In re Mitchell

• Decision Date: 15 November 2000
• Docket Number: Bankruptcy No. 94-18204-JNF. Adversary No. 00-1375.
• Citation: 255 BR 97
• Parties: In re James H. MITCHELL, III and Mary A. Mitchell, Debtors. Xytest Corporation and George R. Berbeco, Plaintiffs, v. James H. Mitchell, III and Mary A. Mitchell, Defendants.
• Court: U.S. Bankruptcy Court — District of Massachusetts

255 B.R. 97 (2000)

In re James H. MITCHELL, III and Mary A. Mitchell, Debtors Xytest Corporation and George R. Berbeco, Plaintiffs, v. James H. Mitchell, III and Mary A. Mitchell, Defendants.

Bankruptcy No. 94-18204-JNF. Adversary No. 00-1375.

United States Bankruptcy Court, D. Massachusetts.

November 15, 2000.

Jack R. Pirozzolo, Willcox, Pirozzolo & McCarthy, Boston, MA, for plaintiffs.

James H. Mitchell, III, Mary A. Mitchell, defendants pro se.

MEMORANDUM

JOAN N. FEENEY, Bankruptcy Judge.

I. INTRODUCTION

The matter before the Court is the Plaintiffs' Motion to Dismiss, Abstain and/or Stay as to Defendants' Counterclaims and Third Party Complaint and to Strike Affirmative Defenses and Request for Hearing (the "Motion to Dismiss"). In view of the complete record before this Court, including the Debtors' Verified Opposition to Plaintiffs' Motion to Dismiss, the Court finds that oral argument and a hearing are unnecessary. Determination of the Motion requires consideration of the following:

1) the Complaint filed on July 31, 2000 against James H. Mitchell, III and Mary A. Mitchell (the "Debtors" or the "Mitchells") by Xytest Corporation ("Xytest") and George R. Berbeco ("Berbeco") (collectively the "Plaintiffs"), who obtained a judgment against the Debtors and Somerset Capital Corporation ("Somerset") in June of 1999 from the Superior Court in and for the County of San Mateo, California (the "California Judgment") and who seek a determination that the California Judgment is nondischargeable either because the claims arose postpetition or, alternatively, because the Debtors\' obligations to them are nondischargeable under 11 U.S.C. §§ 523(a)(2)(A) or (a)(6);

2) the Answer to the Complaint filed by the Debtors;

3) the Fifty-three Affirmative Defenses asserted by the Debtors as follows:

(1) Failure to Join an Indispensable Party (the Debtors did not identify the indispensable party or parties); (2) Plaintiffs Are Not a Real Party in Interest (the Debtors assert the Plaintiffs lack standing to bring the instant adversary proceeding); (3) Plaintiffs are Not a Proper Party to Bring This Action; (4) Defendant Not Responsible for Third Party (the Debtors assert the Plaintiffs\' claims are barred because their injuries, if any, were caused by someone for whose conduct the Debtors were not legally responsible); (5) Failure to State a Claim; (6) Lack of Damages; (7) Failure to Mitigate Damages; (8) de minimis non curat lex (the Debtors maintain the Plaintiffs\' claims are barred by this doctrine which according to Black\'s Law Dictionary, (5th ed.1979), means that "the law does not care for, or take notice of, very small or trifling matters . . ."); (9) Plaintiff\'s Negligence; (10) Contributory Negligence; (11) Res Judicata; (12) Collateral Estoppel and Issue Preclusion; (13) Waiver, Estoppel, Novation and Reaffirmation; (14) Breach by the Plaintiff sic(the Debtors state that the Plaintiffs breached the contracts that are the subject of the present dispute); (15) Doctrine of Illegality; (16) Violation of Laws of Massachusetts (the Debtors state that the Plaintiffs\' violations of Massachusetts and California law caused their injuries); (17) Unclean Hands; (18) Estopped by Own Acts; (19) Fraud Has Not Been Plead with Particularity; (20) Representations Were Made in Good Faith (the Debtors state that all their representations were made in good faith); (21) Plaintiff sic Misrepresented Several Facts (the Debtors did not indicate which facts were misrepresented); (22) Spoilation sic of Evidence (the Debtors do not identify what evidence was destroyed); (23) Time Barred (the Debtors assert the Plaintiffs are time barred from filing the complaint "at this late date"); (24) Statute of Limitations; (25) Laches; (26) Waiver of Rights; (27) Failure to Honor Obligations; (28) Failure to Provide Reasonable Opportunity to Cure; (29) Not sic Proximate Cause; (30) Failure to Perform all Conditions; (31) Set-off; (32) Unreasonable Delay by the Plaintiff sic; (33) Lack of Personal Jurisdiction (the Debtors state that the California Court lacked personal jurisdiction over them and Somerset); (34) Lack of Service (the Debtors state that they were never served with the First Amended Complaint in the California action); (35) Lack of Subject Matter Jurisdiction (the Debtors state that the California Superior Court lacked subject matter jurisdiction); (36) Forum Selection Clause (the Debtors state that the forum selection clause required the litigation to take place in Massachusetts, not California); (37) Violation of Decision of the Suffolk Superior Court (the Debtors do not state which decision was violated); (38) Violation of the Automatic Stay (the Debtors claim that the Plaintiffs and their affiliates violated the automatic stay and that any judgment entered is void as a matter of law); (39) Violation of the Discharge Injunction; (40) Failure to Plead Fraud and Concealment (the Debtors state that the Plaintiffs failed to plead fraud against Mary Mitchell); (41) Fraud Not Proven; (42) Lack of Reliance; (43) No Fiduciary Duty; (44) Claims are Based upon Discharged Claims (the Debtors state that the "Plaintiffs\' claims are barred because their claims, if any, are based on claims of FET, Inc., Thermonics, Inc., George B. Kurtz, Paul J. Roberts and James C. Kufis, all of whom failed to file a non-dischargeability sic and whose claims are therefore forever extinguished"); (45) Failure to File Opposition (the Debtors state that Berbeco\'s claims are barred because he failed to oppose the Debtors\' motion to amend their schedules); (46) Failure to Object to Characterization of Claims; (47) Judicial Estoppel (the Debtors state that the Plaintiffs made allegations in this case that are contrary to allegations made in the California action); (48) Punitive Damages (the Debtors state that the Plaintiffs\' claims are barred because the punitive damage awarded specified in the California Judgment sic is contrary to California law and violated the Fourteenth Amendment to the U.S. Constitution); (49) Failure to Seek Relief (the Debtors state that the Plaintiffs failed to seek the relief that they obtained in the California action); (50) California Judgment is Void; (51) California Judgment Was Obtained by Fraud; (52) Fraud upon the Court (the Debtors state that the California judgment was obtained by fraud upon the California court); (53) Judicial Estoppel (the Debtors state that the Plaintiffs\' claims are barred because the Plaintiffs and their affiliates make sic contradictory factual allegations in the California Judgment which were essential to the California Judgment, and thus the Plaintiffs are now judicially estopped from making different factual allegations;¹

