In re Shuey
| Decision Date | 18 December 2019 |
| Docket Number | Case No. 10 BK 27054 |
| Parties | In re: KRISTINE MARIE SHUEY, Debtor. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
Hon. Jack B. Schmetterer
Debtor Kristine Shuey ( "Debtor") now moves to alter or amend the Opinion on Remand [Dkt. No. 73] and Order on Remand [Dkt. No. 75]. For reasons articulated below, Debtor's Rule 9023 Motion to Alter or Amend Ruling and Order (the "Motion to Alter or Amend") [Dkt. No. 76] will be DENIED by separate order to be entered concurrently herewith.
This case has a long history. Creditor Craig Shuey ("Creditor") and Debtor both adopt the "Facts and Procedure History" as stated in the Opinion on Remand. Accordingly, because the parties do not dispute the case background, the Facts and Procedural History identified in the Opinion on Remand are adopted and incorporated herein. [See Dkt. No. 73, at 1-6].
The first ruling on Debtor's Motion to Reopen and Motion for Sanctions granted Debtor's request insofar as she sought to reopen her bankruptcy case, but denied sanctions against Creditor as it held that Creditor's claim against Debtor was a post-petition obligation. [Dkt. Nos. 28 & 30]. Debtor then filed her Motion to Alter or Amend. [Dkt. No. 33]. That Motion to Alter or Amend was likewise denied. [Dkt. Nos. 48 & 50]. Debtor then appealed to the District Court. The District Court issued an Opinion remanding the proceeding to determine: (1) whether Creditor's claim was indeed a contingent claim that was discharged in Debtor's Chapter 7 bankruptcy; and (2) the applicability of any possible 11 U.S.C. § 523(a) exceptions to Creditor's claims. [Dkt. No. 61].
Upon remand, the Opinion on Remand and Order on Remand were entered on August 16, 2019. That Opinion held: (1) Creditor's claim was a contingent pre-petition claim that was discharged in Debtor's chapter 7 bankruptcy; (2) Creditor's pre-petition claim was not excepted from the discharge under any provision of 11 U.S.C. § 523(a); and (3) sanctions against Creditor for violation of the discharge injunction were not warranted as Creditor's actions were undertaken on an objectively reasonable basis. Consequently, the Order on Remand: (1) enjoined Creditor from pursuing any attempt to collect against Debtor for the co-signed student loans made in 2004 and 2005; (2) ordered Creditor to dismiss any counts related to the student loans from the Illinois state court proceeding; and (3) denied Debtor's request of sanctions.
On August 30, 2019, Debtor filed the present Motion to Alter or Amend. [Dkt. No. 76]. In her present Motion to Alter or Amend, Debtor argues that the Opinion on Remand made two errors. Specifically, Debtor argues that the Opinion on Remand erred: (1) by failing to distinguish between damages and sanctions; and (2) by concluding that Creditor's state court collection actions were objectively reasonable. Debtor contends that compensatory damages are distinct from sanctions and ought to be awarded regardless of whether sanctions are granted. Furthermore, Debtor asserts that Creditor's actions of seeking full indemnification under a joint loan could not possibly be "objectively reasonable."
On October 3, 2019, Creditor filed a Response to the Motion to Alter or Amend. [Dkt. No. 85]. In his Response, Creditor argues that Debtor has failed to demonstrate a manifest error of law or fact as his actions against Debtor was not conducted with conscious disregard of the bankruptcy discharge because: (1) Debtor did not object in any state proceeding that Creditor's claim were discharged nor did Debtor seek a determination as to the dischargeability; and (2) Debtor did not list the full value of the joint loans in her Schedule F but rather listed only the pre-petition amounts made by Creditor. Creditor further asserts that the cases cited by Debtor for the proposition that damages can be awarded separate from sanctions are distinguishable as no willful violation of the injunction can be found to exist here; in contrast, Creditor argues that his actions were undertaken in good faith with an objectively reasonable basis as the applicable law is unsettled.1
On October 17, 2019, Debtor filed a Reply. [Dkt. No. 86]. In her Reply, Debtor reiterates the entire procedural history of how Creditor proceeded with collection efforts against Debtor seeking full recovery of all amounts paid and argues that Creditor's action to collect on the full value of post-petition payments on a pre-petition obligation require an imposition of sanctions.
This is the fourth round of briefs (not including any made on appeal at the District Court) of litigation issues since the parties started their battle.
