In re Bryson

• Decision Date: 19 October 1995
• Docket Number: Bankruptcy No. 94 B 01090. Adv. No. 94 A 00762.
• Parties: In re Regina L. BRYSON, Debtor. BANNER OIL COMPANY, Plaintiff, v. Regina L. BRYSON, Defendant.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

187 B.R. 939 (1995)

In re Regina L. BRYSON, Debtor.

BANNER OIL COMPANY, Plaintiff, v. Regina L. BRYSON, Defendant.

Bankruptcy No. 94 B 01090. Adv. No. 94 A 00762.

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

October 19, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jeffrey K. Gutman, Heldrich Gutman & Assoc., Chicago, IL, for Plaintiff.

James A. Chatz, Barry A. Chatz, Charles A. King, Lincolnwood, IL, for Defendant.

REISSUED MEMORANDUM OPINION

JACK B. SCHMETTERER, Bankruptcy Judge.

This Adversary proceeding relates to the bankruptcy case filed by Regina Bryson ("Bryson" or "Debtor") under Chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. Plaintiff Banner Oil Company ("Banner") filed this three-count Adversary Complaint against Bryson to bar her discharge and dischargeability of her debt. Banner is in the business of selling fuel oil and gasoline. Bryson was the president of and principal shareholder in K-C Fuel Oil, Incorporated ("K-C"), a customer of Banner's, and had executed a personal guaranty for K-C's debts to Banner.

In Count I, Banner prays that discharge be denied under 11 U.S.C. § 727(a)(5) for Bryson's alleged failure to explain the loss of assets to meet her liabilities. In Count II, Banner alleges that Bryson's debt to Banner should be declared non-dischargeable under 11 U.S.C. § 523(a)(2)(A) for her alleged use of false pretenses, false representations, and fraud to obtain credit from Banner. In Count III, Banner alleges that her debt should further be declared non-dischargeable under 11 U.S.C. § 523(a)(2)(B) for her alleged use of a false financial statement to obtain credit from Banner.

Bryson has moved for summary judgment as to all counts of the Complaint.¹ Banner has filed a Cross-Motion for Summary Judgment as to Counts I and II of its Complaint. For reasons stated herein and by separate order (1) Bryson's Motion is denied as to Counts I and III; (2) Bryson's Motion is allowed as to Count II; (3) Banner's Motion for Summary Judgment as to Counts I and II is denied; (4) Banner's Additional Response in Opposition to Defendant's Motion for Summary Judgment is stricken; and (5) the case will be set for trial.

Due to many procedural defects by both sides in presenting and opposing these motions, they each lost some ground and the Court was compelled to prepare an extensive analysis in an effort to move the case forward to any possible extent after so much effort by the parties.

I. BACKGROUND

A. Undisputed and Contested Facts

Local Bankruptcy Rule 402.M of this Judicial District requires that the party moving for summary judgment file, inter alia, a detailed statement ("402.M statement") of material facts as to which the movant contends there is no genuine issue. Local Bankr.R. 402.M.² The 402.M statement "shall consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion." Id. (emphasis supplied).

The party opposing the motion is required by Local Rule 402.N to respond ("402.N statement") to the movant's 402.M statement and set forth any material facts which would require denial of summary judgment. Local Bankr.R. 402.N.³ If the 402.N statement fails to deny the material facts set forth in the 402.M statement, those material facts "will be deemed to be admitted." Id.; see also Schulz v. Serfilco, Ltd., 965 F.2d 516, 519 (7th Cir.1992).

Unhappily, the pending cross-motions are rife with procedural defects. When taken as a whole, these defects preclude the entry of summary judgment on Counts I and III on either motion. This Court "should not be required to guess whether the facts asserted by the opposing parties are in direct conflict or scour the record in search of a party's evidence." Fotsch v. Eli Lilly and Co., 1995 WL 238677, at *1 n. 1 (N.D.Ill. Apr. 20, 1995). This Court agrees that:

Compliance with Local Rules 402.M and 402.N is not a mere technicality. The court relies greatly upon the information presented in these statements in separating the facts about which there is a genuine dispute from those about which there is none. In failing to comply with the Local Rules of this court both parties have forced the court to expend an undue amount of its scarce time resolving these motions for summary judgment.

American Ins. Co. v. Meyer Steel Drum, Inc. 1990 WL 92882, at *7 (N.D.Ill. June 27, 1990). District Rules such as these "reflect an attempt to make the parties' respective summary judgment obligations explicit." Waldridge v. American Hoechst Corp., 24 F.3d 918, 921 (7th Cir.1994). The statements required by Rule 402

are not merely superfluous abstracts of the evidence. Rather, they are intended to alert the court to precisely what factual questions are in dispute and point the court to specific evidence in the record that supports a party\'s position on each of these questions. They are, in short, roadmaps, and without them the court should not have to proceed further, regardless of how readily it might be able to distill the relevant information from the record on its own.

