)(6)—Willful and Malicious Injury.

Section 523(a)(6) includes two discrete elements—willfulness and

maliciousness. Even though there is no question that Plaintiff has suffered serious

injury, she must show that the Debtor acted both willfully and maliciously in order

to prevail on her claim.

The Eleventh Circuit has described willfulness as follows:

We have held that proof of “willfulness” requires “‘a showing of an

intentional or deliberate act, which is not done merely in reckless

disregard of the rights of another.’” In re Walker, 48 F.3d 1161,

1163 (11th Cir. 1995) (quoting In re Ikner, 883 F.2d 986, 991 (11th

Cir. 1989)). “[A] debtor is responsible for a ‘willful’ injury when he

or she commits an intentional act the purpose of which is to cause

injury or which is substantially certain to cause injury.” Id. at

1165; see also Kawaauhau v. Geiger, 523 U.S. 57, 61-62 (1998)

(holding that § 523(a)(6) requires the actor to intend the injury, not

just the act that leads to the injury). Recklessly or negligently

inflicted injuries are not excepted from discharge under § 523(a)(6).

Kawaauhau, 523 U.S. at 64.

Maxfield v. Jennings (In re Jennings), 670 F.3d 1329, 1334 (11th Cir. 2012) (citation

format revised for style).

Bankruptcy courts in this State generally recognize that Kawaauhau v.

Geiger narrowed the scope of willfulness:

Thus, with respect to willfulness, it must be shown that a debtor

“acted with the desire to cause” the resulting harm to a targeted

person, acted “with knowledge that injury will occur” to such

person, or acted in the belief that harm was “substantially certain

to result” either through evidence of “subjective motive” regarding

same or when “no other plausible inference” can otherwise be

drawn from the record that the debtor had such knowledge.

Atlanta Contract Glazing, Inc. v. Swofford (In re Swofford), No. G08-20892-REB,

Adv. No. 08-2053, 2008 WL 7842040, at *2 (Bankr. N.D. Ga. Dec. 29, 2008) (citing

Wooley v. Wooley (In re Wooley), 288 B.R. 294, 302 (Bankr. S.D. Ga. 2001)).

However,

reckless conduct that results in injury characterized by an entire

want of care or conscious indifference to the result is not adequate

in accordance with the legal standard set forth in this discharge

exception. In other words, Section 523(a)(6) only applies when a

debtor intends the injury caused by his actions. It does not cover a

failure to meet a duty of care that leads to injury.

Washington v. Robinson-Vinegar (In re Robinson-Vinegar), 561 B.R. 562, 568

(Bankr. N.D. Ga. 2016).

As for malice under § 523(a)(6), the Eleventh Circuit has opined that:

“’Malicious’ means ‘wrongful and without just cause or excessive even in the

absence of personal hatred, spite or ill-will.’ To establish malice, ‘a showing of

specific intent to harm another is not necessary.’” In re Jennings, 670 F.3d at 1334

(citations omitted). “An injury is malicious under Section 523(a)(6) when same is

determined to be ‘wrongful and without just cause or excessive,’ or simply a bad act

having no redeeming social value or purpose whatsoever.” Haramis v. Mitchell (In

re Mitchell), No. G05-21370-REB, Adv. No. 06-2035, 2007 WL 7143084, at *4

(Bankr. N.D. Ga. July 25, 2007) (citing Hope v. Walker (In re Walker), 48 F.3d 1161,

1164 (11th Cir. 1995)).

Plaintiff’s claim of willful and malicious injury fails on several grounds: (1)

vicarious liability cannot be used to succeed on a § 523(a)(6) claim under these facts;

(2) the record does not support Plaintiff’s allegation that the Debtor inflicted a

willful injury on Plaintiff; and (3) the Debtor’s conduct cannot be reasonably

characterized as anything more than recklessness, which fails to meet the standard

established by the Supreme Court.

