In re Hauge
| Decision Date | 26 March 1999 |
| Docket Number | Adversary No. 97-3316.,Bankruptcy No. 87-31337 |
| Citation | 232 BR 141 |
| Parties | In re Roger L. HAUGE, Debtor. Roger L. Hauge, Plaintiff, v. Marvin Skaar, David Torson & Dale Cox, dba Elite Air Center, Defendants. |
| Court | U.S. Bankruptcy Court — District of Minnesota |
COPYRIGHT MATERIAL OMITTED
Zenas Baer, Hawley, MN, for Defendant.
Ralph W. Heuschele, Bloomington, MN, for Plaintiff.
ORDER DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANT DALE COX
This adversary proceeding is before the Court on the Plaintiffs motion for summary judgment against Defendant Dale Cox. At the hearing on the motion, the Plaintiff appeared by his attorney, Ralph W. Heuschele; Defendant Cox appeared by his attorney, Zenas Baer. Upon the moving and responsive documents and the arguments of counsel, the Court makes the following order.
The Plaintiff filed a voluntary petition for relief under Chapter 7 on May 7, 1987. The Plaintiff did not include entries for any of the Defendants as creditors in the schedules for his case. By an order entered on August 26, 1987, the Plaintiff received a discharge under Chapter 7.
In March, 1997, Defendant Cox sued the Plaintiff in the Minnesota State District Court for the Seventh Judicial District, Clay County. In his complaint, he alleged that the Plaintiff was indebted to him for services rendered between August, 1985 and January, 1986. In response, the Plaintiff commenced this adversary proceeding on November 13, 1997. Through his original and amended complaints, he sought a determination that all claims that the Defendants held against him as of May 7, 1987 were discharged in the course of BKY X-XX-XXXX.1
The Plaintiff then moved for an order preliminarily enjoining Defendant Cox from prosecuting the Clay County District Court action pending final judgment in this adversary proceeding. Via an order entered December 24, 1997, this Court granted the motion.
Defendant Cox then answered the Plaintiff's amended complaint. He requested a judgment determining that his claim was excepted from the Plaintiff's discharge. Defendants Skaar and Torson did not serve or file answers; on motion of the Plaintiff, the Court granted default judgment against them.
As between the Plaintiff and Defendant Cox, this adversary proceeding has gone through discovery to the motion at bar.
The Plaintiff now moves for summary judgment against Defendant Cox. He argues that all of the material facts under the applicable statute are undisputed and that the governing law entitles him to judgment.
In response, Defendant Cox maintains that the governing law makes certain additional facts material to the Plaintiff's claim. He then argues that his evidence shows a triable issue on the additional facts, warranting denial of the Plaintiff's motion.
A motion for summary judgment presents a two-step inquiry. The first question is whether there is a "genuine issue as to any material fact." FED.R.CIV.P. 56(c).2 After this fact-oriented and evidence-centered inquiry, the question is whether the movant "is entitled to a judgment as a matter of law." Id.
For the purposes of summary judgment, materiality of facts is measured by whether a given fact "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). As a result, the Court must identify the elements of the claim or defense at issue before examining the evidence of record for the existence of fact disputes. In re Jolly's, Inc., 188 B.R. 832, 838 n. 7 (Bankr.D.Minn.1995). Evidence from the respective sides must then be linked to one or more of those identified elements. In re Jolly's, Inc., 188 B.R. at 837. To be considered for summary judgment analysis, such evidence must be "significant" and "probative," Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th Cir. 1990), as well as "substantial," Krause v. Perryman, 827 F.2d 346, 350 (8th Cir. 1987).
A plaintiff may move for summary judgment by gleaning the elements of its claim or cause of action, amassing the evidence generated by its investigation and discovery, and then "pointing out," Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), that the evidence meets all of the elements and does not establish any affirmative defense. In re Mathern, 137 B.R. 311, 314 (Bankr. D.Minn.1992), aff'd, 141 B.R. 667 (D.Minn. 1992). See also In re Jolly's, Inc., 188 B.R. at 838. When a plaintiff comes forward on this strategy, the defendant may avoid a grant of summary judgment in three ways.
