Bankers Healthcare Grp., Inc. v. Bilfield (In re Bilfield)

• Decision Date: 02 April 2013
• Docket Number: Adversary No. 12–1208.,Bankruptcy No. 12–12680.
• Citation: 493 B.R. 748
• Parties: In re Jeffrey S. BILFIELD and Janet M. Bilfield, Debtors. Bankers Healthcare Group, Inc., Plaintiff, v. Jeffrey S. Bilfield, et al., Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

493 B.R. 748

In re Jeffrey S. BILFIELD and Janet M. Bilfield, Debtors.Bankers Healthcare Group, Inc., Plaintiff,

v.Jeffrey S. Bilfield, et al., Defendants.

Bankruptcy No. 12–12680.

Adversary No. 12–1208.

United States Bankruptcy Court,

N.D. Ohio,

Eastern Division.

April 2, 2013.

Michael C. Brink, Mary Stiles, Tucker Ellis & West, LLP, Cleveland, OH, Melissa S. Hayward, Franklin Skierski Hayward LLP, Dallas, TX, for Plaintiff.

Amelia R. Gray, Cambridge, MA, Susan M. Gray, Susan M. Gray Attys. & Counselors at Law, Rocky River, OH, Thomas C. Loepp, Stow, OH, for Defendants.

MEMORANDUM OF OPINION

PAT E. MORGENSTERN–CLARREN, Chief Judge.

Plaintiff Bankers Healthcare Group, Inc. filed this complaint to ask that the debt owed to it by the debtor Jeffrey Bilfield be found nondischargeable and that both Jeffrey Bilfield and joint debtor Janet Bilfield be denied discharges. The debtors counterclaimed, alleging that the plaintiff willfully violated the automatic stay and requesting damages for that act.

The debtors now move for summary judgment on the complaint, which the plaintiff opposes.¹ For the reasons stated, the motion is granted.

I. JURISDICTION

This court has jurisdiction under 28 U.S.C. 1334 and General Order No. 2012–7 entered by the United States District Court for the Northern District of Ohio on April 4, 2012. This is a core proceeding under 28 U.S.C. § 157(b)(2)(I), (J), and (O), and it is within the court's constitutional authority as analyzed by the United States Supreme Court in Stern v. Marshall, ––– U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).

II. SUMMARY JUDGMENT

Summary judgment should be rendered if the pleadings, the discovery and disclosure materials on the docket, and any affidavits show “that there is no genuine dispute as to any material fact and [that] the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) (made applicable by Fed. R. Bankr.P. 7056); see also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party bears the initial burden of showing that no genuine issue of material fact exists. Gen. Motors Corp. v. Lanard Toys, Inc. 468 F.3d 405, 412 (6th Cir.2006). “[T]hat burden ‘may be discharged by ‘showing—that is, pointing out to the ... court—that there is an absence of evidence to support the nonmoving party's case.’ ” Id. (quoting Bennett v. City of Eastpointe, 410 F.3d 810, 817 (6th Cir.2005)). “Once the moving party has satisfied its burden, the nonmoving party may not rest upon its mere allegations or denials of the opposing party's pleadings, but rather it must set forth specific facts showing that there is a genuine issue for trial.” Havensure, L.L.C. v. Prudential Ins. Co. of Am., 595 F.3d 312, 315 (6th Cir.2010). “In determining whether a genuine issue of material fact exists, [the] court draws all inferences in the light most favorable to the nonmoving party.” Id. The issue at this stage is whether there is evidence on which a trier of fact could reasonably find for the nonmoving party. Street v. J.C Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989).

A plaintiff cannot rest on mere allegations to establish standing in response to a motion for summary judgment “but must set forth by affidavit or other evidence specific facts, ... which for purposes of the summary judgment motion will be taken to be true.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotation marks and citation omitted). Although a plaintiff is not required to produce evidence in a form that would be admissible at trial, an affidavit offered in opposition to summary judgment must be “made on personal knowledge,” must “set forth such facts as would be admissible in evidence,” and must affirmatively show “that the affiant is competent to testify to the matters stated therein.” Alpert v. United States, 481 F.3d 404, 409 (6th Cir.2007) (internal quotation marks and citations omitted); Fed.R.Civ.P. 56(c)(4). Under the same reasoning, unauthenticated documents offered in opposition to summary judgment do not meet the Rule 56 requirements. Alexander v. CareSource, 576 F.3d 551, 558 (6th Cir.2009).

III. DISCUSSION

A. The Positions of the Parties

The complaint states five claims for relief including requests to deny the debtors discharges under 11 U.S.C. § 727(a)(2), (a)(4)(A) and (a)(5) and claims to determine nondischargeability of debt under 11 U.S.C. § 523(a)(2)(B) and (a)(6). The debtors request summary judgment based on the plaintiff's lack of standing and also as to each of the claims. ² The arguments made by the parties are set forth below.

