Browning v. Peters (In re Peters)

• Decision Date: 05 March 2020
• Docket Number: ADV. PRO. NO. 18-05022 (JAM),CASE NO. 18-50125 (JAM)
• Court: U.S. Bankruptcy Court — District of Connecticut
• Parties: IN RE: WILLIAM DAVID PETERS III and VICTORIA BROWNING PETERS, Debtors. ANN BROWNING, RICHARD BROWNING, LANCE BROWNING, KAREN GIUNTA, and JILL MILLIGAN, Plaintiffs, v. WILLIAM DAVID PETERS III and VICTORIA BROWNING PETERS, Defendants.

IN RE: WILLIAM DAVID PETERS III and VICTORIA BROWNING PETERS, Debtors.

ANN BROWNING, RICHARD BROWNING, LANCE BROWNING,KAREN GIUNTA, and JILL MILLIGAN, Plaintiffs, v. WILLIAM DAVID PETERS III and VICTORIA BROWNING PETERS, Defendants.

CASE NO. 18-50125 (JAM)

ADV. PRO. NO. 18-05022 (JAM)

UNITED STATES BANKRUPTCY COURT DISTRICT OF CONNECTICUT

March 5, 2020

CHAPTER 7

ECF NO. 38

APPEARANCES

Kenneth Votre

Votre & Associates

90 Grove Street

Ridgefield, CT 06877

Attorney for the Plaintiffs

Byron Paul Yost

Law Office of Byron Paul Yost

46 Edgewood Street, Unit 72

Stafford Springs, CT 06076

Attorney for the Defendants

MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT

Julie A. Manning, Chief United States Bankruptcy Judge

I. Background

On May 4, 2018, Ann Browning, Richard Browning, Lance Browning, Karen Giunta, and Jill Milligan (the "Plaintiffs") commenced this adversary proceeding against William David Peters III and Victoria Browning Peters (the "Defendants"). The one-count Complaint seeks a determination that a debt owed to the Plaintiffs by the Defendant Victoria Browning Peters is non-dischargeable pursuant to 11 U.S.C. § 532(a)(4). On October 23, 2019, the Plaintiffs filed a Motion for Summary Judgment (the "Motion for Summary Judgment"). ECF No. 38. On December 27, 2019, after the deadline to oppose the Motion for Summary Judgment had passed, the Defendants filed a response to the Motion for Summary Judgment (the "Response"). ECF No. 42. For the reasons that follow, the Motion for Summary Judgment is GRANTED.

II. Jurisdiction

The United States District Court for the District of Connecticut has jurisdiction over the instant proceeding pursuant to 28 U.S.C. § 1334(b). The Bankruptcy Court derives its authority to hear and determine this matter pursuant to 28 U.S.C. §§ 157(a) and (b)(1) and the District Court's General Order of Reference dated September 21, 1984. This is a "core proceeding" pursuant to 28 U.S.C. § 157(b)(2)(I).

III. Undisputed Facts

Local Rule 56(a)(1) of the Local Rules of Civil Procedure of the United States District Court for the District of Connecticut ("Local Rule 56(a)(1)") requires a party moving for summary judgment to file a Local Rule 56(a)(1) Statement of Undisputed Material Facts. D. Conn. L. R. 56(a)(1). Local Rule 56(a)(2) of the Local Rules of Civil Procedure of the United States District Court for the District of Connecticut ("Local Rule 56(a)(2)") requires a party opposing a motion for summary judgment to file a Local Rule 56(a)(2) Statement of Facts in Opposition to Summary Judgment. D. Conn. L. R. 56(a)(2). Local Rule 56(a)(1) and Local Rule 56(a)(2) apply in this adversary proceeding pursuant to D. Conn. Bankr. L. R. 7056-1. Each material fact set forth in a movant's statement and supported by the evidence "will be deemed tobe admitted (solely for the purposes of the motion) unless such fact is controverted by the Local Rule 56(a)(2) Statement required to be filed and served by the opposing party in accordance with this Local Rule..." See D. Conn. L. R. 56(a)(1); see also Parris v. Delaney (In re Delaney), 504 B.R. 738, 746-747 (Bankr. D. Conn. 2014).

Neither party has complied with Local Rule 56(a). Under the circumstances present in this case, however, the Court will not deny summary judgment solely on the basis of the Plaintiffs' failure to comply with the local rules. The Court has reviewed the record and the submissions of the parties to decide the Motion for Summary Judgment. The record and the parties' submissions enable the Court to determine the undisputed facts and that the interests of justice and judicial economy are best served in this adversary proceeding by overlooking the parties' technical non-compliance with the local rules. See Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir. 2001) ("A district court has broad discretion to determine whether to overlook a party's failure to comply with local court rules."); Rocha v. Bakhter Afghan Halal Kababs, Inc., 44 F. Supp. 3d 337, 346 (E.D.N.Y. 2014) (disregarding movant's failure to submit a statement of undisputed material facts, and reviewing the record to decide whether summary judgment should enter); Scull v. Hennegan, No. 15-CV-00309-RJA-JJM, 2017 WL 2374496, at *3 (W.D.N.Y. May 4, 2017), report and recommendation adopted, No. 15-CV-309-A, 2017 WL 2362395 (W.D.N.Y. May 31, 2017) (overlooking movant's failure to include a statement of undisputed facts as required by the local rules and declining to deny a motion for summary judgment on that basis).

