# James Liukonen

> United States Bankruptcy Court, E.D. Wisconsin · June 9, 2025

URL: https://www.frixlaw.com/law-library/cases/11068060

## Case

- **Court:** United States Bankruptcy Court, E.D. Wisconsin
- **Decided:** June 9, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11068060

## How later opinions describe it (automated extraction)

- noting that “many courts” have adopted the middle approach
- finding slander to be a “personal injury tort”

## Opinion text

BY |e ae
So Ordered.
Dated: June 9, 2025
Wf A—_—
. Michael Halfenger
Chief United States} Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF WISCONSIN

In re:
James Liukonen, Case No. 24-26139-gmh
Chapter 13
Debtor.

Stephanie Johnson,
Plaintiff,
Vv. Adv. Proc. No. 25-2028-gmh
James Liukonen,
Defendant.

DECISION AND ORDER (1) GRANTING RELIEF FROM STAY TO CONTINUE
CIVIL ACTION AGAINST THE DEBTOR IN THE DISTRICT COURT AND
(2) DENYING DEFENDANT’S MOTION TO DISMISS;
AND
REPORT AND RECOMMENDATION THAT DISTRICT COURT SHOULD DENY
JOHNSON’S MOTION TO WITHDRAW THE REFERENCE

Stephanie Johnson is the plaintiff in a pending civil action in the Eastern District
of Wisconsin against chapter 13 debtor James Liukonen. That action was statutorily
stayed by 11 U.S.C. §362(a) when Luikonen filed a chapter 13 bankruptcy petition.
Johnson filed an adversary proceeding in this court in which she pleads claims that
duplicate those she was pursuing in the district court and adds a request that those
claims are not dischargeable. She seeks to have the district court continue its
adjudication of her claims against the debtor, either by this court granting relief from
the stay imposed by §362(a) of the Bankruptcy Code or by convincing the district court
to withdraw the reference of the parties’ adversary proceeding to the bankruptcy court
(or perhaps also withdrawing the reference of the debtor’s bankruptcy case—her
request is unclear). The debtor opposes these requests and asks that this court dismiss
Johnson’s adversary proceeding for failing to state a claim upon which relief can be
granted.
For the reasons explained below, this court (a) grants relief from the §362(a) stay
to allow Johnson to pursue a final adjudication of her claims in the district court, (b)
denies the debtor-defendant’s motion to dismiss the adversary proceeding but stays
that proceeding to await a final order by the district court, and (c) recommends to the
district court that it not withdraw the reference of either the adversary proceeding or
the debtor’s chapter 13 case.
I
In April 2023 Johnson sued Liukonen in the United States District Court for the
Eastern District of Wisconsin. Johnson v. Liukonen, No. 23-cv-00543 (E.D. Wis.) (Duffin,
M.J., presiding). She alleged that Liukonen, her landlord, discriminated against her
based on her race and disability and that he acted in ways that intentionally or
negligently inflicted emotional distress, violating both federal and state law. She asked
that her claims by tried by a jury and that the court award her compensatory and
punitive damages, alleging that Liukonen’s actions were “malicious and done with an
intentional disregard of [her] rights”. Johnson v. Liukonen, No. 23-cv-00543, ECF No. 1, at
6. Magistrate Judge Duffin, who, with the parties’ consent, presides over the case
through entry of a final judgment, see 28 U.S.C. §636(c), entered a final pretrial order on
November 4, 2024, setting the matter to be tried by a jury commencing November 18,
2024. Johnson, No. 23-cv-00543, ECF No. 34.
On November 14, 2024, Liukonen filed a petition commencing a bankruptcy case
under chapter 13, which stayed further proceedings in the district court. See In re
Liukonen, Case No. 24-26139 (Bankr. E.D. Wis.) & 11 U.S.C. §362(a). In February 2025
Johnson sought relief in this court, commencing an adversary proceeding in which she
repleads the claims made in the district court and further alleges that her claims are
excepted from discharge in this case under chapter 13 of the Bankruptcy Code because
they are “claims [ ] for bodily injury within the meaning of” 11 U.S.C. §1328(a)(4).
Johnson v. Liukonen, Adv. Proc. No. 25-02028, ECF No. 1, at 2 (Bankr. E.D. Wis.). She also
filed a motion for relief from the §362(a) stay to allow the district court case to proceed,
combined with a request that the district court withdraw the reference.1 In re Liukonen,
Case No. 24-26139, ECF Nos. 43 & 43-1. Liukonen objected to the motion for relief from
the stay and filed a motion to dismiss the adversary proceeding pursuant to Federal
Rule of Civil Procedure 12(b)(6) (incorporated into this proceeding by Federal Rule of
Bankruptcy Procedure 7012), arguing that Johnson’s complaint fails to state an
actionable claim for relief. Id. ECF No. 49; see also Johnson v. Liukonen, Adv. Proc. No.

