Townsend v. Ganci

Filing 8

MEMORANDUM AND OPINION. For the reasons set forth herein,, the order of the Bankruptcy Court is affirmed in its entirety. The Clerk of Court shall close this case. SO ORDERED. Ordered by Judge Joseph F. Bianco on 2/27/2017. (Zbrozek, Alex)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 16-CV-2814 (JFB)
_____________________

RAYMOND A. TOWNSEND,
Appellant,
VERSUS

GERALYN GANCI,
Appellee.
___________________
MEMORANDUM AND ORDER
February 27, 2017
___________________

JOSEPH F. BIANCO, District Judge:
The instant case is a pro se appeal by
Raymond A. Townsend (“Townsend” or
“appellant”) from the May 16, 2016
summary judgment order of the Honorable
Carla E. Craig, United States Bankruptcy
Judge, holding that the debt owed by
appellant to pro se appellee Geralyn Ganci
(“Ganci” or “appellee”) is non-dischargeable
pursuant to the Bankruptcy Code, 11 U.S.C.
§ 523(a)(6). See In re Townsend, 550 B.R.
220 (Bankr. E.D.N.Y. 2016). The debt at
issue stems from a civil judgment following
a jury trial before this Court in Ganci v. U.S.
Limousine Service Ltd., et al., 10-CV-3027
(JFB) (AKT) (E.D.N.Y.) (the “Civil Case”).
On September 16, 2014, the jury found
Townsend liable to Ganci for employment
discrimination, in violation of Title VII of

the Civil Rights Act, 42 U.S.C. § 2000e et
seq. (“Title VII”), and New York law.
(Civil Case, ECF No. 119.) The jury
awarded Ganci $450,000 in compensatory
damages and $100,000 in punitive damages
against Townsend, and it also found that
Townsend was not liable for intentional
infliction of emotional distress (“IIED”).
(Id.) The Court subsequently set aside the
punitive damages award after determining
that punitive damages against Townsend
were not available under Title VII or New
York law (id., ECF No. 143), and it granted
Ganci $167,478.50 in attorneys’ fees and
$3,168 in costs, Ganci v. U.S. Limousine
Service Ltd., 2015 WL 1529772, at *8
(E.D.N.Y. Apr. 2, 2015).
The Clerk of the Court entered final
judgment in the Civil Case on April 8, 2015.

(Civil Case, ECF No. 148.) Thereafter,
appellant filed for Chapter 7 bankruptcy on
July 27, 2015. See Townsend, 550 B.R. at
223.
Appellee then commenced an
adversary
proceeding
seeking
a
determination that the Civil Case judgment
is non-dischargeable (the “Adversary
Proceeding”), id. at 224, which led to this
appeal.

sexually assaulted her on one occasion, that
he sent unwanted, unsolicited, and
unwelcome text messages and voice mails of
sexually explicit nature over an extended
period of time and attempted to compel
sexual relations with her during that
extended period of time.” (Id., ECF No. 57
at 12:17-22.)
The Civil Case proceeded to a six-day
jury trial from September 3, 2014 to
September 16, 2014 on plaintiff’s
employment discrimination and IIED
claims. (See id., ECF Nos. 105-16.) The
jury returned a verdict on September 16,
2014, finding for Ganci on the employment
discrimination claims and for Townsend on
the IIED claim. (Id., ECF No. 119.) On the
verdict
form,
the
jury
responded
affirmatively to, inter alia, the following
questions:

For the reasons set forth below, having
conducted a de novo review of the
Bankruptcy Court’s decision, the Court
concludes that appellant’s arguments are
without merit and affirms the order of the
Bankruptcy Court in its entirety.
I. BACKGROUND
The Court summarizes the facts and
procedural history relevant to the instant
appeal.

1. Did plaintiff prove, by a
preponderance of the evidence, that
Raymond Townsend subjected her to
offensive acts or statements about
sex?

A. The Civil Case
Ganci filed suit against Townsend in the
Civil Case on July 1, 2010 alleging claims
of employment discrimination based on
sexual
harassment,
hostile
work
environment, and retaliation; as well as
claims for IIED and negligent infliction of
emotional distress. (Civil Case, ECF No. 1.)
Townsend moved for summary judgment
and spoliation sanctions on December 1,
2011 (id., ECF No. 38), and Ganci crossmoved for summary judgment on January
19, 2012 (id., ECF No. 43). In an oral ruling
on September 10, 2012, this Court denied
the parties’ motions. (Id., ECF No. 54.) Of
note, the Court held that a rational jury
could find for Ganci on her employment
discrimination claims because she had
“stated under oath that Mr. Townsend

2. Did plaintiff prove, by a
preponderance of the evidence, that
she did not welcome the offensive
acts or statements, which means that
plaintiff did not directly or indirectly
invite or solicit them by her own acts
or statements?
3. Did plaintiff prove, by a
preponderance of the evidence, that
the offensive acts or statements were
so severe or pervasive that they
materially altered the terms and
conditions of her employment?

