In re Staggs
| Decision Date | 06 June 1994 |
| Docket Number | Bankruptcy No. 93-10443. Adv. No. 93-1088. |
| Citation | 178 BR 767 |
| Parties | In re Ervin STAGGS, Debtor. James FORRESTER, Rachel L. Forrester, Plaintiffs, v. Ervin STAGGS, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Indiana |
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David Peebles, Fort Wayne, IN, for debtor.
Donald Aikman, Fort Wayne, IN, for trustee.
DECISION
On July 3, 1986, the defendant/debtor, Ervin Staggs, was involved in a bar fight with the plaintiff, James Forrester, at the Red Apple Inn in Marion, Indiana. As a result of that altercation, the plaintiff filed a civil action on July 5, 1988, alleging that the defendant had committed battery against him. Defendant filed an answer of denial on April 3, 1989. Almost three years later, plaintiff filed a motion for summary judgment. The defendant did not appear at any of the hearings held as a result of the motion or otherwise contest it. On September 1, 1992, the Circuit Court found that "there was no genuine issue of material fact and that Defendant Ervin Staggs committed battery upon Plaintiff and that as a result of that battery Plaintiff suffered injuries." Summary Judgment Decree, No. 27C01-8811-CP-772 (Grant Circuit Ct. Sept. 1, 1992). A hearing to determine damages was scheduled for October 14, 1992. Once again the defendant failed to appear. Following this hearing, the state court entered a judgment in favor of the plaintiff and against the defendant for $150,000.00 in compensatory damages and $450,000.00 in punitive damages. Defendant subsequently filed for relief under Chapter 7 of the United States Bankruptcy Code. By its complaint in this adversary proceeding, plaintiff seeks a determination that the obligation owed to him as a result of the state court judgment is nondischargeable, as a debt for a willful and malicious injury. 11 U.S.C. § 523(a)(6).
This matter is currently before the court on plaintiff's motion for summary judgment.1 Plaintiff argues that the state court's judgment collaterally estops the defendant from disputing the dischargeability of the debt in question. See Grogan v. Garner, 498 U.S. 279, 284 n. 11, 111 S.Ct. 654, 658 n. 11, 112 L.Ed.2d 755 (1991) (). Although defendant has conceded his liability to the plaintiff,2 he argues that his conduct was not "willful and malicious" under § 523(a)(6) and that collateral estoppel does not apply.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Bankr.P. 7056(c). Thus, summary judgment is essentially an inquiry as to "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).
Initially, Rule 56 requires the moving party to inform the court of the basis of the motion and to identify "those portions of the `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The non-moving party may oppose the motion with any of the evidentiary materials listed in Rule 56(c), but reliance on the pleadings alone is not sufficient to withstand summary judgment. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, 464 U.S. 960, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). In ruling on a summary judgment motion, the court accepts as true the non-moving party's evidence, draws all legitimate inferences in favor of the non-moving party, and does not weigh the evidence and credibility of witnesses. Anderson, 477 U.S. at 249, 106 S.Ct. at 2511.
Pursuant to 11 U.S.C. § 523(a)(6), any debt attributable to a "willful and malicious injury by the debtor to another entity . . ." is nondischargeable. The terms "willful" and "malicious" are separate elements, both of which must be satisfied. In re Kimzey, 761 F.2d 421, 424 (7th Cir.1985); In re Adams, 147 B.R. 407, 412 (Bankr.W.D.Mich. 1992); In re Walsh, 143 B.R. 691, 695 (Bankr.N.D.Ohio 1992); In re Muhammad, 135 B.R. 294, 298 (Bankr.N.D.Ill.1991). It is plaintiff's burden to show by a preponderance of the evidence that these elements have been met. Grogan, 498 U.S. at 284, 111 S.Ct. at 661. Exceptions to dischargeability are construed strictly against the creditor and in favor of the debtor. Matter of Scarlata, 979 F.2d 521, 524 (7th Cir.1992); Matter of Zarzynski, 771 F.2d 304, 306 (7th Cir. 1985); Fidelity Financial Services, Inc. v. Cornell-Cooley, 158 B.R. 128, 135 (D.S.D.Ind.1993).
As used in § 523(a)(6), "willful" is universally equated with "intentional." In re Posta, 866 F.2d 364, 367 (10th Cir.1989); Chrysler Credit Corp. v. Rebhan, 842 F.2d 1257, 1264 (11th Cir.1988). Thus, a plaintiff must simply prove that the obligation in question arises out of a debtor's intentional act. "The intent required is intent to do the act at issue, not intent to injure the victim." In re Britton, 950 F.2d 602, 605 (9th Cir. 1991). See also In re Littleton, 942 F.2d 551, 554 (9th Cir.1991); In re Mills, 111 B.R. 186, 194 (Bankr.N.D.Ind.1988).
