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Ross v. Rosemary Swift D/B/A Ray Swift Aluminum Products et al.

CASE NO. 2292 CRB-6-95-2



APRIL 23, 1996

















The claimant was represented by Mark Johnson, Esq., Sullivan, Reis, Sanchy & Logan, 9 Mason St., Torrington, CT 06790.

The respondent Ray Swift Aluminum Products was represented by Kevin Daly, Jr., Esq., Upson & Daly, 52 Holmes Ave., Waterbury, CT 06710-2412.

The respondent Philip Theeb, Jr., was not represented at oral argument and appeared pro se at trial.

The Second Injury Fund was not represented at oral argument. Notice sent to J. Sarah Posner, Esq., Assistant Attorney General, 55 Elm St., P. O. Box 120, Hartford, CT 06141-0120.

This Motion to Submit Additional Evidence pursuant to a Petition for Review from the January 26, 1995 Finding of Facts and Award of Compensation of the Commissioner acting for the Sixth District was heard November 17, 1995 before a Compensation Review Board panel consisting of the Commission Chairman Jesse M. Frankl and Commissioners Roberta S. Tracy and Amado J. Vargas.


JESSE M. FRANKL, CHAIRMAN. The respondent Ray Swift Aluminum Products (The Swifts)1 has petitioned for review from the January 26, 1995 Findings of Facts and Award of Compensation by the Commissioner acting for the Sixth District. Pursuant to that appeal, the Swifts have filed a Motion to Submit as Additional Evidence documents from a United States Bankruptcy Court that purport to discharge the claimant’s workers’ compensation claim against the respondent. After examining the relevant law, we conclude that this case must be reopened.

Ray Swift, a home remodeler, had been hired to install a new roof on a house in Bristol. Swift subcontracted the labor to the respondent Philip Theeb, Jr., who in turn hired the claimant as a roofer’s assistant on or about May 25, 1992. A little over a week later, the claimant slipped, fell from the roof and was seriously injured. The trial commissioner concluded that the claimant was an employee of Theeb, and that the Swifts were the principal employer under § 31-291. He ordered both parties to pay the claimant’s medical bills and compensation under the Workers’ Compensation Act.

The Swifts, who appeared pro se at trial, hired an attorney for their appeal. Along with a challenge to the factual findings themselves, the Swifts listed as a Reason for Appeal the discharge of the claimant’s debt in bankruptcy. The Swifts then moved to submit as additional evidence the Chapter 7 bankruptcy petition and the notice of discharge in order to show that the claimant’s claim was discharged in the bankruptcy proceeding. Apparently, no mention of the bankruptcy was ever made to the trial commissioner by either the Swifts or the claimant, who was allegedly aware that the bankruptcy petition included his claim. Thus, the trial commissioner could not account for the bankruptcy discharge in his decision.

Administrative Regulation § 31-301-9 allows this board to accept additional evidence if it is material to the case at hand and if the party moving for its admission can demonstrate a good reason why it was not admitted below. Formal hearings were held on the instant claim on September 2, 1993, November 3, 1993, and January 12, 1994. The Bankruptcy Court records submitted by the respondents show that Ray and Rosemary Swift, the manager and owner of Ray Swift Aluminum Products, filed a Chapter 7 petition on June 29, 1993. Although the workers’ compensation claim at issue was not originally listed on the schedule of creditors, an amended schedule was filed on September 8, 1993 listing “Phillip Theebe Jr.” as a creditor for a “Miscellaneous Personal Injury Claim [sic]” that was still in dispute. On October 6, 1993, the Bankruptcy Judge issued an order discharging Michael and Rosemary Swift, along with Swift Aluminum Products, from all dischargeable debts.

Normally, we would be inclined to reject such evidence, because it was available at the time of the second formal hearing, and the only reason it was not submitted as evidence was the oversight of the pro se respondents. However, pursuant to 11 U.S.C. § 524, the bankruptcy discharge order notes that “Any judgment heretofore or hereafter obtained in any court other than this court is null and void as a determination of the personal liability of the debtor with respect to . . . debts dischargeable under 11 U.S.C. Sec. 523. . . . [A]ll creditors whose judgments are declared null and void by [this order] . . . are enjoined from instituting or continuing any action or employing any process or engaging in any act to collect such debts as personal liabilities of the above-named debtor.” Workers’ compensation claims are normally not exempt from discharge under the Bankruptcy Code, and the claimant’s claim may very well have been discharged in the federal court proceedings.

A discharge in bankruptcy was considered an affirmative defense for many years. Failure to plead it in civil proceedings would result in a waiver of that defense. See In Re Innis, 140 F.2d 479, 481 (7th Cir. 1944) (as a matter of congressional favor, debtor is permitted to file discharge in pending suits as a bar to further prosecution). Changes made to the Bankruptcy Code in 1970, however, have been interpreted as relaxing the burden on a debtor to plead discharge as an affirmative defense.

Matter of Gallagher, 47 B.R. 92 (Bankr. W. D. Wis. 1985), explained that § 524(a) declares any judgment rendered on a discharged debt by a non-bankruptcy court null and void, and enjoins creditors holding discharged debts from taking or continuing any action on such debt. Id., 97, citing Collier on Bankruptcy (15th Ed. 1981). “Accordingly, should a creditor institute suit in a state court postdischarge, and obtain therein a judgment against the debtor, such judgment is rendered null and void by section 524(a). The purpose of the provision is to make it absolutely unnecessary for the debtor to do anything at all in the state court action.” Id. (emphasis in original). Other federal courts, including the Seventh Circuit, have adopted this line of reasoning as well. See Matter of Paeplow, 972 F.2d 730, 738 (7th Cir. 1992); In re Levy, 87 B.R. 107, 108-109 (Bankr. N. D. Cal. 1988). No recent federal authority adopts the contrary position.

It thus appears that, if the Swifts’ liability for the claimant’s claim was in fact discharged by the bankruptcy court, we must honor that judgment regardless of the Swifts’ failure to plead discharge as a defense to the claimant’s claim. Whether or not the listing of “Phillip Theebe, Jr.” as a creditor in the amended list of creditors was sufficient to discharge the instant workers’ compensation claim is a separate question, however, that must be answered before the Swifts can be released from liability. See Walton v. Hector Trucking, 1835 CRB-1-93-9 (decided April 13, 1995); see also In re Gray, 57 B.R. 927, 931 (Bankr. D. R. I. 1986), affirmed, 60 B.R. 428 (D. R. I. 1986) (failure to schedule creditor ordinarily results in exception from discharge, absent timely notice to creditor; once debtor receives discharge, creditor must show that he was not duly scheduled). Because factual findings might be necessary on that issue, especially regarding notice, we must remand this matter to the Sixth District for a determination of whether the claimant’s claim against the Swifts was discharged. See Levy, supra, 108 (jurisdiction over most dischargeability issues is held concurrently by bankruptcy court and any appropriate nonbankruptcy forum).

The Swifts have not technically satisfied § 31-301-9 in their Motion to Submit Additional Evidence. However, we have determined that 11 U.S.C. § 524 requires that their bankruptcy discharge (if applicable) be honored regardless. Consistent with our decision in Murphy v. City of West Haven, 2197 CRB-3-94-10 (decided Sept. 11, 1995), we construe the Swifts’ motion as a motion to reopen and modify the award under § 31-315 C.G.S. The case is remanded to the Sixth District for further proceedings consistent with this opinion.

Commissioners Roberta S. Tracy and Amado J. Vargas concur.

1 Ray and Rosemary Swift are the manager and owner, respectively, of Ray Swift Aluminum Products. BACK TO TEXT

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