The first way goes purely to the factual aspects of the proceeding. A defendant would follow it if it accepted the plaintiff's recitation of the elements of its claim as legally correct, but disputed the plaintiff's proof on them. In such a posture, a defendant can avoid summary judgment by producing significant, probative, and substantial admissible evidence that denies the existence of one or more of the elements, or that would establish a pleaded affirmative defense. In re Johnson, 139 B.R. 208, 214 (Bankr.D.Minn.1992).3 If the defendant's evidence has the requisite weight, it will then be entitled to a trial (if the controverted evidence goes to the plaintiff's claim), or to judgment in its favor (if the plaintiff does not produce evidence to challenge the factual basis of the affirmative defense).
The second way goes purely to the legal dimension. If the defendant concedes the facts asserted by the plaintiff, it can argue that the governing law supports judgment in its favor, rather than in the plaintiff's. This path is used, for example, to obtain judicial construction of the terms of a contract, e.g., United States Fidelity and Guaranty Co. v. Housing Auth. of the City of Poplar Bluff, 114 F.3d 693 (8th Cir.1997), or to determine whether an agreement is enforceable under public policy considerations, In re Mathews, 207 B.R. 631, 638 n. 8 (Bankr.D.Minn.1997).
The third way is less commonly seen, and involves both legal and factual considerations. The defendant may acknowledge those facts that the plaintiff posits, but disagree with the plaintiff's characterization of the scope of material facts. The defendant would argue that the plaintiff must prove additional or alternative elements, and then would assert one of two things: there is no evidence to support one or more of them, or the evidence makes out a triable dispute on them. If the defendant's identification of the elements is correct, the first sub-path could lead to a grant of summary judgment for the defendant, absent rebuttal by the plaintiff. The second could result in the denial of the plaintiff's motion, and a trial on the merits.
Defendant Cox has responded to the Plaintiff's motion with the last approach just described. It is appropriate to first identify the acts, events, and circumstances that are not in controversy.
1. Before his bankruptcy filing, the Plaintiff was engaged in the brokerage or sale of insurance benefit packages to banks and other business entities in Minnesota, North and South Dakota, and Montana. During 1985, he began working out of an office in Fargo, North Dakota, while retaining his residence in the Minneapolis-St. Paul metropolitan area.
2. Soon after he started, the Plaintiff began working in consort with Defendants Skaar and Torson. Skaar and Torson were to locate prospective clients, to make the first contacts with them, and then to accompany the Plaintiff for an initial call at the clients' places of business.
3. At that time, Defendant Cox ran a charter air transport business and brokered the sale of airplanes.
4. Through Skaar, the three made arrangements with Defendant Cox for chartered flights to prospective clients' places of business, and to and from the Plaintiff's place of residence.
5. For the first several months in which Defendant Cox provided charter service to the three, the billing and payment for his service were handled rather loosely. In the spring of 1986, however, the Plaintiff, Skaar, and Torson established a joint account for the segregation of funds to pay their combined business expenses, including Defendant Cox's charges. This account was termed "the HTS Account." The Plaintiff's Fargo office manager administered it, taking deposits from the three, receiving Defendant Cox's billings, and making payment on this and other debts as appropriate.
6. From June 1986 through early 1988, Defendant Cox billed for his current services to the HTS Account and the Plaintiff's office manager paid him out of the account.
7. The Plaintiff, Skaar, and Torson terminated their association in 1988. After that, the HTS Account and its participants had no remaining obligation to Defendant Cox for any services rendered after June 1, 1986.
8. When he filed for bankruptcy in May, 1987, the Plaintiff did not include an entry for Defendant Cox on any of the debt schedules he submitted with his petition. Defendant Cox's name and address were not among those on the mailing matrix used by the clerk of this Court for the case.
9. The "Notice of Chapter 7 Bankruptcy Case" issued for the plaintiff's case by the clerk of this Court on May 27, 1987, fixed September 24, 1987, as the last day to timely file a proof of claim, and August 25, 1987, as the last day to timely file complaints under 11 U.S.C. § 523(c) and former 11 U.S.C. § 15727(a).
10. The Plaintiff never requested the clerk of this court to add Defendant Cox to the records or matrix for his case pursuant to former Loc. R. BANKR. P. (D.MINN.) 112(b). Nor did he file an amended A Schedule to add a claim for him, as provided under former LOC. R. BANKR. P. (D.MINN.) 112(f).
11. As a result, Defendant Cox never received formal notice of the Plaintiff's bankruptcy filing or of the...
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