Petition for Writ of Certiorari — Brown v. Sanford

Supreme Oourt, U.S.

FILED

96 538 0CT 2 19%

NO. ____OSFICe OF THE CLERK

In the

Supreme Court of the United States

October Term 1996

KAY BROWN, Petitioner

VS.

TOMMIE RAY SANFORD, INDIVIDUALLY

AND DBA TOMMIE RAY'S, Respondent

On Petition for a Writ of Certiorari

To the United States Court of Appeals

For the Fifth Circuit

PAR ARR RRRAA RAR ARAL AD AAD EDD DD

PETITION FOR A WRIT OF CERTIORARI

PARR RRR ARRAS ARRAS ERE R EEA

Mynde S. Eisen

State Bar No. 06503950

Law Office of Mynde S. Eisen, P.C.

P. O. Box 630749

Houston, Texas 77263

(713) 266-2955

(713) 266-3008 (facsimile)

ATTORNEYS FOR PETITIONER

KAY BROWN

~

ae,

oe -

QUESTIONS PRESENTED FOR REVIEW

1. | WHETHER A DEBT WHICH AROSE FROM

A JUDGMENT AWARDED UNDERA STATE'S DRAM SHOP

ACT AGAINST THE SELLER, PROVIDER AND/OR SERVER

OF ALCOHOLIC BEVERAGES SHOULD BE EXEMPT

FROM DISCHARGEABILITY PURSUANT TO

11 U.S.C. § 523(a)(6).

LIST OF ALL PARTIES

PETITIONER:

Counsel for Petitioner:

Counsel for Respondent:

Kay Brown

Mynde S. Eisen

Law Office of Mynde

Eisen, P.C.

P. O. Box 630749

Houston, TX 77263

(713) 266-2955

(713) 266-3008 (Fax)

RESPONDENT:

Tommie Ray Sanford,

Individually and dba

Tommie Ray's

Don J. Knabeschuh

Parker & Knabeschuh

55 Waugh Drive,

Suite 601

Houston, TX 77007

(713) 868-1212

(713) 868-1575 (Fax)

QUESTIONS PRESENTED FOR REVIEW ................:0008

a UI i ci ss othcanawunebetnncebubdnsevebenioctenen

PN TIRED sesechcidecscedsssalel ledastbvinesnsecsanssecessen

TABLE OF CITED AUTHORITIES. ............cccccccccscsessessessees

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STATUTORY PROVISION INVOLVED ............:cccceeeeee

STATEMENT

I. STATEMENT OF FACTS. ...........:.ccceeceeeees

il. FEDERAL JURISDICTION ...............0008

iH. PROCEEDINGS BELOW ...............000065

REASONS FOR GRANTING THE PETITION ................

I. JUDGMENTS UNDER STATE DRAM

SHOP ACTS SHOULD BE EXCEPTED

FROM DISCHARGE nw. ..cccscsscesssscccssseeess

A. Claims Arising Under Violation of a

State's Dram Shop Act Are Analogous

to Claims that are Nondischargeable

Under 11 U.S.C. § 523(a)(9) ............

B. Negligent Actions Can Give Rise to

Willful and Malicious As Defined by

11 U.S.C. § SZS(aNG) .........cccrccesreeess 9

C. Dram Shop Acts Place Primary Liability

On the Provider of the Alcoholic

PME sietantrhtincscentecsnctnkcehcaindoninin 11

Hl. The Decision of the Court of Appeals is

VOT IIOU. ocsncevianceserssdvtcbedsvertebvoeescabieldalied 12

Hil. This Case Is Important ..................cceee 17

MA PUTLAE sicbiicishveidiniatrcutaiicghesonascannadinkaisetacivbasennaia 19

Cases

Chrysler Credit Corp. v. Perry Chrysler

Plymouth, Inc., 783 F. 2d 480 (5th Cir.

be ee EAS AS RRS BRD 3S 1 Lt la ORS a 9

Fuller v. Maxus Energy Corp.

