Kepple v. Miller: Independent Contractor Salesperson Cannot Claim Violation of Bankruptcy Code

A Georgia appellate court has considered a salesperson's lawsuit filed against a broker for the broker's alleged violation of the Bankruptcy Code for terminating her allegedly because of her bankruptcy discharge.

Cheryl Kepple ("Salesperson") was a licensed real estate salesperson who was an independent contractor associated with Southside Partners, Inc., d/b/a ReMax Advantage ("Brokerage"). The Salesperson paid monthly fees to the Brokerage for office space and other office support amenities.

In 1996, the Brokerage terminated its relationship with the Salesperson because she had accumulated approximately $20,000 worth of unpaid fees and she was also not selling any properties. However, one of the Brokerage's owners intervened on behalf of the Salesperson and she was allowed to remain with the Brokerage. Later that same year, the Salesperson filed for bankruptcy and the bankruptcy court issued an order discharging all of the Salesperson's unpaid office fees.

In 1998, the Brokerage terminated the Salesperson. She filed a lawsuit against the Brokerage, alleging that her termination constituted a breach of contract and also a violation of the federal Bankruptcy Code, arguing that she was fired solely because of her unpaid debts that were discharged in bankruptcy. The trial court ruled in favor of the Brokerage, and the Salesperson appealed.

The Court of Appeals of Georgia affirmed the ruling of the trial court. The court considered the Brokerage's argument that it could not violate the Bankruptcy Code provision in question because the Salesperson was an independent contractor and not an employee of the Brokerage. The provision in question states that "[n]o private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor, or bankrupt...solely because such debtor...has not paid a debt that is dischargeable."

Looking at the relevant case law, the court found that there was a split of opinion over whether this section covered independent contractors or was limited to employees. The most recent bankruptcy court to consider this issue had determined that the plain meaning of the language used by Congress in the Bankruptcy Code demonstrated that Congress intended to limit this section to employees only. The court agreed with that rationale, and so ruled that the Salesperson was not protected by this section of the Bankruptcy Code. Thus, the court affirmed the ruling of the trial court.

The court rejected the Salesperson's attempts to claim she wasn't an independent contractor, finding the overwhelming amount of evidence before the court confirmed she was an independent contractor, including her own affidavit filed with the court in which she identified herself as an independent contractor. Further, the court ruled that the Brokerage could have fired the Salesperson even if she had been protected by the Bankruptcy Code, as the Brokerage had numerous other reasons to terminate her, such as lack of sales and fighting with other employees. The Bankruptcy Code only protects those who are fired for no other reason than their discharged debts, and here the Brokerage had numerous legitimate reasons for firing the Salesperson.

The court also affirmed the trial court's rejection of her breach of contract claims. The Salesperson argued that the trial court had stated in its order dismissing the breach of contract allegations that she was an employee. The court found that the Salesperson was misconstruing the trial court's order, which had stated she had an at will agreement with the Brokerage, meaning she could be terminated at any time. Thus, the court ruled that the trial court had properly rejected the Salesperson's lawsuit and so affirmed the judgment in favor of the Brokerage.

Kepple v. Miller, 572 S.E.2d 687 (Ga. Ct. App. 2002).