In re Kugler
| Decision Date | 29 July 1994 |
| Docket Number | Bankruptcy No. 93-12695-AB. Adv. No. 93-1278. |
| Citation | 170 BR 291 |
| Parties | In re Sharon H. KUGLER, Debtor. Michelle HILDEBRAND, and State Farm Insurance Company, as subrogee of Michelle Hildebrand, Plaintiffs, v. Sharon H. KUGLER, a/k/a Sharon H. McGee, Defendant. |
| Court | U.S. District Court — Virgin Islands, Bankruptcy Division |
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Benjamin M. Smith, III, Brault, Palmer, Grove, Zimmerman, White & Mims, Fairfax, VA, for Hildebrand and State Farm.
Robert B. Easterling, Easterling & Goodall, Stafford, VA, for Kugler.
MARTIN V.B. BOSTETTER, Jr., Chief Judge.
The plaintiffs, Michelle Hildebrand and State Farm Insurance Company ("State Farm"),1 have moved for summary judgment, asking this Court to except their claims from discharge under 11 U.S.C. § 523(a)(9). In response, the debtor, Sharon H. Kugler, has cross-moved for summary judgment. For the reasons that follow, we deny both the plaintiffs' motion for summary judgment and the debtor's cross-motion for summary judgment.
On February 25, 1987, Kugler was driving home from work and was accompanied by two passengers, Hildebrand and Calvin Newton, when her car collided with a locomotive, killing Newton and injuring Hildebrand. Kugler was taken to a hospital, and was given a drug-urine screen approximately two hours after the accident. A laboratory report setting forth the results of the drug-urine screen shows that Kugler tested positive for amphetamine and methamphetamine (amphetamines), cocaine metabolite, phencyclidine (PCP), and cannarinoid (marijuana). Ex. 2.2
As a result of the accident, the Commonwealth of Virginia charged Kugler with reckless driving in violation of Va.Code § 46.1-189, and with driving while intoxicated in violation of Va.Code § 18.2-266. Kugler pleaded guilty to the reckless driving charge. The Commonwealth of Virginia then entered a nolle prosequi, dismissing the charge of driving while intoxicated.3
Subsequently, Hildebrand instituted a negligence action against Kugler in the Circuit Court of Stafford County, Virginia. As permitted by the Virginia rules of procedure, Hildebrand's motion for judgment sets forth a general allegation of negligence;4 in other words, the motion contains no specific allegation that Kugler was driving under the influence of drugs or alcohol when the accident occurred. In response, Kugler filed a grounds of defense5 denying negligence on her part and asserting the defenses of contributory negligence and assumption of the risk. A few months later, Kugler's attorney withdrew from the case, and there is no indication that Kugler obtained new counsel.
At a deposition that took place after her attorney withdrew, Kugler admitted to smoking marijuana on a daily basis around the time of the accident. Ex. 5, at 13. According to Kugler, Hildebrand also smoked marijuana and was aware that Kugler used marijuana daily. Id. Kugler testified further that using marijuana made her feel "laid back," "very relaxed," and also made her "slower." Id. Kugler did not recall whether she consumed alcohol, marijuana, or any other drug on the date of the accident, but did testify that she "assumed" she used marijuana on the date of the accident because she ordinarily smoked it at lunch and while commuting to and from work. Id. at 23. Finally, Kugler said she consumed amphetamines and marijuana on the night before the accident. Id. at 24.
Following the deposition, Hildebrand filed a motion in limine asking the state court to suppress the deposition statements made by Kugler. The motion in limine asserted that the deposition statements and "similar statements by Kugler or any other witness are not relevant to the issues in this action, or if slightly relevant, the relevance is outweighed by the prejudice to" Hildebrand. Ex. D. Although a hand-written notation, marked by the state-court clerk as a "copy teste," indicates that the state court granted the motion in limine, the record before us contains no written order memorializing the state court's decision. See Ex. E (hand-written notation).
After she moved to suppress the deposition statements, Hildebrand filed requests for admission, asking Kugler to admit inter alia the following statement:
On February 25, 1987, at the time of the accident alleged . . . the Defendant, Sharon Kugler, was under the influence of alcohol, a narcotic drug or some other self-administered intoxicant or drug to a degree which impaired her ability to drive and operate her motor vehicle safely.
