In re Leopoldio CHACON

Citation438 B.R. 725
Decision Date01 October 2010
Docket NumberBankruptcy No. 13-09-10449 SR.,Adversary No. 09-1068 S.
PartiesIn re Leopoldio CHACON, Debtor. Glennis Dorris, an individual, Plaintiff, By and Through her Guardian, Lavelya Dorris v. Leopoldio Chacon, Defendant.
CourtUnited States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of New Mexico

OPINION TEXT STARTS HERE

COPYRIGHT MATERIAL OMITTED.

F. Shaun Burns, Burns Law Firm, PC, San Diego, CA, for Plaintiff.

Wesley O. Pool, Clovis, NM, for Defendant.

MEMORANDUM OPINION RELATING TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

JAMES S. STARZYNSKI, Bankruptcy Judge.

This matter is before the Court on Plaintiff's Motion for Summary Judgment (“Motion”) and Memorandum in Support (docs 26, 27) on Plaintiff's First Amended Complaint (doc 23) and Defendant's Partial Objection thereto with Memorandum in Support (docs 31, 32) and Plaintiff's Reply Memorandum (doc 38). Plaintiff appears through her attorney F. Shaun Burns. Defendant appears through his attorney Wesley O. Pool. This is a core proceeding to determine the dischargeability of a debt. 28 U.S.C. § 157(b)(2)(I). The Court will grant the Motion in part.

HISTORY

A brief history derived from the undisputed facts will provide context for the following discussion. Plaintiff is a 61-year-old female; she was 60 in June 2008 when Defendant sexually assaulted her. Fact 2. Plaintiff has been mentally disabled since birth and has the intelligence level of an 8-year old. Fact 3. This disability makes her extremely vulnerable to force and coercion. Id. In addition, Plaintiff has been physically handicapped since birth and is unable to bathe herself. Fact 4. Therefore she needs physical support and assistance in bathing and personal hygiene. Id. In June 2008, when the sexual assaults occurred, Defendant was employed by Interim Healthcare, Inc. (“Interim”) to provide healthcare services to Plaintiff. Fact 6. On August 29, 2008, the Curry County Deputy District Attorney filed a two count criminal information against Defendant charging two different instances of criminal sexual penetration in the third degree contrary to Section 30-9-11(F) 1, NMSA 1978. Fact 7; Doc 37-1. These actions constitute third degree felonies. Id. On January 6, 2009, the State of New Mexico and Defendant entered into a Plea and Disposition Agreement, pursuant to which Defendant would plead guilty to one count of Criminal Sexual Contact “in the third degree” contrary to Section 30-9-11(F), NMSA 1978 [sic 2 ] in exchange for a sentence of three years (to be suspended in favor of three years of supervised probation), and a dismissal of the second count. Facts 8, 9; Doc 37-2. The State District Court Judge approved the Plea and Disposition Agreement on March 10, 2009. Id. Also on March 10, 2009, the State Court entered a “Judgment, Sentence and Order Suspending Sentence” in conformity with the Plea and Disposition Agreement. Doc 37-3. A certified transcript of the March 10, 2009 sentencing hearing is attached to the affidavit of the State Court Reporter. Fact 11; Doc 29-1. In the hearing, the State District Court Judge convicted Defendant of Criminal Sexual Contact in the Third Degree, “reduced” from Criminal Sexual Penetration a Third Degree felony. Id., pp. 5-6; Fact 16. After questioning the Defendant about his history, educational background and work history, the Judge commented:

This is an egregious act. It is a violation of a person's bodily sanctity. It is a betrayal. We have a person who has special needs who has been placed in the responsibility of someone who is giving her care and he has betrayed that trust. That makes it particular[ly] egregious.

Id., p. 11; Fact 18.

Defendant filed for Chapter 13 relief on February 9, 2009. On March 10, 2009, Plaintiff, who had not yet received notice of the bankruptcy, filed an eight count complaint in the Ninth Judicial District Court, Curry County, New Mexico as case D-0905-CV-02009-00152 (the State Case.”) The State Case names Defendant, Interim, and John Does and Jane Does 1-50 (doc 37-5).

Counts 1, 2, 3 and 4 are against the Defendant only and allege, respectively, battery, assault, intentional infliction of emotional distress and personal injury. Counts 5, 6, 7 and 8 are against Interim only and allege, respectively, negligence, negligent entrustment, negligence per se and gross negligence.

THE ADVERSARY PROCEEDING

Plaintiff's First Amended Complaint filed in this adversary proceeding (hereafter “Complaint”) contains four counts seeking to declare nondischargeable under 11 U.S.C. § 1328(a)(4) 3 claims for 1) Battery, 2) Assault, 3) Intentional Infliction of Emotional Distress, and 4) [Willful and Malicious] Personal Injury. It also seeks relief from the automatic stay to allow Plaintiff to prove and liquidate her claims in state court. Alternatively, it asks the Bankruptcy Court 4 to determine her damages, including punitive and exemplary damages, costs of suit, and attorney fees 5 .

