Figueroa v. Barreto (In re Barreto)

• Decision Date: 12 July 2013
• Docket Number: ADV. NO.: 12-01582-BKC-PGH-A,CASE NO.: 12-17964-BKC-PGH
• Citation: 514 B.R. 702
• Parties: In re: Ana Mercedes Barreto, Debtor. Edwin Figueroa, Plaintiff. v. Ana Mercedes Barreto, Defendant.
• Court: U.S. Bankruptcy Court — Southern District of Florida

514 B.R. 702

In re: Ana Mercedes Barreto, Debtor.Edwin Figueroa, Plaintiff.

v.Ana Mercedes Barreto, Defendant.

CASE NO.: 12-17964-BKC-PGH

ADV. NO.: 12-01582-BKC-PGH-A

United States Bankruptcy Court,

West Palm Beach Division.

West Palm Beach Division

Signed July 12, 2013

Angelo A. Gasparri, Esq., Attorney for the Plaintiff.

John M. Cruz, II, Esq., Attorney for the Defendant.

CHAPTER 7

FINDINGS OF FACT & CONCLUSIONS OF LAW

Paul G. Hyman, Chief Judge, United States Bankruptcy Court

THIS MATTER came before the Court for trial on May 29, 2013, upon Edwin Figueroa's (the “Plaintiff”) Complaint to Determine Dischargeability of Debt (the “Plaintiff's Complaint”) against Ana Mercedes Barreto (the “Defendant”).

PROCEDURAL BACKGROUND

On August 24, 2012, the Plaintiff filed his Motion for Summary Judgment (the “Motion for Summary Judgment”) (ECF No. 12). On September 19, 2012, the Defendant filed her Response to Motion for Summary Judgment (Defendant's Opposition) (the “Defendant's Response”) (ECF No. 16). Pursuant to the Order Setting Briefing Schedule (ECF No. 14) on the Plaintiff's Motion for Summary Judgment, the Plaintiff and the Defendant filed a Joint Stipulation of Fact (“J.Stip.”) (ECF No. 17). On October 1, 2012, the Plaintiff filed a Notice of Filing No Reply to be Made to Defendant's Response to Summary Judgment (ECF No. 18), which simply reaffirmed statements made in the Plaintiff's Motion for Summary Judgment. On November 30, 2013, the Court entered the Order Granting in Part and Denying in Part Plaintiff's Motion for Summary Judgment (the “Order Granting Summary Judgment in Part”) (ECF No. 24). The Court determined that the debt resulting from the damages associated with both the state court's finding of fraudulent misrepresentation and civil theft is nondischargeable.

Subsequently, the Court held a trial to determine whether the debt resulting from the breach of contract judgment is also nondischargeable pursuant to 11 U.S.C. § 523(a)(6). The Court now determines that after considering the evidence presented at trial and the same principles of collateral estoppel utilized when determining the dischargeability of the debt arising from the fraudulent misrepresentation and civil theft damages, the damages associated with the breach of written contract claim are also non discharge able pursuant to § 523(a)(6).

FACTUAL BACKGROUND

On or about March 4, 2009, the Plaintiff filed an Amended Complaint and Demand for Jury Trial against the Defendant in the Circuit Court of the 15 ^th Judicial Circuit in and for Palm Beach County, Florida (the “Circuit Court Proceedings”). J. Stip. at¶ 2.¹ The Amended Complaint contained fourteen counts against the Defendant stemming from a series of events in 2007 that allegedly began with the Defendant's misappropriation of funds from a Washington Mutual Credit Line. Pl.'s Compl. (ECF No. 1). The allegations included a variety of additional willful actions against the Plaintiff, including the theft and conversion of personal property, trespass upon real property, and intentional infliction of damage upon the Plaintiff's real property. Id.²

The Circuit Court conducted a civil jury trial to resolve the allegations contained in the Plaintiff's complaint. J. Stip. at ¶ 3. During the Circuit Court proceedings, the Defendant's attorney cross-examined witnesses called by the Plaintiff. Id. On November 16, 2011, the jury returned a verdict against the Defendant (the “Circuit Court Jury Verdict”). Id. at ¶ 4. On the verdict form, the jury answered “yes” to question # 1 which asked, “Did the Defendant, Ana Barreto commit Fraudulent Misrepresentation on the Plaintiff, Edwin Figueroa?” Id. at ¶ 5. Additionally, the jury answered “yes” to question # 2 which asked, “Did the Defendant, Ana Barreto commit Civil Theft of the Plaintiff, Edwin Figueroa's property?” Id. at ¶ 6. Based on its findings, the jury awarded $827,464.35 in damages to the Plaintiff and against the Defendant. Id. at ¶ 7.³ The Circuit Court then entered an Order consistent with the jury's findings on November 22, 2011 (the “Circuit Court Judgment”). Id. at ¶ 8.