1. Before seeking relief from the stay in this court, Johnson filed a motion in the district court requesting
that the district court proceed with the jury trial and modify “the stay in this matter [to] allow this case
to proceed in the District Court”. Johnson v. Liukonen, No. 23-cv-00543, ECF No. 52, at 1; see also ECF
No. 51. Johnson’s request that the district court try the case there, notwithstanding Liukonen’s pending
bankruptcy proceeding, invited further proceedings in the district court, all of which certainly offended
§362(a)(1)’s automatic stay on “the . . . continuation . . . of a judicial . . . action . . . against the debtor that
was . . . commenced before the commencement of the case under” the Bankruptcy Code. Johnson v.
Liukonen, No. 23-cv-00543, ECF Nos. 51 & 52. Judge Duffin promptly informed Johnson that she must
obtain relief from the §362(a) stay in the bankruptcy court before her district court case could continue.
Id. ECF No. 56.
25-02028, ECF No. 4. Johnson objected to the motion to dismiss. Johnson v. Liukonen,
Adv. Proc. No. 25-02028, ECF No. 7.
Johnson’s request for relief from the automatic stay, Liukonen’s motion to
dismiss Johnson’s adversary proceeding, and Johnson’s motion to withdraw the
reference of her pending adversary proceeding all involve interrelated facts and legal
issues, which this decision addresses in turn.
II
Johnson requests relief from the §362(a) stay so that the district court can try her
claims against the debtor to a jury, as it was prepared to do when Liukonen filed his
bankruptcy case, and she asserts that her claims will be deemed not dischargeable
under §1328(a)(4) after they are liquidated in the district court proceeding. Section
362(d)(1) authorizes this court to modify the §362(a) stay “for cause”, and allowing
creditors to liquidate their claims in other forums can constitute cause for relief when
litigation elsewhere is the most efficient course. See In re Stewart, 649 B.R. 755, 763
(Bankr. N.D. Ill. 2023). Opposing this course, Luikonen argues that §1328(a)(4)’s
discharge exception is inapplicable as a matter of law because it is limited to debts for
damages awarded before the debtor commences a bankruptcy case that result from
conduct that causes personal injury. Johnson v. Liukonen, Adv. Proc. No. 25-02028, ECF
No. 4, at 2–11. Liukonen argues that there is no persuasive reason to grant relief from
the automatic stay to try claims to judgment only to have the enforcement of that
judgment barred by a bankruptcy discharge. See 11 U.S.C. §524(a)(1) (“A discharge . . .
voids any judgment at any time obtained, to the extent that such judgment is a
determination of the personal liability of the debtor with respect to any debt discharged
under section . . . 1328 of this title”.). Liukonen makes the same arguments about the
scope of §1328(a)(4) to support his motion to dismiss the adversary proceeding.
Under these circumstances, to adjudicate both the motion for relief from the
automatic stay and the motion to dismiss the adversary proceeding, the court must first
decide whether, if Johnson were to prevail on her claims in the district court, those
claims could be deemed not dischargeable under §1328(a)(4).
A
Section 1328(a)(4) excepts from discharge certain debts for damages awarded in a civil
action before the entry of the chapter 13 discharge order. Section 1328(a) directs the court to
grant a chapter 13 debtor’s discharge “after completion by the debtor of all payments
under the plan”, except for debts of the type provided for in §1328(a)(1)–(4). By not
making a discharge available until the debtor completes all plan payments, §1328(a)’s
plain text provides the temporal benchmark for determining whether the debtor owes a
dischargeable debt. 2 Only when the debtor has completed the plan and the court grants
the discharge is there a reason to determine whether a debt that is excepted from
discharge under §1328(a)(1)–(4).
Section 1328(a)(4) provides that, once the debtor completes the plan payments,
“the court shall grant the debtor a discharge of all debts . . . except any debt . . . 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.” If no damages have been awarded before the discharge is
granted, the matter is at an end, since the discharge operates to enjoin permanently the
continuation of any civil action to collect otherwise dischargeable debts. 11 U.S.C.
§524(a)(2). Before the court grants a discharge, however, a creditor with an unliquidated
debt may pursue a damages award, either in the bankruptcy court or, with relief from
the §362(a) stay, in some other forum, and if that creditor obtains a damages award
before the discharge enters, the debt will not be discharged if it satisfies §1328(a)(4)’s