1. Vicarious Liability Not Sufficient.

Plaintiff alleges that the actions of both the Debtor and Sanders caused the

willful and malicious injury to her. Plaintiff avers that Sanders engaged in

wrongful conduct when she wrote the improper dosage prescription and alleges that

the Debtor is responsible for Sanders’ acts and omissions under both the Protocol

Agreement and Georgia agency law. As to the Debtor, Plaintiff alleges that the

Debtor inadequately trained and supervised Sanders, to whom she had delegated

authority to prescribe the drug lamotrigine.

The allegations centered on Sanders’ conduct fail to support a § 523(a)(6)

claim against the Debtor. Section 523(a)(6) refers to “willful and malicious injury by

the debtor . . . .” 11 U.S.C. § 523(a)(6) (emphasis added). Courts generally have

held that “for purposes of § 523(a)(6), a spouse or other third party's actions cannot

be imputed to the debtor absent evidence the debtor was personally involved in the

act.” Mothershead v. Bacchus (In re Bacchus), No. 10-10195-JDW, Adv. No. 10-1017,

2010 WL 3909697, at *4 (Bankr. M.D. Ga. Sept. 29, 2010); Ford Motor Credit Co. v.

Moody (In re Moody), 277 B.R. 865, 871 (Bankr. S.D. Ga. 2001) (“Although Debtor

did not willfully injure Plaintiff or its property, Debtor could be liable if [his

company] did so and if Debtor was actively involved in inflicting the injury.”); see

also Greer v. Bruce (In re Bruce), 593 B.R. 765, 777 (Bankr. S.D. Ohio 2018) (“[T]he

willful and malicious conduct of others, even if the debtor may be legally responsible

for that conduct under state law, cannot be imputed to the debtor for purposes of

Section 523(a)(6).”); Loucks v. Smith (In re Smith), 537 B.R. 1, 15 (Bankr. M.D. Ala.

2015) (“Vicarious liability, without more, cannot form the basis for a determination

that [the debtor’s] conduct was ‘willful’ within the meaning of § 523(a)(6).”).

In Borges v. Placeres (In re Placeres), 578 B.R. 505 (Bankr. S.D.N.Y. 2017),

the court considered an analogous factual scenario. There, the debtor was an

attorney, against whom a former client brought an action under § 523(a)(6). The

basis for the claim was a judgment for legal malpractice that the former client

obtained in state court before the bankruptcy case was filed. The client-plaintiff

was given improper advice by a paralegal working under the debtor’s authority, and

not by the debtor directly. Even though the debtor acknowledged responsibility for

the erroneous advice given by his paralegal, the court held that the advice given by

the paralegal could not satisfy a § 523(a)(6) claim against the debtor because the

plaintiff had “failed to show that [the debtor] was personally involved in or knew of”

the paralegal’s bad advice to the client. Id. at 516-17; see also Loucks v. Smith (In

re Smith), 537 B.R. 1 (Bankr. M.D. Ala. 2015) (debtor’s knowledge that his

employees were sexually harassing plaintiffs was not sufficient to salvage

§ 523(a)(6) claim from dismissal for failure to allege facts that could establish

willfulness).

Here, there is no indication in the record that the Debtor was actively

involved in or knew of Sanders’ inaccurate prescription to Plaintiff. Indeed, the

record is clear that the Debtor was unaware of Sanders’ treatment of Plaintiff until

after Plaintiff’s injury. As a result, the writing of the improper prescription by

Sanders cannot support a § 523(a)(6) claim, even if it were established that Sanders

acted as the Debtor’s agent.

Accordingly, the Court considers only the Debtor’s conduct for purposes of the

Plaintiff’s § 523(a)(6) claim.

2. The Record Does Not Support a Finding that the Debtor’s

Conduct was Substantially Certain to Result in Plaintiff’s

Injury or was Otherwise Willful.

