In re Larkham, Bankruptcy No. 82-168
| Decision Date | 14 June 1983 |
| Docket Number | Adv. No. 82-0181,Bankruptcy No. 82-168,82-0182. |
| Citation | 31 BR 273 |
| Court | U.S. Bankruptcy Court — District of Vermont |
| Parties | In re Everal H. LARKHAM and Cynthia N. Larkham, d/b/a Lark-Ridge Farm, Debtors. Maureen CARTER, Plaintiff, v. Everal H. LARKHAM and Cynthia N. Larkham d/b/a Lark-Ridge Farm, Defendants. |
Susan Apel of South Royalton Legal Clinic, South Royalton, Vt., for plaintiff.
Jerome I. Meyers, Springfield, Vt., for defendants.
The Complaint of Maureen Carter, brought pursuant to § 362(d) of the Bankruptcy Code, for Relief from the Automatic Stay of § 362(a), came on for a hearing after notice. The Complainant seeks relief in order that she may continue to prosecute against the Debtors, an employment discrimination suit now pending before the United States District Court for the District of Vermont.
From the records in the case, the pleadings and representations of counsel, the following facts have been established:
On July 15, 1982, the Debtors filed a Petition for Relief under Chapter 7 of the Bankruptcy Code. Prior thereto, on September 16, 1981, the Plaintiff had commenced in the United States District Court for the District of Vermont, an action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and the Equal Pay Act, 29 U.S.C. § 206, against the debtor, Everal H. Larkham, and E.H. Larkham, Inc., also a Debtor in a collateral proceeding. As of July 15, 1982, Plaintiff's civil rights action was in the discovery phase. The defendants have requested a jury trial in that action.
There is also pending for determination a complaint filed by the plaintiff to determine the dischargeability of the debt which is the subject matter of the suit pending in United States District Court. In addition the debtors as defendants have filed motions for summary judgment as to this complaint and the one for relief from stay.
The motions of the defendants for summary judgment are without merit. Plaintiff in her complaint to declare the debt of the defendants non-dischargeable, alleges that, pursuant to § 523(a)(6) of the Bankruptcy Code, the liability for damages results from the wilful and malicious conduct of the defendant. This clearly establishes a genuine issue as to a material fact. Admittedly, the cause of action in the United States District Court is predicated on a deprivation of rights guaranteed by Title VII of the Civil Rights Act of 1964 and does not allege wilful and malicious conduct by the defendants in haec verba. This, as pointed out by the plaintiff, is immaterial. She still has the burden of establishing such conduct in this Court if the debt is to be declared nondischargeable. A genuine issue of fact is thereby raised and its determination is within the exclusive jurisdiction of the Bankruptcy Court. § 523(c).
The plaintiff's complaint for relief from the automatic stay is predicated on § 362(d)(1) of the Code which requires the establishment of cause. This in itself raises a genuine issue of fact which, under § 362(g)(2), imposes the burden to prove the non-existence of cause on the defendants who are opposing relief from stay.
This Court recognizes that summary judgment is a drastic remedy and that it should resolve all doubts as to the existence of genuine issues of fact against the moving party. The Court will further view all inferences from the facts in a light most favorable to the parties opposing the motion. Mid-South Grizzlies v. National Football League, 550 F.Supp. 558 (E.D.Penn. 1982); United States v. Diebold, 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1964)
As stated in In re Rineer, 22 B.R. 447 (Bkrtcy.N.D.Ill.1982);
The movant bears the burden of proving that no genuine issue of material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Thus, summary judgment may be denied even where the opposing party offers no evidence, if the movant fails to meet his burden. Garza va. Chicago Health Clubs, Inc., 347 F.Supp. 955, 965 (N.D.Ill.1972). Doubts as to the existence of an issue of fact are resolved in favor of the party opposing the motion. If difference inferences and conclusions can reasonable be drawn from the facts offered, summary judgment should be denied. Harvey v. Great Atlantic and Pacific Tea Co., 388 F.2d 123, 124-25 (5th Cir.1968). See also, In re Chong, 16 B.R. 1, 5 (Bkrtcy. Hawaii 1980).
Summary judgment must be denied where there remains the slightest doubt as to any material fact. United States v. Del Monte De Puerto Rico, Inc. (1st Cir.1978) 586 F.2d 870, 872. In the instant case there is considerable doubt.