2. Contrast 11 U.S.C. §727(b), which explicitly provides, “Except as provided in [11 U.S.C.] section 523
. . . , a discharge under [11 U.S.C. §727(a)] discharges the debtor from all debts that arose before the date
of the order for relief under [ ] chapter [7] . . . .”
other requirements.
In seeking to persuade the court to deviate from this straightforward reading of
§1328(a), the debtor champions two decisions, issued shortly after Congress added
§1328(a)(4) in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005:
Parsons v. Byrd (In re Byrd), 388 B.R. 875, 876-77 (Bankr. C.D. Ill. 2007), and In re Nuttall,
No. 06-14233, 2007 WL 128896 (Bankr. D. N.J. Jan. 11, 2007). Both decisions conclude
that §1328(a)(4)’s application is limited to debts for civil damages awarded before the
debtors commenced their chapter 13 case. Byrd is procedurally similar to this
proceeding. Before the debtor, Byrd, filed for bankruptcy, Parsons had filed a civil
lawsuit against him for damages sustained in a bar fight. While the civil case was
pending, Byrd filed a chapter 13 case. Parsons then filed an adversary proceeding
seeking a declaration that the debt was not dischargeable. The court granted Byrd’s
motion to dismiss, ruling that the debt was dischargeable because Byrd filed for
bankruptcy before Parsons obtained a damages award. Id. at 877. Similarly, in Nuttall,
the creditor, a victim of the debtor’s aggravated criminal assault, asked the bankruptcy
court for relief from the stay to liquidate his personal injury claim in state court. 2007
WL 128896, at *1.
Byrd and Nuttall reason as follows: Because §1328(a)(4)’s exception to discharge
is limited to (certain) debts “for restitution, or damages, awarded in a civil action”,
§1328(a)(4), “only restitution or damages ‘awarded’ in a civil action against the debtor
are potentially non-dischargeable at the completion of payments in a Chapter 13 case.”
Byrd, 388 B.R. at 877. From this, they conclude, “a pre-petition award of restitution or
damages for willful or malicious injury is a prerequisite to a finding of a non-
dischargeability under §1328(a)(4).” Id. (emphasis added) (citing Collier on Bankruptcy
(15th Edition Revised 2006) & Keith M. Lundin, Chapter 13 Bankruptcy (3rd ed. 2000 &
Supp.2006)); see also Nuttall, 2007 WL 128896, at *3 (“Although Congress may not have
intended for victims of intentional torts to be subject to discharge of their debts where
the Debtor beats them in a race to the courthouse, this Court finds that the plain
language of the statute requiring that the debt be ‘awarded’ means that the debt is
subject to discharge until there has been a determination of liability, which has not yet
occurred in the matter before this Court.”). But neither decision explains why a damages
award must precede the petition date to satisfy the §1328(a)(4) exception when the chapter
13 discharge cannot be granted until plan completion.
Rather than answer this question, Byrd turns to differences between §1328(a)(4)
and §523(a)(6): “Section 1328(a)(4) is clearly worded differently than 11 U.S.C.
§ 523(a)(6), and, had Congress intended a different meaning, it could easily have
worded § 1328(a)(4) to include restitution or damages as being non-dischargeable
regardless of the entry of a judgment in a civil proceeding prior to the filing of a
Chapter 13 bankruptcy petition.” Id.3 True, §523(a)(6), while similar to §1328(a)(4) in
some ways, has no “awarded in a civil action” language, and Congress could have
clarified the matter, as it eventually did in §523(a)(19)’s exception for debts for
securities-related wrongdoing and §523(a)(9)’s exception for debts arising from a
debtor’s intoxicated use of a motor vehicle.4 So what? That Congress could have added

3. See also Keith M. Lundin, Lundin On Chapter 13, § 159.7, at ¶ 10,https://www.lundinonchapter13.com
/Content/Section/159.7 (last visited May 13, 2025) (“By analogy, § 101(14A) speaks of a domestic
support obligation that is ‘established or subject to establishment.’ The less expansive use of the word
‘awarded’ in § 1328(a)(4) should confine this exception to discharge to restitution or damages that
already happened at the Chapter 13 petition.”).

4. The debtor argues that “Congress understood the effect of the language in” previous versions of
§523(a)(9) and (19) to require prepetition awards, and so the fact that Congress later amended those
statutes, and thus knew how to word statutes in a way to include post-petition debts, but did not
include similar language in §1328(a)(4), demonstrates that it intended for §1328(a)(4) to apply only to
prepetition awards. Johnson v. Liukonen, Adv. Proc. No. 25-02028, ECF No. 4, at 4–7. The debtor also
argues that the relevant amendments to §523(a)(19)—which clarified that the debt from a qualifying
securities-related wrongdoing may “result[], before, on, or after the date on which the petition was
filed, from” any manner of judgments, orders, or agreements—was enacted as part of the same 2005
Act that created §1328(a)(4), and the fact that Congress did not use the same language in each section
means that Congress intended §1328(a)(4) only to apply to prepetition awards. Id. at 6–7.
more words to §1328(a)(4)—could have, for example, added “debt . . . for damages
awarded in a civil action at any time before the discharge is granted under this section . . .”—
is irrelevant. The exception’s context makes the imagined addition superfluous and its
omission irrelevant.
Nuttall simply presumes, without further explication, that the petition date is the
time to determine whether there is a damages award for purposes of §1328(a)(4):
[T]his Court finds that the plain language of the statute requiring that the
debt be ‘awarded’ means that the debt is subject to discharge until there has
been a determination of liability, which has not yet occurred in the matter
before this Court. . . . To hold other than to require a determination of
liability in order to find the debt nondischargeable under § 1328(a)(4) would
be to render the word “awarded” mere surplusage, which this Court cannot
do.
Therefore, [the creditor’s] claim for $300,000 cannot be held to be
nondischargeable because it is a contingent and unliquidated claim, not yet
reduced to judgment and awarded by a court of competent jurisdiction, and
therefore outside of the statutory exception to discharge created by the
plain language of § 1328(a)(4).
Id. at *3–4. Like Byrd and the treatises on which it relies, Nuttall does not explain why a
claim that is contingent and unliquidated when the debtor files his bankruptcy petition
can’t later become a liquidated debt for “damages[] awarded in a civil action” potentially