Focusing only on the allegations surrounding the actions or inactions of the

Debtor, the Court finds no suggestion in the record that the Debtor acted with any

intent (willfulness) to injure Plaintiff. Plaintiff, however, argues that the

willfulness element of § 523(a)(6) can be met by a showing that the Debtor’s actions

were “substantially certain” to result in injury to Plaintiff. In support of her claim,

Plaintiff cites to Smith v. Assevero (In re Assevero), 185 B.R. 951, 956 (Bankr. N.D.

Ga. 1995).

In Assevero, like here, a physician filed bankruptcy while a medical

malpractice claim was pending against him. The plaintiff, a former patient, filed an

adversary proceeding seeking a determination that the physician-debtor’s

inadequate treatment was willful and malicious and thus that the resulting debt

was nondischargeable. On the plaintiff-patient’s motion for summary judgment, the

court held that “a ‘willful and malicious injury’ has not been established unless it is

shown that [the debtor] intended to cause her injury, or knew that such injury was

substantially certain to result from his conduct.” 185 B.R. at 955. The court denied

summary judgment, holding that the plaintiff-patient had failed to show the

nonexistence of a genuine issue of material fact as to the Debtor’s necessary state of

mind or awareness in relation to the substantial certainty of the patient’s injuries,

and holding that the debtor did not overcome the inferences in the record of the

debtor’s intent or knowledge of substantial certainty. Id. at 958.

Unlike Assevero, the Debtor did not personally render treatment to Plaintiff5;

thus the Plaintiff argues that the Debtor’s failure to train and supervise, as well as

her lack of awareness regarding Sanders’ competence in prescribing the drugs

which the Debtor authorized Sanders to prescribe, meet the “substantially certain”

test for willfulness. Plaintiff argues that the Court should infer that the Debtor

knew that her conduct was substantially certain to result in injury to Plaintiff

5 Assevero does not directly support Plaintiff’s request for denial of the Debtor’s motion for

summary judgment because in that case it was the debtor who performed the medical treatment of

which the patient complained. Therefore, it was possible for the record to lend itself to inferences of

whether the debtor had intent or knowledge that the patient’s injuries were substantially certain to

result from the debtor’s conduct. Here, on the other hand, the Debtor did not personally treat

Plaintiff, and was not even aware that Sanders was treating Plaintiff until after the injuries

occurred. There are no inferences as to the Debtor’s willfulness under these facts.

because she knew that lamotrigine could cause severe injury if improperly

prescribed, but nevertheless authorized and continued to allow Sanders to prescribe

lamotrigine to patients despite the Debtor’s having (1) no knowledge of Sanders’

general competency as a nurse, (2) no knowledge of Sanders’ training or experience

in prescribing lamotrigine, (3) failed to train Sanders to correctly prescribe

lamotrigine, (4) failed to monitor prescriptions written by Sanders, (5) failed to

supervise the treatment Sanders gave to patients, and (6) learned that nurses

practicing under her authorization were writing prescriptions with which she did

not agree.6

Although the Assevero court used a subjective test for assessing whether

conduct is “substantially certain” to result in injury, the Eleventh Circuit has noted

that courts differ on whether to apply an objective or subjective standard when

assessing “substantial certainty.” See Kane v. Stewart Tilghman Fox & Bianchi PA

(In re Kane), 755 F.3d, 1285, 1293 (11th Cir. 2014) (recognizing disagreement about

“whether the term ‘substantial certainty’ is subjective standard, requiring a creditor

to prove that a debtor actually knew that the act was substantially certain to injure

the creditor, or an objective standard, requiring a creditor to show only that a

debtor’s act was in fact substantially certain to cause injury.”).7

Regardless which test—subjective or objective—is applied, however, this

record cannot support a finding that the Debtor’s conduct was substantially certain

to result in Plaintiff’s injury. First, under the subjective standard the record must

6 Nothing in the record suggests that, prior to Plaintiff’s injuries, the Debtor was aware of any

improper drug prescriptions written by Sanders.

7 Post-Geiger cases suggest a trend that courts consider Geiger to have neutralized the

objective “substantially certain” standard. See, e.g., Carrillo v. Su (In re Su), 290 F.3d 1140 (9th Cir.