Id. at 923 (citations omitted).

1. Bryson's Motion for Summary Judgment

Local District Rule 12 M⁴ "clearly enunciates both what a party moving for summary judgment must do and the consequences for failing so to do." Schulz, 965 F.2d at 518; Fobert v. Berkel, Inc., 1995 WL 88939, at *2 (N.D.Ill. Mar. 2, 1995). The movant was to file a 402.M statement, which is to contain "references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth" in the purported 402.M statement. Local Bankr.R. 402.M; American Ins., 1990 WL 92882, at *7.

Bryson has failed in important respects to comply with Local Rule 402.M. Her 402.M Statement of Undisputed Material Facts is devoid of any "references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth" in that statement as required by Local Bankruptcy Rule 402.M. This deficiency "constitutes grounds for denial of the motion." See also Schulz, 965 F.2d at 517 ("If the moving party does not comply, the motion may be lost . . . ").

This failure to comply with the Local Rules, although serious and normally grounds for denial of the motion⁵, is not significant unless the non-movant disputes some or all of the movant's assertions. That is, if the non-movant's 402.N statement admits each of the assertions contained in a defective 402.M statement, then the defect is to that extent mooted, and the two statements can be treated as a stipulation. However, such defects in the 402.M statement take on considerable significance when the non-movant denies an assertion contained in the defective 402.M statement and that assertion goes to a material fact. Just as the failure to comply with Rule 402.N results in the movant's assertions of undisputed fact being deemed admitted, the converse is true of the failure to comply with Rule 402.M. That is, those assertions contained in a defective 402.M statement that are controverted are deemed disputed, and, if they go to a material fact, preclude entry of summary judgment.

Here, despite Bryson's lack of compliance with Rule 402.M, Banner has admitted certain assertions set forth in Bryson's defective 402.M statement. Thus, those assertions constitute admitted and undisputed facts.

In Banner's 402.N(3)(b) statement of additional undisputed facts, it has omitted supporting references to some factual assertions. However, this procedural defect is not significant here given that Bryson has admitted each of Banner's defective assertions.

Essentially, by their admissions, each party rescued the other from some of their respective procedural errors. However, as will be shown below, there remain many disputed factual issues that preclude summary judgment as to most of the counts.

a. Undisputed Facts

The undisputed facts with respect to Bryson's Amended Motion for Summary Judgment, as gleaned from Bryson's 402.M statement, Banner's 402.N statement, and Bryson's 402.M reply to Banner's 402.N statement, are as follows:

1. Bryson is an individual residing in Chicago. Bryson's 402.M at ¶ 1.⁶

2. Bryson is the Debtor in Bankruptcy Case No. 94 B 1090 under Chapter 7 of the Bankruptcy Code. Bryson's 402.M at ¶ 2.

3. By its Adversary Complaint, Banner seeks the denial of Bryson's discharge pursuant to 11 U.S.C. § 727(a)(5) and the determination that the debt Bryson owes to Banner is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A) and (B). Bryson's 402.M at ¶ 4.

4. Banner is a judgment creditor of Bryson. On July 13, 1992, the Circuit Court of Cook County, Illinois entered judgment in favor of Banner and against Bryson in the amount of $163,396.91. The case number is 90 L 7131. Banner still has a claim for $50,000 pending against Bryson. Bryson's 402.M at ¶ 3; Banner's 402.N(3)(b) at ¶ 26.

5. Kathleen Rudis and Timothy Rudis are the only officers, the only directors, and the only shareholders of Banner. Bryson's 402.M at ¶ 5.

6. From January 1989 to the present, Bryson was the president of and a 90% shareholder in K-C Fuel Oil, Incorporated ("K-C"). Bryson's 402.M at ¶ 6; Banner's 402.N(3)(b) at ¶ 1.

7. K-C is an Illinois corporation. Bryson's 402.M at ¶ 6.

8. K-C filed a petition under Chapter 11 of the Bankruptcy Code on January 18, 1991, in the United States Bankruptcy Court for the Northern District of Illinois. The case number was 91 B 1189. Bryson's 402.M at ¶ 7; Banner's 402.N(3)(b) at ¶ 31.

9. K-C filed its Schedules and Statement of Affairs on March 12, 1991. These filings were certified under penalty of perjury by Archie Burton ("Burton") in his capacity as secretary of K-C. Banner's 402.N(3)(b) at ¶ 32.

10. Accounts receivable...