Hilgartner v. Yasuko Yagi
| Decision Date | 30 June 2022 |
| Docket Number | Civil Action 1:21-cv-01179 (RDA/IDD),1:21-cv-01123 (RDA/IDD),Bankruptcy 20-10695-BFK,20-1049-BFK |
| Parties | LEE ANDREW HILGARTNER, Debtor/Appellant, v. YASUKO YAGI, Creditor/Appellee. YASUKO YAGI, Plaintiff, v. LEE ANDREW HILGARTNER, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
LEE ANDREW HILGARTNER, Debtor/Appellant,
v.
YASUKO YAGI, Creditor/Appellee.
YASUKO YAGI, Plaintiff,
v.
LEE ANDREW HILGARTNER, Defendant.
Civil Action Nos. 1:21-cv-01179 (RDA/IDD), 1:21-cv-01123 (RDA/IDD)
Bankruptcy Nos. 20-10695-BFK, 20-1049-BFK
United States District Court, E.D. Virginia, Alexandria Division
June 30, 2022
MEMORANDUM OPINION AND ORDER
ROSSIE D. ALSTON, JR. UNITED STATES DISTRICT JUDGE
This matter comes before the Court on Debtor/Appellant Lee Andrew Hilgartner's (“Hilgartner”) appeal of the United States Bankruptcy Court for the Eastern District of Virginia's (“Bankruptcy Court”) Findings of Fact and Conclusions of Law (“F&C”) and Judgment on the dischargeability and allowability of Creditor/Appellee Yasuko Yagi's (“Yagi”) proof of claims. The Court dispenses with oral argument because it would not aid in the decisional process. Fed.R.Civ.P. 78; E.D. Va. Loc. Civ. R. 7(J). The Court has reviewed the Bankruptcy Court record (Dkt. Nos. 4-7), Hilgartner's opening brief (Dkt. 11), Yagi's response brief (Dkt. 12), and the Bankruptcy Court's F&C (Dkt. 11-5) and Report & Recommendation (“Recommendation”) (Dkt.
11-5) and Amended Supplement to the Recommendation (“Amended Supplement”) (Dkt. 12-1). Having considered the issues presented in this appeal, the Court AFFIRMS in part and REVERSES in part the Bankruptcy Court's dischargeability judgment and ADOPTS in part and AMENDS in part the Recommendation and Amended Supplement of the Bankruptcy Court for the reasons that follow.
I. BACKGROUND
Ms. Yasuko Yagi is a Japanese citizen and Mr. Lee Hilgartner is a United States citizen residing in the Eastern District of Virginia. Hilgartner served in the U.S. Army from 1989 until 2012, attaining the rank of Lieutenant Colonel. During this period, and beginning in June of 2002, Yagi and Hilgartner met in Japan and began a long-distance extra-marital romantic relationship. In April of 2010, Yagi visited Hilgartner in Washington, D.C. for the purpose of obtaining payment for her prior travel expenses to visit him. On April 23, 2010, Hilgartner picked up Yagi in his car and was “snarling” at her. Dkt. 11-5 at 4. During the ensuing car ride, the two engaged in heated argument. At one point, Hilgartner “reached out with his hand as the car was still in motion at a high rate of speed, grabbed Ms. Yagi by the hair and slammed her head into the passenger-side window - twice - with a great deal of force.” Id.[1] Hilgartner then grabbed Yagi and repeatedly pushed her body against the console separating them in the front compartment of the vehicle. Id. at 5. He also gripped her hands “very forcefully.” Id. Despite Yagi's hysterical crying, Hilgartner continued to grab and push her “violently down into his own thigh.” Id. On May 8, 2010, the parties met again. While in Yagi's apartment, Hilgartner “became enraged again and grabbed Ms. Yagi by both arms . . . until her hands felt cold.” Id. at 7. Hilgartner admits to grabbing her on
the balcony but he claims he did so to prevent her from committing suicide. Some time after these incidents, Yagi contacted law enforcement, but Hilgartner was never arrested or charged. In fact, the parties continued to see one another and vacationed together. Id. at 8. While the parties dispute many of the events that followed during that day, the Bankruptcy Court found Yagi's testimony more credible than Hilgartner's. Id. at 7.
On June 7, 2010, Hilgartner signed a statement in which he admitted:
I, Lee Andrew Hilgartner, on 23 April 2010, out of anger while arguing about transportation costs, did grab Yasuko Yagi, after she slapped my head as a result of rude comments I made, by the hair and hit her head and shoulders into the passenger side door and window, two times, of my rental Toyota Pruis,[sic] while driving on Virginia Highway 7, in the vicinity of McLean, VA. As a result, Ms. Yagi suffered from Whiplash on the right side of her head, her right shoulder, and right arm; diagnosed at the George Washington University Hospital on 2 May 2010
Additionally, on 8 May 2010, while in Ms. Yagi's rental apartment at 601 24th St. NW, in Washington DC, after a heated exchange in which I was to sign a guarantee as assurance to her, I did grab both of her arms forcefully resulting in bruising on her arms and hands. She did return to the George Washington University Hospital for a follow-up on her whiplash as well as to have these bruises documented. In total, Yasuko Yagi had to visit the George Washington University Hospital 5 times, as a result of my actions.