2002) (holding that subjective standard is appropriate); Henderson v. Wooley (In re Wooley), 288 B.R.

294, 302 (Bankr. S.D. Ga. 2001) (expressing doubt as to whether objective test remains); see also

Restatement (Second) of Torts § 8A (1965) (“The word ‘intent’ is used throughout the Restatement of

this Subject to denote that the actor desires to cause consequences of his act, or that he believes that

the consequences are substantially certain to result from it.”) (emphasis added).

show that the Debtor had actual knowledge that her conduct was substantially

certain to injure Plaintiff. Under this standard, the claim fails. There is no

evidence in the record indicating that the Debtor knew that, in signing the Protocol

Agreement (authorizing Sanders to prescribe lamotrigine) or in failing to supervise

Sanders, she was substantially certain that Plaintiff would be injured. The record

does not support the argument that the Debtor “knew that the resulting

consequences were certain and, nonetheless, proceeded with the act in question.” In

re Assevero, 185 B.R. at 957 n.7. Knowledge of lamotrigine’s danger if improperly

prescribed is a far cry from substantial certainty that a failure to adequately

supervise and train a licensed professional nurse practitioner would result in the

injury to Plaintiff.8 “Merely knowing that . . . harm might result is not the degree of

culpability which supports a determination of nondischargeability under Section

523(a)(6).” Walters v. Betts (In re Betts), 174 B.R. 636, 650 (Bankr. N.D. Ga. 1994).

Similarly, the objective standard of substantial certainty is not satisfied on

this record. Despite the Plaintiff’s assertion, substantial certainty entails more

than merely showing that an injury was foreseeable. The Eleventh Circuit has

declined to find an injury “substantially certain” to result from a debtor’s conduct

where there is not “an unbroken chain of events leading from [the debtor’s]

intentional act to [the plaintiff’s] physical injury.” Hope v. Walker (In re Walker), 48

F.3d 1161, 1165 (11th Cir. 1995). Other courts have followed suit. See, e.g., Baker

v. Wentland (In re Wentland), 410 B.R. 585, 601 (Bankr. N.D. Ohio 2009)

8 See O.C.G.A. § 43-26-3(1.1) (referenced by O.C.G.A. § 43-34-25(1)):

Advanced practice registered nurse means a registered professional nurse who

is licensed by the board under this article or who holds a multistate license under

Article 4 of this chapter, who is recognized by the board as having met the

requirements established by the board to engage in advanced nursing practice,

and who holds a master's degree or other graduate degree from an approved

nursing education program and national board certification in his or her area of

specialty, or a person who was recognized as an advanced practice registered

nurse by the board on or before June 30, 2006 . . . .

(“[F]oreseeability does not equate with substantial certainty.”); Blair v. Boughter (In

re Boughter), 297 B.R. 916, 921 (Bankr. S.D. Ga. 2003) (“If a plaintiff shows that

there appears to be an unbroken chain of events leading from an intentional act to

an injury and asserts facts showing that a debtor intended for that harm to occur,

then that debtor may not prevail in a summary judgment motion regarding

dischargeability under § 523(a)(6).” (citing In re Walker, 48 F.3d 1161, 1165);

Woolner v. LaFevor (In re LaFevor), No. 05-83912, Adv. No. 06-6167, 2007 WL

7136476 (Bankr. N.D. Ga. Jan. 11, 2007) (section 523(a)(6) claim failed due to

intervening act between debtor’s action and ultimate injury); Broussard v. Fields (In

re Fields), 203 B.R. 401, 411 (Bankr. M.D. La. 1996) (foreseeability of injury not

sufficient to sustain § 523(a)(6) claim); see also Morris v. Brown (In re Brown), 489

Fed. Appx. 890, 891 (6th Cir. 2012) (where Sixth Circuit upheld bankruptcy court’s

granting of summary judgment against § 523(a)(6) claim premised on defendant’s

failure to follow contractual, statutory, and common sense duties in relation to

timber operation, on grounds that substantial certainty requires more than

foreseeability).

