In re Calisoff, Bankruptcy No. 87 B 01192
| Decision Date | 01 July 1988 |
| Docket Number | Adv. No. 87 A 0275,Bankruptcy No. 87 B 01192,87 A 0276 and 87 A 0471. |
| Citation | 92 BR 346 |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
| Parties | In re Charles I. CALISOFF, Debtor. Sherry CALISOFF, Plaintiff, v. Charles I. CALISOFF, Defendant. Melvyn H. BERKS, Plaintiff, v. Charles I. CALISOFF, Defendant. Owen L. DOSS, Plaintiff, v. Charles I. CALISOFF, Defendant. |
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James Sprayregen, Lord, Bissell & Brook, Chicago, Ill., for plaintiffs.
Arthur Gold, Kaplan, Gold & Gallagher, Chicago, Ill., for debtor/defendant.
Walter Soroka, Chicago, Ill., for Owen Doss.
These three adversary proceedings come before the Court on cross motions for summary judgement filed by the plaintiffs, Sherry Calisoff, Melvyn H. Berks and Owen L. Doss and by the Debtor/Defendant Charles I. Calisoff. The plaintiffs seek an Order declaring that certain debts arising from the Calisoffs' divorce are non-dischargeable because those debts are for the support of Mrs. Calisoff. They also object to the discharge of his Chapter 7 case because he made false statements and failed to keep adequate records. The Court finds that there are no genuine issues of material fact and concludes that as a matter of law the divorce-related debts are for support and that the Debtor has unjustifiably failed to keep records from which his financial condition or business transactions might be ascertained. Therefore, the Debtor's motion for summary judgement will be denied and the plaintiffs' motions for summary judgement will be granted.
On June 13, 1986, the Circuit Court of Cook County entered a judgement for dissolution of marriage in the case of The Marriage of Sherry Calisoff and Charles I. Calisoff, No. 82 D 3366. That judgement provides that 1) Charles is to hold his ex-wife harmless on a $40,000 obligation due to the First Illinois Bank of Wilmette she incurred to finance the purchase of the marital home at a sale pursuant to an Internal Revenue Service tax levy, 2) Charles is to hold Sherry harmless on a $3,000 obligation to Ohannes Korogluyn she also incurred to purchase the marital home at the tax sale, 3) Charles is to pay attorney's fees of $7,500 to Owen Doss, who was one of Sherry's divorce lawyers, 4) Charles is to pay attorney's fees of $30,000 to Melvyn Berks, also one of Sherry's divorce lawyers, and 5) Charles is to reimburse Sherry $5,257.51 for payment of the 1983 and 1984 real estate taxes on the marital home. Those five obligations are the debts that the plaintiffs here (Sherry and the two divorce lawyers) allege are non-dischargeable because they are for support.
On January 26, 1987, Charles Calisoff filed for protection under Chapter 7 of the Bankruptcy Code. The Debtor listed some debts pursuant to the divorce judgement on his Schedule A-Statement of all Debts of the Bankrupt. The debts listed on the Schedule A include the five obligations listed above. The Debtor also stated on Schedule A that these debts were part of a property settlement and therefore were dischargeable in bankruptcy.
Sherry Calisoff then filed an adversary proceeding to determine the dischargeability of the five debts. The complaint alleges that they are in the nature of alimony, maintenance or support and therefore are non-dischargeable under § 523(a)(5).1 The Debtor has answered that these debts are the result of a division of marital property and may be discharged. The complaint further alleges that the Debtor knowingly and fraudulently made false statements and claims in connection with his Chapter 7 filing and failed to keep adequate records from which his financial condition could be ascertained and therefore objects to the Debtor's discharge under § 727(a). The Debtor claims that his records were adequate and denies that any false statements or claims were made.
Both Melvyn Berks and Owen Doss also filed adversary proceedings to determine dischargeability. Both allege that the attorneys' fees awarded to them by the Circuit Court and payable by the Debtor are in the nature of alimony, maintenance or support and therefore are not dischargeable. Mr. Berks further objects to the Debtor's discharge on the same grounds specified by Sherry Calisoff. The Debtor denies that the debts are not dischargeable, claims his records were adequate and denies that he made any false statements or claims.
The plaintiffs in all three adversary proceedings have moved for summary judgement. The Debtor has moved for summary judgement in Sherry Calisoff's and Mr. Berks' adversary proceedings.
