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    "parties": [
      "THOMAS KEARNS, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Thomas Hlady, d/b/a Frank Goodness, Appellee)."
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        "text": "JUSTICE COLWELL\ndelivered the opinion of the court:\nClaimant, Thomas Kearns, obtained an arbitration award against respondent, Thomas Hlady d/b/a Frank Goodness, for injuries Kearns sustained while working for Hlady. Kearns subsequently filed with the Industrial Commission (Commission) a motion for attorney fees and penalties under sections 16 and 19(k) of the Workers\u2019 Compensation Act (Act) (820 ILCS 305/16, 19(k) (West 1994)), alleging that Hlady unreasonably and vexatiously refused to pay the award. The Commission, however, found that Hlady\u2019s chapter 7 bankruptcy discharge provided him with reasonable basis not to pay the award. In case number 97 \u2014 L \u2014 50571, the circuit court of Cook County confirmed the Commission\u2019s decision, and Kearns appeals. Kearns also appeals from the circuit court\u2019s determination in case number 98 \u2014 L \u2014 50183 that Kearns\u2019 workers\u2019 compensation claim against Hlady was discharged by the bankruptcy order.\nWe agree that Kearns\u2019 claim was discharged by the bankruptcy order and therefore affirm the orders of the circuit court.\nI. FACTUAL AND PROCEDURAL BACKGROUND\nThomas Hlady was the sole proprietor of a fast-food restaurant named Frank Goodness. On August 25, 1988, while working at the restaurant, Kearns was cut with a knife and sustained injuries to his left thumb. He filed an application for adjustment of claim on April 3, 1989, alleging that he suffered severed nerves, veins and tendons in his left hand as a result of the incident. On May 24, 1989, Kearns\u2019 attorney sent a certified letter to Hlady notifying him of the pending claim and of a June 6, 1989, arbitration hearing. The letter was sent to Hlady at 5206 West 159th Street, Oak Forest, Illinois, which was the restaurant\u2019s address. The return receipt of the letter was signed by \u201cMary Dwyer\u201d and was dated June 2. Hlady, however, denies ever receiving the letter.\nOn November 6, 1989, Hlady filed for bankruptcy under chapter 7 of the United States Bankruptcy Code (11 U.S.C. \u00a7 727 (1994)) and subsequently moved to Las Vegas, Nevada, where he currently resides. He did not list Kearns\u2019 workers\u2019 compensation claim on his bankruptcy schedule. On February 21, 1990, the United States Bankruptcy Court issued an order releasing Hlady, \u201cAKA Frank Goodness,\u201d from \u201call dischargeable debts.\u201d Kearns was never notified of the bankruptcy proceeding.\nOn March 18, 1993, an ex parte arbitration hearing was held on Kearns\u2019 application for adjustment of claim. Kearns offers no explanation as to why it took so long for the hearing to be held, and the record contains no indication that Hlady was notified of the hearing. Kearns was the only person to testify at the hearing. Following the hearing, the arbitrator found Kearns entitled to eight weeks of temporary total disability benefits, compensation for a 50% loss of the use of his left thumb and $5,679.65 in medical expenses. Nevertheless, Hlady did not pay the award. The arbitrator\u2019s decision was mailed to the restaurant\u2019s Oak Forest address, but since the restaurant was out of business, and since Hlady was living in Las Vegas, Hlady never received the decision. The Commission notified Kearns\u2019 attorney by mail that the decision of the arbitrator was undeliverable as addressed.\nOn March 9, 1995, Kearns filed a motion with the Commission seeking attorney fees and penalties under sections 16 and 19(k) of the Act (820 ILCS 305/16, 19(k) (West 1994)) for Hlady\u2019s alleged unreasonable and vexatious nonpayment of the arbitration award. Hlady filed a response to Kearns\u2019 motion on July 11, 1995. Citing In re Mendiola, 99 B.R. 864 (Bankr. N.D. Ill. 1989), Hlady maintained that Kearns\u2019 workers\u2019 compensation claim was .discharged by the bankruptcy order of February 1990, even though the claim was not listed on the bankruptcy schedule.