2

4. Did plaintiff prove, by a
preponderance of the evidence, that a
reasonable person—not someone
who is overly sensitive—would have
found that the offensive acts or
statements materially altered the
terms and conditions of the person’s
employment, which means that a
reasonable person would have found
the working conditions hostile and
abusive?

9. Did plaintiff prove, by a
preponderance of the evidence, her
claim that Raymond Townsend
intentionally inflicted emotional
distress upon her?
(Id.)
The jury awarded Ganci $450,000 in
compensatory damages and $100,000 in
punitive damages against Townsend (id.);
however, in a subsequent oral ruling, the
Court set aside the punitive damages award
after determining that punitive damages
against Townsend were not available under
Title VII or New York law (id., ECF No.
143).
The Court also granted Ganci
$167,478.50 in attorneys’ fees and $3,168 in
costs, Ganci, 2015 WL 1529772, at *8, and
the Clerk of the Court entered final
judgment in the Civil Case on April 8, 2015
(Civil Case, ECF No. 148).

5. Did plaintiff prove, by a
preponderance of the evidence, that
she herself believed that the
offensive
acts
or
statements
materially altered the terms and
conditions of her employment,
meaning that plaintiff believed that
her work environment was hostile or
abusive?
7. Did plaintiff prove, by a
preponderance of the evidence, that
she was constructively discharged?

B. The Adversary Proceeding
After Townsend filed a voluntary
petition under chapter 7 of the Bankruptcy
Code on July 27, 2015, Ganci commenced
the Adversary Proceeding on September 18,
2015 seeking a determination that the Civil
Case judgment is non-dischargeable
pursuant to 11 U.S.C. § 523(a)(6) (“Section
523(a)(6)”). Townsend, 550 B.R. at 223-24.
Ganci moved for summary judgment on
February 26, 2016, and the Bankruptcy
Court granted her motion on May 16, 2016.
Id. at 224, 228.

13. Did plaintiff prove, by a
preponderance of the evidence, that
Raymond Townsend acted with
malicious intent to violate plaintiff’s
rights, or with reckless disregard of
plaintiff’s rights, such that punitive
damages are warranted against
Raymond Townsend?
(Id.) The jury responded in the negative to
the following questions:
6. Did plaintiff prove, by a
preponderance of the evidence, that
she was terminated because plaintiff
rejected
Raymond
Townsend’s
sexual advances?

The Bankruptcy Court held that
(1) collateral estoppel precluded Townsend
from re-litigating in the Adversary
Proceeding identical issues that were
3

decided in the Civil Case; and (2) the Civil
Case judgment was non-dischargeable under
Section 523(a)(6) because that debt resulted
from “willful and malicious injury” by
Townsend to Ganci. Id. at 225-28 (quoting
11 U.S.C. § 523(a)(6)).

favorable to the non-movant . . . any genuine
and disputed issue of material fact underlies
the bankruptcy court’s decision.”); In re
Perosio, 364 B.R. 868, 871 (N.D.N.Y. 2006)
(“This Court also reviews the Bankruptcy
Court’s denial of Appellants’ motions for
summary judgment de novo.”); accord Beier
v. Beier, No. 94 Civ. 2677 (SS), 1995 WL
60026, at *2 (S.D.N.Y. Feb. 14, 1995).

C. The Appeal
On June 2, 2016, Townsend filed a pro
se Notice of Appeal of the Bankruptcy
Court’s judgment.
The Notice of
Bankruptcy Record Received was filed on
October 14, 2016, and appellant filed his
brief on December 14, 2016. Appellee, also
proceeding pro se, did not file a brief within
the time period specified by Federal Rule of
Bankruptcy Procedure 8018. The Court has
fully considered all of the submissions in
this appeal.

III. DISCUSSION
On appeal, Townsend does not contest
the collateral estoppel determination of the
Bankruptcy Court. Instead, his challenge is
limited to the non-dischargeability holding,
and he argues specifically that the
Bankruptcy Court improperly relied on In re
Spagnola, 473 B.R. 518 (Bankr. S.D.N.Y.
2012), to find that the Civil Case judgment
resulted from willful injury by Townsend to
Ganci. In addition, appellant claims that the
jury’s finding of non-liability on the IIED
claim demonstrates that it concluded that
the employment discrimination conduct was
not willful.