The debtor further observes that Congress amended §523(a)(9)’s language, removing a
requirement that the debt “arise[] from a judgment or consent decree”, in order to “close the loophole
which allowed drunk drivers to escape payment to their victims prior to entry of a judgment or
consent decree.” Id. at 6 (quoting In re Weilein, 319 B.R. 175, 178 (Bankr. N.D. Iowa 2004)) (emphasis
omitted). Other courts, however, rely on decisions interpreting that same older version of §523(a)(9)
not to require that such a claim be “reduced to judgment at the time [the debtor] filed his bankruptcy
petition.” See, e.g., Buckley v. Taylor (In re Taylor), 388 B.R. 115, 120 (Bankr. M.D.Pa. 2008) (discussing
Young v. Rose (In re Rose), 86 B.R. 86 (Bankr. E.D. Mich. 1988)); see also Woods v. Roberts (In re Roberts),
431 B.R. 914, 918–19 (Bankr. S.D. Ind. 2010) & Waag v. Permann (In re Wagg), 418 B.R. 373, 380–81
(B.A.P. 9th Cir. 2009). Ultimately, these arguments are unpersuasive because, as explained above, the
plain language of §1328(a)(4) provides a clear deadline for a creditor to obtain a qualifying civil
damages award, and that deadline is entry of the discharge order.
excepted from discharge by §1328(a)(4) if an award is made during the bankruptcy case
but before the court grants the discharge. 11 U.S.C. §1328(a)(4) (emphasis added).
As the debtor concedes, moreover, most courts have rejected the Byrd-Nuttall
interpretation of §1328(a)(4).5 Johnson v. Liukonen, Adv. Proc. No. 25-02028, ECF No. 4, at
4. Generally, these courts reason that “awarded” in §1328(a)(4) functions as a past
participle, defining a type of debt for restitution and damages: “By reading ‘awarded’
as part of a participial phrase, the word is not rendered mere surplusage, but part of a
phrase that describes what types of ‘restitution’ and ‘damage’ awards are protected
from discharge.” Taylor, 388 B.R. at 119. “’As a past participle, ‘awarded’ merely
signifies ‘completion’ or an entry of a restitution or damages award at the time of the
determination of nondischargeability. Nothing in phraseology of section 1328(a)(4)
requires, either implicitly or explicitly, entry of a prepetition judgment.’” Roberts, 431
B.R. at 918 (quoting Waag, 418 B.R. at 379) (citations omitted).6

5. See Waag v. Permann (In re Waag), 418 B.R. 373, 381 (B.A.P. 9th Cir. 2009) (“Based on the grammatical
structure of section 1328(a)(4), the context in which it is used, and its policy and object, we agree . . .
that it does not differentiate between a judgment entered prepetition and one entered postpetition.”);
Buckley v. Taylor (In re Taylor), 388 B.R. 115, 119 & 120 (Bankr. M.D. Pa. 2008) (“When § 1328(a)(4) is
interpreted within the overall grammatical structure of § 1328(a) it is plain that the statute does not
intend to differentiate between a judgment entered before and one entered after a bankruptcy petition
is filed.”); In re Abbott, No. 15-06822-5, 2016 WL 6892456, at *2 (Bankr. E.D.N.C. Nov. 22, 2016) (“The
court finds In re Byrd to reflect a minority view that has been rejected by the majority of courts to have
considered the issue, and declines to follow its reasoning.”) (collecting cases); K.C. v. Grosso (In re
Grosso), 512 B.R. 768, 773 (Bankr. D. Del. 2014) (“[T]his Court concludes that a claim for liability that has
not been reduced to a judgment at the time a debtor files a petition may nevertheless be excepted from
discharge pursuant to § 1328(a)(4).”); Adams v. Adams (In re Adams), 478 B.R. 476, 483–84 (Bankr. N.D.
Ga. 2012); In re Capote, No. 11–22087, 2012 WL 1597375, at *1 (Bankr. S.D. Fla. May 7, 2012); Miller v.
Schaub (In re Schaub), No. 11-23707, Adv. No. 11–01811, 2012 WL 1144424, at *3–5 (Bankr. D.N.J. Apr. 4,
2012); Kubera v. Edmonds (In re Edmonds), No. 11-01064, Adv. No. 11–00137, 2011 WL 5909420, at *2–3
(Bankr. E.D.N.C. Aug. 22, 2011); Woods v. Roberts (In re Roberts), 431 B.R. 914, 916–19 (Bankr. S.D. Ind.
2010); See also Hon. W. Homer Drake, Jr., Hon. Paul W. Bonapfel, & Adam M. Goodman, CHAPTER 13
PRAC. & PROC., Vol. 2, 21:17, 821–22 & n.21 (2022 ed.) (collecting cases).