\nThe Commission agreed with Hlady. Although it found that Kearns \u201csustained accidental injuries arising out of and in the course of his employment,\u201d the Commission wrote, \u201cIn cooperation with the court\u2019s opinion in Mendiola, we find [Hlady\u2019s] bankruptcy discharge assertion constitutes an affirmative defense and provided a reasonable basis for dispute. We hereby deny [Kearns\u2019] Motion for Penalties and Attorneys Fees.\u201d Kearns appealed, and, in case number 97 \u2014 L \u2014 50571, the circuit court confirmed the order of the Commission. Kearns timely appealed the circuit court\u2019s order.\nOn February 25, 1998, Kearns filed in the circuit court a petition for judgment on award pursuant to section 19(g) of the Act (820 ILCS 305/19(g) (West 1998)). On May 5, 1998, the circuit court ordered the parties to brief the issue \u201cof whether [Kearns\u2019] claim falls under the \u2018willful and malicious\u2019 exception to the Bankruptcy Code, 11 U.S.C. \u00a7 523(a)(6).\u201d Kearns therefore filed a petition to determine discharge-ability on September 22, 1998, and Hlady responded in turn. Kearns argued that his workers\u2019 compensation claim was excepted from the bankruptcy discharge, since the claim allegedly arose out of Hlady\u2019s intentionally tortious conduct. In case number 98 \u2014 L \u2014 50183, the circuit court denied Kearns\u2019 petitions, finding that Kearns\u2019 underlying claim was discharged by the bankruptcy order of February 1990. Kearns timely appealed that decision, and the appeals from matters numbers 97 \u2014 L \u2014 50571 and 98 \u2014 L \u2014 50183 were consolidated before this court.\nII. ANALYSIS\nThe main issue on appeal is whether or not Kearns\u2019 workers\u2019 compensation claim was discharged by the bankruptcy order of February 1990. Before we reach that issue, however, we must first determine whether the circuit court had jurisdiction to consider Kearns\u2019 petition to determine dischargeability. The reason we are concerned with the circuit court\u2019s jurisdiction, rather than that of the Commission, is because the Commission did not decide whether Kearns\u2019 claim was discharged by the bankruptcy order when it ruled on Kearns\u2019 motion for attorney fees and penalties. At the Commission level, Hlady did not raise the bankruptcy discharge as an affirmative defense to Kearns\u2019 claim itself (see Mendiola, 99 B.R. at 870); rather, Hlady raised the discharge in an attempt to show that he had a reasonable basis for nonpayment of the arbitration award. Thus, the first time the parties actually litigated the dischargeability issue was after the circuit court ordered the parties to brief that issue.\nIn considering the jurisdictional issue, a review of the relevant portions of the Bankruptcy Code becomes necessary. Hlady filed for chapter 7 bankruptcy, and his petition was granted. Section 727(b) of the Bankruptcy Code (11 U.S.C. \u00a7 727(b) (1994)) defines the scope of a chapter 7 debtor\u2019s discharge. Under that section, a discharge \u201cdischarges the debtor from all debts that arose before the date of the order for relief,\u201d except as provided in section 523 (11 U.S.C. \u00a7 523 (1994)).\nSection 523(a) provides that \u201c[a] discharge under section 727 *** does not discharge an individual from any debt\u201d specified in the 10 subsections of section 523(a). 11 U.S.C. \u00a7 523(a) (1994). Section 523 divides the discharge exceptions into two categories \u2014 those listed in sections 523(a)(2), (a)(4) and (a)(6), and all others. The \u201call others\u201d category includes the following: debts arising from taxes (subsection (1)), alimony and child support (subsection (5)), fines or penalties (subsection (7)), educational loans (subsection (8)), judgments from drunk driving cases (subsection (9)) and debts that could have been, but were not, discharged in a prior bankruptcy proceeding (subsection (10)). See 11 U.S.C. \u00a7\u00a7 523(a)(1), (a)(5), (a)(7) through (a)(10) (1994).