II. STANDARD OF REVIEW
The Court will review the Bankruptcy
Court’s legal conclusions de novo and its
factual findings for clear error. See In re
Hyman, 502 F.3d 61, 65 (2d Cir. 2007); see
also In re Bayshore Wire Prods. Corp., 209
F.3d 100, 103 (2d Cir. 2000) (“Like the
District Court, we review the Bankruptcy
Court’s findings of fact for clear error, . . .
its conclusions of law de novo, . . . its
decision to award costs, attorney’s fees, and
damages for abuse of discretion.”).

For the reasons that follow, having
conducted a de novo review of the
Bankruptcy Court’s decision, the Court
disagrees with appellant and affirms the
order of the Bankruptcy Court.
A. Applicable Law
The Bankruptcy Code discharges
preexisting debts in order to give “honest
but unfortunate” debtors a fresh start.
Cohen v. de la Cruz, 523 U.S. 213, 217
(1998). However, the Bankruptcy Code
contains numerous exceptions to the “fresh
start” principle and denies relief to debts
resulting from certain types of undesirable

A bankruptcy court’s decision to grant
summary judgment based upon undisputed
facts is reviewed de novo. See In re Treco,
240 F.3d 148, 155 (2d Cir. 2001) (“[W]ith
respect to the grant of partial summary
judgment, the posture in which this appeal
reaches us, we review de novo whether,
viewing the record in the light most
4

523(a)(6).

behaviors, such as injury by the debtor to the
creditor. To that end, Section 523(a)(6)
provides, in relevant part, that:

With respect to the willfulness prong—
the only element that Townsend challenges
on appeal—the Bankruptcy Court held that,
although “a finding that a defendant has
created a hostile work environment does not
per se lead to a finding of willfulness,”
Townsend, 550 B.R. at 226 (citing In re
Goldberg, 487 B.R. 112, 127 (Bankr.
E.D.N.Y. 2013)), the “jury’s factual findings
[in the Civil Case], however, establish that
[Townsend] directly subjected [Ganci] to
offensive acts or statements about sex. The
jury further found that [Ganci] did not
directly or indirectly invite or solicit such
statements,” id. at 226-27. The Bankruptcy
Court cited Spagnola for the proposition that
“[e]xposure to unwelcome sexual conduct,
like an advancing of one’s prurient interests
to the point of harassment, is the injury that
a sexual harassment victim suffers,” id. at
227 (citing 473 B.R. at 523), and Goldberg
for the principle that “where an employer’s
deliberate conduct is found to constitute
unlawful
discrimination
against
an
individual employee, it necessarily follows
that such intent was for the purpose of
causing injury,” id. (citing 487 B.R. at 127).
Accordingly,
the
Bankruptcy
Court
concluded that because the Civil Case jury
determined that appellant specifically
directed discriminatory conduct in the form
of sexual harassment at appellee, and
appellee did not invite or solicit such
conduct, those “facts are sufficient to
establish that [Townsend] acted with the
intent to cause the injury” at issue. Id.

A discharge under . . . this title does
not discharge an individual debtor
from any debt . . . (6) for willful and
malicious injury by the debtor to
another entity or to the property of
another entity.
11 U.S.C. § 523(a)(6).
The Second Circuit has held that, as used
in Section 523(a)(6),
the word “willful” indicates “a
deliberate or intentional injury, not
merely a deliberate or intentional act
that leads to injury.” The injury
caused by the debtor must also be
malicious, meaning “wrongful and
without just cause or excuse, even in
the absence of personal hatred, spite,
or ill-will.” Malice may be implied
“by the acts and conduct of the
debtor in the context of [the]
surrounding circumstances.”
Ball v. A.O. Smith Corp., 451 F.3d 66, 69
(2d Cir. 2006) (quoting Kawaauhau v.
Geiger, 523 U.S. 57, 61 (1998); In re
Stelluti, 94 F.3d 84, 87-88 (2d Cir. 1996)).
The party seeking to establish nondischargeability—in this case appellee—
must prove those elements by a
preponderance of the evidence. Id.
B. Analysis

Appellant argues that Spagnola is
distinguishable because there, the civil jury
was specifically asked and found that the
defendant (i.e., the debtor in the subsequent

Having conducted a de novo review, the
Court agrees with the Bankruptcy Court that
appellee carried her burden under Section
5

satisfy.
Accordingly, contrary to
appellant’s contention, it is not clear that
the jury determined that his conduct
toward appellee lacked willfulness.

bankruptcy
action)
intentionally
discriminated against the plaintiff on the
basis of her gender. He contends that, in
contrast, the Civil Case resulted in no such
finding, and that the jury’s decision that he
was not liable on the IIED claim establishes
that he did not act willfully.