6. These decisions offer additional supporting grounds. They observe that §1328(a)(3) and (4) “are parallel
and designed to distinguish between restitution imposed (‘included’) in a criminal case and restitution
imposed (‘awarded’) in a civil case[,] [n]either [of which] requires a prepetition imposition of such
The overall reasoning of Taylor and its progeny is more compelling than that of
Byrd and Nuttall. Section 1328(a)(4) is best read to direct a determination of whether a
debt is “for . . . damages[] awarded in a civil action” after the debtor has completed all
plan payments and is eligible for a discharge under §1328(a), not before the debtor
commences the chapter 13 case. Therefore, the fact that Johnson has yet to obtain a
damages award in a civil action does not now warrant a conclusion that, as a matter of
law, her unliquidated debt is dischargeable in this chapter 13 case.
B
For purposes of §1328(a)(4), “personal injuries to an individual” include both physical
and psychological (emotional) injuries. The debtor next contends that Johnson’s debt
cannot be excepted from discharge because any award she might obtain will not result
from “personal injury to an individual” within the meaning of §1328(a)(4). Johnson
asserts that her claims for emotional distress seek damages for personal injury within
the meaning of §1328(a)(4). Johnson v. Liukonen, Adv. Proc. No. 25-02028, ECF No. 1, at
5–6 & ECF No. 7, at 7–8.
The Bankruptcy Code does not define “personal injury,” either in §1328 or
elsewhere. And, as many decisions acknowledge, “personal injury” as used in that
section may “(1) refer[] solely to personal bodily injury; (2) include[] non-physical injury
but not business or financial injuries; or (3) include[] all injuries insofar as the injury is
treated as a personal injury under non-bankruptcy law.” Michael v. Denson (In re
Denson), No. 19-00070, Adv. No. 19-50014, 2020 WL 1547493, at *3 (Bankr. S.D. Ind. Mar.