841 S.W.2d 881 (Tex. Civ. App. — Waco 1992, no writ) ... 8

Garner v. Lehrer

36 F. Srd 677 (Sth Cir. 1905)................cccccoeses 15, 16

Impulsora Del Territorio Sur., S.A. v. Cecchini

780 F.2d. 1440, (9th Cir.

UN aaciteadiitsnie taille ckcsas cee <ominckets sabedbdombobccaneicaktle 9

In re Adams

761 F.2d 1422 (Sth Cir. 1985) ..................c.cc00000 6,7

In re Austin

36 B.R. 306 (Bankr. N.D. Tenn.

TPE GisivbcckbicG ecb nasi aie 14, 15

In re Callaway

41 B.R. 311 (Bankr. E.D. Penn.

Ba pre eee ma ee Sch eh ant oe eB alr Bl lp OO 7

In re Cloutier

33 B.R. 18 (Bankr. D. Me.

BOD vinctls nae ieaend Setbclich ses sendcvnaaacnuia cca ceaees 8

In re Dean

79 B.R. 659 (Bankr. N.D.

fg Rr ME votes eh Fr RC A 10, 13

In re Eggers

51 B.R. 452 (Bankr. E.D. Tenn.

TEED ssccinsidmnslonnsestlbtiatabastneabccieneascuamenagcthianl 14, 15

In re Franklin

726 F.2d 606 (10th Cir. 1984) ..0000... eee 10

In re Greenwail

21 B.R. 419 (S.D. Ohio

TEUISEER sininvancbinkes aceleialbhetentansieeiaeksimaiiedl ie einen 7

In re Horne

46 B.R. 814 (Bankr. N.D. GA

TODD sscsssonsesnasensivsunhidhospithiesibiadciasnbdiatheD ieee 14,15

In re Keller

106 B.R. 639 (9th Cir.

TIPUED ancscvccccccnaikshnpisbscndtesoettitendcadubabcbuiuceriee 9, 10, 17

In re Pineau

149 B.R. 522, (Bankr. D. Me.

1992), rev'd on other grounds,

149 B.R. 239 (D. Me. 1993) .......... eee 13, 15

In re Quezada

716 F.2d 427 CGR CR, TRGB) vasccccccesccnsccaiatainxessecciss 9

In re Rex

150 B.R. 505 (Bankr. D. Mass. 1993)............ 14, 15

vi

ery A

In re Strauss

99 B.R. 396 (Bankr. N.D.

RS RRS Saas

In re Taneff

901 B.R. 501 (W.D.N.Y 1996)

In re Wooten

30 B.R. 357 (Bankr. N.D. Ala.

PSR ca CM

Parklane Hosiery Co. v. Shore

439 U.S. 322, 9 S. Ct. 645

) LORI SEGNS SaaS eae

Perkins v. Scharffe

817 F. 2d 392 (6th Cir. 1987),

cert. denied, 484 U.S. 853

PRUNE P aitirsjpiiacin cal tatabessscesves

Sewell v. Smith

819 S.W.2d 565 (Tex. Civ. App.—

Dallas 1991) aff'd 858 S.W.2d 350

EE ESE ROUL en tress Mesa ROPE PTD

vii

SU OO a

44 U5.C. § SEONG) isiecnnccnrcn

414 B.C. S SLND) siincisincsocesssoss

USE OU

USC. 618i...

SUSE Bt oo

Tex. Alco. Bev. Code § 2.01

(Vernon 1992)..............cccceeee

Tex. Alco. Bev. Code § 2.02

VOTTION CTE Pac cscisecsscsuisas chet

viii

Saisiniesiinaditvin i, iv, 4, 6, 7,

pedaieeeneteayeneds 4, 3, #, 8,

11, 12, 18

Pcanbhbebicestin 2,8, 11, 13

14, 16

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 1996

KAY BROWN, Petitioner

v.

TOMMIE RAY SANFORD, INDIVIDUALLY

AND DBA TOMMIE RAY’S, Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Kay Brown respectfully petitions for a writ of certiorari

to review the judgment of the United States Court of Appeals

for the Fifth Circuit.

OPINIONS BELOW

The opinion of the Court of Appeals for the Fifth Circuit

is unreported. (App. 1-4). The opinion of the United States

District Court (App. 5-10) and the judgment of the Bankruptcy

Court (App. 11-12) are unreported. The bankruptcy findings

were made on the record and are provided in the Appendix.

