UNITED STATES BANKRUPTCY COURT

Plaintiff, )

JAMIE LYNN TREON, )

Defendant. )

Plaintiff, Home Instead Senior Care of Oregon (Home Instead), filed

this adversary proceeding to have its claim against defendant-debtor,

Jamie Treon, declared nondischargeable and reduced to judgment. The

claim arises from alleged breaches of employment agreements containing

non-compete and non-solicitation provisions. For the reasons discussed

below, I conclude that, when debtor went to work for one of Home

Instead’s former clients one month after she stopped working for Home

Below is an Opinion of the Court.

_______________________________________

Thus, Home Instead’s claim that the debt debtor owes it is

nondischargeable under 11 U.S.C. § 523(a)(6) will be dismissed.

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FACTS

Home Instead, which runs a service that provides primarily non-

medical in-home care to seniors, employed debtor as a caregiver from

about June 14, 2005, until she resigned on April 28, 2006. As a

condition of her employment, debtor signed two contacts with Home Instead

- a “Caregiver Confidentiality, Non-Solicitation and Non-Compete

Agreement” (Non-Compete Agreement) and an “Employment Agreement.” Those

During one of her last visits with Mayfield, debtor informed him and

Susan Lewis (who was Mayfield’s medical decision maker and power of

attorney) that she was resigning from Home Instead. Debtor testified

that, after she told Mayfield and Lewis that she was leaving Home

Instead, Lewis suggested that debtor continue working for Mayfield as a

private caregiver after she quit. Lewis testified that debtor was the

one who made the suggestion. I believe Lewis’s version and find that

debtor was the one who made the suggestion, based on Lewis’s demeanor and

the fact that Lewis has no stake in this proceeding.

There was testimony that Home Instead clients sign a contract

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agreeing that, if the client chooses to stop receiving services from Home

Instead, the client must wait for one year before independently hiring a

former employee of Home Instead. None of the written contracts between

Home Instead and its clients were introduced in evidence. Nor was there

As a result of the conversation with debtor, Lewis contacted Home

Instead on or about April 26, 2006, to cancel Mayfield’s service

contract. That day Matt Van Sooy, a Home Instead employee, contacted

Lewis and warned her that it would be a breach of Mayfield’s service

contract if she independently hired debtor. A few hours after that

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conversation, Lewis reinstated Mayfield’s contract with Home Instead.

There was no break in the services Home Instead provided to Mayfield.

As for the Hinmans, debtor denies making a similar proposal to

provide post-termination services to the Hinmans. Home Instead did not

with respect to hiring former Home Instead employees. Matt Van Sooy also

called Rick Hinman (the Hinmans’ son) to tell him about the contract

restrictions. On May 2, the Hinmans reinstated their contract.

Ali Davidson, another co-owner of Home Instead, was suspicious that

debtor was attempting to solicit Home Instead clients. When debtor

picked up her final paycheck, Ali Davidson warned debtor that she could

not continue working for Home Instead clients under the terms of her Non-

Compete Contract and Employment Agreement. Debtor told Davidson that she

had intended to continue styling Mrs. Hinman’s hair and was contemplating

having her husband mow the Hinmans’ lawn. Davidson told debtor that she

could not provide those services, and was to have no contact with

Mayfield or the Hinmans.

In the weeks after she left Home Instead, debtor requested and

received copies of her Non-Compete and Employment Agreements. She sought

the advice of counsel to clarify her rights and obligations under the

case it had filed against defendant prior to her bankruptcy. Farra

testified that debtor’s counsel had filed a motion for summary judgment

in state court on the theory that debtor had not breached the contracts,

because the contract language did not extend to “former” clients of Home

Instead. Although the state court judge denied debtor’s motion, the

theory used in the motion corroborates debtor’s testimony regarding the

advice she received from counsel as to what the contracts required.