Moreover, “[c]ourts within the Second
Circuit have found that if a debtor believes
that an injury is substantially certain to
result from his conduct, the debtor will be
found to have possessed the requisite intent
to injure required” for purposes of Section
523(a)(6). In re Ferrandina, 533 B.R. 11,
26 (Bankr. E.D.N.Y. 2015) (collecting
cases). As the court in Ferrandina correctly
found, the creation of a workplace
“environment permeated with intimidation,
and volatility” based on “behavior that was
inappropriate and offensive” satisfies this
standard. Id. at 29 (citations omitted).
There, the debtor “deliberately and
intentionally discriminated against [the
creditor] because of her gender.
[He]
repeatedly touched [the creditor] in a sexual
manner without her consent, sent her
sexually explicit e-mails, made sexually
explicit comments, and called her late at
night and on weekends to talk about sex.”
Id. As discussed above, there was evidence
of similar conduct by Townsend in the Civil
Case, and on that basis, the jury determined,
inter alia, that Townsend subjected Ganci to
offensive acts or statements about sex; that
Ganci did not invite or solicit such acts or
statements; and that the acts or statements
were so severe or pervasive that they
materially altered the terms and conditions
of Ganci’s employment. (Civil Case, ECF
No. 119.) The Court holds that such
findings evince intentional conduct by
appellant. See Goldberg, 487 B.R. at 127.

However, intent is not the only element
of an IIED cause of action under New York
law. As the Court instructed the jury, to
prevail on her IIED claim, Ganci was
required to show:
(1) That Raymond Townsend’s
conduct towards plaintiff was so
outrageous and shocking that it
exceeded all reasonable bounds of
decency as measured by what the
average member of the community
would tolerate;
(2) That Townsend’s conduct caused
severe emotional distress to plaintiff;
and
(3) Townsend acted with the desire
to cause such distress to plaintiff, or
under circumstances known to
Townsend
which
made
it
substantially certain that that result
would follow, or recklessly and with
utter disregard of the consequence
that might follow.
(Civil Case, ECF No. 112 at 25.) On the
verdict form, the jury merely indicated
that Ganci had failed to prove “by a
preponderance of the evidence . . . that
Raymond
Townsend
intentionally
inflicted emotional distress upon her”
(id., ECF No. 119)—it did not state
which IIED element Ganci had failed to

In addition, although the Court set aside
the Civil Case jury’s punitive damages
6

award against Townsend because it
concluded that such relief was unavailable
as a matter of law, the jury did conclude, as
indicated on the verdict form, that
“Raymond Townsend acted with malicious
intent to violate plaintiff’s rights, or with
reckless disregard of plaintiff’s rights . . . .”
(Civil Case, ECF No. 119.) The decision
setting aside the punitive damages award did
not negate that finding. 1

compel Ganci’s resignation, or with the
belief that such injury was substantially
certain to result from his conduct. See Ball,
451 F.3d at 69; Ferrandina, 533 B.R. at 26.

Finally, the Court notes that the jury also
concluded that Townsend constructively
discharged Ganci.
(See id.)
In its
instructions, the Court said that to prove
constructive discharge, Ganci was required
to show:

IV. CONCLUSION

Accordingly, for the foregoing reasons,
the Court affirms the Bankruptcy Court’s
conclusion that the Civil Case judgment is
non-dischargeable under Section 523(a)(6)
of the Bankruptcy Code. 2

For the foregoing reasons, the order of
the Bankruptcy Court is affirmed in its
entirety. The Clerk of Court shall close this
case.

First, that Raymond Townsend made
plaintiff’s
working
conditions
intolerable;

SO ORDERED.
__________________
JOSEPH F. BIANCO
United States District Judge

Second, that plaintiff’s gender was a
motivating factor in Townsend’s
actions; and

Dated: February 27, 2017
Central Islip, New York

Third, that plaintiff’s resignation was
a reasonably foreseeable result of
Townsend’s actions, or Townsend
acted with the intent of forcing
plaintiff to quit.
(Id., ECF No. 112 at 24.)
satisfies the willfulness
523(a)(6) because the
Townsend either acted

***
Appellant Raymond A. Townsend, pro se.
Appellee Geralyn Ganci, pro se.

The third element
prong of Section
jury found that
with intent
to

1
In fact, based upon that finding and additional
findings by the jury, a punitive damages award was
made by the jury against Townsend’s company under
Title VII in the amount of $450,000, which was
modified by the Court to $100,000 under the
applicable statutory cap. (See Civil Case, ECF Nos.
119, 143.)

2
Although Townsend does not contend on appeal
that Ganci failed to satisfy the malice prong of
Section 523(a)(6), the Court has independently
reviewed that element and affirms the Bankruptcy
Court’s determination because appellant’s conduct
was clearly wrongful and without just cause or
excuse.

7