\nThe debts listed in sections 523(a)(2), (a)(4) and (a)(6) make up the second category of debt \u2014 debts arising from various intentional torts. This category includes debts incurred by false pretenses, fraud or use of false financial statements (subsection (2)); debts incurred by defalcation by a fiduciary, embezzlement or larceny (subsection (4)); and debts for willful and malicious injury (subsection (6)). See 11 U.S.C. \u00a7\u00a7 523(a)(2), (a)(4), (a)(6) (1990). Since Kearns alleged only that he suffered injuries resulting from Hlady\u2019s willful and malicious conduct (a section 523(a)(6) allegation), we must concern ourselves only with how courts treat parties claiming to be intentional-tort creditors.\nSection 523(c) provides that, where the debt was listed on the debtor\u2019s bankruptcy schedule, a debt of the kind listed in section 523(a)(2), (a)(4) or (a)(6) is discharged unless the creditor files a complaint in the bankruptcy court to determine its dischargeability within a strict time limit of 60 days after the first meeting of creditors. 11 U.S.C. \u00a7 523(c) (1994); Fed. R. Bankr. E 4007(c). Pursuant to section 523(c), the bankruptcy court has exclusive jurisdiction to determine whether such a scheduled debt was discharged. 11 U.S.C. \u00a7 523(c) (1994); Mendiola, 99 B.R. at 866.\nHowever, where a debt arising from an intentional tort was not listed on the bankruptcy schedule, section 523(a)(3)(B) controls, and no limitations period for contesting dischargeability exists. In re McKinnon, 165 B.R. 55, 56 n.7 (Bankr. D. Me. 1994). Section 523(a)(3)(B) provides in pertinent part:\n\u201c(a) A discharge under section 727 *** does not discharge an individual debtor from any debt\u2014\n* * *\n(3) neither listed nor scheduled ***, in time to permit\u2014\n$ $ $\n(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of discharge-ability of such debt under one of such paragraphs, unless such creditor had actual notice or actual knowledge of the case in time for such timely filing and request[.]\u201d 11 U.S.C. \u00a7 523(a)(3)(B) (1994).\nThe reason Congress enacted section 523(a)(3)(B) was that, \u201c[wjithout the type of special accommodation for omitted debts found at \u00a7 523(a)(3)(B), a crafty debtor who has defrauded a customer could work a second fraud by omitting the debt from the schedules until after the deadline for contesting dischargeability.\u201d Lauren A. Helbling & Hon. Christopher M. Klein, The Emerging Harmless Innocent Omission Defense to Nondischargeability under Bankruptcy Code \u00a7 523(a)(3)(A): Making Sense of the Confusion over Reopening Cases and Amending Schedules to Add Omitted Debts, 69 Am. Bankr. L.J. 33, 44 (Winter 1995). An intentional tort creditor may seek a determination of nondischargeability regardless of whether the underlying bankruptcy proceeding was an \u201casset case\u201d or a \u201cno-asset case.\u201d 69 Am. Bankr. L.J. at 43.\nMost importantly for our purposes, in section 523(a)(3)(B) actions, \u201c[s]tate courts enjoy concurrent jurisdiction with the bankruptcy court to determine dischargeability.\u201d First Community Bank v. Ohio Casualty Insurance Co., 154 Ill. App. 3d 133, 136 (1987). Accord Mendiola, 99 B.R. at 868 n.6 (interpreting 11 U.S.C. \u00a7 523(c) (1988)); In re Keenom, 231 B.R. 116, 126-27 (Bankr. M.D. Ga. 1999).