B. Standing

Standing is a basic requirement in every federal case. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). It is “a qualifying hurdle that plaintiffs must satisfy[.]” Cmty. First Bank v. Nat'l Credit Union Admin., 41 F.3d 1050, 1053 (6th Cir.1995). Any plaintiff invoking federal jurisdiction bears the burden of establishing standing. Clapper v. Amnesty Int'l USA, ––– U.S. ––––, 133 S.Ct. 1138, 1148–49, 185 L.Ed.2d 264 (2013). The plaintiff's standing to bring this complaint is, therefore, the first issue which must be addressed. The question posed is whether the plaintiff “is entitled to have the court decide the merits of the dispute or of particular issues.” Warth, 422 U.S. at 498, 95 S.Ct. 2197.

Standing involves two limitations: a constitutional one and a prudential one. McGlone v. Bell, 681 F.3d 718, 728 (6th Cir.2012). The constitutional limitation is based on the “case or controversy” requirement of Article III of the United States Constitution. U.S. CONST. art. III, § 2, cl.1. To meet this limitation, the plaintiff must show that: (1) it has suffered an injury-in-fact which is concrete and particularized and actual or imminent, rather than conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely rather than merely speculative that the injury will be redressed by a favorable decision. LPP Mortg., Ltd. v. Brinley, 547 F.3d 643, 647–48 (6th Cir.2008). The injury required under this limitation “may exist solely by virtue of ‘statutes creating legal rights, the invasion of which creates standing.’ ” Lujan, 504 U.S. at 578, 112 S.Ct. 2130 (quoting Warth, 422 U.S. at 500, 95 S.Ct. 2197). To meet the injury-in-fact requirement, a party must have a personal stake in the outcome of the controversy. Warth, 422 U.S. at 498–99, 95 S.Ct. 2197. Constitutional standing must exist at filing and is a jurisdictional limitation that cannot be waived. Zurich Ins. Co. v. Logitrans, Inc., 297 F.3d 528, 531 (6th Cir.2002); see also Cundiff v. Cundiff (In re Cundiff), 227 B.R. 476, 478 (6th Cir. BAP 1998) (noting the same).

To meet the prudential limitation on standing a plaintiff must: (1) assert its own legal rights and not rest its claims to relief on the legal rights or interests of third parties; (2) assert more than a generalized grievance that is shared by a large class of citizens; and (3) in statutory cases, fall within the “zone of interests” regulated by the statute in question. Coal Operators & Assocs., Inc. v. Babbitt, 291 F.3d 912, 916 (6th Cir.2002). These requirements enforce the principle that “ ‘the plaintiff must be a proper proponent, and the action a proper vehicle, to vindicate the rights asserted.’ ” Id. at 916 (quoting Pestrak v. Ohio Elections Comm'n, 926 F.2d 573, 576 (6th Cir.1991)).

The plaintiff requests that the debtors be denied a discharge under Bankruptcy Code § 727(a)(2), (4), and (5). This relief may only be requested by the trustee, a creditor, or the United States trustee. 11 U.S.C. § 727(c)(1). As the plaintiff is not the chapter 7 trustee or the United States trustee, its standing to bring these claims hinges on its being a creditor. The term “creditor” in this context means an “entity that has a claim against the debtor that arose at the time of or before the order for relief[.]” 11 U.S.C. § 101(10)(A). The definition of “claim” is broad and includes the “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured[.]” 11 U.S.C. § 101(5)(A). Courts uniformly hold that a plaintiff that is not a creditor lacks standing to object to discharge under § 727(a). See, for example, Lussier v. Sullivan (In re Sullivan), 455 B.R., 829, 835 (1st Cir. BAP 2011) (“Thus, whether [plaintiff] has standing here turns on whether [plaintiff] is a creditor.”); Shelton v. Wilson (In re Wilson), 311 B.R. 566, 569 (D.Or.2004), aff'd185 Fed.Appx. 696 (9th Cir.2006) (noting that the plaintiff objected to discharge as a creditor and must be a creditor to have standing to do so); CM Temp. Servs., Inc. v. Bailey (In re Bailey), 375 B.R. 410, 414–15 (Bankr.S.D.Ohio 2007) (same); Kirby v. Kirby (In re Kirby), 356 B.R. 324, 326 (Bankr.D.N.H.2006) (same); Rasmussen v. Ryan (In re Ryan), Adv. No. 04–6007, 2006 WL 6812694 at *9 (Bankr.D.Idaho 2006) (same).

The same is true of the plaintiff's request that a specific debt be found to be nondischargeable under § 523(a)(2)(B) and (a)(6): its standing to bring those claims depends on it being “the creditor to whom such debt is owed.” 11 U.S.C. § 523(c)(1); see alsoFed. R. Bankr.P. 4007(a) (stating that “a debtor or any creditor may file a complaint to obtain a determination of dischargeability”). Consequently, standing to bring those claims requires that the plaintiff be a creditor. Fezler v. Davis (In re Davis), 194 F.3d 570, 574 (5th Cir.1999); Premier Capital, LLC v. Gavin (In re Gavin), 319 B.R. 27, 33 (1st Cir. BAP 2004).

Two Sixth Circuit cases which address the issue of standing...