In re Goux
| Decision Date | 09 April 1987 |
| Docket Number | Adv. No. 85-0047.,Bankruptcy No. 85-00118 |
| Citation | 72 BR 355 |
| Parties | In re Frederick W. GOUX, Debtor. Ronald GUALTIERI, Plaintiff, v. Frederick W. GOUX, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of New York |
McMahon & Grow, Rome, N.Y., for plaintiff.
Vincent R. Corrou, Jr., Utica, N.Y., for defendant; Raymond A. Meier, of counsel.
MEMORANDUM-DECISION, FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
Plaintiff Ronald Gualtieri ("Gualtieri") seeks summary judgment on his complaint objecting to the dischargeability of a debt due him from Frederick W. Goux ("Debtor"). As grounds for relief, Gualtieri relies upon §§ 523(a)(2)(A) and (a)(4) of the Bankruptcy Code, 11 U.S.C. §§ 101-151326 ("Code").
The Court is familiar with this proceeding, having previously rendered a Decision dated September 4, 1986, 65 B.R. 121, denying Debtor's motion to dismiss Gualtieri's complaint, denying Debtor's motion to convert to a Chapter 13 case, and declaring void (as a matter of law pursuant to Code § 362(a)) a confession of judgment executed by Debtor during the pendency of his case. The following facts are a compilation of those divulged during the course of the earlier motion, as well as from present affidavits of the parties.
Debtor originally filed a petition for Chapter 13 relief on February 13, 1985. The case was converted to one under Chapter 7 by Court Order dated May 21, 1985.
Gualtieri filed his adversary complaint based on Code § 523(a)(2)(A) on July 9, 1985, and later amended it to include a cause of action under Code § 523(a)(4).
In August, 1977, Gualtieri gave Debtor the sum of $10,000.00. Gualtieri contends he gave the money to Debtor to acquire a bond on the former's behalf. Debtor states Gualtieri asked him to invest the money in whatever investment was deemed appropriate. Irrespective of just what was Gualtieri's initial request, Debtor failed to purchase any bonds or securities, failed to apply the money to any investment on Gualtieri's behalf, and never returned any funds to Gualtieri.
Gualtieri thereafter gave a sworn statement to the City of Rome, New York, Police Department reciting his allegations concerning the transfer and non-return of the $10,000.00. As a result, a felony complaint was lodged against Debtor on August 21, 1981, charging him with the offense of grand larceny in the second degree. Former New York Penal Law § 155.35 (McKinney 1975).1
On May 19, 1982, Debtor pled guilty to a reduced charge of petit larceny. Former New York Penal Law § 155.25 (McKinney 1975).2 Debtor was sentenced to three years probation, and received a $40.00 penalty. Debtor asserts he pled guilty because his attorney told him to do so.
On May 17, 1985, the Debtor was released from probation, and executed a Confession of Judgment on Gualtieri's behalf in the amount of $8,035.00. As indicated, the execution took place while the Code § 362 stay was in force. This sum represented the original amount due Gualtieri, less payments received during the course of Debtor's probation. The Confession of Judgment was prepared by the Oneida County Department of Probation, with Gualtieri neither requesting nor securing the same.
The Court has jurisdiction over this core proceeding, 28 U.S.C. § 157(b)(2)(I), pursuant to 28 U.S.C. § 1334 and § 157(a).
Code § 523(a)(2) excepts from discharge certain debts, to the extent obtained by:
As with all exceptions to discharge, these provisions are to be strictly construed in the Debtor's favor. Gleason v. Thaw, 236 U.S. 558, 562, 35 S.Ct. 287, 289, 59 L.Ed. 717, 719 (1915). The burden of proof lies with the party contesting dischargeability, with clear and convincing proof being necessary on each essential element of the claim. Waterbury Community Federal Credit Union v. Magnusson (In re Magnusson), 14 B.R. 662, 667 (Bankr.N.D.N.Y. 1981) (Marketos, B.J.). This heightened standard of proof is particularly appropriate when fraud or dishonesty on the debtor's part is at issue. Id. at 667; Household Finance Corp. v. Callery (In re Callery), 6 B.R. 527, 529 (Bankr.S.D.N.Y.1980).
While Gualtieri advances two grounds for nondischargeability, a review of the documents filed on his behalf reveals primary reliance upon Code § 523(a)(4). Thus, the Court's inquiry will begin by questioning whether Debtor's prior plea of guilty to the state court criminal charge of petit larceny suffices, as a matter of law, as a basis for maintaining his personal liability for the allied debt.3
Fed.R.Civ.P. 56(c) () provides that summary judgment is proper when the court determines that "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."
