In re Jacobs

Decision Date25 January 2011
Docket NumberAdversary No. 07 A 00959.,Bankruptcy No. 07 B 13733.
Citation448 B.R. 453
PartiesIn re David J. JACOBS, Debtor.Juan Zamora, Plaintiff,v.David J. Jacobs, Defendant.
CourtU.S. Bankruptcy Court — Northern District of Illinois

OPINION TEXT STARTS HERE

Arthur R. Ehrlich, Goldman & Ehrlich, Chicago, IL, for Plaintiff.Gregory K. Stern, Gregory K. Stern, P.C., Chicago, IL, for Defendant.

MEMORANDUM OPINION

SUSAN PIERSON SONDERBY, Bankruptcy Judge.

This matter comes before the court on the motion of plaintiff Juan Zamora (the Plaintiff) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure on the second amended complaint seeking to except from discharge a debt owed to the Plaintiff by debtor-defendant David J. Jacobs (the Defendant) under section 523(a)(2)(A), (a)(4), and (a)(6) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), (a)(4), (a)(6). For the reasons set forth below, the court grants the motion in its entirety in favor of the Plaintiff and enters judgment that the debt in the amount of $271,581.90, plus interest of 9% per year which has been accruing since January 4, 2006, is nondischargeable under the statutory exceptions.

I. JURISDICTION

The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. The proceeding concerns a determination of the dischargeability of a particular debt and is therefore a core proceeding under 28 U.S.C. § 157(b)(2)(I). Venue is properly placed in this court pursuant to 28 U.S.C. § 1409(a).

II. SUMMARY JUDGMENT STANDARD

In order to prevail on a motion for summary judgment, the movant must meet the criteria set forth in Rule 56 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7056. Rule 56(c) provides, in pertinent part, as follows:

The judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c)(2). The primary purpose of the summary judgment procedure is to avoid unnecessary trials where no genuine issues of material fact are in dispute. See Trautvetter v. Quick, 916 F.2d 1140, 1147 (7th Cir.1990); Farries v. Stanadyne/Chi. Div., 832 F.2d 374, 378 (7th Cir.1987) ( quoting Wainwright Bank & Trust Co. v. Railroadmens Fed. Sav. & Loan Ass'n of Indianapolis, 806 F.2d 146, 149 (7th Cir.1986)). Thus, on a motion for summary judgment, the court has “one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial.” Kodish v. Oakbrook Terrace Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir.2010) (internal quotation omitted). Where the material facts are not in dispute, the only issue is whether the moving party is entitled to judgment as a matter of law. ANR Advance Transp. Co. v. Int'l Bhd. of Teamsters, Local 710, 153 F.3d 774, 777 (7th Cir.1998).

All reasonable inferences drawn from the underlying facts must be viewed in a light most favorable to the nonmoving party. McKinney v. Cadleway Props., Inc., 548 F.3d 496, 499–500 (7th Cir.2008); Roger Whitmore's Auto. Servs., Inc. v. Lake Cnty., Ill., 424 F.3d 659, 666–67 (7th Cir.2005). The existence of a material factual dispute is sufficient only if the disputed fact is determinative of the outcome under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Fritcher v. Health Care Serv. Corp., 301 F.3d 811, 815 (7th Cir.2002). [S]ummary judgment is not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial.” Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990). The Seventh Circuit has noted that trial courts must remain sensitive to fact issues where they are actually demonstrated to warrant denial of summary judgment. Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1065–66 (7th Cir.2000); Szymanski v. Rite–Way Lawn Maint. Co., 231 F.3d 360, 364 (7th Cir.2000).

The party seeking summary judgment always bears the initial responsibility of informing the ... court of the basis for [his] motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which [he] believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotation omitted). Once the moving party satisfies his initial burden of production, the party opposing the motion may not rest on the mere allegations or denials in his pleadings; rather, his response must set forth specific facts showing that there is a genuine issue for trial. See id. at 324, 106 S.Ct. 2548; Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir.2001).

