The Virginia Defamation Law Blog
One of the main goals of the Bankruptcy Code is to give honest debtors a chance to start over financially. But to strike a fair balance between helping debtors and protecting creditors’ rights to collect what they’re owed, the Code makes clear that some debts can’t be wiped out—especially when public policy calls for it. That includes debts tied to a debtor’s misconduct. For instance, bankruptcy courts have long held that someone who commits fraud shouldn’t be able to use bankruptcy as a shield. When it comes to defamation claims, the relevant Code section is 11 U.S.C. § 523(a)(6), which blocks the discharge of debts that stem from a debtor’s willful and malicious actions. Is defamation a willful and malicious action? Well, that depends.
Defamation judgments are notoriously difficult to categorize as dischargeable or nondischargeable because the tort of defamation doesn’t fit neatly into a single category, as the level of intent needed to hold someone liable can vary depending on who’s involved. If the person suing is a public figure, for example, they have to show that the defendant either knowingly made a false statement or did so with serious doubts about its truth. If the plaintiff is a private figure, on the other hand, the bar is lower—they just need to show the defendant was careless or negligent, without needing to prove any intent to harm. So bankruptcy courts will normally want to hear some evidence before they will rule on whether a particular defamation judgment is dischargeable.
To establish nondischargeability under Section 523(a)(6), a creditor must prove three elements: (1) the debtor caused an injury; (2) the debtor’s actions were willful; and (3) that the debtor’s actions were malicious. (See Ocean Equity Grp., Inc. v. Wooten (In re Wooten ), 423 B.R. 108, 128 (Bankr. E.D. Va. 2010)). On the issue of willfulness, the Supreme Court has held that Section 523(a)(6) encompasses only acts done with actual intent to cause injury and not merely intentional acts that happen to cause an injury. (See Kawaauhau v. Geiger, 523 U.S. 57 (1998)). In other words, for a tort to be considered willful, the actor must have intended the consequences of his act and not merely intended to perform the act itself. For purposes of § 523(a)(6), “willfulness” has been defined as an act taken with “substantial certainty [that] harm [would result] or a subjective motive to cause harm.” (See Parsons v. Parks (In re Parks ), 91 Fed. Appx. 817, 819 (4th Cir. 2003)).
The malice requirement means something different than in most other contexts. For purposes of Section 523(a)(6), a debtor acts with malice when “[the] debtor’s injurious act was done deliberately, intentionally and with knowing disregard for [the] plaintiff’s rights.” (See Reed v. Owens (In re Owens), 449 B.R. 239, 255 (Bankr. E.D. Va. 2011)). “A debtor may act with malice even though he bears no subjective ill will toward, and does not specifically intend to injure, his creditor.” (First Nat’l Bank of Md. v. Stanley (In re Stanley), 66 F.3d 664, 667 (4th Cir. 1995)).
The latest case to catch my eye involving these issues is Darnell v. Wasinger. John Franklin Darnell, the appellant and debtor, appealed a January 5, 2024 order from the U.S. Bankruptcy Court for the Eastern District of Virginia. The bankruptcy court had ruled that two defamation judgments obtained against him by Carolina 
and Maddalena Wasinger were non-dischargeable under 11 U.S.C. § 523(a)(6).
Meghan Wasinger, mother of Carolina and Maddalena Wasinger, had employed John Darnell, the appellant and debtor, as a real estate agent. Darnell later worked for Meghan at a brokerage she founded. A dispute over two real estate transactions—allegedly excluding Darnell and resulting in a $13,000 loss of compensation—prompted Darnell to retaliate. On September 25–26, 2020, according to the opinion, Darnell posted defamatory content on the website FairfaxUnderground.com using multiple aliases to conceal his identity. He falsely accused Carolina Wasinger of being arrested for assaulting a police officer while intoxicated, and claimed Maddalena Wasinger was arrested for armed robbery and second-degree manslaughter. He further implicated their brother, Stephen Wasinger, in a related crime. Darnell later stipulated that all the statements were defamatory per se.
In October 2020, the Wasinger sisters filed civil defamation suits in Fairfax County Circuit Court. The cases were consolidated and tried in August 2022. A jury awarded Carolina Wasinger $120,000 in compensatory and $180,000 in punitive damages, and Maddalena Wasinger $175,000 in compensatory and $210,000 in punitive damages.
Darnell filed for Chapter 7 bankruptcy in January 2023, seeking to discharge these judgments. The Wasingers responded with an adversary complaint asserting that the debts were nondischargeable under Section 523(a)(6). After a December 2023 trial, the bankruptcy court concluded that the judgments were nondischargeable because his actions were both willful and malicious. Darnell appealed the decision to the district court, which affirmed the decision.
On the issue of willfulness, the district court held that “Mr. Darnell willfully published falsehoods about the Wasingers. Mr. Darnell intentionally posted the defamatory statements on the internet, thus publishing them.” The court noted that he admitted as his deposition that he knew the statements were not true and that he felt ill will toward the Wasingers’ mother. That was enough, in the court’s view, to establish the willfulness element. After all, it reasoned, the true injury in defamation cases is the publication of falsehoods about the creditor that led to the damaged reputation, and Mr. Darnell intentionally did that.
The district court also agreed with the bankruptcy court on the issue of malice. For one thing, the jury’s award of punitive damages meant the jury found Darnell acted with malice. The court noted that the malice standard under Section 523(a)(6) is less stringent than it is in defamation claims, so concluded that the jury’s award of punitive damages was sufficient to establish malice under Section 523. Even without the verdict, however, the court found that Darnell caused injury with no just cause or excuse for his actions, and that was sufficient to show malice as well.