In re Robert Anthony Strozewski & Amy Jean Strozewski
| Decision Date | 18 October 2011 |
| Docket Number | Adversary No. 11–80211.,Bankruptcy No. GK 11–00227. |
| Citation | 458 B.R. 397 |
| Court | U.S. Bankruptcy Court — Western District of Michigan |
| Parties | In re Robert Anthony STROZEWSKI & Amy Jean Strozewski, Debtors.Michelle McCurdie, Plaintiff,v.Robert Anthony Strozewski, Defendant. |
OPINION TEXT STARTS HERE
Terrence J. Lilly, Esq., Kalamazoo, MI, for Michelle McCurdie, Plaintiff.Thomas R. Betker, Esq., St. Joseph, MI, for Robert Anthony Strozewski, Debtor–Defendant.
Michelle McCurdie (the “Plaintiff”) obtained a state court judgment against Robert Anthony Strozewski (the “Debtor”) for actions taken by the Debtor in connection with the termination of the Plaintiff's employment at a Days Inn hotel in Kalamazoo, Michigan. After the Debtor filed for bankruptcy relief, the Plaintiff brought this adversary proceeding, seeking a determination that the debt owed to her under the state court judgment is nondischargeable under § 523(a)(6) of the Bankruptcy Code.1 For the reasons that follow, the court holds that the state court judgment is entitled to collateral estoppel effect in this adversary proceeding. Because the state court judgment conclusively establishes the elements required to except a debt from discharge under § 523(a)(6), the Plaintiff's motion for summary judgment on her nondischargeability complaint shall be granted.
This court has jurisdiction over this bankruptcy case. 28 U.S.C. § 1334. The case and all related proceedings have been referred to this court for decision. 28 U.S.C. § 157(a); Local Rule 83.2(a) (W.D. Mich.). This adversary proceeding is a core proceeding. 28 U.S.C. § 157(b)(2)(I) (). Notwithstanding a recent Supreme Court decision, Stern v. Marshall, –––U.S. ––––, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), this court is constitutionally authorized to enter a final order. See Tibble v. Wells Fargo Bank, N.A. (In re Hudson), 455 B.R. 648, 656 (Bankr.W.D.Mich.2011) ().
The facts in this adversary proceeding are undisputed. The Plaintiff worked as a front desk clerk at a Days Inn hotel in Kalamazoo, Michigan, which was managed and operated by Prudent Lodging of Kalamazoo, LLC (“Prudent Lodging”). (Plf. Motion, Exh. A, ¶ 7–8.) 2 The Debtor was the Operations Manager of Prudent Lodging. ( Id. at ¶ 9.)
In the course of her employment, the Plaintiff repeatedly advised the Debtor and Hiresh K. Patel, Prudent Lodging's Operating Member, about health and safety concerns at the Days Inn. ( Id. at ¶ 10.) These concerns included leaks in the roof, mold, a disabled fire alarm, uncovered electrical boxes, improper storage and labeling of chemicals, and improper food refrigeration. ( Id.) When the Debtor and Patel failed to take action to correct the health and safety issues identified by the Plaintiff, she contacted the Michigan Bureau of Safety and Regulation (“MIOSHA”) to inquire about filing a complaint. ( Id. at ¶ 13.) The Plaintiff ultimately filed a Notice of Alleged Safety Hazards with MIOSHA, by faxing the notice from a machine at a friend's workplace, Great Northern Century Company. ( Id. at ¶ 15.)
As a result of the Plaintiff's actions, her employment with Prudent Lodging was terminated. ( Id. at ¶ 16.) The Plaintiff was informed of her termination during a meeting with the Debtor. ( Id.) After the Plaintiff attempted to read her dismissal notice, the Debtor threatened to call the police if she did not leave the hotel premises immediately. ( Id. at ¶ 17.) The Debtor also refused to allow the Plaintiff to gather her personal possessions. ( Id. at ¶ 18.) Instead, he and a co-worker escorted the Plaintiff through the front door of the Days Inn and off the hotel property. ( Id.)
