In re Carothers
| Decision Date | 05 June 1982 |
| Docket Number | Adv. No. 81-0187.,Bankruptcy No. 3-81-488 |
| Parties | In re Vernon N. CAROTHERS, Debtor. NORTH CENTRAL WOOL MARKETING CORPORATION, Plaintiff, v. Vernon N. CAROTHERS, Defendant. |
| Court | United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — District of Minnesota |
Bruce Hanson, and Amy Sadoff, St. Paul, Minn., for plaintiff.
Jon Hopeman, Minneapolis, Minn., for defendant.
At St. Paul, in said District, this 15th day of June, 1982.
The above-titled case is before the undersigned United States Bankruptcy Judge upon plaintiff's motion for summary judgment.
NOW, upon all of the file, record and proceedings, the following Memorandum Decision, incorporating Findings of Fact and Conclusions of Law, is made and entered, and is deemed to comply with Rules of Bankruptcy Procedure.
On March 17, 1981, defendant filed a voluntary petition for relief under Chapter VII of the Bankruptcy Code. The petition seeks, inter alia, discharge of an indebtedness which is evidenced by a judgment entered in the District Court, County of Dakota, First Judicial District, State of Minnesota, in a case entitled North Central Wool Marketing Corporation v. Output Systems, Inc., a Minnesota corporation, and Vernon N. Carothers. Plaintiff challenges the dischargeability of this debt.
Throughout the period relevant to our inquiry, defendant was president of Output Systems, Inc., a Minnesota corporation engaged in designing and installing customized computer packages.
In mid-June, 1976, plaintiff entered into a contract with Output Systems whereby plaintiff agreed to purchase and Output agreed to sell and provide plaintiff with certain computer hardware and associated programming software to accomplish a "perpetual inventory control system."
In early August, 1976, Output was advised by the potential hardware supplier, Digital Equipment Corporation (DEC), that DEC would not meet its delivery date and that the delay in delivery would be substantial. With plaintiff's apparent blessing, Output assembled a new configuration of hardware which combined DEC components with components produced by other computer manufacturers.
Delivery of the various components and their integration by Output occupied the better part of January through April, 1977. On April 25, Output began transfer of the equipment to plaintiff's facility; initial installation and set-up was completed on April 29, 1977.
On May 3, 1977, in a letter to plaintiff, Output submitted a revised completion schedule, which contemplated that the entire computer system would be completed and ready for use on or about May 21, 1977.
Defendant's version of precipitating events is not a matter of this record. According to plaintiff, the revised completion schedule was not met. Plaintiff's Memorandum of Law in Support of Motion for Summary Judgment, p. 3. On June 24, 1977, plaintiff advised employees of Output to suspend their work and, by letter of July 1, 1977, revoked acceptance of both hardware and software.
On September 29, 1977, plaintiff commenced an action in Dakota County District Court against defendant and Output Systems, Inc., seeking compensatory damages of $106,095.16 and punitive damages of $200,000.00, for breach of contract and fraudulent misrepresentation.
The action came to trial on March 23, 1978. At the close of plaintiff's case, the trial court granted a defense motion to dismiss the punitive damage claim. On April 3, 1978, a jury returned a special verdict as follows:
The trial court adopted the verdict of the jury as its Findings of Fact, appended Conclusions of Law and ordered judgment entered accordingly.
The summary judgment rule, Rule 56(c), Federal Rules of Civil Procedure, applies in this adversary proceeding; Rule 756, Rules of Bankruptcy Procedure, provides, in part, that:
". . . The judgment sought shall be rendered forthwith 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 judgment as a matter of law. . . . "
This rule serves a useful purpose in the scheme of judicial administration by providing a vehicle through which fictitious, vexatious, or unsubstantial fact issues can be separated from genuine substantive fact issues which are properly reserved for resolution by a trier of fact. The rule enables a litigant to present to the Court for determination in a summary fashion those cases which can be determined solely upon questions of law.