On or about December 22, 2011, the Defendant filed a consolidated Motion for New Trial and/or Motion to Alter/Amend Judgment to Deem said Motions timely filed; Alternatively, Motion for Relief from Judgment (the “Circuit Court Motion for New Trial”). Id. at ¶ 9. The motion alleged, among other things, that the Defendant's lawyer was incompetent and that there were insufficiencies regarding the trial and the verdict. Id. The motion, however, did not mention the Defendant's inability to “offer any evidence at trial” or any other “due process” allegations regarding the trial. Id. at ¶ 11.⁴ On or about January 5, 2012, the Circuit Court denied the Defendant's Circuit Court Motion for New Trial. Id. at ¶ 10. As a result, the Circuit Court Judgment, based upon the Circuit Court Jury Verdict, became final. Id. at ¶ 10. The Defendant failed to file and perfect an appeal of the underlying litigation and has received no other post-judgment relief in the Circuit Court Proceedings. Id. at ¶ 12. The dischargeability of the debt owed to the Plaintiff which resulted from the Circuit Court Judgment is at issue in the present matter.

On March 30, 2012, the Defendant filed a voluntary Chapter 7 bankruptcy petition.⁵ On June 18, 2012, the Plaintiff instituted this adversary proceeding seeking to determine the dischargeability of the debt owed by the Defendant to the Plaintiff as a result of the Circuit Court Judgment. More specifically, the Plaintiff alleges that the debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(4) and § 523(a)(6).

FINDINGS OF FACT

At the May 29, 2013 trial, the Court received into evidence as Exhibit 3 the Plaintiff's Pretrial Stipulation from the Circuit Court Proceedings (the “Circuit Court Pretrial Stipulation”). Ex. 3.⁶ The Circuit Court Pretrial Stipulation specifically states that the Plaintiff and the Defendant “jointly file” the Stipulation. The Circuit Court Pretrial Stipulation states: ⁷ On April 25, 2007, the Plaintiff and the Defendant entered into a written agreement (the “Agreement”) to refinance the property located at 3164 Santa Margarita Road, West Palm Beach, Florida (the “Property”). Id. at ¶ a. The Agreement provided in part that funds from the refinancing would be jointly managed by the Plaintiff and the Defendant for the exclusive purpose of paying the mortgage, insurance taxes, association dues, necessary expenses for house repairs, and sale listing fees for the Property. Id. at ¶ c. The parties expressly agreed that neither party was to use any of the funds with the other's consent. Id. at ¶ d.

On April 25, 2007, the Plaintiff and the Defendant opened a joint checking account number ending in 1357 (the “Joint Account”) at Washington Mutual Bank's branch # 1674, located at West Palm Beach–Okeechobee Financial Center. Id. at ¶ e. The Joint Account was opened so that the Plaintiff and the Defendant could deposit the proceeds from the refinancing that were to be used to pay the carrying costs of the Property and fulfill the terms of the Agreement. Id. at ¶ f.

On April 30, 2007, Nations Title Agency Inc. issued a check in the amount of $27,464.35 in proceeds from the refinancing (the “Check”). Id. at ¶ g. On May 2, 2007, the Plaintiff received the Check. Id. at ¶ i. The Check was made payable exclusively to the Plaintiff. Id. at ¶ h. On the same day, the Defendant and the Plaintiff went to Washington Mutual Bank to deposit the Check in the Joint Account. Id. at ¶ i. The Plaintiff and the Defendant met with Washington Mutual Bank's Assistant Financial Center Manager (the “Manager”) upon their arrival and explained why they were at the bank. Id. at ¶ j-¶ k. Washington Mutual Bank's Manager witnessedthe Plaintiff's endorsement of the Check, and then, accompanied only by the Defendant, the Manager and Defendant left the Plaintiff, deposited the Check, and returned to the Plaintiff. Id. at ¶ l. The following week, the Plaintiff called Washington Mutual Bank to find out when he would receive checks for the Joint Account. Id. at ¶ m. Washington Mutual Bank informed the Plaintiff that it mailed the checks to him and that there was no money as yet in the Joint Account. Id. That same day, May 11, 2007, the Plaintiff was leaving on a pre-scheduled vacation, returning on Sunday, May 20, 2007. Id. After the Plaintiff returned from his vacation, he went to the bank to find out why the Check funds were not available in the Joint Account. Id. at ¶ n. Washington Mutual Bank informed the Plaintiff that the Check was deposited into the Defendant's account number 030800003956434. Id. at ¶ o.

Immediately after discovering that the funds had been placed in the Defendant's account, the Plaintiff informed Washington Mutual Bank of the nature of the Check, the purpose of the Joint Account, and the substance of the Agreement. Id. at ¶ p. In doing so, the Plaintiff put Washington Mutual Bank on notice that the Check funds were in dispute. Id. at ¶ q. Consequently, Washington Mutual Bank gave the Plaintiff a telephone number to call. Id. at ¶ r. The Plaintiff made a few calls from the bank in an effort to recover the funds from the Check. Id. at ¶ r. Washington Mutual Bank informed the Plaintiff that the best it could do was to “put a freeze” on the contested funds. Id. at ¶ s. Later that week, the Plaintiff received Washington Mutual Bank's May 23, 2007 letter signed by Washington Mutual Bank's First Vice–President & Assistant General Counsel, Anabel I. Nemrow. Id. at ¶ t-¶ u.⁸ The letter proposed an escrow type arrangement in which the funds would remain where they were until the dispute was resolved. Id. at ¶ w. In the alternative, the bank stated that it would commence an interpleader action and deliver the funds to the Registry of the Court. Id. The letter gave a deadline for the parties to decide their course of action before the bank would commence...