Even a debtor’s knowledge of a strong probability of harm—a finding or

inference not supported by this record—is insufficient. Armstrong v. Oslin (In re

Oslin), 584 B.R. 363, 372 (Bankr. N.D. Okla. 2018) (“. . . knowledge of a strong

probability that someone might be harmed is not enough” under § 523(a)(6)).

Likewise, establishing that the conduct proximately caused the injury fails to

satisfy the objective standard for substantial certainty. See Guerra & Moore Ltd.,

LLP v. Cantu (In re Cantu), 389 Fed. App’x. 342, 346 (5th Cir. 2010) (jury’s finding

that injuries were proximately caused by debtor’s conduct does not equate to finding

of substantial certainty). In Assevero, the case championed by Plaintiff, Judge

Brizendine held that “[f]oreseeability or merely knowing that harm might result is

not the degree of culpability which supports a determination of nondischargeability

under Section 523(a)(6).” In re Assevero, 185 B.R. at 956.

Applying the standard set forth by these cases, the Court is unable to find

that Plaintiff’s injury was substantially certain to occur as a result of any failure of

the Debtor to supervise or otherwise ensure that Sanders was adequately trained to

write prescriptions for lamotrigine. The subsequent intervening events—including

the conduct of Sanders, which did not necessarily result from the Debtor’s failure to

supervise—between the conduct alleged of the Debtor, and the actual injury to

Plaintiff, preclude a finding of substantial certainty.

To successfully resist summary judgment, Plaintiff must present some

affirmative evidence supporting her position. Hope v. Walker (In re Walker), 48 F.3d

1161, 1163 (11th Cir. 1995) (“A moving party is entitled to summary judgment if the

nonmoving party has ‘failed to make a sufficient showing on an essential element of

her case with respect to which she has the burden of proof.’” (citing Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986). Plaintiff has not met her burden as to this issue.

3. The Debtor’s Conduct Does Not Amount to More than

Recklessness.

The Supreme Court has made clear, in a medical malpractice context, that

reckless conduct is not sufficient to constitute a § 523(a)(6) claim. Kawaauhau v.

Geiger, 523 U.S. 57, 64 (1998) (“We hold that debts arising from recklessly or

negligently inflicted injuries do not fall within the compass of § 523(a)(6).”).

Furthermore, a bankruptcy court in our Circuit has recently held that:

[R]eckless conduct resulting in an injury that evidences an entire

want of care or conscious indifference to the consequences is not

sufficient under the legal standard established in this exception to

discharge. Stated differently, Section 523(a)(6) addresses only

those situations in which a debtor desired the injury caused by his

conduct. It does not reach a debtor's failure to meet a duty of care

that results in injury to someone else.

Loucks v. Smith (In re Smith), 537 B.R. 1, 13 (Bankr. M.D. Ala. 2015) (citing

Bracciodieta v. Raccuglia (In re Raccuglia), 464 B.R. 477, 483 (Bankr. N.D. Ga.

2011) (emphasis added)); see also Dearmas v. Gibbs (In re Gibbs), No. 05-20436,

Adv. No. 05-2039, 2006 WL 6885805, at *3 (Bankr. S.D. Ga. Jan. 18, 2006) (“Even if

Debtor intentionally or knowingly failed to perform duties in compliance with a

particular standard of care, Section 523(a)(6) cannot apply in this case because

Plaintiff has not demonstrated that Debtor intentionally or knowingly acted to

cause her injury.” (citation omitted)).