restitution.” Waag, 418 B.R. at 380; see also Adams, 478 B.R. at 483–84; Schaub, 2012 WL 1144424, *3–4.
They also look to decisions interpreting the pre-1990 version of §523(a)(9), which held that the language
then in effect—which excepted “any debt . . . to the extent that such debt arises from a judgment . . .
entered in a court of record against a debtor wherein liability was . . . a result of the debtor’s operation
of a motor vehicle while illegally intoxicated”—not to require that such a claim be “reduced to
judgment at the time [the debtor] filed his bankruptcy petition.” See, e.g., Taylor, 388 B.R. at 120
(discussing Young v. Rose (In re Rose), 86 B.R. 86 (Bankr. E.D. Mich. 1988)); see also Roberts, 431 B.R. at
918; and Waag, 418 B.R. at 380–81.
30, 2020) (quoting Seubert v. Deluty (In re Deluty), 540 B.R. 41, 47 (Bankr. E.D.N.Y. 2015))
(emphasis in original).
The meaning of “personal injury” in §1328(a) is a question of federal statutory
interpretation. One starts with the text, which excepts from discharge “any debt” “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.” §1328(a)(4) (emphasis added). The Seventh Circuit has
construed the word “injury” in a related context—§523(a)(6)’s discharge exception for
“debt[s] . . . for willful and malicious injury by the debtor to another entity or to the
property of another entity”—“to mean a ‘violation of another’s legal right, for which the
law provides a remedy.’” First Weber Grp., Inc. v. Horsfall, 738 F.3d 767, 774 (7th Cir.
2014) (quoting Weinstein & Assocs., Ltd. v. Lymberopoulos (In re Lymberopoulos), 453 B.R.
340, 343 (Bankr. N.D. Ill. 2011)). Presuming that the same concept of “injury” applies
equally to §1328(a)(4)’s use of “willful or malicious injury”—that injury (read: the willful
or malicious violation of a legal right) must have caused a “personal injury” (or death)
to an individual for which damages were awarded in a civil action. In this context the
“personal” modifier seems best understood to distinguish harms to the person from
financial harms or harms to one’s business or property (which can also be caused by
willful or malicious violations of legal rights but which may be discharged under
§1328(a) because §523(a)(6) does not apply to a discharge granted under that section,
see §1328(a)(2)); see also Universal Restoration Svcs, Inc. v. Hartung (In re Hartung), No.
12-21920, Adv. No. 12-2359, 2014 WL 201100, at *7 (Bankr. E.D. Wis. Jan. 17, 2014), aff’d,
511 B.R. 538 (E.D. Wis. 2014) (“Because the damages in this [chapter 13] case are to
property and not to person, the plaintiff’s arguments in favor of a nondischargeable
judgment based upon a willful and malicious injury are rejected.”).
Although “personal injury” could be interpreted in a more restrictive manner—
that the willful or malicious invasion of legal right must cause physical, rather than
psychological, harm—nothing about §1328(a)(4)’s text so requires. Contrast 11 U.S.C.
§522(d)(11)(D) (providing an exemption for the “debtor’s right to receive, or property
that is traceable to—. . . a payment . . . on account of personal bodily injury, not
including pain and suffering or compensation for actual pecuniary loss . . .” (emphasis
added)). Congress elected in 2005 to limit the chapter 13 discharge by excepting
liquidated debts for willful or malicious injuries—again, invasions of legal rights—that
cause personal injury or death to individuals, rather than by applying §523(a)(6) to
chapter 13 cases and simply excepting debts for all willful and malicious injuries the
debtor causes to entities (that is, to individuals and legal entities alike, see §101(15) &
(41)) or to their property. In context, there’s no compelling reason to limit further the
types of personal injuries to individuals covered by §1328(a)(4) beyond those suffered
by the person, in contrast to financial injuries or injuries to property, all of which are
covered by the exclusion in §523(a)(6), which Congress elected not to apply wholesale
to the chapter 13 discharge. See Schubert Osterrieder & Nickelson PLLC v. Bain (In re Bain),
436 B.R. 918, 924 (Bankr. S.D. Tex. 2010) (“Emotional distress is among the types of
injury covered by § 523(a)(6).”) (citing Hagan v. McNallen (In re McNallen), 62 F.3d 619,
625–26 (4th Cir. 1995), and Petro v. Miller (In re Miller), 403 B.R. 804, 818 (Bankr. W.D.
Mo. 2009)).
In all events, most courts interpreting the scope of §1328(a)(4)’s “personal injury”
limitation have concluded that §1328(a)(4)’s use of “personal injury” includes non-
physical harms. See Adams, 478 B.R. at 487 (“defin[ing] ‘personal injury’ in § 1328(a)(4)
to exclude injuries to property, but to include nonphysical injuries such as defamation
and emotional distress.”); Plys v. Ang (In re Ang), 589 B.R. 165, 180 (Bankr. S.D. Cal.
2018) (“The vast majority of courts define ‘personal injury’ as harm both physical and
nonphysical (such as defamation and intentional infliction of emotional distress).”);
Sales v. Bailey (In re Bailey), 555 B.R. 557, 561–63 (Bankr. N.D. Miss. 2016); B.B. v.
Grossman (In re Grossman), 538 B.R. 34, 42 (Bankr. E.D. Cal. 2015) (“The settled federal
interpretation of ‘personal injury’ includes nonphysical injuries”); Deluty, 540 B.R. at 47
(“‘[P]ersonal injury’ in the context [of] section 1328(a)(4) . . . excludes financial injury,
but includes non-physical injuries, not just bodily injury.”) (citing Adams, 478 B.R. at
487).
The debtor’s arguments to the contrary are unconvincing. The debtor relies on
decisions that construe 28 U.S.C. §157(b)(5)’s use of the distinct phrase “personal injury
tort.” See Adv. Proc. No. 25-02028, ECF No. 4, at 8–10 (citing Massey Energy Co. v. W. Va.
Consumers for Justice, 351 B.R. 348, 350–51 (E.D. Va. 2006); Perino v. Cohen (In re Cohen),
107 B.R. 453, 455 (S.D.N.Y. 1989); Byrnes v. Byrnes, (In re Byrnes), 638 B.R. 821, 826–30
(Bankr. D.N.M. 2022); Priest v. Interco, Inc. (In re Interco, Inc.), 135 B.R. 359, 362 (Bankr.
E.D. Mo. 1991); and Vinci v. Town of Carmel (In re Vinci), 108 B.R. 439, 441–42 (Bankr.
S.D.N.Y. 1989)). It is far from clear that the phrase “personal injury tort” used in
28 U.S.C. §157(b)(5) and case law interpreting that phrase should inform the
understanding of §1328(a)(4)’s use of “personal injury to an individual”, especially
given the contextual differences: Section 1328(a)(4) limits the scope of the discharge
under chapter 13, excepting from that discharge debts for nondischargeable awards of
damages for willful or malicious injuries (i.e., invasion of legal rights) that cause
“personal injury” or death to individuals, whereas 28 U.S.C. §157(b)(5) allocates
responsibility for adjudicating certain claims, instructing that “[t]he 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.” There is no convincing textual reason to equate the type of personal injury
for which an award of damages may be excepted from discharge under §1328(a)(4) of
title 11 with Congress’s use of “personal injury” to qualify the types of torts to be heard
by the district court, rather than the bankruptcy court, under §157(b)(5) of title 28. And,
even in the §157 context, many courts have concluded that “personal injury” includes
non-physical harms. See S.V. v. Kratz, Nos. 12-C-705, 10-C-919, 2012 WL 3070979, at *2
(E.D. Wis. July 26, 2012) (“The term personal injury . . . means injury to the person of
another. The mental and emotional suffering and humiliation alleged by Plaintiff
constitute injuries to her person.”); In re Stewart, 649 B.R. at 760 (“The majority view,
though – and the most reasonable – lies in the middle, defining personal injury to
include ‘emotional and reputational harms’ but not business and financial injuries.”)
(quoting Adams, 478 B.R. at 486–87); Adams, 478 B.R. at 486-87 (noting that “many
courts” have adopted the middle approach); Adelson v. Smith (In re Smith), 389 B.R. 902,
907–08 (Bankr. D. Nev. 2008) (explaining why the middle view is the better view).
Courts in this circuit have also generally taken the middle view, reading “personal
injury tort” to include torts for non-bodily injury. See, e.g., S.V. v. Kratz, 2012 WL
3070979, at *2 (finding “personal injury tort” includes “mental and emotional suffering
and humiliation”); Lightfoot v. Bally Total Fitness Corp., No. 08 C 1733, 2011 WL 13383764,
at *2 (N.D. Ill. Jan. 6, 2011) (holding that discrimination and defamation claims are
“personal injury tort” claims under §157(b)(1)(B)); Rizzo v. Passialis (In re Passialis), 292
B.R. 346, 351–52 (Bankr. N.D. Ill. 2003) (finding slander to be a “personal injury tort”).7
Given all this, the court declines the debtor’s invitation to read “personal injury”
in §1328(a)(4) as limited to bodily injuries and to exclude psychological or emotional
injuries. At a minimum, Johnson’s claims against the debtor for intentional infliction of
emotional distress are ones for personal injuries that potentially give rise to an award of
damages made not dischargeable by §1328(a)(4).