The Bankruptcy Court may look behind a state Court judgement to determine whether a debt is dischargeable. Klingman v. Levinson, 831 F.2d 1292 (7th Cir. 1987). In addition, the Bankruptcy Court may in its discretion apply collateral estoppel to issues in the bankruptcy case that 1) were actually litigated in the state Court action, 2) were determined by a final judgement and 3) were essential to the judgement. Matter of Dohm, 19 B.R. 134 (N.D. Ill.1982); In re Wade, 26 B.R. 477 (Bankr. N.D.Ill.1983). In the case at bar, the issue of dischargeability was not litigated in the state Court. The state Court judgement therefore may not preclude a trial on the issue of dischargeability in the Bankruptcy Court.
Nevertheless, collateral estoppel may be used to preclude re-litigation of certain issues that were litigated in the state Court. Findings on those issues may be considered as evidence in the § 523 dischargeability proceeding and the § 727 discharge proceeding. See, In re Halpern, 810 F.2d 1061 (11th Cir.1987); In re Condict, 71 B.R. 485 (Bankr.N.D.Ill.1987). To the extent that the findings of fact and conclusions of law in the state Court divorce judgement may be used as evidence in these adversary proceedings, the parties are precluded from relitigating those findings and conclusions.
Rule 56 of the Federal Rules of Civil Procedure, made applicable to the adversary proceedings in the Bankruptcy Court by Bankruptcy Rule 7056, provides that summary judgement will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgement as a matter of law." In 1986, the Supreme Court decided a trilogy of cases which encouraged the use of the summary judgement motion as a means to efficiently dispose of factually unsupported claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Electric Industrial Corp. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ().
The movant's initial burden is to show that there is no basis in the record for findings of facts that might determine a result of the case in favor of the non-movant. See, Anderson, 477 U.S. at 251, 106 S.Ct. at 2510, 91 L.Ed.2d at 214; Childress, A New Era for Summary Judgments: Recent Shifts at the Supreme Court, 116 F.R.D. 183, 190 (1986). Such a showing would satisfy the movant's burden under Rule 56(c) that there are no genuine issues as to any material facts.
The Supreme Court has now specifically rejected the view that summary judgement will not be granted if there is a scintilla of evidence supporting the non-movant. "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., 475 U.S. at 586, 106 S.Ct. at, 1356, 89 L.Ed.2d at, 552. Instead, once the movant's initial burden is met, the non-movant must show that there is a genuine dispute as to a material fact. Id. Of course, all evidence must still be viewed most favorably to the non-movant. Bartman v. Allis Chalmer Corp., 799 F.2d 311, 312 (7th Cir.1986), cert. denied, 479 U.S. 1092, 107 S.Ct. 1304, 94 L.Ed.2d 160 (1987). Summary Judgement should not be denied "`merely because some evidence has been introduced by the party having the burden of proof.'" 477 U.S. at 251, 106 S.Ct. at 2510 quoting Improvement Co. v. Munson, 14 Wall 442, 448, 20 L.Ed. 867 (1872).
The parties have filed cross motions for summary judgement. Each motion must be ruled on independently and all motions must be denied if there are genuine issues of material fact. ITT Industrial Credit Corp. v. D.S. America, Inc., 674 F.Supp. 1330, 1331 (N.D.Ill.1987).
Federal Rule of Civil Procedure 56(e) governs the form of affidavits submitted in connection with motions for summary judgement. The parties may not rest on mere allegations set forth in their pleadings, nor may they rest on conclusory statements in their affidavits. See Posey v. Skyline Corp., 702 F.2d 102 (7th Cir. 1983) cert. denied 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 366 (1983). The Debtor's affidavit merely verifies his answers to the complaints. The Debtor's affidavit does not satisfy the requirement of Rule 56(e). It does not set forth specific facts showing a genuine issue, but merely rests on the pleadings.
Furthermore, Rule 12(e) of this Court's Rules requires that the party moving for summary judgement file a detailed statement of material facts as to which they contend there is no genuine issue. Rule 12(f) requires that the party opposing the summary judgement motion file a statement of material facts as to which there is a genuine issue. If the non-moving party's 12(f) statement fails to deny the facts set forth in the movant's statement, those facts...
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