Considered in a light most favorable to Plaintiff, the evidence demonstrates,

at best, only the Debtor’s recklessness. The record contains no indication of willful

conduct taken by the Debtor toward Plaintiff. Plaintiff cannot escape the conclusion

that her claim for willful and malicious injury, no matter how articulated, is at its

core a claim for negligent or reckless failure to meet the appropriate standard of

care. See In re Walker, 48 F.3d at 1165 (“[T]his type of ‘injury’ is nothing more than

a recasting of the ‘reckless disregard’ standard expressly rejected by Congress and

by this court.”). Indeed, in Walker, the Eleventh Circuit found that, although the

failure to maintain workers compensation insurance required by statute may

subject a debtor to criminal penalties, such a failure amounts only to, at most,

reckless conduct. Id. at 1165. Here, Plaintiff alleges that the Debtor violated

contractual duties and Georgia regulations or statutes.9 Following the reasoning of

Walker, Plaintiff’s argument fails as a matter of law.

Because the issue of willfulness is dispositive as to the Debtor’s Motion, the

Court need not consider whether the Debtor’s conduct was malicious.

9 Moreover, even if Plaintiff had been a party to the Protocol Agreement between the Debtor

and Sanders, which she of course was not, a knowing breach of contract is not within the ambit of

§ 523(a)(6). Navy Fed. Credit Union v. Purse (In re Purse), 537 B.R. 28, 39 (Bankr. S.D. Ga. 2015) (“A

debt arising from a knowing breach of contract is not the type of debt excepted from discharge under

11 U.S.C. § 523(a)(6)” (citing Kawaauhau v. Geiger, 523 U.S. at 62)).

For these reasons, summary judgment should be granted in Debtor’s favor as

to the § 523(a)(6) claim.

D. § 523(a)(2)(A)—Fraudulent Misrepresentation.

To prevail under § 523(a)(2)(A), Plaintiff must prove

that the Debtor obtained money, property or credit from the

Plaintiff[]: (1) by false representation, pretense, or fraud; (2)

knowingly made or committed; (3) with the intent to deceive or to

induce acting on same; (4) upon which the Plaintiff[] actually and

justifiably relied; and (5) from which the Plaintiff[] suffered

damages, injury or loss as a proximate result.

Washington v. Robinson-Vinegar (In re Robinson-Vinegar), 561 B.R. 562, 566

(Bankr. N.D. Ga. 2016) (citations omitted).

As to the types of fraud referenced in the statute: “A false representation is

an ‘express misrepresentation.’ ‘False pretense involves an implied

misrepresentation or conduct intended to create and foster a false impression.’”

Navy Fed. Credit Union v. Purse (In re Purse), 537 B.R. 28, 32 (Bankr. S.D. Ga.

2015) (citations omitted). “Actual fraud requires showings that the defendant made

a false or misleading representation with the intent to induce reliance and that the

plaintiff detrimentally relied on the representation.” SunTrust Bank v. Brandon (In

re Brandon), 297 B.R. 308, 313 (Bankr. S.D. Ga. 2002). “Legal or constructive

fraud, which involves an act contrary to a legal or equitable duty that has a

tendency to deceive, yet not originating in an actual deceitful design, is insufficient.”

Bracciodieta v. Raccuglia (In re Raccuglia), 464 B.R. 477, 485 (Bankr. N.D. Ga.

2011).

The misrepresentation of a medical professional’s credentials may give rise to

a nondischargeable debt under § 523(a)(2)(A). See Hanft v. Church (In re Hanft),

315 B.R. 617, 621 (S.D. Fla. 2002); Abrahamson v. Doyan (In re Doyan), 204 B.R.

250 (Bankr. S.D. Fla. 1996).

The assessment of Plaintiff’s § 523(a)(2)(A) claim differs significantly from

the assessment of Plaintiff’s § 523(a)(6) claim. First, “[u]nder § 523(a)(2)(A), the

disqualifying act does not have to be committed by the debtor.” In re Placeres, 578

B.R. at 517 (emphasis in original). In other words, vicarious liability can support a

§ 523(a)(2)(A) claim. Lioce v. Heinz (In re Heinz), 501 B.R. 746, 760 (Bankr. N.D.