7. “The Seventh Circuit has not weighed in except to hold that business torts are not personal injury torts,
implicitly rejecting the broad interpretation.” Stewart, 649 B.R. at 760, n.3 (citing Horwitz v. Alloy Auto.
Co., 992 F.2d 100, 103 (7th Cir. 1993)).
III
A
There is cause to modify the §362(a) stay to allow the district court to finally adjudicate
Johnson’s civil action against the debtor. Section 362(d) of the Bankruptcy Code allows this
court to modify §362(a)’s “automatic” stay on proceedings against a debtor when there
is cause to do so. 11 U.S.C. §362(d). As explained above, Johnson’s claims against the
debtor for intentional infliction of emotional distress damages are ones for personal
injuries that potentially give rise to an award of damages made not dischargeable by
§1328(a)(4), but only if Johnson obtains an award of damages before this court grants
the discharge. Currently the §362(a) stay is depriving Johnson of her ability to obtain
such an award. For that reason, the court concludes that there is cause to grant relief
from the automatic stay.
As In re Stewart aptly explains:

The procedural posture here is not novel: “a personal injury tort action . . .
initiated in State Court, interrupted by [a] chapter 13 filing[,] and . . .
followed by [a] nondischargeability adversary proceeding.” Dorris v.
Chacon (In re Chacon), 438 B.R. 725, 736 (Bankr. D.N.M. 2010). Neither is the
appropriate judicial response. Courts facing these circumstances commonly
“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.” Id. (citing cases); see also In re Cooney, No. 17-20071, 2017 WL
4119582, at *2 (Bankr. D. Kan. Sept. 14, 2017) (lifting stay to permit state
court action to continue); In re Abbott, No. 15-06822-5-SWH, 2016 WL
6892456, at *2 (Bankr. E.D.N.C. Nov. 22, 2016) (same); Miller v. Schaub (In re
Schaub), Nos. 11-23707 (DHS), 11-01811 (DHS), 2012 WL 1144424, at *5
(Bankr. D.N.J. Apr. 4, 2012) (same). There is every reason to follow the
common practice here.

649 B.R. at 763. For this reason, and because all of Johnson’s claims in the district court
(and here) arise of a common set of facts, the court will modify the §362(a) stay to allow
the district court to finally adjudicate all claims pleaded in Johnson v. Liukonen, No. 23-
cv-00543 (E.D. Wis.).
B
Because Johnson may succeed in obtaining a civil damages award that is not
dischargeable under §1328(a)(4), the debtor’s motion to dismiss Johnson’s adversary proceeding
must be denied. Liukonen has moved to dismiss Johnson’s adversary proceeding, Johnson
v. Liukonen, Adv. No. 25-02028 (Bankr. E.D. Wis.), pursuant to Federal Rule of Civil
Procedure 12(b)(6), which applies here by operation of Federal Rule of Bankruptcy
Procedure 7012. Liukonen argues that the adversary proceeding should be dismissed
because “even if all of the Complaint’s allegations are taken as true, Ms. Johnson’s
alleged claims would still be dischargeable in Mr. Liukonen’s bankruptcy” case. Adv.
Proc. No. 25-02028, ECF No. 4, at 2. For the reasons explained in part II, however, the
court concludes that Johnson has claims that, if liquidated before the debtor completes
his plan, may be determined to be not dischargeable under §1328(a)(4). Therefore, the
court will deny Liukonen’s motion to dismiss but will stay further proceedings in the
adversary proceeding to await the district court’s adjudication of Johnson’s claims in
the civil action.
C
This court recommends that the district court deny Johnson’s request to withdraw the
reference. District courts have “original . . . jurisdiction of all civil proceedings . . . related
to cases under title 11”, i.e., the Bankruptcy Code, including this one. 28 U.S.C. §1334(b).
The District Court for the Eastern District of Wisconsin, however, has referred all such
proceedings to this court. See 28 U.S.C. §157(a) (“Each district court may provide that
. . . any or all proceedings . . . related to a case under title 11 shall be referred to the
bankruptcy judges for the district.”) & Order of Reference (E.D. Wis. July 10, 1984)
https://www.wied.uscourts.gov/general-orders/order-reference (last visited June 4,
2025) (“[A]ll proceedings . . . related to a case under title 11 shall be referred to the
bankruptcy judges of this District.”). But a “district court may withdraw, in whole or in
part, any case or proceeding referred under this section . . . for cause shown.” 28 U.S.C.
§157(d).
Federal Rule of Bankruptcy Procedure 5011(a) provides that “[a] motion to
withdraw a case or proceeding under 28 U.S.C. § 157(d) must be heard by a district
judge.” As the district court has recognized, however, this court may make a report and
recommendation on a request to withdraw the reference. See Charmoli v. Aspen Am. Ins.
Co., No. 23-cv-321, 2023 WL 3984590, at *4 (E.D. Wis. June 13, 2023).
Johnson requests that the district court “withdraw the reference of this case,
returning it to the district court for trial.”8 In re Luikonen, Case No. 24-26139, ECF No. 62,
at 10. A “case” in bankruptcy parlance is the matter commenced by the filing of a
bankruptcy petition that creates a bankruptcy estate to be administered for the benefit
of creditors and in which certain debtors, including individuals who petition for
bankruptcy under chapter 13, may pursue a discharge of their debts. See 11 U.S.C.
§§301–303, 541(a), 1328; see also 28 U.S.C. §§157(a) & (b)(1), & 1334(a). In context,
Johnson does not appear to seek withdrawal of the reference of the debtor’s case, only
her adversary proceeding in which she repleads the claims against the debtor that are
already pending in the district court. Johnson offers no reason for the district court to
take over administration of the debtor’s chapter 13 case; she just wants it to try her
claims against the debtor.
Even so, this decision and order significantly undermines the justification for
withdrawing the reference of Johnson’s adversary proceeding, Johnson v. Liukonen, Adv.
Proc. No. 25-02028, because it modifies the stay to allow the district court to enter
judgment on Johnson’s claims against the debtor. If in presiding over Johnson’s district