In their answers to both complaints the defendants allege that they fail to set forth a cause of action upon which this Court can grant relief. These appear to be pro forma allegations. The plaintiff has complied with Rule 8 of the Federal Rules of Civil Procedure (). This requires a pleading containing a short and plain statement of the grounds upon which the court's jurisdiction depends; a short and plain statement of the claim showing the pleader is entitled to relief; and a demand for judgment for the relief to which he deems himself entitled. An examination of the two complaints of the plaintiff reveals that there has been compliance with Rule 8, Fed.R.Civ.P.
The issue raised by the plaintiff's complaint for relief from stay is whether the plaintiff should be permitted to proceed to judgment in her pending suit against the defendants in U.S. District Court for damages arising from alleged employment discrimination.
Section 362(d) provides: "On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, . . . for cause. . . ." In deciding whether sufficient cause is provided by plaintiff's desire to proceed in another forum, the Court recognizes that the facts of the complaint will determine whether relief is appropriate. H.R.Rep. No. 595, 95th Cong., 1st Sess. 343-4 (1977). Relevant considerations beyond plaintiff's desire to continue elsewhere the instant employment discrimination action are whether the bankruptcy estate will be prejudiced by a lifting of the stay and whether the granting of relief will interfere with or be inconsistent with this bankruptcy proceeding. S.Rep. No. 989, 95th Cong., 2d Sess. 52-3 (1978), U.S.Code Cong. & Admin.News, p. 5787. Where neither prejudice to the bankruptcy estate nor interference with the bankruptcy proceeding is demonstrated, the desire of a stayed party to proceed in another forum is sufficient cause to warrant lifting the automatic stay. In re Rounseville, 20 B.R. 892 (Bkrtcy.D.R.I.1982); In the Matter of Rapco Foam, 23 B.R. 692 (Bkrtcy. W.D.Wis.1982); Paden v. Union for Experimenting Colleges, Etc., 7 B.R. 289 (D.C.N.D. Ill.)
A 362(a) stay is designed to implement two goals: to prevent the dissipation of the bankrupt's assets during the pendency of the bankruptcy proceeding, Power-Pak Products, Inc. v. Royal-Globe Insurance Co., 433 F.Supp. 684, 686 (W.D.N.Y.1977); In the Matter of Cuba Electric and Furniture Corp., 430 F.Supp. 689, 691 (D. Puerto Rico 1977); Teledyne Industries, Inc. v. Eon Corporation, 373 F.Supp. 191, 203 (S.D.N.Y. 1977) and to avoid the multiplicity of claims in different forums against the estate. In the Matter of the Bohack Corp., 599 F.2d 1160, 1167 (2d Cir.1979); Baum v. Anderson, 541 F.2d 1166, 1169 (5th Cir.1976). Paden v. Union for Experimenting Colleges, Etc., supra, 7 B.R. at 290. An alternative purpose of the § 362(a) stay, that of preventing the debtor from having to defend against a multiplicity of claims in different forums, has been considered less than compelling. In re Rounseville, supra, 20 B.R. at 893; Paden v. Union for Experimenting Colleges, Etc., supra, 7 B.R. at 291 n. 3; In the Matter of Zeckendorf, 326 F.Supp. 182, 185 (S.D.N.Y.1971).
The principal purpose of the automatic stay is to avoid diminution of the bankruptcy's assets. This purpose is in no way compromised by the instant employment discrimination action, at least so far as the injunctive relief portion of the suit is concerned. With respect to the back pay remedy, allowing the plaintiff to proceed toward, if not to, the point of judgment, has several advantages. It insures the expeditious consideration of her civil rights suit, an important priority of Congress. See Alexander v. Gardner-Denver Co., 415 U.S. 36, 47, 94 S.Ct. 1011, 1019, 39 L.Ed.2d 147 (1977). At the same time, permitting the liability issues to be decided in another tribunal would not dismember the bankruptcy estate and appears to be consistent both with the Congressional intent underlying the Bankruptcy Act of 1978 and with the Supreme Court's decision in Northern Pipeline Construction Co. v. Marathon PipeLine Co., ___ U.S. ___, 103 S.Ct. 199, 74 L.Ed.2d 160 (1982). The legislative history of the stay provision under the 1978 Act indicates that actions which pose "no great prejudice to the bankruptcy estate" should be permitted "to continue in their place of origin, . . . in order to leave the parties to their chosen forum and to relieve the bankruptcy court from many duties that may be handled elsewhere." S.Rep. No. 989, 95th Cong. 2d Sess. at 50 (1978), U.S.Code Cong. & Admin.News, p. 5836.
Similar reasoning was found compelling in a recent Bankruptcy Court lift-stay decision involving a tort claimant who, having requested a determination as to the dischargeability of his contingent claim, sought to reduce the claim to a judgment in another forum. See In Re Rouseville, supra, at page 893:
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