(App. 13-20). The judgment from the 295th Judicial District

Court of Harris County, Texas is unreported and is set forth

in the Appendix. (App. 21-24).

JURISDICTION

The Court of Appeals entered its judgment on July 5,

1996. The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTORY PROVISION INVOLVED

# 11 U.S.C. § 523 - Due to its length, the entire statute

is reprinted in the Appendix pursuant to Supreme

Court Rule 14. See App. 25-33.

2. Tex. Alco. Bev. Code §§ 2.01, 2.02 Due to its length,

the entire statute is reprinted in the Appendix pursuant

to Supreme Court Rule 14. See App. 34-35.

STATEMENT

I. STATEMENT OF FACTS

On October 2, 1990, Petitioner Kay Brown

(“Petitioner”) was seriously injured when her automobile was

struck by an automobile being driven by Ed Reasoner

(“Reasoner"). The accident occurred at approximately

9:45 p.m.

At the time of the accident, Reasoner was legally

intoxicated. Prior to the accident, Reasoner had been drinking

continuously at Respondent Tommie Ray's for a period of

over 10 hours.

)

Respondent is Tommie Ray Sanford, individually, and

Tommie Ray Sanford in his capacity as the bar Tommie Ray's

(“collectively Respondent”). Respondent provided and sold

alcoholic drinks to Reasoner' at a time when Respondent

knew Reasoner was intoxicated and presented a danger to

himself and others.

Respondent further testified that he did not carry any

type of liability insurance and made no provision to have funds

in case anyone was injured due to Respondent's negligence

and/or violations of the Texas Dram Shop Act. Respondent

also admitted that it was his responsibility as the owner of

the bar and provider of the liquor to supervise his employees.

Respondent Tommie Ray Sanford still owns the bar.

Petitioner sued Respondent and Reasoner in the

295th Judicial District Court of Harris County, Texas. On

April 2, 1993, Petitioner was awarded a judgment against

Respondent by the 295th Judicial District Court. The 295th

Judicial District Court found that Respondent was liable for

providing or selling alcoholic beverages to an obviously

intoxicated person pursuant to Tex. Aico. Bev. Code Ann.

§ 2.01 et.seg. (Vernon 1992) (the “Texas Dram Shop Act’).

The 295th Judicial District Court further found that

Respondent's violation of the Texas Dram Shop Act was the

proximate cause of Petitioner's injuries.

‘Respondent argued that his employees actually

served the drinks, but for the purposes of liability under the

Texas Dram Shop Act, Tex. Aico. Bev. Code § 2.01 ef. seq.

(Vernon 1992), Respondent is liable because he provided

the alcoholic beverages for sale under his liquor license.

3

Ee ee a ee

ll. FEDERAL JURISDICTION

This case arose under Title 11 of the United States

Code. The Bankruptcy Court's decision was appealed to the

District Court pursuant to 28 U.S.C. §§ 157 and 158(a). The

District Court affirmed the Bankruptcy Court and this decision

was appealed to the Fifth Circuit Court of Appeals pursuant

to 28 U.S.C. §§ 157 and 158(a).

lil. PROCEEDINGS BELOW

On April 29, 1993, Respondent filed a voluntary

petition for relief under Chapter 7 of Title 11 of the United

States Code (the “Bankruptcy Code”). On July 20, 1993,

Petitioner timely brought a cause of action seeking to hold

Respondent's debt to Petitioner nondischargeable pursuant

to 11 U.S.C. § 523(a)(6).

After a trial on the merits, the Bankruptcy Court found

that Reasoner went to Respondent Tommie Ray's intending

to and succeeding to get drunk. The Bankruptcy Court also

found that Respondent Tommie Ray's, served Reasoner

alcoholic beverages and that Reasoner was drunk at the time

the drinks were being served. However. the Bankruptcy Court

found that Respondent Tommie Ray Sanford, in his individual

capacity, did not serve the drinks to Reasoner, therefore the

liability was only vicarious and the debt to Petitioner was

dischargeable..

The Bankruptcy Court granted the Final Judgment in

favor of Respondent which was entered of record on

January 25, 1996. -Petitioner perfected her appeal to the

United States District Court on June 22, 1994. The United

States District Court affirmed the Final Judgment of the

Bankruptcy Court, and Petitioner perfected her appeal to the

United States Court of Appeals for the Fifth Circuit. The Fifth

Circuit issued its opinion affirming the holdings of the District

Court and the Bankruptcy Court on July 5, 1996.

