In re Cole
| Decision Date | 28 November 2000 |
| Docket Number | Bankruptcy No. 91-20137-7. Adversary No. 91-2014. |
| Citation | 255 BR 439 |
| Parties | In re George M. COLE, Debtor. Leland Stanley, Plaintiff, v. George M. Cole and Enid Bone and Joint Clinic, Inc., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Texas |
Roger Cox, Sanders Baker, P.C., Amarillo, TX, for plaintiff.
Steven Lee Hoard, Mullin, Hoard & Brown, Amarillo, TX, for defendant.
This adversary proceeding was remanded by the district court with instructions to reconsider whether George M. Cole's actions constitute a willful and malicious injury to Leland Stanley under 11 U.S.C. § 523(a)(6) in light of the Supreme Court's holding in Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998). This court was specifically instructed to conduct an evidentiary hearing to allow Cole to offer any testimony or evidence on the issue of whether he committed a deliberate tortious injury and not merely a deliberate or intentional act that led to injury, or that Cole was negligent, grossly negligent, or reckless. Such evidentiary hearing was held on September 11, 2000.
This court has jurisdiction of this matter under 28 U.S.C. § 1334(a) and 28 U.S.C. § 157(a). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(1) and (b)(2)(I). This memorandum opinion contains the court's findings of fact and conclusions of law. FED.R.BANKR.P. 7052 and FED. R.BANKR.P. 9014.
In August of 1987, the Debtor, George Cole, D.O., performed ligament reconstruction surgery on Leland Stanley's left hand. During surgery, Dr. Cole cut Mr. Stanley's median nerve which resulted in the loss of seventy-five percent of the use of his hand. Stanley filed a medical malpractice action against Cole in the District Court of Garfield, Oklahoma, and, on June 11, 1990, a judgment was entered against Cole and the co-defendant, Enid Bone & Joint Clinic, Inc.,1 in the amount of $250,000.00 in actual damages and $750,000.00 in punitive damages. The punitive damages award was based on the jury's finding that Cole's actions were "wanton and reckless."
On April 3, 1991, Cole filed a petition for relief under Chapter 7 of the Bankruptcy Code in the Northern District of Texas, Amarillo Division. Stanley filed this adversary proceeding asserting that the Oklahoma state court judgment is nondischargeable under § 523(a)(6) of the Bankruptcy Code. Trial was held before the bankruptcy court on February 2, 1992. The bankruptcy court, Judge John C. Akard, found Cole's actions to be "willful and malicious," and declared the Oklahoma judgment nondischargeable.
Cole appealed to the United States District Court for the Northern District of Texas and raised the following issues on appeal: (1) whether the bankruptcy court erred in holding Stanley's judgment against Cole to be nondischargeable because there was no evidence to support a finding of "willful and malicious" conduct on the part of Cole; (2) whether the bankruptcy court erred in holding the judgment to be nondischargeable because there was no legally sufficient evidence to support a finding of "willful and malicious" conduct on the part of Cole; (3) whether the bankruptcy court erred as a matter of law in holding the judgment nondischargeable because the bankruptcy court applied the wrong legal standard in construing the meaning of "willful and malicious"; (4) whether the bankruptcy court erred in admitting into evidence, over Cole's hearsay objection, testimony from the prior Oklahoma state court trial because prior testimony constitutes hearsay, and there was no showing of "unavailability of the witnesses" under Rule 804(a) of the Federal Rules of Evidence; (5) whether the bankruptcy court erred by partially basing its finding of nondischargeability on the doctrine of collateral estoppel; (6) whether the evidence establishes that Cole actually intended to injure Stanley; (7) whether the evidence establishes that Cole's conduct constituted a "wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse"; and (8) whether the bankruptcy court erred in finding that Cole's conduct "amounted to `a willful disregard of that which he knew to be his duty' and a complete and total disregard of accepted medical practice."
On June 27, 1995, the district court, Judge Mary Lou Robinson, remanded the case to this court for rehearing on the sole issue of whether the prior testimony of three doctors was admissible under the former testimony exception to the hearsay rule, FED.R.EVID. 804(b)(1), or under the other exceptions section of such rule, FED. R.EVID. 804(b)(5). The district court stated that "the evidence, if admissible, overwhelmingly supports the bankruptcy court's conclusion," but, "if the evidence is not admissible, then the bankruptcy court's finding is not supported by the evidence." As to all other issues, the findings and conclusions of the bankruptcy court were affirmed.
