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Reyes v. McCarley12/30/2004
ry.
Indeed, the Walker court stated: "It is well established that [§ 524(e)] permits a creditor to bring or continue an action directly against the debtor for the purpose of establishing the debtor's liability when, as here, establishment of that liability is a prerequisite to recovery from another entity." In re Walker, supra, 927 F.2d at 1142.
In In re Jet Florida systems, Inc., supra, 883 F.2d at 975, the Fifth Circuit Court of Appeals emphasized that the fresh start policy is not intended to provide a method by which insurers can escape their obligation "based simply on the financial misfortunes of the insured."
Other courts have pointed out that the language of section 524 does not specifically require that the postdischarge injunction be lifted or modified for such an action to proceed. See Taff v. Baker, 861 P.2d 341, 345 (Okla. Ct. App. 1993); Lubermen's Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624, 625, 630 N.Y.S.2d 1003, 1004 (1995) (noting that state courts retain the power to determine the effect of a discharge in bankruptcy where a tort claimant seeks to proceed against a discharged debtor only for the purpose of recovering against an insurer).
Defendant also maintains that he would be denied a fresh start because he may be required to bear some incidental costs by participating in the litigation, including the potential for lost wages if he attends the trial on a day he would otherwise be working. The Walker court indicated that these types of incidental litigation costs do not interfere with a debtor's fresh start, and we therefore reject this contention. In re Walker, supra, 927 F.2d at 1143.
Thus, given plaintiff's stated acknowledgement here that she does not seek recovery against defendant's personal assets and will pursue the action only to the extent of the automobile liability insurance proceeds, we conclude that the trial court abused its discretion in dismissing the action for failure to prosecute based on plaintiff's failure to secure an order from the bankruptcy court modifying the permanent injunction under 11 U.S.C. § 524(e).
Accordingly, the order of dismissal is reversed, and the case is remanded for reinstatement of the complaint and for further proceedings consistent with this opinion.
JUDGE GRAHAM and JUDGE CRISWELL concur.
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