The Continuing Saga of Amber Heard and Johnny Depp
Is Bankruptcy the Next Stop and is a âFresh Startâ Available for Amber Heard?
The well-publicized defamation case of Johnny Depp and Amber Heard resulted in a substantial judgment against Heard. Setting off the amount awarded to Depp, Heard will be liable for approximately $8 million in compensatory and punitive damages. If Heard files for relief under bankruptcy law, is that judgment dischargeable? What can Johnny Depp do if that arises to protect his interest? This article discusses substantive issues that may arise if that were to occur.
A fundamental concept of American bankruptcy law is to provide a âfresh start,â enabling businesses and individuals to have a second chance in their business or personal financial affairs. Title 11 of the United States Code, commonly referred to as the Bankruptcy Code, provides for the discharge of debts through the bankruptcy process.
Despite the underlying principle of a âfresh start,â Section 523 of the Bankruptcy Code lists 19 kinds of debt that can survive a bankruptcy case and allow creditors to continue collection. These nondischargeable debts generally include those arising from fraud, willful and malicious actions, family support, tax debts, and generally, bad acts. Additionally, Section 727 of the Bankruptcy Code permits the Bankruptcy Court to deny discharge of the debtor if certain âbad faithâ activities can be proven. In essence, while the bankruptcy law protects âhonest but unfortunateâ debtors from debts they incur, it also protects creditors who have claims against debtors which, as a matter of public policy, should not be discharged.
Creditors are entitled to challenge the debtorâs right to a discharge. However, a debt falling within one of the exceptions is not automatically excepted from discharge. The creditor has the burden of requesting that the court declare a debt nondischargeable. In several prior client alerts, we have discussed nondischargeability of debts.
The well-publicized defamation case of Johnny Depp and Amber Heard resulted in a substantial judgment against Heard. Setting off the amount awarded to Depp, Heard will be liable for approximately $8 million in compensatory and punitive damages.
If Depp seeks to enforce the judgment, the issue that will likely arise is whether filing personal bankruptcy can provide Heard a fresh start. As usual, a decision to file bankruptcy will be based on many factors including Heardâs other assets and debts, available exemptions, and the likelihood of discharging the judgment debt. If Heard chooses to file, the burden will be on Depp to challenge Heardâs right to a discharge and/or object to dischargeability of the judgment debt.
In finding against Heard, the jury found that, under Virginia law, she published a statement about Depp which was false and defamatory. Further, the jury found that Heard made the statement with âactual maliceâ, which is required to recover damages for defamation where the purported victim is a public official or public figure and the alleged defamation relates to a matter of public concern.
Generally, a judgment based on defamation may be nondischargeable if the judgment creditor proves both âwillful and maliciousâ conduct. As such, because a judgment sounding in defamation can be construed as a willful injury, it may be precluded from discharge under Section 523(a)(6). However, although the jury found that Heard acted with âactual malice,â the âmaliceâ required to except judgment debt from discharge is not necessarily the equivalent to the definition of âactual maliceâ required to support a defamation claim, which could be established simply by showing that the debtor had recklessly disregarded the truth. See for example, In re Ellerbee, 177 B.R. 731, 742 (Bankr. N.D. Ga. 1995) (noting that â[a] finding of malice in connection with defamation,â under state law âmay or may not include conduct that would be considered malicious in the context of section 523(a)(6)â).
For purposes of Section 523(a)(6), âmaliciousâ injury generally requires (a) a wrongful act, (b) done intentionally, (c) which necessarily causes injury, and (d) done without just cause or excuse. See Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1209 (9th Cir. 2001). Since the jury found Heard liable for defamation, the first two prongs are satisfied as a matter of law. The third prong is likely to be satisfied because Heardâs statements, claiming that Depp physically and sexually abused her, caused Depp to lose millions in movie contracts and substantially harmed him in his occupation as an actor.
The last prong may provide Heard with a potential argument. Courts in the Ninth Circuit, where Heard may potentially file her bankruptcy based on her residence, have found that although it âmay be rare to find a just cause and excuse for defamation,â In re Sicroff, 401 F.3d 1101, 1107, n.5 (9th Cir. 2005), there is no per se rule that there could never be just cause or excuse for defamation. In re Hagele, EC-15-1033-JuDTa, 2016 WL 3965899 (B.A.P. 9th Cir. July 18, 2016). The debtor carries the burden of going forward on the final element of malice, which may be satisfied by the debtor affirmatively asserting âjust cause or excuse.â Thus, if Heard is able to affirmatively assert a âjust cause or excuseâ for the wrongful act of defaming Depp, she may be able to defeat his claim that the judgment debt is not dischargeable and potentially avoid having to pay the judgment.
Please note that this is a general overview of developments in the law and does not constitute legal advice. Nothing herein creates an attorney-client relationship between the sender and recipient. If you have questions regarding these provisions, or any other aspect of bankruptcy law, please contact Michael Traison (firstname.lastname@example.org) at (312) 860-4230 or Michael Kwiatkowski (email@example.com) at (516) 357-3700. We thank Samantha Giuglianotti, a 2022 Summer Associate with Cullen and Dykman LLP, for her assistance and research in the preparation of this alert.
This article was previously published on Cullen/Dykman, June 21, 2022, and is republished here by permission.
Michael H. Traison is a Partner at Cullen/Dykman and based in New York City. He specializes in Bankruptcy and Creditorsâ Rights.
Mr. Traison may be contacted at (312) 860-4230 or by e-mail to firstname.lastname@example.org.
Michael Kwiatkowski is Of Counsel with Cullen/Dykman and based in Garden City, New York. He specializes in Bankruptcy and Creditorsâ Rights.
Mr. Kwiatkowski may be contacted at (516) 296-9144 or by e-mail to email@example.com.
 Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367 (2007) (âThe principal purpose of the Bankruptcy Code is to grant a âfresh startâ to the âhonest but unfortunate debtorâ.â) (quotation marks and citation omitted).
 Non Dischargeable Debts – Cullen and Dykman (cullenllp.com), including those arising from bad acts: Debtors Behaving Badly: Non-Dischargeability of Debt Based on Debtorâs âBad Actsâ (cullenllp.com), and student loan debt: Student Loan Debt Discharged in Recent Bankruptcy Court Opinion – Cullen and Dykman LLP (cullenllp.com); Student Loan Debt Discharged in Recent Illinois Bankruptcy Court Opinion – Cullen and Dykman LLP (cullenllp.com); Another Bankruptcy Court Rules in Favor of Discharging Student Loan Debt. – Cullen and Dykman LLP (cullenllp.com); An Update on Student Loan Debt: Interpretation of the Statute is Critical – Cullen and Dykman LLP (cullenllp.com).