The Court finds the following undisputed facts:¹

1. The Plaintiffs are siblings or step-siblings of the Defendant Victoria Browning Peters.

2. Byram Browning, father of the Plaintiffs and the Defendant Victoria Browning Peters, executed an inter vivos trust on June 23, 1993 (the "Trust").

3. The beneficiaries of the Trust are the Plaintiffs and the Defendant Victoria Browning Peters.

4. The Defendant Victoria Browning Peters was the sole trustee of the Trust.

5. Byram Browning died on May 28, 2006.

6. The Plaintiffs began to have questions concerning the terms of the Trust after Byram Browning's death. Their attempts to obtain answers from the Defendant Victoria Browning Peters were unsuccessful.

7. In 2008, after no distributions from the Trust had been made and no information regarding the Trust's terms were forthcoming, the Plaintiff Richard Browning filed a Petition for an Accounting in the Connecticut Probate Court.

8. On April 13, 2012, the Plaintiff Richard Browning filed a Petition for Sanctions against the Defendant Victoria Browning Peters in her capacity as trustee of the Trust in the Connecticut Probate Court. The Petition for Sanctions alleged that the Defendant Victoria Browning Peters mismanaged trust assets, concealed her mismanagement, commingled trust funds with her personal funds, failed to maintain trust records, engaged in self-dealing, and willfully and fraudulently took trust funds that did not belong to her amounting to statutory theft.

9. The Petition for Sanctions sought the following relief:

i. A finding that the Defendant Victoria Browning Peters owed a fiduciary duty to the Plaintiffs as beneficiaries of the Trust;ii. A finding that the Defendant Victoria Browning Peters breached her fiduciary duty to the Plaintiffs as beneficiaries of the Trust;

iii. A finding that the breach of fiduciary duty was so egregious that it rose to the level of fraud; and

iv. An imposition of sanctions on the Defendant Victoria Browning Peters to make the beneficiaries whole after they were forced to expend time and money to obtain information about the Trust.

10. The Connecticut Probate Court held two evidentiary hearings on the Petition for Sanctions, at which the Defendant Victoria Browning Peters, who was represented by counsel, testified.

11. On July 3, 2014, the Connecticut Probate Court ruled in the Plaintiffs' favor on the Petition for Sanctions (the "Probate Court Judgment").

12. The Probate Court Judgment makes the following findings:

i. The Defendant Victoria Peters, as trustee of the Trust, had a fiduciary duty to the other beneficiaries of the Trust.

ii. The Defendant Victoria Peters breached her fiduciary duty by withholding assets that did not belong to her; by removing, for her own benefit, assets of the Trust; and by benefitting personally at the expense of the other beneficiaries.

iii. The actions the Defendant Victoria Browning Peters took with respect to the Trust were willful and with the intent to the deprive the other beneficiaries of what was rightfully theirs, and amount to fraud while in a fiduciary capacity.iv. The Defendant Victoria Browning Peters is liable for a surcharge in the amount of $161,734.98.

13. The Probate Court Judgment is a final judgment.

14. On February 2, 2018, the Defendants filed a voluntary petition under Chapter 11 of the Bankruptcy Code. See ECF No. 1 in Case No. 18-50125.

15. The Plaintiffs commenced this Adversary Proceeding to determine the non-dischargeability of the Probate Court Judgment on May 4, 2018.

16. On May 17, 2019, the Defendants' Chapter 11 case was converted to a case under Chapter 7. See ECF No. 91 in Case No. 18-50125.

17. The Plaintiff's Motion for Summary Judgment was filed on October 23, 2019.

IV. Summary Judgment Standard

Federal Rule of Civil Procedure 56(a) is made applicable to these proceedings by Federal Rule of Bankruptcy Procedure 7056. Rule 56 directs that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Fed. R. Bankr. P. 7056. The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). "Upon consideration of a motion for summary judgment, 'the judge's function . . . is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'" Delaney, 504 B.R. at 746 (quoting Anderson, 477 U.S. at 249). "[T]he court 'cannot try issues of fact; it can only determine whether there areissues to be tried.'" Mex. Constr. & Paving v. Thompson (In re Thompson), 511 B.R. 20, 24 (Bankr. D. Conn. 2014) (quoting Flaherty v. Lang, 199 F.3d 607, 615 (2d Cir. 1999)).

At the summary judgment stage, the moving party must show there are no material issues of fact, and the court must consider all facts in the light most favorable to the non-moving party. Conn. Ironworkers Emp'rs Ass'n v. New England Reg'l Council of Carpenters, 869 F.3d 92, 98-99 (2d Cir. 2017), cert. denied, 138 S. Ct. 1547 (2018) (citing Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 456, (1992); Gemmink v. Jay Peak Inc., 807 F.3d 46, 48 (2d Cir. 2015)). Once the moving party has met its...