From April 28, 2006, her last day of work for Home Instead, to June

2, 2006, debtor had no working relationship with any current or former

Home Instead clients, nor did she attempt to or actually solicit, divert,

services from Home Instead. On May 31, Rick Hinman called Home Instead

and once again canceled his parents’ service contract. On June 1, Rick

Hinman contacted debtor and offered her employment as one of his parents’

private caregivers. The Hinmans had been using the services of at least

one private caregiver before they hired the debtor. Following her

attorney’s advice, debtor confirmed with Rick Hinman that the Hinmans

were no longer clients of Home Instead. Satisfied with Rick Hinman’s

answers, debtor started providing care for the Hinmans on June 2, 2006.

Soon after, Home Instead discovered that debtor was working for the

Whether debtor willfully and maliciously injured Home Instead by

working for Home Instead’s former clients within three months of

terminating her employment with Home Instead.

DISCUSSION

Bankruptcy Code § 523(a)(6) excepts from discharge debts resulting

from “willful and malicious injury by the debtor to another entity or to

the property of another entity.” The plaintiff has the burden of proving

every element of the claim by a preponderance of the evidence. Grogan v.

Garner, 498 U.S. 279, 290 (1991); In re Gee, 173 B.R. 189, 191 (9th Cir.

BAP 1994).

Kawaauhau v. Geiger, 523 U.S. 57, 61-62 (1998) (indicating that negligent

and reckless torts and intentional breaches of contract are outside the

scope of what was “plainly expressed” in § 523(a)(6)). “It is well

settled that a simple breach of contract is not the type of injury

addressed by § 523(a)(6).” In re Riso, 978 F.2d 1151, 1154 (9th Cir.

2001). An intentional breach of contract is excepted from discharge only

if it is “accompanied by tortious conduct which results in willful and

malicious injury.” In re Jercich, 238 F.3d 1202, 1205 (9th Cir. 2001).

Under Jercich, the first question in determining whether a breach of

each element separately).

For the reasons discussed below, I find that debtor’s conduct was

not tortious and did not give rise to a willful or malicious injury.

Thus, Home Instead’s nondischargeability claim fails.

1. Tortious Conduct:

(a) Must Home Instead prove an intentional tort?

Home Instead argues that debtor’s conduct constituted intentional

interference with economic relations, which is a tort. However, Home

Instead also argues that it need not prove that defendant’s conduct

constituted a tort, but instead must prove only that debtor’s conduct was

The law is clear in the Ninth Circuit that a debt arising from a breach

of contract is nondischargeable under § 523(a)(6) only to the extent that

the breach of contract was accompanied by willful and malicious tortious

conduct. Riso, 978 F.2d at 1154; Jercich, 238 F.3d at 1205. See also In

re Hayes, 315 B.R. 579, 590 (Bankr. C.D. Cal. 2004). As the Ninth

Circuit recently said:

In 1998, . . . the Supreme Court clarified that the § 523(a)(6)

exception “is confined to debts ‘based on what the law has for

generations called an intentional tort.’” Geiger, 523 U.S. at 60

(quoting Geiger v. Kawaauhau (In re Geiger), 113 F.3d 848, 852 (8th

Cir. 1997)(en banc)).

defendant’s conduct was tortious. It merely concluded that, under the

facts of that case, the breach of a covenant not to compete was willful

and malicious. The Jercich court cited Trammell as an example of a case

in which an intentional breach of contract had resulted in willful and

malicious injury. It did not cite Trammell as a way of softening the

requirement that there be an intentional tort in order for damages for

breach of contract to be nondischargeable under § 523(a)(6). In any

event, the defendant’s conduct in Trammell would have constituted

tortious conduct, and therefore Trammell is consistent with Jercich.

