Can Amber Heard File Bankruptcy In Johnny Depp Case?

Actress Amber Heard departs the Fairfax County Courthouse on June 1, 2022 in Fairfax, Virginia. (Photo by Win McNamee/Getty Images.)

belongs to amber can’t just apply federal bankruptcy laws to avoid paying the actor millions of dollars Johnny Depp, but it could potentially use bankruptcy proceedings to slow payments. So says a law professor and expert in the field, who said the latter possibility is risky for Heard — should it be the case Aquaman Actress chooses this path.

A Virginia state court jury ruled Wednesday afternoon that Heard defamed Depp three more times over a Washington Post op ed. While some have complained that the jury’s first defamation finding included a headline that Heard’s legal team claimed Heard never wrote, the bottom line is that the jury appears to have disbelieved most of Heard’s statements and determined that Heard Depp must pay $10 million in compensatory damages and $5 million in punitive damages for the defamation. The presiding judge immediately capped the punitive damages award at $350,000 under a Virginia statute capping punitive damages at that amount.

The jury dismissed two of Heard’s counterclaims against Depp, but decided that Adam Waldman, a lawyer who acted as Depp’s agent, only once defamed Heard. That finding resulted in a counter-award of $2 million in compensatory damages and no punitive damages from Depp to Heard.

Actor Johnny Depp waves to supporters from his vehicle as he exits a Fairfax County Courthouse May 27, 2022 in Fairfax, Virginia. Depp was not in the courtroom for the sentencing but is said to have watched the proceedings from afar from the UK. (Photo by Alex Wong/Getty Images.)

The question is whether money changes hands at all. While Heard has promised to appeal the underlying court decisions in the case, bankruptcy law says she likely can’t protect herself from having to pay Depp Bruce MarkelProfessor of Bankruptcy Law and Practice at Northwestern Pritzker School of Law in Illinois.

The analysis begins with Section 523(a)(6) of the Bankruptcy Code. It states that “debt relief” under various other sections of the Act “does not relieve an individual debtor of any debt. . . due to intentional and fraudulent infringement by the debtor of another legal entity or of the property of another legal entity.”

In other words, bankruptcy law protects individuals from debts they incur, but it also protects individuals who have valid claims against debtors. An alternative – in which debtors could avoid tort liability simply by filing for bankruptcy – would effectively neutralize much of the legal system. As a general legal axiom, tort judgments serve to compel wrongdoers to pay for the damages they cause, and this premise cannot generally be avoided by bankruptcy.

“I think there are at least two reasons why bankruptcy wouldn’t help Ms. Heard,” Professor Markell told Law&Crime via email.

His first rationale includes a little insight into Congressional intent behind bankruptcy law (we’ve edited the answer very slightly):

Damages for defamation (whether general or criminal) are generally considered inexcusable under section 523(a)(6) of the intentional and malicious standard. The Congressional history of “willful” indicates that it means “willful or intentional.” “Malicious” means a willful disregard of one’s duties or without good reason or excuse; it requires no ill will or specific intention to harm. rewrite Necklace about bankruptcyFor example, most courts have ruled that an intentional wrongful act that necessarily causes harm or has a significant likelihood of causing harm and occurs without good cause or excuse is “intentional and malicious” within the meaning of section 523(a)(6). ).

That standard would even cover the general damages awarded to Mr. Depp. In other words, the standard for punitive damages is stricter than the standard for intentional and malicious; While all punitive damages are generally considered intentional and malicious, not all intentional and malicious damages are equivalent to punitive damages. Therefore, it is highly likely that the entire judgment, not just the punitive damages portion, would be unappealable [in a hypothetical bankruptcy proceeding].

If true, Ms. Heard would not derive any real benefit from filing for bankruptcy. She would have to pay in full the offset between Depp’s $10,350,000 in damages and her $2,000,000 reward.

That would result in Heard paying Depp $8,350,000, Law&Crime noted yesterday.

Professor Markell continued:

she [Heard] gain a procedural advantage in filing a Chapter 11 as it could propose to pay the award over time, similar to how Texaco has proposed paying Pennzoil’s damages [in the late 1980s] (Texaco was solvent but could not pay [a] Over $10 billion in damages immediately, so it filed a Chapter 11 plan to settle the claim and pay it over time).

Some commentators have suggested that Heard might be able to use bankruptcy proceedings to avoid an award of damages, but would remain hooked for an award of $350,000 in reduced punitive damages. However, for the reasons given above, Prof. Markell disagrees with this assessment.

The second reason Markell said Heard probably wouldn’t benefit from a bankruptcy filing is this:

The second reason is speculative and builds on the last paragraph. If a person can pay their debts, they should. If Ms. Heard has the financial means to pay the judgment, filing for bankruptcy to halt or reduce payments could be viewed as bad faith (this theory plays out in the [Johnson & Johnson] Talk cases currently ahead of 3D Circuit). But I have no idea of ​​Ms Heard’s current or future financial situation – or Mr Depp’s desire to enforce the ruling in full. If he were to offer terms that fit Ms Heard’s finances, there would be far less justification for bankruptcy. But that’s for the future.

Questions about Heard’s financial situation aside, it remains to be seen if Depp will actually attempt to collect the amount owed to him by the jury.

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