Ford v. Landon (In re Landon)

• Decision Date: 11 August 2020
• Docket Number: 19-01041-M),Case No. 19-11005-M,Adversary No. 19-01039-M (consolidated with Adv. 19-01040-M
• Citation: 619 B.R. 727
• Parties: IN RE: Sheldon E. LANDON, Debtor. Daniel B. Ford, Jr., Plaintiff, v. Sheldon E. Landon, Defendant. Blair M. Tingley, Plaintiff, v. Sheldon E. Landon, Defendant. Jeffrey S. Robbins, Plaintiff, v. Sheldon E. Landon, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Oklahoma

619 B.R. 727

IN RE: Sheldon E. LANDON, Debtor.

Daniel B. Ford, Jr., Plaintiff,

v.Sheldon E. Landon, Defendant.

Blair M. Tingley, Plaintiff,

v.Sheldon E. Landon, Defendant.

Jeffrey S. Robbins, Plaintiff,

v.Sheldon E. Landon, Defendant.

Case No. 19-11005-M

Adversary No. 19-01039-M (consolidated with Adv. 19-01040-M

19-01041-M)

United States Bankruptcy Court, N.D. Oklahoma.

Signed August 11, 2020

David L. Ashbaugh, Claremore, OK, for Debtor

MEMORANDUM OPINION

TERRENCE L. MICHAEL, UNITED STATES BANKRUPTCY JUDGE

Before the Court is the Motion for Summary Judgment (the "Motion"),¹ filed by Jeffrey S. Robbins ("Robbins" or "Plaintiff"); a Response,² filed by Sheldon E. Landon ("Landon" or "Defendant"); and a Reply,³ filed by Robbins. Robbins holds a state court judgment against Landon and filed this adversary proceeding to except it from discharge in Landon's present bankruptcy case. The following findings of fact and conclusions of law are made pursuant to Federal Rule of Bankruptcy Procedure 7056.

Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b),⁴ and venue is proper pursuant to 28 U.S.C. § 1409. Reference to the Court of this matter is proper pursuant to 28 U.S.C. § 157(a). Determination as to the dischargeability of a debt is a "core" proceeding as that term is defined in 28 U.S.C. § 157(b)(2)(I).

Summary Judgment Standard

The United States Court of Appeals of the Tenth Circuit has held that

Summary judgment is appropriate when "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). "An issue is ‘genuine’ if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Adler v. Wal–Mart Stores, Inc. , 144 F.3d 664, 670 (10th Cir. 1998). "An issue of fact is ‘material’ if under the substantive law it is essential to the proper disposition of the claim."

Id. Put differently, "[t]he question ... is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Shero v. City of Grove , 510 F.3d 1196, 1200 (10th Cir. 2007) (quotation omitted). "On summary judgment the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (quotation omitted).

The Court will apply this standard to the Motion.

Findings of Fact

Robbins is an individual who resides in Massachusetts and a judgment creditor of Landon. On May 14, 2019, Landon filed a petition for relief under chapter 7 of the United States Bankruptcy Code, Case No. 19-11005-M.

In 2014, Landon filed suit against Daniel B. Ford, Jr. ("Ford") in Massachusetts in Barnstable Probate and Family Court (the "Probate Court"), Docket No. BA14E0063QC, alleging claims that Ford breached duties he owed to Landon, who was the beneficiary of a certain trust over which Ford was trustee (the "Probate Action"). Robbins represented Ford in the Probate Action as legal counsel. On December 30, 2016, the Probate Court issued an order setting the matter for trial to commence on April 27, 2017.⁵ The frustration of the Probate Court with the parties can be summed up in the following emphatic statement contained in the order setting trial:

The Plaintiff and Defendant are prohibited from filing any further Pleadings without first obtaining permission from the Court to do so. The Court will not accept any pleadings filed by [Landon], pro se .

On April 25, 2017, two days before the commencement of trial, Landon, through counsel, filed a Motion to Continue the Trial Date (the "Motion to Continue") in the Probate Action, wherein she requested a continuance of two months to accommodate newly retained counsel.⁶ The Probate Court held a hearing and ruled on the Motion to Continue that same day (the "Fee Order").⁷ Landon was represented by counsel at the hearing.⁸ In addition to denying Landon's Motion to Continue, the Probate Court made two hand-written annotations to the Fee Order:

1) 6,265.00 to be paid by Plaintiff [Landon] within 90 days to Atty Robbins.

2) The Plaintiff [Landon] is Ordered to pay Attorney Jeffrey S. Robbins $6,265.00 in legal fees for his appearance in Court today as the Court finds that the Filing of the Motion to Continue two days before trial was frivolous.