When the movant supports his motion for summary judgment, the opposing party must set forth specific facts showing a genuine issue for trial. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968); Wyler v. United States, 725 F.2d 156, 160 (2d Cir.1983); Project Release v. Prevost, 722 F.2d 960, 969 (2d Cir.1983); Contemporary Mission, Inc. v. United States Postal Service, 648 F.2d 97, 107 (2d Cir.1981).
The court's duty then consists of considering all the admissible evidence set forth, as well as all reasonably deducible inferences therefrom. Schwabenbauer v. Board of Education, 667 F.2d 305, 313 (2d Cir.1981); George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 554-55 (2d Cir.1977); United States v. Matheson, 532 F.2d 809, 813 (2d Cir.), cert. denied, 429 U.S. 823, 97 S.Ct. 75-6, 50 L.Ed.2d 85 (1976). The court is not to resolve questions of fact, but rather is to determine whether any material, factual questions have been raised, after resolving all questionable inferences in favor of the party against whom the judgment is sought. Board of Education v. Pico, 457 U.S. 853, 863, 102 S.Ct. 2799, 2806, 73 L.Ed.2d 435 (1982); United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); United States v. Matheson, supra, 532 F.2d at 813; Judge v. City of Buffalo, 524 F.2d 1321, 1323 (2d Cir.1975); Heyman v. Commerce and Industry Ins. Co., 524 F.2d 1317, 1320 (2d Cir.1975); Rhoads v. McFerran, 517 F.2d 66, 68 (2d Cir.1975). "Summary judgment should not be denied where the only issues raised are frivolous or immaterial ones which would simply serve to provide an exercise in futility or a purposeless trial for the . . . court." United States v. Matheson, supra, 532 F.2d at 813; See Beal v. Lindsay, 468 F.2d 287, 291 (2d Cir.1972); Houghton Mifflin Co. v. Stackpole Sons, Inc., 113 F.2d 627, 628 (2d Cir.1940) (per curiam) The opposing party cannot simply rely on conclusive statements. Wyler v. United States, supra, 725 F.2d at 160; Contemporary Mission, Inc. v. United States Post Office, supra, 648 F.2d at 107; Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980); See Markowitz v. Republic National Bank, 651 F.2d 825, 828 (2d Cir. 1981).
The Court interprets Gualtieri's repeated reference to Debtor's guilty plea as his attempt to collaterally estop Debtor from now contesting factual issues which were relevant to the state court criminal action. "Collateral estoppel, like the related doctrine of res judicata, has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation." Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552 (1979) (footnote and citation omitted). The United States Supreme Court has recognized that the doctrine of res judicata is inapplicable to a bankruptcy court's consideration of debt dischargeability. Brown v. Felsen, 442 U.S. 127, 138-39, 99 S.Ct. 2205, 2213, 60 L.Ed.2d 767 (1979). As to the applicability of the doctrine of collateral estoppel, the United States Supreme Court noted in dicta that "if, in the course of adjudicating a state-law question, a state court should determine factual issues using standards identical to those of § 17 of the former Bankruptcy Act, then collateral estoppel, in the absence of countervailing statutory policy, would bar relitigation of those issues in the bankruptcy court." Id. at 139 n. 10, 99 S.Ct. at 2213 n. 10, 60 L.Ed.2d at 776 n. 10.
In view of these expressions, courts have uniformly applied the doctrine of collateral estoppel in proceedings under both the former Bankruptcy Act as well as the Code. Revelle Motors, Inc. v. Spector (In re Spector), 22 B.R. 226, 231 (Bankr.N.D.N.Y. 1982) (Marketos, B.J.); Rolls Tools, Ltd. v. Herman (Matter of Herman), 6 B.R. 352, 359-60 (S.D.N.Y.1980); First National Bank of Boston v. Overmeyer (In re Overmeyer), 52 B.R. 111, 116 (Bankr.S.D.N.Y.) motion to amend denied, 53 B.R. 952 (1985); Matter of Esposito, 44 B.R. 817, 823 (Bankr.S.D.N.Y.1984); Moreno v. Schwartz (In re Schwartz), 36 B.R. 355, 357 (Bankr.E.D.N.Y.1984); Great American Insurance Co. v. Graziano (In re Graziano), 35 B.R. 589, 594 (Bankr.E.D.N. Y.1983); Wiese v. Sloan (In re Sloan), 18 B.R. 1021, 1023-24 (Bankr.E.D.N.Y.1982); MA & M Inc. v. Supple (Matter of Supple), 14 B.R. 898, 903-04 (Bankr.D.Conn. 1981); In re Iannelli, 12 B.R. 561, 563 (Bankr.S.D.N.Y.1981); Tickner v. Allen (Matter of Allen), 3 B.R. 355, 357-59 (Bankr W.D.N.Y.1980). Cf. City...
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