Ala. 2013, as amended Nov. 13, 2013) (“The Eleventh Circuit has recognized that a

debt may be excepted from discharge either when the debtor personally commits

actual fraud or when such actual fraud is imputed to the debtor under agency

principles.” (citing Hoffend v. Villa (In re Villa), 261 F.3d 1148 (11th Cir. 2001)).

Additionally, unlike § 523(a)(6), recklessness may be sufficient to support a

non-dischargeability claim under § 523(a)(2)(A). “Reckless disregard for the truth

or falsity of a statement can also supply the necessary basis for a determination of

non-dischargeability [under § 523(a)(2)(A)].” In re Purse, 537 B.R. at 36 (citations

omitted).

Considering the evidentiary inferences favorably toward Plaintiff as the non-

moving party, the Court concludes that several questions of material fact exist as to

Plaintiff’s § 523(a)(2)(A) claim. Therefore, the Court must deny summary judgment

to the Debtor as to Count II of Plaintiff’s Complaint.

1. Agency

Plaintiff alleges that Sanders fraudulently represented herself as a doctor to

Plaintiff, and that Plaintiff justifiably relied on this representation to her

detriment, stating that she would not have taken lamotrigine prescribed by a nurse

practitioner and would have asked to speak to a doctor. Plaintiff alleges that

Sanders’ representing herself as a doctor denied Plaintiff the opportunity to consult

or receive treatment from a doctor, to her detriment.

The record is not dispositive as to whether agency exists between the Debtor

and Sanders. Thus, whether Sanders acted as an agent of the Debtor when she

represented herself as a doctor is a genuine issue of material fact.

Agency is defined under the Georgia Code, which provides that “[t]he relation

of principal and agent arises wherever one person, expressly or by implication,

authorizes another to act for him or subsequently ratifies the acts of another in his

behalf.” O.C.G.A. § 10-6-1. Georgia courts have explained:

“Agency is the relationship which results from the manifestation of

consent by one person to another that the other shall act on his

behalf and subject to his control, and consent by the other so to

act.” The existence of agency and the extent of the agent's

authority are questions of fact. “A claim of agency may be proved,

as any other fact, by circumstantial evidence. The fact of agency

may be established by proof of circumstances, apparent relations,

and the conduct of the parties. Direct evidence of an agency

relationship is not required.”

S. Exposition Mgmt. Co. v. Genmar Indus., Inc., 250 Ga. App. 702, 704-05, 551

S.E.2d 830, 832 (2001) (citations omitted); see also Nissan Motor Acceptance Corp. v.

Stovall Nissan, Inc., 224 Ga. App. 295, 298, 480 S.E.2d 322, 325 (1997) (affirming

denial of summary judgment due to genuine issue of material fact as to agency).

“Bare assertions or denials of the existence of an agency relationship are

admissible as statements of fact only when made by one of the purported parties to

the relationship.” Chakales v. Hertz Corp., 825 F. Supp. 312, 314 (N.D. Ga. 1993). A

bare allegation of the existence of agency by a non-party to the alleged agent-

principal relationship is “merely an unsupported conclusion of law;” however, if

there is competent evidence of agency beyond the non-party’s allegation, the

existence of agency should be determined at trial rather than on summary

judgment. Id. (citations omitted).

Here, the Debtor, the alleged principal, denies an agency relationship with

Sanders. Plaintiff, a non-party to the relationship, asserts that such an agency

relationship existed. Neither the Debtor nor Plaintiff cites to any testimony of the

alleged agent, Sanders, regarding the existence of the alleged principal-agent

relationship.

The Court finds that competent evidence of the relationship exists beyond

Plaintiff’s allegation. Under the terms of the Protocol Agreement, the Debtor

delegated to Sanders authority to write lamotrigine prescriptions. See also

O.C.G.A. § 43-34-25(a)(10) (defining “Nurse protocol agreement” as one in which

physician delegates to nurse practitioner authority to perform certain acts). The

Protocol Agreement also assigns the Debtor responsibility to supervise and train

Sanders. Further, under Georgia Rules and Regulations, “the delegating physician

is responsible for all the medical acts performed by the [nurse practitioner].” Ga.