REASONS FOR GRANTING THE PETITION

This Petition for Writ of Certiorari should be granted

because the decision of the Fifth Circuit Court of Appeals

involves an important question of federal law that has not

been and should be settled by this Court.

I. JUDGMENTS UNDER STATE DRAM SHOP ACTS

SHOULD BE EXCEPTED FROM DISCHARGE

The question presented involves. the

nondischargeability of debts which arise from judgments

pursuant to a Dram Shop Act. This issue has not been

addressed, by any Bankruptcy Court, United States District

Court or this Court that has been reported, and the Bankruptcy

Code is silent on this issue.

The Bankruptcy Code specifically addresses the

nondischargeability of debts which arise from injuries cause

by drunk drivers, but the debts that arise from the actions of

those who help the drunk become more intoxicated are not

specifically dealt with. The debts that arise from violations of

a state’s Dram Shop Act should receive the same treatment

as those debts that arise from the injuries caused by drunk

drivers.

A. Claims Arising Under Violation of a State’s

Dram Shop Act Are Analogous to Claims

that are Nondischargeable Under 11 U.S.C.

§ 523(a)(9)

Prior to the enactment of 11 U.S.C. § 523(a)(9),

judgments or debts caused by injuries from intoxicated drivers

were held nondischargeable under 11 U.S.C. § 523(a)(6).

See in re Adams, 761 F.2d 1422 (9th Cir. 1985). At the time

that Congress enacted 11 U.S.C. § 523(a)(9), most of the

existing dram shop statutes did not exist. For example, the

Texas Dram Shop Act, the statute at issue in the case at bar,

was not enacted until 1987, and has not, prior to the present

case, been challenged in the Bankruptcy Court in any type

of reported opinion.

The policy behind holding debts arising out of injuries

by drunken drivers nondischargeable involves the voluntary

nature of the act by the driver. See Adams, 761 F.2d 1422.

Although this act may be considered one of negligence, the

“voluntary acts of drinking and driving while intoxicated

constitute conduct sufficiently intentional to support a finding

of willfulness and malice as contemplated by 11 U.S.C.

§ 523(a)(6) . . .." Adams, 761 F.2d at 1427. See also In re

Greenwall, 21 B.R. 419, 421 (S.D. Ohio 1982) (liabilities

incurred as a result of drunk driving held nondischargeable

because the “voluntary drinking by defendant constituted an

intentional act sufficient to support the conclusion that the

injury caused by the defendant was willful and malicious”);

In re Callaway, 41 B.R. 311, 346 (Bankr. E.D. Penn. 1984)

(voluntary act of drinking and driving in an intoxicated state

is sufficiently intentional and deliberate to make debt

nondischargeable); /n re Wooten, 30 B.R. 357, 358 (Bankr.

N.D. Ala. 1983) (debt is nondischargeable because act of

drinking is intentional act).

The reasoning that was applied in Adams and its

progeny should be applied in cases involving judgments

arising from Dram Shop Act violations. The voluntary act of

serving an already intoxicated person is sufficiently intentional

and deliberate to make the debt nondischargeable.

Under a Dram Shop Act, a person who has provided,

sold or served alcoholic beverages to an already intoxicated

person who presents a clear danger to himself or others can

be liable for the injuries caused by the intoxicated person.

See e.g., Tex. Alco. Bev. Code § 2.02. The voluntary act of a

debtor in providing, selling or serving alcoholic beverages to

a person whom he knows is obviously intoxicated to the extent

that person presents a clear danger to himself and others

which results in injury should certainly fall within the willfulness

and malice as contemplated by 11 U.S.C. § 523(a)(6).

Dram Shop statutes provide exclusive statutory

remedies and usually preclude any remedy for a common

law cause of action under negligence. See Tex. Alco. Bev.

Code § 2.01 et. seq.; Sewell v. Smith, 819 S.W.2d 565 (Tex.

