Dragisic v. Boricich (In re Boricich)

• Decision Date: 15 November 2011
• Docket Number: Bankruptcy No. 08 B 15248.,Adversary No. 08 A 00728.
• Citation: 464 B.R. 335
• Parties: In re Branko and Nada BORICICH, Debtors.Phillip Dragisic, Individually and Derivatively On Behalf of White Eagle, Inc., Plaintiff, v. Branko Boricich, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

464 B.R. 335

In re Branko and Nada BORICICH, Debtors.Phillip Dragisic, Individually and Derivatively On Behalf of White Eagle, Inc., Plaintiff,
v.
Branko Boricich, Defendant.

Bankruptcy No. 08 B 15248.

Adversary No. 08 A 00728.

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

Nov. 15, 2011.

[464 B.R. 336]

Alan E. Sohn, Law Offices of Alan E. Sohn, Chicago, IL, for Plaintiff.

Theodore T. Scudder, Lombard, IL, for Defendant.

MEMORANDUM OPINION ON POST TRIAL MOTIONS (1) Motion of Defendant to Alter or Amend Judgment (Docket No. 109) (2) Motion of Plaintiff to Alter or Amend Judgment (Docket No. 107) JACK B. SCHMETTERER, Bankruptcy Judge.

Following trial, Findings of Fact and Conclusions of Law were made and entered, and Judgment entered. Plaintiff's Complaint was allowed only in Count V to the extent that $659,160.85 was held to be a nondischargeable debt owed to Plaintiff under 11 U.S.C. § 523(a)(4).

Adjudications of nondischargeable debts have usually been accompanied by final dollar judgments in favor of the winner under Seventh Circuit authority discussed in In re Hallahan, 936 F.2d 1496, 1508 (7th Cir.1991). However, briefing was requested on whether that practice continued to be appropriate in light of Stern v. Marshall, ––– U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011).

While objecting to entry of final dollar judgment, the Defendant also moved to alter or amend the nondischargeability judgment by reducing it “in fairness” to $437,894.08. Defendant's argument did not demonstrate either an error of fact or an error of law in the Findings and Conclusions that were entered. Therefore, Defendant's Motion to Amend Judgment will by separate order be denied.

The Supreme Court decision in Stern held that judgment by an Article I Bankruptcy Judge on a counterclaim arising under nonbankruptcy law is not Constitutionally permitted, even though it is under “core” authority, when the counterclaim is founded on “a state law action independent of the federal bankruptcy law,” and is based upon private rather than public rights. Id. at 2611. The counterclaim in Stern involved no antecedent bankruptcy determination and was in an action for which a party might demand a trial by jury. Id. at 2611 (citing Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989)).

In contrast, this Adversary proceeding to bar dischargeability of debt due to

[464 B.R. 337]

Plaintiff under 11 U.S.C. § 523(a)(4), claimed to be a core...