In Gubbiotti v. Stanley (2012), the Superior Court of Pennsylvania made it harder in some circumstances for plaintiffs in a personal injury case to collect a judgment. Frank and Linda Gubbiotti and Dean and Sheryl Pavinski sued Michael Stanley for injuries sustained during a car crash in Luzerne County in 2006. Shortly after the Complaint was filed, Stanley filed for Chapter 7 bankruptcy, listing the plaintiffs in this case as creditors holding unsecured, non-priority claims. The plaintiffs received a Suggestion of Bankruptcy from Stanley and failed to object to the bankruptcy or to the dischargability of his debt, had a judgment in the case been granted. The trial court granted a summary judgment in Stanley’s favor.
The plaintiffs appealed to the Superior Court, arguing that 40 P.S. § 117 allowed them to pursue their claim post-bankruptcy because they were seeking money from Stanley’s insurer, not him as a person. The Superior Court disagreed, holding that since Stanley’s liability under his insurance had still not yet been determined, the discharge of his debts still applied to them. The Gubbiotti’s and Pavinski’s were entitled to no relief.
Although the Court did hold that the discharge of unresolved debts applies to insurers in personally injury cases, they were careful to note that the discharge does not apply when a judgment had already been entered prior to declaring bankruptcy. That is, if a judgment had been ordered against Stanley before he declared bankruptcy, the debt would not have been discharged.
Personal injury lawyers and their clients should be aware of this case. The key points to take away are if you are the plaintiff in a personal injury case (or representing the plaintiff), you must take action in bankruptcy court if the defendant files for bankruptcy before a judgment has been entered. In addition, the plaintiff should always object to the dischargability of the debt, and if necessary, take action in state court, where the case would likely be allowed to continue. As always, if you have a personal injury claim, contact one of our Pennsylvania Personal Injury Lawyers for a free initial consultation.