Civ. App.—Dallas 1991) aff'd 858 S.W.2d 350 (Tex. 1993)

(Although the Texas Supreme Court implied that the statute

was one of negligence, Sewell only dealt with the comparative

negligence of determining liability between the provider of

the alcoholic beverages and the intoxicated person. Sewell

did not deal with the liability between the provider of the

alcoholic beverages and innocent third parties injured by the

intoxicated person.) See a/so Fuller v. Maxus Energy Corp..,

841 S.W.2d 881 (Tex. Civ. App. — Waco 1992, no writ).

Holding that violations of state Dram Shop Acts would

be consistent with the public policy behind the enactment of

the Dram Shop Acts. The voluntary act of an entity or person

who willfully provides for sale or sells beverages under his

liquor license to a person whom he knows is already

intoxicated should not be able to absolve his intentional act

by filing bankruptcy. See /n re Cloutier, 33 B.R. 18, 20 (Bankr.

D. Me. 1982) (debt resulted from driving while intoxicated

held nondischargeable because substantial certainty of injury

resulted from judgment debtor's drinking gave rise to

inference of intent to injure).

B. Negligent Actions Can Give Rise to

Willful and Malicious As Defined by 11

U.S.C. § 523(a)(6)

Although, the argument may be made that a person's

violation under a Dram Shop Act is merely one of negligence,

this is not sufficient to take the debtor entirely out of the willful

and malicious standard that is set forth in 11 U.S.C.

§ 523(a)(6). It is the nature of the action that will determine

whether it meets the willful and malicious standard of 11

U.S.C. § 523(a)(6).

Willful means deliberate or intentional. Malicious

means a conscious disregard of one's duties or without just

Cause or excuse and does not require ill will or specific intent

todo harm. Chrysler Credit Corp. v. Perry Chrysler Plymouth,

Inc., 783 F. 2d 480 (Sth Cir. 1986); in re Quezada, 718 F.2d

121 (5th Cir. 1983); Perkins v. Scharffe, 817 F. 2d 392 (6th

Cir. 1987), cert. denied, 484 U.S. 853 (1987). The standard

for determining whether a debt should be discharged is

“[w]hen a wrongful act, . . . done intentionally, necessarily

produces harm and is without just cause or excuse, it is ‘willful

and malicious’ even absent proof of specific intent to injure.”

In re Keller, 106 B.R. 639, 643 (9th Cir. 1989) (citing /mpulsora

Dei Territorio Sur., S.A., v. Cecchini, 780 F.2d. 1440, 1442-

1443 (9th Cir. 1986). Courts have held negligent actions in

malpractice cases to be nondischargeable if certain elements

are present. See Keller, 106 B.R. 639.

The requisite elements that need to be found are: 1)

that the debtor know, expected or should have known, form

an objective perspective, that his conduct was certain or

almost certain to cause harm; 2) the debtor’s conscious

disregard of his duties without just cause or excuse in a

manner that he should have known presented a risk of harm;

and 3) the debtor's willingness to risk a creditor's loss due to

9

SESE ee a ae ee oe

the prospect of personal benefit. Keller, 106 B.R. at 644.

See also In re Strauss, 99 B.R. 396, 399-400 (Bankr. N.D. Ill.

1989) (debtor's knowledge that an act could cause

foreseeable injury, but refuses to take steps to prevent same

is malicious. Failure to procure worker’s compensation

insurance is malicious injury). These elements give rise to

subjective intent and implied malice. When intent and malice

are present, even though the state court judgment is one of

negligence, the debt should be nondischargeable. See /n re

Dean, 79 B.R. 659, 662 (Bankr. N.D. Tex. 1987); See a/so

Scharffe, 817 F.2nd 392; In re Franklin, 726 F.2d 606 (10th

Cir. 1984).

Like the malpractice cases and the cases involving

injuries caused by drunk drivers, debts arising out violations

of state Dram Shop Acts should be nondischargeable. The

voluntary act of the debtor providing or selling alcoholic

beverages to a person whom he knows is obviously

intoxicated which results in an injury should certainly fall

within the willfulness and malice as contemplated by 11 U.S.C.

§ 523(a)(6). The voluntary act of an entity or person who

willfully provides for the sale or sells alcoholic beverages

under his liquor license should not be absolved from all liability

simply because he personally did not serve the drink to the

already intoxicated person.

