In the Chapter 13 bankruptcy case of Kelley Lavone Simms-Wilson, the debtor filed an adversary proceeding against the creditor who was also at the time her employer. The adversary proceeding against the creditor/employer claimed that she had been terminated from her employment because she had filed bankruptcy and owed one of the company’s clients back taxes.
In March 2009, while her bankruptcy case was still pending, Simms-Wilson interviewed for an associate attorney position with Linebarger. The position entailed assisting in the representation of Linebarger’s various Fort Bend County clients, including Fort Bend and Lamar, which are two of Linebarger’s largest Houston clients.
However, one of those clients, Fort Bend County, was also a creditor in Simms-Willson’s bankruptcy case. The debtor did not conceal this fact; but also did not directly bring it up. However, the employer could have discovered the information easily because the debtor/employee authorized a credit and background check. The debtor was eventually hired; but soon after, it was “discovered” that she owed a client money. The employer said that it was against the company’s policy to hire anyone who owed one of their client’s money so she would be terminated. When the debtor/employee inquired about working out some type of payment plan that would enable her to keep her job, the employer initially agreed but eventually the debtor was terminated anyway.
Because of her termination, the debtor/employee filed an adversary proceeding against her employer/creditor claiming that she was terminated because of her bankruptcy and because she owed a debt.
The bankruptcy law says that a plaintiff alleging a violation of § 525(b)(3) must prove that the sole reason the plaintiff was terminated was due to the plaintiff’s failure to pay a dischargeable debt or because they filed bankruptcy. The bankruptcy court determined that the debtor/employee was fired solely because of her failure to pay the debt to Fort bend and ruled in the debtor’s favor, however they did not grant punitive damages or payment for attorney fees.