In re Cunningham

• Decision Date: 17 October 2006
• Docket Number: Adversary No. 06-6086.,Bankruptcy No. 05-83750-JB.
• Citation: In re Cunningham, 355 B.R. 913 (Bankr. N.D. Ga. 2006)
• Parties: In re Willie CUNNINGHAM, Debtor. Eddie Lou Morris, Plaintiff, v. Willie Cunningham, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

355 B.R. 913

In re Willie CUNNINGHAM, DebtorEddie Lou Morris, Plaintiff, v.Willie Cunningham, Defendant.

Bankruptcy No. 05-83750-JB.

Adversary No. 06-6086.

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

October 17, 2006.

COPYRIGHT MATERIAL OMITTED

Leslie Ann Skiba, Esq., for Plaintiff/Petitioner/Movant.

Jerry A. Daniels, Esq.And David L. Holbrook, Esq., for Defendant/Respondent.

ORDER

JOYCE BIHARY, Bankruptcy Judge.

This adversary proceeding is before the Court on PlaintiffEddie Lou Morris' motion for partial summary judgment.Plaintiff filed a complaint objecting to the dischargeability of a 1994 judgment entered in her favor against Debtor Willie Cunningham by the Superior Court of Fulton County, Georgia, on the grounds that the judgment is nondischargeable under 11 U.S.C. § 523(a)(2)(A)and§ 523(a)(6).Plaintiff's motion for partial summary judgment is based on § 523(a)(2)(A) which excepts from discharge a debt obtained by false pretenses, a false representation or actual fraud.Defendant does not dispute any of the facts set forth in Plaintiffs Statement of Material Facts, but argues that the judgment should not be enforced alleging that venue was improper.This is a core proceeding under 28 U.S.C. § 157(b)(2)(I).After carefully considering the record, the motion and the parties' briefs, the Court concludes that the material facts are undisputed and that Plaintiff is entitled to summary judgment on her § 523(a)(2)(A) claim.

In support of her motion for partial summary judgment, plaintiff filed an affidavit and a numbered statement of undisputed material facts as required by Local Rule.Defendant failed to submit a response to movant's numbered statement of material facts, and they are deemed admitted.BLR 7056-I(a)(2), NDGa. (2005).Thus, the following facts are undisputed.

In early January of 1987, plaintiffEddie Lou Morris contacted defendantWillie Cunningham regarding the purchase of certain real property located at 2650 Colonial Drive, College Park, Georgia (the "Property").At the time, defendant was a real estate agent and the President of Unicorn Properties, Inc.("Unicorn").On May 23, 1988, the Georgia Real Estate Commission(the "Commission") revoked defendant's real estate license.As part of its decision, the Commission specifically concluded that Mr. Cunningham was a party"to the falsification of documents" and "made substantial misrepresentations in connection with"plaintiffs attempted purchase of the Property.

Defendant specifically represented to plaintiff that the Property carried a mortgage that could be assumed through the Federal Housing Authority and required a down payment of $5,000.00.In reliance on defendant's representations, plaintiff decided to purchase the Property.On or about January 14, 1987, plaintiff met with defendant and James M. Crow, Sr.("Crow") for a closing on the sale of the Property.At the closing, plaintiff gave Messrs. Cunningham and Crow two (2) cashier's checks totaling $5,000.00 and executed a contract for deed.In return, plaintiff was given an unsigned warranty deed for purchase of the Property from Mr. Crow.Being informed and believing that she had purchased the Property, plaintiff took possession of the Property and made several monthly payments.On or about August 15, 1987, Mr. Crow executed a warranty deed in favor of Nexus Real Estate Mortgage and Investment Company("Nexus") wherein Mr. Crow purported to convey his interest in the Property to Nexus.Mr. Crow served as Nexus's Chief Financial Officer and Secretary.Although a dispossessory action by Nexus against plaintiff was dismissed by the magistrate court, the Property was later foreclosed upon and sold by Metmor Financial, Inc.("Metmor Financial").

On March 2, 1988, plaintiff filed a Complaint related to her attempted purchase of the Property in the Superior Court of Fulton County, FileNo. D-54288, against Messrs. Cunningham and Crow, Nexus, Unicorn and Metmor Financial (the "Superior Court Case").As part of the Superior Court Case, plaintiff asserted claims for fraud and breach of fiduciary duty against defendant individually.Defendant filed his Answer and Counterclaim in the Superior Court Case on March 31, 1988 through counsel.Defendant's counsel later withdrew and defendant proceeded pro se.Despite being served with a notice of trial calendar, defendant failed to appear at the trial in the Superior Court held on June 20, 1994.

At the trial, the Superior Court found defendant liable on plaintiff's claims and entered a judgment.A jury trial was conducted to determine the damages suffered by plaintiff, and on June 20, 1994, the Verdict and Final Judgment were entered by the Superior Court against defendant, Nexus and Unicorn pursuant to which plaintiff was awarded, jointly and severally, $30,519.21 in special damages, $300,000 in general damages, and $20,000.00 in attorneys' fees and costs, as well as post-judgment interest in the amount of 7% per annum.As part of the Verdict and Final Judgment, plaintiff was also awarded punitive damages of $166,666.63 against defendant individually.