Id. at 9. For fear that Yagi would expose his affair, Hilgartner agreed in the statement to pay her $80,000.00 in monthly installments of $13,333.00.[2]
On July 5, 2010, Hilgartner executed a settlement agreement (“Settlement Agreement”) with Yagi, subject to the laws of the District of Columbia, in which he further admitted:
On or about April 23, 2010, Yasuko Yagi was injured during an incident that involved an altercation between the Parties. On May 8, 2010, Yasuko Yagi was again injured due to certain contact between her and Lee Andrew Hilgartner. Lee Andrew Hilgartner acknowledges his responsibility for his infliction of those injuries. These two incidents comprise, for purposes of this agreement, the “Incidents.”
In a signed writing dated June 7, 2010, Lee Andrew Hilgartner acknowledged his factual and legal responsibility for his infliction of Yakuko Yagi's injuries, and Lee Hilgartner hereby again so acknowledges: I sincerely apologize for my actions toward you, and for the consequences, and for the pain, damage, and suffering I have caused you and your family.
Id. at 11 (emphasis added). The Settlement Agreement further obligated Hilgartner to pay $415,000.00 (“Principal Amount”) to Yagi over a specified time period lasting approximately 150 months. Included in the Principal Amount were attorney's fees associated with the legal work done to secure the Settlement Agreement, Dkt. 11-1 at 2-4. The Settlement Agreement also required a 15% interest charge on any late payments and up to a $1,000.00 late penalty, Id. at 3-4, and that Hilgartner secure his payments of the Principal Amount by maintaining a life insurance policy over the pendency of the repayment plan, Id. at 4. In the event Hilgartner missed three consecutive payments beyond the cure date, the Settlement Agreement qualified such event as a material breach of the contract and permitted Yagi to pursue legal enforcement. Id. at 4. And if any suit or action were commenced to enforce or interpret any aspect of the Settlement Agreement, “the prevailing Party . . . shall be entitled to an award against the other Party for the prevailing Party's reasonable attorney's fees and costs incurred both at trial and on any appeal.” Id. at 7.
On July 18, 2019, Yagi's counsel sent a demand notice for payment to Hilgartner in the amount of $144,486.88, reflecting more than three months of missed installment payments, late charges, accrued interest, and expenses triggered by the Settlement Agreement. Dkt. 11-3 at 1-2. On October 10, 2019, before this Court, Yagi filed a complaint against Hilgartner to enforce the Settlement Agreement. See Yagi v. Hilgartner, No. 1:19-cv-01305-RDA-TCB. Yagi then moved for entry of a default judgment against Hilgartner and noticed a hearing before this Court on March 6, 2020. Two days prior to that hearing, Hilgartner filed a Voluntary Petition under Chapter 13 of the Bankruptcy Code (“Chapter 13 Plan”). See In re Hilgartner, No. 20-10695-BFK. That filing
stayed the case before this Court. As an intervening creditor, Yagi filed a Proof of Claim No. 1-1 for $336,850.25 and objected to the Chapter 13 Plan because she argued her claim was non-dischargeable under Bankruptcy Code § 1328(a)(4). Hilgartner objected to Yagi's Proof of Claim, arguing (a) she did not have a pre-petition judgment, which he submitted as a perquisite to any non-dischargeable debt under § 1328(a)(4) and (b) the personal injury claims evolved from tort to contract as a result of the Settlement Agreement. On August 5, 2020, the Bankruptcy Court upheld Yagi's Proof of Claim, finding that § 1328(a)(4) “does not require that damages be awarded in a civil action before a bankruptcy case is filed” and rejected the view that the personal injury claims had merged into the Settlement Agreement. In re Hilgartner, No. 20-10695-BFK, 2020 WL 6875960, at **3-4 (Bankr. E.D. Va. Aug. 5, 2020).[3]
Hilgartner then converted his petition to Chapter 7 on December 3, 2020 and filed a motion to dismiss his bankruptcy case on December 30, 2020. The Bankruptcy Court dismissed the case without objection on January 27, 2021. But on February 25, 2021, Hilgartner filed a second Voluntary Petition under Chapter 13-again staying the breach of contract case before this Court. Yagi filed a Proof of Claim No. 4-4 for $463,637.11. After objecting to this Proof of Claim, Hilgartner moved to convert his case to Chapter 11, which the Bankruptcy Court permitted on May 10, 2021. That case remains pending.
During Hilgartner's first Chapter 13 bankruptcy case, on July 23, 2020, Yagi filed her Complaint before the Bankruptcy Court, seeking a determination on the dischargeability of Hilgartner's debt to her pursuant to the Settlement Agreement, and an adversary proceeding (“Adversary Proceeding”) commenced. When the Bankruptcy Court dismissed Hilgartner's Chapter 13 Plan, it elected not to dismiss Yagi's Adversary Proceeding once Hilgartner had filed
his second bankruptcy petition. The Bankruptcy Court held a hearing on the merits of Yagi's Complaint and her Proof of Claim on May 21, 26, and 27, 2021 and issued its F&C and Recommendation on the Personal Injury Proof of Claim on July 23, 2021.
In its ruling, the Bankruptcy Court first addressed Yagi's Complaint and determined that only certain of Hilgartner's obligations...
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