Subject matter jurisdiction lies under 28 U.S.C. § 1334. The district court may refer bankruptcy proceedings to a bankruptcy judge under 28 U.S.C. § 157 and 28 U.S.C. § 1334, and this proceeding was thereby referred here by Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. Venue lies under 28 U.S.C. § 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (0). Jurisdiction also exists in this matter as "the discharge injunction arises under the Bankruptcy Code at § 524(a)(2)." In re Torrence, No. 14-BK-34470, 2015 WL 3962529, at *2 (Bankr. N.D. Ill. June 26, 2015), subsequently aff'd sub nom. Torrence v. Comcast Corp., 663 F. App'x 475 (7th Cir. 2016).
Debtor's Motion to Alter or Amend is brought under Federal Bankruptcy Procedure Rule 9023. FED. R. BANKR. P. 9023. Rule 9023 incorporates Federal Civil Procedure Rule 59. Id. (). Under Rule 59(e), a party may move to alter or amend a judgment. See FED. R. CIV. P. 59(e). However, unlike Rule 59, which allows a motion to alter or amend to be filed within 28 days after the entry of the judgment, under Bankruptcy Rule 9023, the motion must instead be filed within 14 days. See FED. R. BANKR. P. 9023.
"To prevail on a Rule 59(e) motion to alter or amend judgment, a party must 'clearly establish' (1) that the court committed a manifest error of law or fact, or (2) that newly discovered evidence precluded entry of judgment." Blue v. Hartford Life & Acc. Ins. Co., 698 F.3d 587, 598 (7th Cir. 2012) (citing Harrington v. City of Chicago, 433 F.3d 542, 546 (7th Cir. 2006)). This allows the court to correct its own errors to avoid burdensome appellate proceedings. Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995). The decision to grant or deny a motion to alter or amend is within the sound discretion of the court. In re Prince, 85 F.3d 314, 324 (7th Cir. 1996). However, motions to alter or amend should not be used to relitigate old matters or present cases under new legal theories. King v. Cooke, 26 F.3d 720, 726 (7th Cir. 1994), cert. denied, 514 U.S. 103 (1995).
As a preliminary matter, if Debtor ever decided to seek monetary damages, an adversary proceeding was required to seek such relief. FED. R. BANKR. P. 7001(1). None was ever filed.
Debtor asserts that a "manifest error" was made in the earlier decision in not recognizing that compensatory damages should be awarded regardless of whether sanctions are granted. This argument was not raised prior to judgment; accordingly, it has been waived. A motion to alter or amend "does not provide a vehicle for a party to undo its own procedural failures, and it certainly does not allow a party to introduce new evidence or advance arguments that could and should have been presented" prior to judgment. Bordelon v. Chicago Sch. Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). In six prior briefs over the course of the case, Debtor never once previously made the contention that damages should be awarded separate from sanctions. While Debtor's prayers for relief in prior briefs did request a hearing to determine the extent of her damages, no argument was made as to damages being granted unconnected to sanctions. Instead, Debtor's sole argument was simply that "bankruptcy courts have the authority to award remedial and compensatory damages in the form of sanctions for violations of the discharge injunction." [Dkt. No. 8, at 8] (emphasis added). Now, for the first time in her present Motion to Alter or Amend, Debtor raises the contention that damages are distinct from sanctions. Debtor's new argument is waived. "Arguments that could have been made earlier but are instead raised for the first time in a Rule 59 motion are waived." Gen. Auto Serv. Station v. City of Chicago, 526 F.3d 991, 1006 (7th Cir. 2008). To the extent Debtor's prior requests for an evidentiary hearing to determine the extent of her damages constituted such an argument, her unsupported arguments are likewise waived. M.G. Skinner & Assocs. Ins. Agency v. Norman-Spencer Agency, Inc., 845 F.3d 313, 321 (7th Cir. 2027) ("Perfunctory and undeveloped arguments are waived, as are arguments unsupported by legal authority.").
Furthermore, even if not waived, Debtor's argument that the bankruptcy court made an error of law is without merit. To succeed upon a finding of manifest error of law, Debtor must "clearly establish" that the bankruptcy court failed to recognize "controlling precedent." Anderson v. Holy See, 934 F. Supp. 2d 954, 958 (N.D. Ill. 2013), aff'd sub nom. Anderson v. Catholic Bishop of Chicago, 759 F.3d 645 (7th Cir. 2014). Oto v. Metro. Life Ins. Co., 224 F.3d...
To continue reading
Request your trial