Given this function, a Court must, first, examine the evidence presented on a motion for summary judgment with the view to ascertaining whether or not a triable material fact issue is presented. The Court's function is not to resolve disputed fact questions. Doza v. American National Ins. Co., 314 F.2d 230 (8th Cir. 1963); Sprague v. Vogt, 150 F.2d 795 (8th Cir. 1945); Neff v. World Publishing Co., 349 F.2d 235 (8th Cir. 1965); Dulansky v. Iowa-Illinois Gas and Elec. Co., 191 F.2d 881 (8th Cir. 1951). The moving party has the burden of affirmatively demonstrating the absence of any genuine issue of material fact when the evidence available is viewed in the light most favorable to the opposing party, Percival v. General Motors Corp., 539 F.2d 1126 (8th Cir. 1976); Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180 (8th Cir. 1976) cert. den. 429 U.S. 1040, 97 S.Ct. 738, 50 L.Ed.2d 751 (1977), and must establish his right to a judgment with such clarity as to leave no room for controversy by demonstrating that the other party is not entitled to recover under any circumstances discernible from the evidence, Goodman v. Parwatikar, 570 F.2d 801 (8th Cir. 1978); Bellflower v. Pennise, 548 F.2d 776, 777 (8th Cir. 1977); Robert Johnson Grain Co. v. Chemical Interchange Co., 541 F.2d 207 (8th Cir. 1976); Percival v. General Motors Corp., supra; Ozark Milling Co. v. Allied Mills, Inc., 480 F.2d 1014 (8th Cir. 1973); Windsor v. Bethesda Hospital, 523 F.2d 891 (8th Cir. 1975); Cervantes v. Time, Inc., 464 F.2d 986 (8th Cir. 1972) cert. den. 409 U.S. 1125, 93 S.Ct. 939, 35 L.Ed.2d 257 (1973), while conceding to the answering party the benefit of all reasonable factual inferences, McSpadden v. Mullens, 456 F.2d 428 (8th Cir. 1972), and without regard to an assessment or measurement of credibility. United States v. United Marketing Association, 291 F.2d 851 (8th Cir. 1961); Johnson Farm Equipment Co. v. Cook, 230 F.2d 119 (8th Cir. 1956). The purpose of the rule is not to deprive litigants of the right to a trial if there are material fact issues to be decided, but to determine whether or not such material fact issue exists. Poller v. Columbia Broadcasting Co., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 64 S.Ct. 724, 88 L.Ed. 967 (1944). If the record discloses that there is a possibility of a genuine issue of fact, the motion must be resolved against the moving party, Johnson Farm Equipment Co. v. Cook, supra; Caylor v. Virden, 217 F.2d 739 (8th Cir. 1955); Union Transfer Co. v. Riss & Co., 218 F.2d 553 (8th Cir. 1955); Traylor v. Black, Sivalls & Bryson, Inc., 189 F.2d 213 (8th Cir. 1951), even where, though the basic facts are not in dispute, the parties can, in good faith, disagree on the subjective inferences to be drawn from established facts. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963); Pfizer, Inc. v. International Rectifier Corp., supra; Hart v. Johnston, 389 F.2d 239 (6th Cir. 1968); Washington Post Co. v. Keogh, 365 F.2d 965 (D.C.Cir.1966) cert. den. 385 U.S. 1011, 87 S.Ct. 708, 17 L.Ed.2d 548 (1967). In short, summary judgment is an extreme remedy which should be only sparingly employed. Matter of Citizens Loan & Saving Co., 621 F.2d 911 (8th Cir. 1980); Giordano v. Lee 434 F.2d 1227 (8th Cir. 1970); see, Nix v. Sweeney, 573 F.2d 998 (8th Cir. 1978). Caution is the policy, but this does not mean that a court should hesitate to grant summary judgment in a case which is ripe for summary disposition.
Plaintiff's motion for summary judgment is premised upon the contention that the doctrine of collateral estoppel bars relitigation of the factual issues surrounding the state court finding of fraud; and that the state court verdict satisfies the requisite elements of a nondischargeable debt within the meaning of the Bankruptcy Code, Title 11 U.S.C. § 523(a)(2).
In Brown v. Felsen, 442 U.S. 127, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979), the United States Supreme Court...
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