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Bankrupt employer can avoid debt from Wage Act judgment

Home construction project


A U.S. Bankruptcy Court judge in Massachusetts has found that a judgment debt owed by a contractor to two workers in their state Wage Act case can be discharged.

Plaintiffs Julio Simoes and Eduardo Pereira, who performed construction work for debtor Nicholas A. Sivieri III, brought successful misclassification and overtime claims against the debtor in state court, obtaining judgments of $43,000 and $17,000 respectively, including attorneys’ fees and multiple damages.

After the debtor filed for Chapter 7 protection, the creditors brought an adversary proceeding arguing that the debts were nondischargeable under §523(a)(6) of the U.S. Bankruptcy Code, which excludes from discharge any debt due to “willful or malicious” injury to someone else.

But Judge Christopher J. Panos dismissed their claims.

“While the Plaintiffs have raised substantial concerns that the Debtor took advantage of them given their citizenship status, sophistication, and the fact that English is not their native language, [they] have not met their burden to demonstrate that the Debtor acted willfully and with malice to injure the Plaintiffs in not paying overtime, even though the Debtor misclassified the Plaintiffs and violated the Massachusetts wage act,” Panos wrote in entering judgment in the debtor’s favor following trial.

Debtor’s counsel Lane N. Goldberg of Braintree, Massachusetts, said his client was pleased by the decision.

“The evidence at trial demonstrated that, pursuant to [§523(a)(6)], Mr. Sivieri did not act willfully or with malice to injure the plaintiffs,” Goldberg said.

Peter Cole of Brighton, Massachusetts, who represented the creditors, declined to comment other than to say his clients are appealing the ruling.