Just as the intoxicated person cannot relieve its !iability

for injuries he causes by filing Chapter 7, neither should the

person who provided the liquor to the intoxicated person be

able to absolve his liability. The Bankruptcy Code specifically

exempts debts caused by injuries from intoxicated drivers.

See 11 U.S.C. § 523(a)(9). The Bankruptcy Code should

also exempt from discharge the debts of those individuals

who provided additional alcoholic beverages to the already

intoxicated person.

10

” a a

On the Provider of the Alcoholic

Beverages

Dram Shop Acts, such as the Texas Dram Shop Act

are not statutes of vicarious or imputed liability, as both the

Fifth Circuit and the Bankruptcy Court interpreted, but rather

are direct liability statutes. The statutes place direct liability

on the person who provides, sells or serves the liquor. See

e.g., Tex. Alco. Bev. Code § 2.02. Therefore, even if the debtor

did not actually serve the drink but provided such beverages

for sale under his liquor license, he is directly responsible for

the injuries caused. See Tex. Alco. Bev. Code § 2.02.

A provider of alcoholic beverages is defined as a

person who sells or serves an alcoholic beverage under

authority of a license or permit or someone who otherwise

sells an alcoholic beverage to an individual. See e.g. Tex.

Alco Bev. Code § 2.01.

Therefore, a person who violates a state Dram Shop

Act, voluntarily and intentionally provides for the sale of

alcoholic beverages to an already intoxicated person which

causes injuries to an innocent third party. This person should

not be able to walk away from his liabilities simply by filing a

proceeding in bankruptcy and claiming that he did not actually

serve the drinks to the intoxicated person. To reach this

conclusion flies in the face of the public policy behind the

Dram Shop statutes.

11

il. The Decision of the Court of Appeals is

Erroneous

The Fifth Circuit affirmance of the Bankruptcy Court's

finding that Sanford's debt should be dischargeable cause

he 1) “did not personally sell any drinks to Reasoner,” and 2)

that “Sanford’s actions, because he had no personal

involvement, were not willful, but rather, at worst negligent”

(App. at 3-4) is erroneous for several reasons.

First, the Bankruptcy Court misinterpreted the liability

under the Texas Dram Shop Act. The Texas Dram Shop Act

put direct liability upon Respondent in his capacity as Tommie

Ray's for providing and selling the liquor, even if he did not

serve the liquor. Thus, contrary to the Bankruptcy Court's

interpretation, this was not a case of vicarious liability. See

Section IC supra.

Second, negligence in certain circumstances such as

in drunk driving cases and malpractice actions can be willful

and malicious for the purposes of 11 U.S.C. § 523(a)(6).

When the requisite elements that give rise to a subjective

intent and implied malice, it is sufficient to bar the

dischargeability of the debt under 11 U.S.C. § 523(a)(6). See

Section IB supra.

The 295th Judicial District Court of Harris Count found

that Tommie Ray Sanford dba Tommie Ray’s was liable to

Appellant because he provided or sold the alcoholic

beverages to an already intoxicated person. (App. at 21-22)

Based upon the fact that Respondent held the liquor license

for Tommie Ray's, the 295th Judicial District Court awarded

judgment for Petitioner against Respondent, individually and

doing business as Tommie Ray's. (App. 21-24)

12

aati ata ii

In the present case, Respondent filed a Chapter 7

bankruptcy individually and for his dba, Tommie Ray’s.

Respondent testified that he never supervised any of his

employees even though he knew it was is responsibility not

to serve or sell alcoholic beverages to already intoxicated

) persons, and that he did not carry any liability insurance to

cover any risk. Further, the 295th Judicial District Court found

him primarily liable for selling alcohol beverages to Reasoner,

which was the proximate cause of Petitioner's injuries. These

findings alone give rise to the intent and malice that would

make this case nondischargeable under the standards in

similar cases. See /n re Pineau, 149 B.R. 522, 527 (Bankr.

D. Me. 1992), rev'd on other grounds, 149 B.R. 239 (D. Me.

1993); Strauss, 99 B.R. at 399-400; Dean, 79 B.R. at 662.