When resolution of a dispositive issue requires the court to determine a party's state of mind, summary judgment is usually inappropriate, because the credibility of the witness cannot be ascertained without the trier of fact's observation of the demeanor of the witness during direct and cross examination. McGreal v. Ostrov, 368 F.3d 657, 677 (7th Cir.2004); Keybank USA, N.A. v. Garcia (In re Garcia), Nos. 03 B 50412, 04 A 00821, 2004 WL 2862311, at *2 (Bankr.N.D.Ill. Dec. 13, 2004); Am Isuzu Motors, Inc. v. George's Comet Motorcars, Ltd. (In re George's Comet Motorcars, Ltd.), 100 B.R. 403, 405 (Bankr.N.D.Ill.1989). If the defendant's state of mind is a necessary element of the plaintiff's case, courts must be careful in granting summary judgment based solely on the defendant's categorical denial that the required mental state existed. Corrugated Paper Prods., Inc. v. Longview Fibre Co., 868 F.2d 908, 914 (7th Cir.1989). “Summary judgment is appropriate, however, even when issues of scienter are involved, if in response to a properly supported motion for summary judgment, the non-movant offers no specific facts to show that there is a genuine issue for trial or simply relies on mere allegations or denials.” George's Comet Motorcars, 100 B.R. at 405.

Under Local Bankruptcy Rule 7056, a motion for summary judgment imposes special procedural burdens on the parties. Specifically, the Rule requires the moving party to supplement its motion and supporting memorandum with a statement of undisputed material facts (the “7056–1 Statement”). Local Bankr.R. 7056–1. The 7056–1 Statement “must consist of short numbered paragraphs, including within each paragraph specific references to the affidavits, parts of the record, and other supporting materials relied upon to support the facts set forth in that paragraph. Failure to submit such a statement constitutes grounds for denial of the motion.” Local Bankr.R. 7056–1(B). The Plaintiff has filed a 7056–1 Statement that complies with the requirements of the Rule. It contains numbered paragraphs setting out assertedly undisputed facts with specific references to accompanying exhibits.

The party opposing a summary judgment motion is required by Local Rule 7056–2 to submit a response (the “7056–2 Statement”) to the movant's 7056–1 Statement and to set forth any material facts that would require denial of summary judgment, specifically referring to the record for support of each such denial. Local Bankr.R. 7056–2. The opposing party must respond “to each numbered paragraph in the moving party's statement” and make “specific references to the affidavits, parts of the record, and other supporting materials relied upon[.] Local Bank. R. 7056–2(A)(2)(a). “All material facts set forth in the statement required of the moving party will be deemed to be admitted unless controverted by the statement of the opposing party.” Local Bankr.R. 7056–2(B). Facts that are denied without evidentiary support for the denial are admitted. Maxwell v. Penn Media (In re marchFirst, Inc.), Nos. 01 B 24742, 03 A 1141, 2010 WL 4027723, at *2 (Bankr.N.D.Ill. Oct.14, 2010). In addition, facts to which the opposing party offers a response that is neither a direct admission nor a denial are admitted. Id.

The Defendant has filed a 7056–2 Statement that complies, in part, with the Rule. He has responded to each numbered paragraph in the Plaintiff's 7056–1 Statement and has made specific references to supporting materials upon which he relies. Virtually all of those references are to paragraphs in an affidavit of the Defendant attached to his 7056–2 Statement as Exhibit A. In several instances, however, those references do not offer evidentiary support for the denials in the Defendant's 7056–2 Statement. ( See Def. L.R. 7056–2 Resp. ¶¶ 8, 11, 12, 13, 16, 17, 18, 21, 22, 23, 28, 36, 38.) In other instances, the Defendant notes, by way of a purported explanation, that there is “no sufficient factual basis” for the Plaintiff's allegations. ( See id. ¶¶ 7, 18, 36, 38.) Each of these statements of fact for which the Defendant has not proffered evidentiary support will be deemed admitted. See Local Bankr.R. 7056–2(B); see also marchFirst, 2010 WL 4027723, at *2; Bank One, NA v. Knopfler (In re Holstein), Nos. 00 B 18138, 03 A 00638, 2004 WL 26516, at *1 n. 1 (Bankr.N.D.Ill. Jan.5, 2004).

The Defendant has set forth additional material facts that he alleges are uncontested and require the denial of summary judgment pursuant to Rule 7056–2(A)(2)(b). The Plaintiff objects to several of these statements of fact as vague, conclusory, lacking foundation, and/or lacking specificity. ( See Pl. Resp. to Def. 7056–2 Resp. Add'l Facts ¶¶ 50, 53, 54, 57, 65. 1) A respondent may admit facts or deny them; there are...

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