On remand, the bankruptcy court, by its Memorandum of Opinion entered January 5, 1996, found that the prior testimony was admissible, consistent with the Federal Rules of Evidence, and, in addition, collaterally estopped Cole from re-litigating the willful and malicious issue. The bankruptcy court issued its order reaffirming the prior holding which declared the Oklahoma state court judgment nondischargeable under § 523(a)(6).
Cole appealed again to the district court, identifying the following issues on appeal: (1) whether the bankruptcy court erred in holding Stanley's judgment against Cole to be nondischargeable because there was no evidence to support a finding of "willful and malicious" conduct on Cole's part; (2) whether the bankruptcy court erred in holding the judgment against Cole to be nondischargeable because there was no legally sufficient evidence to support a finding of "willful and malicious" conduct on Cole's part; (3) whether the bankruptcy court erred in basing its finding of nondischargeability on the doctrine of collateral estoppel because the issue of "willful and malicious" was neither "actually litigated" nor "necessarily decided" in the prior Oklahoma state court case; (4) whether the bankruptcy court erred in holding the debt nondischargeable on both collateral estoppel grounds and pursuant to an independent fact finding, while preventing Cole from offering any evidence to rebut Stanley's evidence; (5) whether the bankruptcy court erred in holding that collateral estoppel prevented Cole from offering any evidence to rebut Stanley's evidence; (6) whether the bankruptcy court erred in reaffirming its prior judgment; (7) whether the bankruptcy court erred in holding the debt nondischargeable because it applied the wrong legal standard in construing the meaning of "willful and malicious"; (8) whether the bankruptcy court erred in admitting into evidence, over Cole's objection, testimony from the Oklahoma state court trial; (9) whether the evidence established that Cole actually intended to injure Stanley; (10) whether the evidence established that Cole's conduct constituted a "wrongful act done intentionally, which necessarily produces harm and is without just cause or excuse"; (11) whether the bankruptcy court erred in finding that Cole's conduct amounted to a willful disregard of that which he knew to be his duty and a complete and total disregard of accepted medical practice; and (12) whether the bankruptcy court erred in finding that Cole's conduct constituted a willful and malicious injury.
On his second appeal, the district court, Judge Mary Lou Robinson, issued a Memorandum Opinion and Order dated April 12, 2000, affirming in part and vacating in part the bankruptcy court's ruling. Three issues are addressed: (1) the applicable legal standard on "willful and malicious" as established by the United States Supreme Court in its 1998 opinion, Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90; (2) whether the bankruptcy court erred in admitting the testimony of the three doctors from the Oklahoma state court; and (3) whether the bankruptcy court erred in only admitting testimony from the Oklahoma state court trial and refusing to allow evidence from Cole. The district court affirmed the bankruptcy court's ruling, save for the bankruptcy court's finding that Cole's actions constituted a willful and malicious injury. The bankruptcy court's nondischarge order was therefore vacated and the case remanded for further consideration in light of the decision in Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998).2
On September 11, 2000, this court held a hearing in accordance with the district court's instructions. After hearing oral argument concerning the new legal standard for a "willful and malicious injury" referenced in 11 U.S.C. § 523(a)(6) and allowing Cole to present evidence rebutting the assertion that his conduct and the resulting injury were "willful and malicious," the court took the matter under advisement.
The facts underlying this court's prior nondischargeability judgment are set forth at In re Cole, 136 B.R. 453 (Bankr. N.D.Tex.1992). The findings of the court in such opinion are hereby incorporated by reference. After hearing on September 11, 2000, upon remand from the district court, this court elaborates on and makes additional findings.
In February of 1987, Stanley, as a result of suffering a dislocation of his left index finger, had his hand examined at a hospital emergency room. At this time, as well as at a subsequent check-up in May of 1987, no nerve problems were found in Stanley's left hand.
In July of 1987, Stanley sought medical treatment for his dislocated left index finger from Dan Butler, M.D., who is an orthopedic surgeon in Enid, Oklahoma. Dr. Butler evaluated Stanley's finger and recommended that he undergo joint ligament reconstruction. Dr. Butler did not treat Mr. Stanley. In August of 1987,...
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