Metmor Financial was dismissed from the suit by the trial court on November 28, 1988, and Mr. Crow died before trial.Defendant did not object to or appeal either the Verdict or the Final Judgment.To date, defendant has not paid any of the punitive damages owed to plaintiff pursuant to the Verdict and Final Judgment against him, and neither defendant, Unicorn nor Nexus has paid plaintiff any of the damages awarded against them jointly and severally as part of the Verdict and Final Judgment.

On October 20, 1998, defendant filed a voluntary petition for bankruptcy pursuant to Chapter 7 of the Bankruptcy Code, Case No. 98-77567(the "First Bankruptcy").Plaintiff was never notified of defendant's First Bankruptcy, and defendant did not include plaintiffs Final Judgment in the Statement of Financial Affairs filed with his First Bankruptcy or in Schedules D, E or F.On October 15, 2005, defendant fled another Chapter 7 case, Case No. 05-83750(the "Second Bankruptcy").As with the First Bankruptcy, plaintiff was not notified of defendant's Second Bankruptcy, and defendant failed to identify plaintiffs Final Judgment in the Statement of Financial Affairs filed with his Second Bankruptcy or in Schedules D, E or F thereto.Defendant also failed to provide plaintiff with any notice of the creditors' meeting related to his Second Bankruptcy held on December 6, 2005.After first becoming aware of defendant's Second Bankruptcy, plaintiff filed her Complaint in this case on February 3, 2006 objecting to the dischargeability of her judgment claim.

A court will only grant summary judgment when there is "no genuine issue as to any material fact and the moving party is entitled to summary judgment as a matter of law."Fed.R.Civ.P. 56(c), made applicable by Fed. R. Bankr.P. 7056.Lusk v. Williams(In re Williams), 282 B.R. 267, 271(Bankr.N.D.Ga.2002)(citingCelotex Corp. v. Catrett,477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986)).The movant bears the burden of going forward and ultimately of proving all elements of the cause of action.Williams,282 B.R. at 271(citingCelotex,477 U.S. at 322, 106 S.Ct. 2548)."Courts must review all facts and inferences in the light most favorable to the non-moving party."Bridge Capital Investors, II v. Susquehanna Radio Corporation,468 F.3d 1212, 1215(11th Cir.2006);Samples on Behalf of Samples v. Atlanta,846 F.2d 1328, 1330(11th Cir.1988).

Plaintiff argues that the doctrine of collateral estoppel, or issue preclusion, applies and entitles plaintiff to a summary judgment on her § 523(a)(2)(A) claim.Collateral estoppel prohibits the relitigation of issues that have been adjudicated in a prior lawsuit, and collateral estoppel principles apply to dischargeability proceedings.Sterling Factors, Inc. v. Whelan(Sterling Factors, Inc. v. Schaner), 245 B.R. 698, 704(N.D.Ga.2000)(citingGrogan v. Garner,498 U.S. 279, 284 n. 11, 111 S.Ct. 654, 112 L.Ed.2d 755(1991)).When determining the preclusive effect of state court judgments, bankruptcy courts apply the collateral estoppel law of that state.U.S. Const. Art. IV, § 1;28 U.S.C. § 1738(2006);Allen v. McCurry,449 U.S. 90, 96, 101 S.Ct. 411, 66 L.Ed.2d 308(1980);St. Laurent v. Ambrose(In re St. Laurent), 991 F.2d 672, 675-76(11th Cir.1993).Under Georgia law, the following elements must be established before collateral estoppel may be invoked: (I) there must be an identity of issues between the first and second actions; (2) the duplicated issue must have been actually and necessarily litigated in the prior court proceeding; (3) determination of the issue must have been essential to the prior judgment; and (4)the party to be estopped must have had a full and fair opportunity to litigate the issue in the course of the earlier proceeding.Dement v. Gunnin(In re Gunnin),227 B.R. 332, 336(Bankr.N.D.Ga.1998).

There is an identity of issues between the claim of fraud asserted in the Superior Court Case and the dischargeability claim under § 523(a)(2)(A).Georgia law requires the following elements to be proven for a finding of liability on fraud: (1) a false representation made by defendant; (2) which the defendant knew was false; (3) made with an intent to deceive the plaintiff; (4) justifiable reliance by the plaintiff on such representation; and (5) damages suffered by the plaintiff as a result.Crawford v. Williams,258 Ga. 806, 375 S.E.2d 223, 224(1989).Fraud under § 523(a)(2)(A) of the Bankruptcy Code requires the following elements to be proved: (1) that the debtor made a false representation with the intent to deceive the creditor; (2) that the creditor relied on the representation; (3) that the reliance was justified; and (4) that the creditor sustained a loss as a result of the representation.Field v. Mans,516 U.S. 59, 74, 116 S.Ct. 437, 446, 133...