Plaintiff also relies on In re Ketaner, 149 B.R. 395 (Bankr. E.D.

company for $1,200,000, but remained the president and chief executive

officer. 149 B.R. at 396. After having a dispute with the company over

his annual bonus, the defendant decided to form his own company with the

goal of destroying his prior employer’s business. Id. at 398. He

successfully enticed the plaintiff’s staff to quit their jobs and come

and work for his new company. The defendant tortiously interfered with

the plaintiff’s contractual and business relations, conspired to injure

the plaintiff in violation of Virginia’s criminal code, breached his

fiduciary duty as an officer of the plaintiff’s corporation, and breached

apply Oregon state law, because the contracts and conduct at issue

occurred in Oregon. Jercich, 238 F.3d at 1206. To prove intentional

interference with economic relations, the tort plaintiff cliams defendant

committed, the plaintiff must establish

(1) the existence of a valid business relationship or expectancy,

defendant], (4) accomplished through improper means or for an

damage to economic relations, and (6) damages.

Uptown Heights Assoc. v. Seafirst Corp., 320 Or. 638, 651 (1995).

The heart of this nondischargeability claim is Home Instead’s

assertion that defendant intentionally interfered with its economic

leaving her employment at Home Instead. The evidence established that

debtor had sought to draw Mayfield away from Home Instead while he was

still a client of Home Instead, but Mayfield did not in fact terminate

his agreement with Home Instead, and debtor never provided private

caregiver services to him after she left her employment with Home

Instead. Therefore, there was in fact no interference with the Home

Instead contract with Mayfield, and no damages arising from debtor’s

solicitation of Mayfield as a client. I agree with plaintiff that it is

reasonable to infer that defendant also solicited the Hinmans in April

just before she left her employment. That solicitation, however, did not

cause the Hinman’s to terminate their services and thus did not damage

plaintiff. As discussed hereafter, I do not believe that debtor

relations with the Hinmans. I conclude that Home Instead failed to

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prove the elements of intentional interference with economic relations

with the Hinmans.

First, Home Instead failed to establish that it had a valid business

relationship with the Hinmans when debtor started working for them in

June 2006. Rick Hinman had canceled his parent’s contract with Home

Instead on May 31, 2006. He then contacted debtor on June 1 and offered

her employment as an independent caregiver for his parents. Debtor

accepted his offer and started working for the Hinmans on June 2.

costs incurred to enforce the provisions of the contract shall be

awarded to one of the parties, the party that prevails on the claim,

whether that party is the party specified in the contract or not,

shall be entitled to reasonable attorney fees in addition to costs

and disbursements.

Home Instead is not entitled to recover attorney fees from debtor

because it did not prevail in this adversary proceeding. Debtor

prevailed on this § 523(a)(6) claim because Home Instead failed to prove

that she willfully and maliciously injured it. That does not mean,

however, that debtor is entitled to recover attorney fees.

The extent to which a debtor who prevails in dischargeability

litigation involving a contract that contains an attorney fee clause can

the basis that the legal work pertained strictly to federal bankruptcy

law. The Ninth Circuit had earlier held that in dischargeability

litigation, attorney fees could not be awarded for legal work related to

I need not resolve in this case the extent to which Travelers has

impacted recovery of attorney fees in dischargeability litigation,

because I find that debtor breached the Non-Compete Agreement. The Non-

Compete Agreement provided that debtor would not “solicit, divert or take

away, or attempt to divert, solicit or take away, the business or

patronage of any of the clients, customers or accounts, or prospective

clients, customers or accounts” of Home Instead during her employment and

for a “period of 3 months after termination.” The contract covers

current and “prospective” “clients, customers or accounts.” The term

months after she left her employment, she is not entitled to attorney

fees under the Non-Compete Agreement. She prevailed in this litigation

because the debt is dischargeable, not because she did not breach the

contract.

The Employment Agreement, which is a separate contract, does not

provide a right to attorney fees in the event enforcement or

interpretation is necessary. Thus, debtor cannot be awarded attorney

fees even if she did not breach the Employment Agreement.

CONCLUSION

Debtor’s conduct was not tortious, and did not cause willful and

to plaintiff, if any, is dischargeable. Both parties’ requests for

attorney fees are denied.

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cc: Milly Whatley

Fred Kowolowski