After terminating the Plaintiff's employment, the Debtor also contacted the Great Northern Century Company to demand a copy of the faxed Notice of Alleged Safety Hazards. ( Id. at ¶ 19.) Impersonating a state inspector, the Debtor threatened to subpoena the document if the employees of Great Northern Century Company did not comply with his demands. ( Id.)
On January 15, 2008, the Plaintiff filed a complaint against the Debtor and Patel in the Kalamazoo County Circuit Court. The Plaintiff's state court complaint alleged three causes of action: (1) intentional infliction of emotional distress; (2) tortious interference with an employment relationship; and (3) civil conspiracy. ( Id.) The Debtor, through counsel, filed an answer to the complaint on February 26, 2008. (Dft. Resp., Exh. B.)
After the Debtor participated in discovery, filed two unsuccessful motions for summary disposition, and attended a case evaluation mediation, the Debtor's attorney withdrew as counsel. (Plf. Motion, Exh. D.) Thereafter, the Debtor abandoned his defense in the state court litigation. ( Id.)
When the Debtor failed to appear for a court-ordered settlement conference, the state court entered a default order on August 4, 2009. (Plf. Motion, Exh. B.) A trial to determine damages was held on September 9, 2009, and a final civil judgment for $592,394.47 was entered against the Debtor and Patel on October 9, 2009 (the ). (Plf. Motion, Exh. C.) The state court judgment does not identify the cause, or causes, of action on which it is based and, aside from stating separate amounts for costs, mediation sanctions, and interest, does not specify the basis for its monetary award. 3 ( Id.)
On January 11, 2011, the Debtor and his wife filed a joint voluntary petition under chapter 7 of the Bankruptcy Code. The Plaintiff filed this adversary proceeding on May 3, 2011, alleging that the state court judgment was based on the Debtor's “willful and malicious” conduct and that the resulting judgment debt should be excepted from the Debtor's discharge under § 523(a)(6). On June 9, 2011, the Plaintiff filed a motion for summary judgment, asserting that the state court judgement is entitled to collateral estoppel effect in this adversary proceeding. The court heard oral argument on the motion on August 19, 2011. At the conclusion of oral argument, the court took the motion under advisement.
The issue presented is whether the state court judgment is entitled to collateral estoppel effect in this adversary proceeding. To answer this general question, the court must consider whether the state court judgment was “actually litigated,” even though it was entered by default, after the Debtor failed to appear at the settlement conference. Because the state court complaint asserted multiple causes of action, and the state court judgment fails to identify the ground, or grounds, on which it is based, this court must also ascertain which issues were “necessarily determined” by the judgment. Finally, this court must determine whether the issues decided by the state court compel the conclusion that the judgment debt should be excepted from discharge under § 523(a)(6).
Federal Rule of Civil Procedure 56, made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 7056, states that a court shall enter summary judgment if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court is not to “weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citation omitted).
Section 523(a)(6) excepts from discharge debts “for willful and malicious injury by the debtor to another entity or to the property of another entity.” 11 U.S.C. § 523(a)(6). The statute requires that the alleged injury be both willful and malicious for a debt to be nondischargeable. Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 463 (6th Cir.1999).
The Supreme Court has held that a finding of willfulness under § 523(a)(6) requires “a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury.” Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 977, 140 L.Ed.2d 90 (1998) (emphasis in original). The Sixth Circuit has interpreted this requirement to mean that a willful injury is one where the debtor “desires to cause [the] consequences of his act, or ... believes that the consequences are substantially certain to result from it.” In re Markowitz, 190 F.3d at 464 (quoting Restatement (Second) of Torts § 8A (1964)). This “formulation triggers in the lawyer's mind the category ‘intentional torts,’ as distinguished from negligent or reckless torts.” Kawaauhau, 523 U.S. at 61, 118 S.Ct. at 977. Accordingly, debts arising out of misconduct such as intentional infliction of emotional distress, malicious prosecution, conversion, assault, false arrest, intentional libel and deliberate vandalism of a creditor's premises have been held to satisfy the willful and malicious injury standard under § 523(a)(6). Steier v. Best (In re Best), 109 Fed.Appx. 1, 5 (6th Cir. June 30, 2004) (unpublished opinion) (citations omitted); National Sign & Signal v. Livingston, 422 B.R. 645, 658 (W.D.Mich.2...
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