Ex. 6, ¶ 3. Although the sheriff attempted to serve the requests for admission upon Kugler, there is no indication that Kugler received the requests for admission or responded to them. See Ex. 8, at 2.
Hildebrand then made at least two attempts to notify Kugler at her last-known address that Hildebrand intended to move for summary judgment "based upon the Pleadings, the Request for Admissions and other evidence to be presented to the Court. . . ." See Ex. 7. The notices, however, were returned to Hildebrand by the sheriff who certified that Kugler "could not be found." Ex. G & H.
Observing that Kugler had failed to inform the court of her whereabouts, and that she had failed to respond to Hildebrand's requests for admission, the Circuit Court of Stafford County, Virginia, entered judgment against Kugler in the amount of $500,000 plus interest. The judgment order prepared by Hildebrand's counsel and entered by the state court made the following finding:
The Court . . . finds upon evidence presented that the Defendant, Sharon Kugler, on February 25, 1987, at the time of the accident alleged . . . was under the influence of alcohol, a narcotic drug, or some other self-administered intoxicant or drug to a degree which impaired her ability to drive and operate her motor vehicle safely. . . .
Ex. 8, at 2 (). No appeal was taken from this judgment order.
Kugler subsequently petitioned this Court for relief under Chapter 7 of the Bankruptcy Code. Hildebrand and State Farm filed a complaint, asking this Court to (1) except the judgment debt from discharge under 11 U.S.C. § 523, and (2) deny Kugler a discharge under 11 U.S.C. § 727. Count I of the complaint, which asserts a claim under § 523(a)(9), alleges that, at the time of the accident, Kugler was driving "under the influence of alcohol, narcotics, or some other substance" that impaired "her ability to operate her motor vehicle safely. . . ." Complaint ¶ 7. In her answer, Kugler denies that she operated her car while driving under the influence. Answer ¶ 5. The parties have cross-moved for partial summary judgment on the § 523(a)(9) count.
Hildebrand and State Farm seek to except their claims from discharge pursuant to § 523(a)(9), which provides that:
11 U.S.C. § 523(a)(9). "Congress sought three objectives when it adopted § 523(a)(9): (1) to deter drunk driving; (2) to ensure that those who caused injury by driving drunk did not escape civil liability through the bankruptcy laws; and (3) to protect victims of drunk driving." Lugo v. Paulsen, 886 F.2d 602, 610 (3d Cir.1989) (quoting Stackhouse v. Hudson (In re Hudson), 859 F.2d 1418, 1423 (9th Cir.1988)). The key, of course, for obtaining a nondischargeable claim under § 523(a)(9) is proof that the claim arose when the debtor was operating a motor vehicle while intoxicated.
To resolve the issue of intoxication, Hildebrand and State Farm point to the judgment entered by the Circuit Court of Stafford County, Virginia. Included in the judgment order is a finding by the state court that Kugler was driving while intoxicated at the time of the accident. Hildebrand and State Farm contend that the state court's finding of intoxication collaterally estops Kugler from disputing the issue of intoxication in this proceeding. Hildebrand and Kugler further argue that collateral estoppel and the full faith and credit statute, 28 U.S.C. § 1738, prohibit us from looking beyond the state-court judgment, and require us to determine that their claims are nondischargeable. Kugler asserts, in response, that collateral estoppel does not attach because the parties involved in the negligence action did not litigate the issue of intoxication.
The full faith and credit statute provides that state "judicial proceedings . . . shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such state . . . from which they are taken." 28 U.S.C. § 1738.6 "Section 1738 requires federal courts to give the same preclusive effect to state court judgments that those judgments would be given in the courts of the State from which the judgments emerged." Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466, 102 S.Ct. 1883, 1889, 72 L.Ed.2d 262 (1982) (footnote omitted). Accordingly, § 1738 requires a federal court "to refer to the preclusion law of the State in which judgment was rendered," Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 380, 105 S.Ct. 1327, 1331, 84 L.Ed.2d 274 (1985), which in this instance is the law of Virginia. See Haring v. Prosise, 462 U.S. 306, 312-16, 103 S.Ct. 2368, 2372-74, 76 L.Ed.2d 595 (1983) (). If the federal court decides that a prior state-court judgment precludes litigation of a particular claim or issue, the federal court may then consider whether federal law carves out an exception to the full faith and credit statute. See Marrese, 470 U.S. at 382-83, 105 S.Ct. at...
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