The Fifth Circuit found no error in the Bankruptcy

Court's finding that Sanford did not personally sell any drinks

to Reasoner; therefore his actions were only vicarious and

not willful and malicious under 11 U.S.C. § 523(a)(6). This

| analysis ignores the plain intent of the Texas Dram Shop Act

) which placed direct liability on Sanford as the owner of

Tommie Rays for providing the liquor for sale to Reasoner.

See Tex. Alco. Bev. Code § 2.02.

There is no case law on point which has interpreted

a Dram Shop statute as to whether the liability is imputed

and whether a violation under the statute is willful and

malicious as defined by 11 U.S.C. § 523(a)(6). The cases

that were relied on by the Bankruptcy Court and the District

Court to show that imputed or vicarious liability cannot

necessarily give rise to the malicious and willful standard

required to hold a debt nondischargeable are all

distinguishable from the facts in the present case. These

cases are all distinguishable because in all of the cases, either

no judgment had been rendered in the state court against

13

the debtor, or the judgment which was rendered in the state

litigation against the debtor was based solely on a statute

that imputed only financial responsibility and not direct liability

against the debtor. See e.g. /n re Austin, 36 B.R. 306 (Bankr.

N.D. Tenn. 1984) (No state judgment existed. Bankruptcy

court found no evidence that minors were being served and

state statute being sued under only placed financial

responsibility on bar for serving the alcohol); /n re Rex, 150

B.R. 505 (Bankr. D. Mass. 1993) (State Court judgment was

rendered solely upon a theory of vicarious liability flowing

from the actions of debtor’s sons and no attempt to show

that debtors had direct liability); In re Horne, 46 B.R. 814

(Bankr. N.D. Ga 1985) (underlying basis was financial

responsibility for parent when son was driving while

intoxicated and no independent liability found); /n re Eggers,

51 B.R. 452 (Bankr. E.D. Tenn. 1985) (liability imputed to

defendant's mother because of financial responsibility, but

no independent cause of action against mother debtor).

The United States District Court relied heavily on /n

re Taneff, 901 B.R. 501, 503 (W.D.N.Y. 1996). However, in

Taneff, the debtor did not specifically remember selling

alcoholic beverages to the injured party. Additional, in Taneff,

there was no existing Dram Shop statute or a state court

finding that found the debtor in Taneff directly liable as in the

case at bar. Unlike the statutes in the cases cited above, the

Texas Dram Shop Act provided direct liability on Respondent

for his act of providing and selling alcoholic beverages to

Reasoner. See Tex. Alco. Bev. Code § 2.02. Under the Texas

Oram Shop Act, Respondent had the responsibility to ensure

that Respondent Tommie Ray’s, his dba, did not provide for

sale or sell liquor to an already intoxicated person. As the

holder of the license or permit, Respondent had the

responsibility and ability to ensure that when he provided the

alcoholic beverages for sale, they did not get sold to an

14

already intoxicated persons. Despite Respondent's direct

responsibility, he chose not to exercise this responsibility by

failing to secure liability insurance and failing to properly

supervise his employees and see that they did not sell or

serve liquor to already intoxicated person. See Pineau, 141

B.R. at 527.

Also, unlike the facts in Austin, Rex, Horne, or Eggers,

where the liability of the Debtors was caused solely by the

act of another, Respondent's act of providing the alcoholic

beverages for sale in the present case was the proximate

cause of Petitioner's injuries. See App. 21-22. Although

Debtor did not specifically serve the drinks, he was directly

liable for providing for the sale the liquor that was served. It

is this act which the Bankruptcy Court should have evaluated

and not the liability of the Respondent.

Further, unlike Taneff, a judgment in this case had

already been entered against Respondent. The Bankruptcy

Court went beyond this State Court Judgement to determine

the basis of liability. The Fifth Circuit's affirmance of this

finding is directly contrary to its findings in Garner v. Lehrer,

56 F.3d 677, 677 (Sth Cir. 1995). See also Parklane Hosiery

Co. v. Shore, 439 U.S. 322, 9 S. Ct. 645 (1978). The Fifth

Circuit should not have affirmed the Bankruptcy Court's

finding of liability other than to determine whether the actual

act of providing the alcoholic beverages for sale constituted

a willful and malicious injury to Petitioner. See Parklane

Hosiery Co., 439 U.S. at 326, 9 S. Ct. at 648; Garner, 56

F.3rd 677.