\nIn the instant case, Hlady did not list Kearns\u2019 claim on his bankruptcy schedule, as he was obligated to do. See In re Knapp, 179 B.R. 106, 110 (1995). Furthermore, Kearns alleged in his petition to determine dischargeability (a) that his injuries arose from Hlady\u2019s willful and malicious conduct and (b) that he (Kearns) was never notified of the bankruptcy proceeding until Hlady responded to the motion for attorney fees and penalties. Thus, based on his petition to determine dischargeability, Kearns\u2019 claim fell within the purview of section 523(a)(3)(B). The circuit court therefore had jurisdiction to determine whether Kearns\u2019 claim was discharged by the bankruptcy order of February 1990. See First Community Bank, 154 Ill. App. 3d at 136; Mendiola, 99 B.R. at 866.\nThough Kearns may have properly pleaded his claim, proving it was a different matter altogether. In order to succeed on a petition to determine dischargeability, a creditor must show two things: first, that he was not listed or scheduled and did not have actual notice of the case in time to file a complaint under section 523(c) of the Bankruptcy Code (11 U.S.C. \u00a7 523(c) (1994)) and Bankruptcy Rule 4007(c); and second, that his claim met the criteria for nondischargeability under section 523(a)(2), (a)(4) or (a)(6). See In re Anderson, 72 B.R. 495, 497 n.5 (Bankr. D. Minn. 1987). Hlady essentially admits that he failed to schedule Kearns\u2019 claim and that Kearns lacked actual notice of the bankruptcy discharge. The issue therefore becomes whether Kearns suffered a \u201cwillful and malicious injury\u201d within the meaning of section 523(a)(6). If so, then Kearns\u2019 claim was excepted from the bankruptcy discharge.\nThe Supreme Court recently interpreted the phrase \u201cwillful and malicious injury\u201d from section 523(a)(6). It observed that \u201c[t]he word \u2018willful\u2019 in (a)(6) modifies the word \u2018injury,\u2019 indicating that nondischargeability takes a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury.\u201d (Emphasis omitted.) Kawaauhau v. Geiger, 523 U.S. 57, 61, 140 L. Ed. 2d 90, 95, 118 S. Ct. 974, 977 (1998). Thus, the Court agreed with the eighth circuit that section 523(a)(6) covers \u201conly acts done with the actual intent to cause injury.\u201d Kawaauhau, 523 U.S. at 61, 140 L. Ed. 2d at 95, 118 S. Ct. at 977.\nThe determination of whether a person acted willfully and maliciously involves an inquiry into that person\u2019s intent, which is a question of fact. Waugh v. Eldridge, 95 F.3d 706, 710 (8th Cir. 1996). Given the unique procedural history of the case, we find that the circuit court was obliged to defer to the Commission\u2019s factual findings in deciding whether or not Hlady intended to injure Kearns, even though the petition to determine dischargeability was filed in the circuit court. This is because Kearns\u2019 claim \u2014 the claim sought to be excepted from the bankruptcy discharge \u2014 was a workers\u2019 compensation case, and, as such, the Commission was responsible for determining the facts of the case. Peabody Coal Co. v. Industrial Comm\u2019n, 259 Ill. App. 3d 356, 358 (1994). Like the circuit court, we must also defer to the factual determinations of the Commission.\nIn short, our standard of review is as follows: we may only reverse the circuit court\u2019s ruling on the petition to determine dischargeability if the Commission\u2019s factual finding regarding Hlady\u2019s intent to injure Kearns was against the manifest weight of the evidence. For a finding to be against the manifest weight of the evidence, an opposite conclusion must be clearly apparent. Flynn v. Industrial Comm\u2019n, 302 Ill. App. 3d 695, 701 (1998).\nThe Commission found that Kearns \u201csustained accidental injuries arising out of and in the course of his employment.\u201d\n(Emphasis added.) At arbitration, Kearns gave the following explanation as to how he was injured:\n\u201c[I]t was getting close to 8:00 o\u2019clock [sic], our closing time[,] and Mr. Hlady *** had a gyros knife and put it in my face and said you better be done [filling the condiment bar] by 8:00 o\u2019clock [sic], and when he put the knife in my face instinctively I grabbed his hand, because I had it like this and he jerked away and I severed my thumb.\nTHE ARBITRATOR: Your left thumb[?]