8. While one might question whether Johnson’s motion states an adequate request to withdraw the
reference under 28 U.S.C. §157(d) and Federal Rule of Bankruptcy Procedure 5011 (see ECF No. 43),
Johnson made clear at the March 18, 2025 hearing and in a subsequent supportive filings that she does
so request (see ECF Nos. 56, 59, & 62, at 10).
court case Judge Duffin concludes for reasons of administrative efficiency or otherwise
that Johnson should be allowed to present evidence in support of her claim that any
damages award the debtor is adjudged to pay her is a debt that is not dischargeable
under §1328(a)(4), he can certainly do so. The Bankruptcy Code does not require that
the bankruptcy court make that determination, unlike determinations that debts are not
dischargeable under subsections (2), (4), or (6) of §523(a). See 11 U.S.C. §523(c)(1). Judge
Duffin—having the benefit of presiding over the parties’ litigation through judgment—
might well be best positioned to decide whether any damages award is “as a result of
willful or malicious injury by the debtor that caused personal injury” to Johnson, within
the meaning of §1328(a)(4). Alternatively, Judge Duffin might conclude that even if
Johnson obtains a damages judgment in the civil action before the debtor receives a
discharge, the goals of just, speedy, and inexpensive adjudication are best served by
leaving the bankruptcy court to determine in Johnson’s adversary proceeding whether
that award is not dischargeable under §1328(a)(4)—a question well within the
bankruptcy court’s bailiwick. Because this court’s modification of the §362(a) stay
seemingly affords Judge Duffin the authority to adjudicate both Johnson’s damages
claims against the debtor and her contention that any damages award is not
dischargeable, there is no cause for the district court to withdraw the reference of the
adversary proceeding. This court therefore recommends that the district court deny
Johnson’s request to withdraw the reference of the adversary proceeding, which this
court will stay pending the outcome of Johnson’s case against the debtor in the district
court.
IV
A
For the reasons stated above in parts I though III.A–B, it is ORDERED:
1. The stay imposed by 11 U.S.C. §362(a) is modified to allow Stephanie Johnson to
continue the litigation of her claims against the debtor in the United States
District Court for the Eastern District of Wisconsin and for that court to
adjudicate all claims alleged in Johnson v. Liukonen, No. 23-cv-00543 (E.D. Wis.);
this modification of the §362(a) stay is effective upon the entry of this order and
is not itself stayed by the pendency of the request to withdraw the reference, see
Fed. R. Bankr. P. 5011(c).
2. James Liukonen’s motion to dismiss Johnson v. Liukonen, Adv. Proc. No. 25-02028,
is denied, and that adversary proceeding is hereby stayed pending the
adjudication by the United States District Court for the Eastern District of
Wisconsin of all claims alleged in Johnson v. Liukonen, No. 23-cv-00543 (E.D.
Wis.), or the district court’s withdrawal of the reference.
3. Unless the district court withdraws the reference of Johnson’s adversary
proceeding, Johnson must file a letter in this court within 10 days of the entry of
a final determination in Johnson v. Liukonen, No. 23-cv-00543 (E.D. Wis.),
informing this court of the result of that action and requesting that this court
conduct further proceedings in the adversary proceeding, if appropriate.
B
For the reasons stated in part III.C, this court reports and recommends that the
district court deny Johnson’s request to withdraw the reference, either limited solely to
her adversary proceeding or including both that proceeding and Liukonen’s chapter 13
case.
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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11068060. Public record. Not legal advice.