The Fifth Circuit also erred by allowing the Bankruptcy

Court to go behind the State Court judgment to render its

finding that Respondent did not individually serve the drinks

to Reasoner. Liability had already be established in the state

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lawsuit and was barred from relitigation by collateral estoppel.

See Parkiane Hosiery Co., 439 U.S. at 326, 9 S.Ct. at 648;

Gamer, 56 F. 3rd 677.

Lastly, the Fifth Circuit erred in affirming the

Bankruptcy Court's findings because the Respondent in this

case is not only Tommie Ray Sanford individually, but Tommie

Ray's the dba which provided for and sold the alcoholic

beverages to Reasoner when he was already intoxicated.

Tommie Ray's was merely a dba and there is no corporate

shield for Respondent Tommie Ray Sanford to hide behind.

By finding only vicarious liability, the Bankruptcy Court and

the District Court absolved Respondent of all of his liability

for providing for the sale of alcoholic beverages to an already

intoxicated person in direct contravention of the Texas Dram

Shop Act. See Tex. Alco Bev. Code § 2.02.

Additionally, Respondent was even more culpable for

his acts of providing and selling alcoholic beverages because

Respondent did not carry liability insurance for his dba.

Respondent knew he had direct liability for selling and

providing alcoholic beverages to the general public, but

intentionally did not carry any type of insurance or provide

any funds to cover any risk. Now he is able to discard all risk

by filing for Chapter 7 bankruptcy.

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lll. This Case ts important

Public policy dictates that owners of establishments

that serve alcoholic beverages should be aware of the

dangers imposed by providing such beverages to an already

intoxicated person. The enactment of the Dram Shop statutes

placed the responsibility on business owners to help insure

the safety of the streets from intoxicated drivers. When a bar

owner, such as Respondent in this case, intentionally sells

alcoholic beverages to a person that he knows is already

intoxicated he should not be able to discharge this

responsibility merely by filing a Chapter 7 proceeding. In

the present case, the Respondent is even more culpable

because of his failure to carry liability insurance and to

supervise his employees from serving the alcoholic

beverages he provided. Public policy dictates that these types

of debts should be nondischargeable.

A person who willfully provides alcohol to an already

intoxicated person is no different that the drunk person who

voluntarily drives the car. The risk to third parties is the same.

When a wrongful act is done intentionally without just cause

or excuse, and such act produces harm, then the act is willful

and malicious. Keller, 106 B.R. at 643.

In the present case, the requisite intent and implied

malice are present. Respondent provided alcohol to

Reasoner when Reasoner was obviously intoxicated to the

extent that Reasoner presented a clear danger to himself

and others, and the intoxication of Reasoner was the

proximate cause of Petitioner's injuries. Therefore, the debt

of Respondent to Petitioner's should be held to be

nondischargeable pursuant to 11 U.S.C. § 523(a)(6).

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Accordingly, the Court is respectfully requested to

grant the petition and reverse the judgment of the Court of

Appeals.

CONCLUSION

. At first blush, this case would appear to rest on a

very special set of facts. However, unless this Court decides

the dischargeability of debts which arise out of the Dram Shop

statutes, restaurants and bars may begin to drop their liability

insurance because they know that debts will be able to be

discharged in bankruptcy. This would fly in the face of the

public policy behind the enactment of the Dram Shop statutes,

the “fresh start” policy behind the Bankruptcy Code, and the

public awareness to stop accidents resulting from drunk

drivers. Only this Court can reverse the erroneous

interpretation of the Fifth Circuit and the Bankruptcy Court of

the dischargeability of the debt that arose from the Texas

Dram Shop Act.

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Therefore, Petitioner respectfully requests the

Court to grant her petition for a writ of certiorari to the

United States Court of Appeals for the Fifth Circuit.

Respectfully submitted,

LAW OFFICE OF MYNDE EISEN,

P.C.

By: Drip d lidine

Mynde S. Eisen

State Bar No. 06503950

P. O. Box 630749

Houston, Texas 77263

(713) 266-2955

(713) 266-3008 (Fax)

ATTORNEYS FOR PETITIONER

KAY BROWN

e:\jamison\brown\appeal\certiora bn

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