Defendant denied substantially every allegation in his Answer. He admitted only: Plaintiff's name, address and age, and the address of her Guardian; his name and address, his former employment with Interim, and the filing of a criminal case against him. He also admitted filing his Chapter 13 case. In his answer he also sought attorney fees, claiming that Plaintiff's case was not substantially justified 6 .

THE MOTION FOR SUMMARY JUDGMENT

Plaintiff's Memorandum in Support contains a Statement of Undisputed Facts, as required by NM LBR 7056-1 (1996) 7 . Defendant's Partial Objection does not specifically contest any proposed fact. Therefore, all material facts set forth in Plaintiff's statement are “deemed admitted.” NM LBR 7056-1 (1996).

Rather, Defendant's partial objections go to the legal theories behind Plaintiff's complaint. On March 25, 2010 the Court entered an Order resulting from pretrial conference (Order”) that established deadlines for filing Motions for Summary Judgment (doc 25). It also ruled: “If the Bankruptcy Court finds that any of Plaintiff's claims against Defendant are nondischargeable, the determination and liquidation of damages shall be referred to the District Court for the Ninth Judicial District, Curry County, New Mexico.”

Plaintiff's Motion, (doc 26, p. 2) refers to the Order:

Pursuant to that Order, Plaintiff requests that this Court find that all of Plaintiff's claims against CHACON are nondischargeable, and that the District Court for the Ninth Judicial District shall have full authority to liquidate, adjudicate, enforce and otherwise deal with Plaintiff's claims against CHACON asserted in that court.

(Emphasis added.)

Defendant claims that Plaintiff's Motion is overbroad in that it seeks to hold all of Plaintiff's claims against Defendant nondischargeable (doc 31, ¶ 1). Specifically, he argues that the State Case complaint refers four times to an alleged fiduciary relationship between Plaintiff and Defendant and that it also refers four times to Defendants allegedly “grossly negligent” conduct. See Doc 31, ¶ 4. Defendant does not dispute that any claims proven against him based on theories of battery, assault, intentional infliction of emotional distress or willful or malicious personal injury would be nondischargeable 8 . Id., ¶ 3. But he argues that any claims based on a breach of fiduciary duty or negligence cannot be held nondischargeable under 11 U.S.C. § 1328(a)(4). As an initial note, the Court finds that Plaintiff has four and only four counts against Defendant in the State Case; she did not raise breach of fiduciary duty or negligence as separate counts.

1. Breach of Fiduciary Duties

Defendant is correct that 11 U.S.C. § 1328(a)(4) does not apply to the same situation as does § 523(a)(4) 9 either by reference to it or by listing its elements. It holds nondischargeable only restitution or debts from “willful or malicious injury by the debtor that caused personal injury to an individual or the death of an individual.” There is no exception to Section 1328 that denies discharge of debts for a breach of fiduciary duty 10 . Therefore, even if Plaintiff could establish a breach of fiduciary duty claim on the above facts 11 in the State Case, any damages would be discharged if Defendant were to complete his Chapter 13 plan. Therefore Defendant argues that this Court should order Plaintiff to refrain from referring to any fiduciary type duties at trial in the State Case. The Court declines to so order for the following reasons.

Plaintiff seeks punitive damages in the State Case. In Green Tree Acceptance, Inc. v. Layton, 108 N.M. 171, 769 P.2d 84 (1989), the New Mexico Supreme Court discussed when punitive damages are allowable.

Punitive damages may be awarded only when the wrongdoer's conduct may be said to be “maliciously intentional, fraudulent, oppressive, or committed recklessly or with a wanton disregard of the plaintiffs' rights.” Hood v. Fulkerson, 102 N.M. 677, 699 P.2d 608 (1985) (quoting Loucks v. Albuquerque Nat'l Bank, 76 N.M. 735, 747, 418 P.2d 191, 199 (1966)). These words are to be taken as used in the disjunctive. See Bank of New Mexico v. Rice, 78 N.M. 170, 180, 429 P.2d 368, 378 (1967), appeal after remand, 79 N.M. 115, 440 P.2d 790 (1968); see also Curtiss v. Aetna Life Ins. Co., 90 N.M. 105, 108, 560 P.2d 169, 172 (Ct.App.), cert. denied, 90 N.M. 7, 558 P.2d 619 (1976). Punitive damages are to be awarded when actual or nominal damages are inadequate to satisfy the wrong committed. Montoya v. Moore, 77 N.M. 326, 330-31, 422 P.2d 363, 366 (1967). Punitive damages do not have to be in reasonable proportion to the actual damages, but they must not be so unrelated to the injury as to plainly manifest passion and prejudice rather than reason and justice. Faubion v. Tucker, 58 N.M. 303, 307, 270 P.2d 713, 716 (1954). Factors to be weighed in assessing punitive damages are the enormity and nature of the wrong and any aggravating circumstances. See Sweitzer v. Sanchez, 80 N.M. 408, 412, 456 P.2d 882, 886 (Ct.App.1969).

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