It is this award of attorney's fees (the "Fee Award") that Robbins seeks to be found excepted from discharge in this proceeding. As a result of the denial of the Motion to Continue, the Probate Court went forward with the hearing on April 27, 2017, the details of which are not relevant here. The Probate Court ultimately dismissed Landon's complaint against Ford (the "Dismissal Order"),⁹ which is currently on appeal by Landon. The Dismissal Order included the following reference to the Fee Award:

The Court notes, however, that on August 25, 2017 [sic], when assessing fees against the Plaintiff for the frivolous Motion to Continue, counsel for the Defendant informed the Court that his normal hourly rate for litigation was $895.00. Based upon that representation, the Court assessed fees of $6,265.00 against the Plaintiff, which represented 7 hours of billable time incurred by counsel for the Defendant in defending against the Motion to Continue, which the Court ultimately found was frivolous.¹⁰

Landon also alleges that the Fee Order is the subject of a pending appeal, which Robbins does not deny, but this Court cannot verify from the record.¹¹

Conclusions of Law

Robbins filed this adversary proceeding asserting that the Fee Award should be excepted from discharge pursuant to § 523(a)(6). In the Motion, Robbins alleges that facts necessary to support a finding of non-dischargeability have been established by the Dismissal Order and the Fee Order, and that this Court is prevented from reconsidering those issues under the doctrines of both claim preclusion and issue preclusion. Landon appears to object to the factual finding made by the Probate Court in the Fee Order that her Motion to Continue was frivolous, and believes that no preclusion doctrines can apply because she asserts that the order is currently subject to appeal.

The validity of a creditor's claim is determined by rules of state law.¹² When a federal court reviews the preclusive effect of a state court judgment, the full faith and credit statute directs a federal court to look to the preclusion law of the state in which the judgment was rendered.¹³ Because the Fee Order was issued by a Massachusetts state court, I must decide what, if any, preclusive effect Massachusetts courts would accord the Fee Order. Massachusetts law recognizes two forms of preclusion presented by previous judgments: 1) claim preclusion, and 2) issue preclusion.¹⁴

1. Claim preclusion

"Claim preclusion makes a valid, final judgment conclusive on the parties and their privies, and prevents relitigation of all matters that were or could have been adjudicated in the action."¹⁵ The elements of claim preclusion under Massachusetts law are: "(1) the identity or privity of the parties to the present and prior actions, (2) identity of the cause of action, and (3) prior final judgment on the merits."¹⁶ Landon was a party in the Probate Action, and Robbins was in sufficient privity with Ford, as his counsel, in that action to satisfy the first element. Robbins's argument stumbles on the second element. The issue before the Probate Court was whether Landon should be sanctioned for her behavior before that court. The issue before this Court is whether the Fee Award should be discharged in her bankruptcy case. Since Brown v. Felsen , the United States Supreme Court has been clear that liability for a debt and the dischargeability of a debt are sufficiently different legal claims that claim preclusion will not prevent a bankruptcy court from reviewing the judgment and record in a prior state court proceeding and looking beyond them when considering the dischargeability of a debt.¹⁷ Because Robbins's claim of non-dischargeability was not litigated in the Probate Action, he has not met his burden to show that claim preclusion applies to this case.¹⁸ The Court does not find grounds to grant summary judgment on the basis of claim preclusion.

2. Issue preclusion

Courts use the doctrine of issue preclusion to prevent the relitigation of issues or facts raised in a second suit on a separate claim between the parties. It is settled law that "the doctrine of issue preclusion, does, under appropriate circumstances, apply in discharge exception proceedings pursuant to § 523(a)."¹⁹ In Massachusetts,

collateral estoppel precludes relitigation of issues in prior actions between the parties or those in privity with those parties, provided the issues were actually litigated in the first action, and determined by a "final judgment on the merits." Smith Barney, Inc. v. Strangie (In re Strangie), 192 F.3d 192, 194 (1st Cir.1999). To apply the doctrine, a court must determine that: (1) there was a valid and final judgment on the merits in the prior adjudication; (2) the party against whom estoppel is asserted was a party (or in privity with a party) to the prior litigation; (3) the issue in the prior adjudication is identical to the issue in the current litigation; and (4) the issue in the prior litigation was essential to the earlier judgment. Alba v. Raytheon Co., 441 Mass. 836, 809 N.E.2d 516, 521 (2004) (citations omitted). The Supreme Judicial Court of Massachusetts has noted that "the ‘guiding principle’ in determining whether to allow a party to use collateral estoppel is whether the party against whom it is asserted had a ‘full and fair opportunity to litigate the issue in the first action or [whether] other circumstances justify affording him an opportunity to relitigate the

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