While the meaning of the term "malicious" has not been resolved by the Seventh Circuit, Matter of Scarlata, 979 F.2d 521, 526 (7th Cir.1992), a generally accepted definition is that it "is a wrongful act done without just cause or excuse, `which necessarily produces harm.'" In re Kemmerer, 156 B.R. 806, 808 (Bankr.S.D.Ind.1993) (quoting In re Cecchini, 780 F.2d 1440, 1442-43 (9th Cir.1986) (emphasis deleted)). Accord Britton, 950 F.2d at 605; Wheeler v. Laudani, 783 F.2d 610, 615 (6th Cir.1986); Seven Elves, Inc. v. Eskenazi, 704 F.2d 241, 245 (5th Cir.1983). It does not require ill will, spite, or personal hatred. In re Seals, 110 B.R. 331, 333 (D.M.D.Tenn.1989); In re Robinson, 140 B.R. 245, 247 (Bankr.C.D.Ill.1992).
The analysis of whether or not a prior judgment precludes the subsequent litigation of a particular issue must proceed with a degree of cautious deliberation. There are both state and federal rules governing collateral estoppel. While these rules are similar, they are not identical and their differences may be outcome determinative. See e.g. Bicknell v. Stanley, 118 B.R. 652 (D.S.D.Ind.1990). As a result, it is important to begin the analysis by choosing the correct rule. A further complication is that there are two different situations where collateral estoppel may come into play. The parties to the subsequent proceeding may or may not be the same as the parties to the litigation which resulted in the judgment that is claimed to operate as an estoppel. Here again, although the standards are similar, they have slight differences. The primary difference is that, where the parties are not identical, whether or not collateral estoppel applies involves the consideration of a number of equitable circumstances which do not enter the equation where the parties are identical. See Restatement (Second) of Judgments § 29. Thus, one cannot simply pull a reported decision off the shelf because it happens to discuss collateral estoppel and advance an argument based upon it. Before doing so, one must ensure that it utilizes the correct rule (state or federal) and the appropriate standard (identical or not identical parties).
A state court judgment is entitled to full faith and credit in bankruptcy proceedings. 28 U.S.C. § 1738; Matter of Bulic, 997 F.2d 299, 304 (7th Cir.1993). Thus, the bankruptcy court must give a state court judgment the same preclusive effect that a state court would give to it. Bulic, 997 F.2d at 304 n. 6; Butler v. City of North Little Rock, Ark., 980 F.2d 501, 503 (8th Cir.1992); In re Guy, 101 B.R. 961, 974 (Bankr.N.D.Ind.1988). Whether a state court judgment precludes the litigation of an issue, therefore, initially depends on state law. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 381, 105 S.Ct. 1327, 1332, 84 L.Ed.2d 274 (1985); Jones v. City of Alton, Ill., 757 F.2d 878, 883 (7th Cir.1985); In re St. Laurent, 991 F.2d 672, 675-76 (11th Cir.1993); In re Nourbakhsh, 162 B.R. 841, 843 (9th Cir. BAP 1994); Bicknell v. Stanley, 118 B.R. 652, 660-61 (D.S.D.Ind.1990); In re Holland, 155 B.R. 745, 747 (Bankr.S.D.Ind.1992). If state law would preclude litigation on an issue that arises in connection with a federal claim, then the court must also consider whether Congress has expressly or implicitly excepted that claim from § 1738. Marrese, 470 U.S. at 383, 105 S.Ct. at 1333; Cook Co. v. MidCon Corp., 773 F.2d 892, 898 (7th Cir. 1985); Bicknell, 118 B.R. at 660.
The general rule of issue preclusion in most jurisdictions is accurately reflected in the Restatement (Second) of Judgments, as follows:
When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim. . . . A review of Indiana case law shows that this general rule is followed by the Indiana courts as well. Bulic, 997 F.2d at 304 n. 6 (quoting Bicknell, 118 B.R. at 644 (citing Hardesty v. Bolerjack, 441 N.E.2d 243, 245 (Ind.App. 1982))).
The Indiana Supreme Court's more recent pronouncement on the issue indicates that this statement of the general rule remains unchanged.3
Generally, collateral estoppel operates to bar a subsequent relitigation of the same fact or issue...
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