\nTHE WITNESS: Yes, sir.\nTHE ARBITRATOR: Was this horse play, was he kidding or what?\nTHE WITNESS: I believe he was kidding. I don\u2019t think he meant me any harm or danger.\u201d\nKearns\u2019 testimony clearly supports the Commission\u2019s finding that Kearns suffered accidental injuries. That finding was therefore not against the manifest weight of the evidence.\nThe record shows that Kearns sustained accidental, rather than willful and malicious, injuries. The circuit court therefore did not err in finding that Kearns\u2019 workers\u2019 compensation claim was not of a kind specified in section 523(a)(6) and that Kearns\u2019 claim was not excepted from Hlady\u2019s bankruptcy discharge. See Kawaauhau, 523 U.S. at 64, 140 L. Ed. 2d at 97, 118 S. Ct. at 978 (\u201cdebts arising from recklessly or negligently inflicted injuries do not fall within the compass of \u00a7 523(a)(6)\u201d).\nSince Kearns\u2019 claim was discharged by the bankruptcy order, Hlady\u2019s nonpayment of the arbitration award could not have been unreasonable and vexatious. Accordingly, the Commission\u2019s denial of Kearns\u2019 motion for attorney fees and penalties was not against the manifest weight of the evidence.\nKearns also argues (in little more than half of a page) that Hlady waived the bankruptcy order as an affirmative defense to the motion for attorney fees and penalties, since Hlady did not raise the bankruptcy defense at the arbitration hearing. Kearns, nonetheless, failed to raise this waiver argument before the Commission, and, as such, his argument is waived. Even if we were to address Kearns\u2019 argument, it would still fail. First, there is nothing in the record suggesting that Hlady had actual or constructive notice of the March 1993 arbitration hearing. If Hlady was not aware of the hearing, he could not have raised the defense there. Second, a bankruptcy discharge \u201cis a defense that presumably could even be raised for the first time on appeal.\u201d 69 Am. Bankr. L.J. at 50. As Kearns fails to cite any authority involving a bankruptcy case to the contrary, his argument fails.\nWe note parenthetically that if Hlady committed an intentional tort against Kearns, then Kearns\u2019 injuries would not be compensable under the Act (820 ILCS 305/11 (West 1994)), since Hlady was Kearns\u2019 employer and since only accidental injuries are compensable under the Act. See Meerbrey v. Marshall Field & Co., 139 Ill. 2d 455, 465 (1990) (where employer commits an intentional tort against employee, resulting claim does not fall within scope of Workers\u2019 Compensation Act); Collier v. Wagner Castings Co., 81 Ill. 2d 229, 239 (1980) (same).\nIII. CONCLUSION\nIn case number 97 \u2014 L \u2014 50571, the circuit court of Cook County confirmed the Commission\u2019s decision denying Kearns\u2019 motion for attorney fees and penalties. In case number 98 \u2014 L \u2014 50183, the circuit court found that Kearns\u2019 workers\u2019 compensation claim against Hlady was discharged by the bankruptcy order. For the foregoing reasons, we affirm both orders.\nAffirmed.\nMcCULLOUGH, EJ., and RAKOWSKI, HOLDRIDGE and RAR-ICK, JJ., concur.",
        "type": "majority",
        "author": "JUSTICE COLWELL"
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    ],
    "attorneys": [
      "Stephen J. Klyczek, of Roddy, Power, Leahy, Guill, Zima & Gifford, Ltd., of Chicago, for appellant.",
      "Neil E Gantz, of Chicago, for appellee."
    ],
    "corrections": "",
    "head_matter": "THOMAS KEARNS, Appellant, v. THE INDUSTRIAL COMMISSION et al. (Thomas Hlady, d/b/a Frank Goodness, Appellee).\nFirst District (Industrial Commission Division)\nNos. 1 \u2014 98 \u2014 0522WC, 1 \u2014 98 \u2014 4243WC cons.\nOpinion filed March 6, 2000.\nStephen J. Klyczek, of Roddy, Power, Leahy, Guill, Zima & Gifford, Ltd., of Chicago, for appellant.\nNeil E Gantz, of Chicago, for appellee."
  },
  "file_name": "0257-01",
  "first_page_order": 277,
  "last_page_order": 286
}