Comp. R. & Regs. 360-32-.05(4). These contractual and regulatory provisions leave

open the implication that an agency relationship may exist.

Although the Debtor denies that Sanders is her agent, the Court finds, in

resolving doubts against the Debtor, that the facts presented create a genuine issue

of material fact as to whether Sanders acted as the Debtor’s agent.

2. Vicarious Liability

As noted previously, vicarious liability applies in the context of a

§ 523(a)(2)(A) claim. Plaintiff testified that Sanders introduced herself as “doctor”

and that Plaintiff relied on this representation. The parties dispute whether

Sanders qualified her introduction as doctor to reference her doctorate nursing

degree and whether Sanders explained her role as a nurse practitioner or advanced

practice registered nurse. Thus, when construed in Plaintiff’s favor the record

reveals questions of material fact regarding Sanders’ conduct (if imputed to the

Debtor) and the Plaintiff’s subsequent reliance on such conduct. Consequently,

summary judgment is inappropriate.

3. Debtor’s Receipt of Money or Property on Account of Fraud

The Debtor argues that she is entitled to summary judgment because

Plaintiff cannot show that the Debtor personally received money, property, services,

or an extension of credit as outlined in § 523(a)(2)(A). To support this assertion, the

Debtor cites to Kernozek v. Rubenstein (In re Rubenstein), 101 B.R. 769 (Bankr.

M.D. Fla. 1989). To the extent that Rubenstein stands for the proposition advanced

by the Debtor, that proposition is not an accurate statement of the law in this

Circuit. The Eleventh Circuit applies the “receipt of benefits” theory for

§ 523(a)(2)(A), which requires only that the debtor benefit in some way from funds

paid by the creditor on account of the fraud. HSSM #7 Ltd. P’ship v. Bilzerian (In re

Bilzerian), 100 F.3d 886, 890 (11th Cir. 1996).10 Such benefit to the debtor may be

indirect. Kondapalli v. DeMasi, 551 B.R. 653, 660 (M.D. Fla. 2016).

Because it is undisputed that Plaintiff paid for at least a portion of her

treatment at River Edge, there exists a question of material fact as to whether the

Debtor, as an employee receiving regular compensation from River Edge, benefited

from the alleged fraudulent conduct.

4. Plaintiff’s Allegations are Pled with Sufficient Particularity.

The Debtor argues that Plaintiff’s Complaint fails to contain sufficient

particularity as to the fraud allegations as required by Rule 9(b), as incorporated by

Bankruptcy Rule 7009. However, this argument, centered on the lack of Plaintiff’s

specific allegations of the fraudulent acts by the Debtor, overlooks Plaintiff’s specific

10 In adopting the “receipt of benefits” theory, the Eleventh Circuit Court of Appeals affirmed a

district court’s reversal of a bankruptcy court’s decision authored by the judge who decided In re

Rubenstein.

allegations of Sanders’ conduct, whose acts might be attributable to the Debtor

under the principle of vicarious liability.

The Complaint contains detailed allegations as to the conduct and

misrepresentations of Sanders. The Court finds the allegations sufficient to pass

muster under Rule 9(b), particularly under the “liberal approach to fraud pleading”

in the context of § 523(a)(2)(A). See Williams v. Carson (In re Carson), No. 06-

68324, Adv. No. 07-9050, 2008 WL 7842099, at *1 (Bankr. N.D. Ga. Mar. 27, 2008).

III. Conclusion.

For the foregoing reasons, the Court finds that the Debtor is entitled to

judgment in her favor as to Count I of Plaintiff’s Complaint brought under

§ 523(a)(6), and that the Debtor is not entitled judgment in her favor as to Count II

of Plaintiff’s Complaint, brought under § 523(a)(2)(A). The Court will enter an

Order in accordance with this Opinion granting in part and denying in part the

Debtor’s Motion for Summary Judgment.

[END OF DOCUMENT]