4) the "Counterclaims and Third Party Complaint" filed by the Debtors and Somerset² against Xytest, Berbeco, and 13 other persons or entities, including Marilyn Mitchell, mother of James H. Mitchell, III, FET/Test, Inc. ("FET"), George B. Kurtz ("Kurtz"), president of FET, Thermonics, Inc. ("Thermonics"), James C. Kufis ("Kufis"), president of Thermonics, and Paul J. Roberts ("Roberts"), president of Xytest, pursuant to which the Mitchells and/or Somerset (the Mitchells and Somerset refer to themselves collectively as the "Somerset Group") assert the following claims:

Count One: Violation of the Discharge Injunction I: The Somerset Group against Roberts, Kurtz, Kufis, the WP & M Group and the C & O Group;³

Count Two: Violation of the Discharge Injunction II: The Somerset Group against Xytest, Berbeco, the WP & M Group, and the C & O Group;

Count Three: Violation of the Automatic Stay (in Somerset Bankruptcy Case): The Somerset Group against Berbeco, Kurtz, Kufis, Roberts, the WP & M Group, and the C & O Group;

Count Four: Declaratory Judgment I — Mary Mitchell Committed No Fraud: The Somerset Group against Xytest, Berbeco, Kurtz, FET, Kufis, Thermonics, and Roberts;

Count Five: Declaratory Judgment II — James Mitchell Committed No Fraud: The Somerset Group against Xytest, Berbeco, Kurtz, FET, Kufis, Thermonics, and Roberts;

Count Six: Declaratory Judgment III — There Was No Concealment: The Somerset Group against Xytest, Berbeco, Kurtz, FET, Kufis, Thermonics, and Roberts;

Count Seven: Declaratory Judgment IV — The Punitive Damages Awarded Are Excessive: The Somerset Group against the Xytest Group;

Count Eight: Declaratory Judgment V — The California Judgment Declaration Was Too Broad: The Somerset Group against the Xytest Group;

Count Nine: Declaratory Judgment VI — Berbeco Owes a Fiduciary Duty to Somerset: The Somerset Group against Berbeco;

Count Ten: Declaratory Judgment VII — Roberts Owes a Fiduciary Duty to Somerset: The Somerset Group against Roberts;

Count Eleven: Declaratory Judgment VIII — Deliberate Misrepresentation to the Court: The Somerset Group against Pirozzolo and Kislik;

Count Twelve: Declaratory Judgment IX — The Xytest Group\'s Claims Were Discharged in the Mitchell\'s Chapter 7 Bankruptcy: the Mitchells against the Complete Xytest Group;

Count Thirteen: Declaratory Judgment X — California Did Not Have Subject matter Jurisdiction: The Somerset Group against the Xytest Group;

Count Fourteen: Declaratory Judgment XI — California Did Not Have Personal Jurisdiction: The Mitchells against the Xytest Group;

Count Fifteen: Declaratory Judgment XII — Who Owns Somerset Capital Corporation: James Mitchell against Marilyn Mitchell;

Count Sixteen: Declaratory Judgment XIII — The Forum Selection Clause Is Valid and Enforceable: The Somerset Group against Xytest, Thermonics and Kufis;

Count Seventeen: Declaratory Judgment XIV — The Forum Selection Clause Is Valid and Enforceable: The Somerset Group against FET, Kurtz, Roberts and Berbeco;

Count Eighteen: Declaratory Judgment XV — FET Term Sheet is Valid and Enforceable: The Somerset Group against FET, Xytest and Kurtz;

Count Nineteen: Declaratory Judgment XVI — FET Non-Circumvention Agreement is Valid and

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