In re Williams, Bankruptcy No. 97-52537
| Decision Date | 23 April 1999 |
| Docket Number | Adversary No. 98-5034.,Bankruptcy No. 97-52537 |
| Citation | 233 BR 398 |
| Parties | In re Deborah A. WILLIAMS, Debtor. J. Bowers Construction Co., Inc., Plaintiff, v. Deborah A. Williams, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
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Douglas D. Jones, Manos & Jones Co., Akron OH, for debtor-defendant.
John T. Waller, Akron, OH, for creditor-plaintiff.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on the plaintiff's motion for summary judgment and the defendant-debtor's response. On October 14, 1998, the Court held an evidentiary hearing on a motion to dismiss the plaintiff's complaint filed by another named defendant, National City Bank.1 At the conclusion of that hearing, counsel for the plaintiff and the defendant-debtor indicated to the Court that, based upon the evidence then presented, the related issue of whether the debt owed to the plaintiff should be precluded from discharge pursuant to 11 U.S.C. § 523(a)(6) could be decided by dispositive motions. The Court then set a briefing schedule and, after several requested extensions by both parties, the matter was taken under advisement on March 12, 1999.
This proceeding arises in a case referred to this Court by the Standing Order of Reference entered in this District on July 16, 1984. It is determined to be a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I), over which this Court has jurisdiction pursuant to 28 U.S.C. § 1334. Based upon the plaintiff's motion for summary judgment, the defendant-debtor's response and the testimony and evidence presented at the October 14, 1998 hearing, the Court makes the following findings of fact and conclusions of law.
On July 26, 1994, a fire damaged the home of the defendant-debtor and her then-husband, Charles Williams. On August 1, 1994, the plaintiff provided the Williamses with an estimate for repairs in the amount of $54,513.49. On October 17, 1994, the plaintiff began repairing the Williams' home. On October 21, 1994, the defendant-debtor's insurance company issued a $45,087.17 settlement check to the joint payment of the plaintiff, the defendant-debtor and other related parties. That settlement check was then deposited into a National City Bank joint savings account which was opened in the name of Deborah Williams and Bob Motz. Mr. Motz, who is a vice president and senior estimator for the plaintiff, was not separately identified by this relationship on the joint account.
Immediately after opening the account, $1,792.00 was jointly withdrawn to enable the defendant-debtor to make a past-due payment on her home. The parties agreed to leave the remaining $43,295.17 in the joint savings account for eventual payment to the plaintiff upon completion of the reconstruction work. The parties also agreed that the joint account would be set up so that the signatures of both the defendant-debtor and Mr. Motz would be required to make a withdrawal. Despite such an agreement and unbeknownst to either Mr. Motz or the defendant-debtor, the joint account was set up to permit withdrawals on an individual signature.
In January of 1995, the plaintiff completed the reconstruction project. Although the plaintiff contends that in March of 1995 it delivered a final bill to the defendant-debtor, the defendant-debtor denies that she ever received such a document. Due to increasing financial pressures and an impending foreclosure on her home, the defendant-debtor attempted to unilaterally withdraw funds from the joint savings account sometime during May of 1995. When her first attempt proved to be a successful one, the defendant-debtor continued to withdraw funds on her signature alone and eventually depleted all but $8.39 of the account proceeds through over 25 transactions. None of the withdrawn money was remitted to the plaintiff, and the plaintiff has never been paid for any of its repair work. On March 19, 1996, the defendant-debtor and her ex-husband sold their home.
On September 10, 1997, defendant-debtor filed a chapter 7 bankruptcy petition. The plaintiff was listed on defendant-debtor's schedules as the holder of an unsecured, nonpriority debt in the amount of $52,659.00. On February 13, 1998,2 plaintiff filed a complaint against the defendant-debtor seeking to have a debt in the amount of $43,295.17 determined to be non-dischargeable pursuant to 11 U.S.C. § 523(a)(6). In that complaint, the plaintiff alleges that it was willfully and maliciously injured by the defendant-debtor's conversion of the proceeds in the joint savings account.
A court shall grant a party's motion for summary judgment "if . . . there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c); FED.R.BANKR.P. 7056. The party moving for summary judgment bears the initial burden of showing the court that there is an absence of a genuine dispute over any material fact, Searcy v. City of Dayton, 38 F.3d 282, 286 (6th Cir.1994) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)), and, upon review, all facts and inferences must be viewed in the light most favorable to the nonmoving party. Searcy v. City of Dayton, 38 F.3d 282, 285 (6th Cir.1994); Boyd v. Ford Motor Co., 948 F.2d 283, 285 (6th Cir.1991), cert. denied, 503 U.S. 939, 112 S.Ct. 1481, 117 L.Ed.2d 624 (1992). The issue of whether a debt should be discharged must be proven by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991).
Section 523(a)(6) of the Bankruptcy Code provides that a discharge under § 727 does not discharge an individual debtor from any debt "for willful and malicious injury by the debtor to another entity or to the property of another entity." When a debtor is found to have converted property, the debt created by that conversion may, under certain circumstances, be excepted from discharge. Accordingly, whether or not the defendant-debtor converted the proceeds in the joint savings account is the determinative issue in this matter.
Conversion is the wrongful control or exercise of dominion over property belonging to another which is inconsistent with or in denial of the rights of the owner. Baltimore & Ohio Railroad Co. v. O'Donnell, 49 Ohio St. 489, 32 N.E. 476 (1892). In order to prove the tort of conversion, a plaintiff must demonstrate: (1) that the plaintiff owned or had a right to possess the subject property at the time of the alleged conversion; (2) that the defendant's alleged conversion was the result of a wrongful act or disposition of the plaintiff's property rights; and (3) that damage to the plaintiff occurred as a result of the alleged conversion. Tabar v. Charlie's Towing Service, Inc., 97 Ohio App.3d 423, 427-28, 646 N.E.2d 1132, 1136 (1994).
Whether the plaintiff owned or had a right to possess the proceeds in the joint savings account at the time of the alleged conversion: In her response, the defendant-debtor argues that the plaintiff never had a property interest in the joint savings account because the account was opened in the name of Bob Motz and not the plaintiff. The defendant-debtor also argues that at the time of the alleged conversion, the plaintiff did not have a right to possess the proceeds in the joint savings account because its right to payment was conditioned upon completion of the work and submission of a final bill to the defendant-debtor. The parties dispute whether a final bill was ever delivered to the defendant-debtor and the defendant-debtor claims that this dispute creates a genuine issue of material fact.3
In this case, neither party has disputed that Mr. Motz was the plaintiff's employee-agent. Also, neither party has disputed that during all of his interactions with the defendant-debtor, Mr. Motz was acting within the scope of that employee-agent capacity or that the defendant-debtor was aware of his relationship to the plaintiff. Therefore, for purposes of analyzing liability as between the plaintiff and the defendant-debtor, the actions of Mr. Motz must be construed as the actions of the plaintiff.4 See First Nat'l Bank of New Bremen v. Burns, 88 Ohio St. 434, 441, 103 N.E. 93, 95 (1913) ().
The defendant-debtor's other argument, that the plaintiff did not have a right to possess the proceeds in the joint savings account at the time of the alleged conversion because a condition to its right to payment was not met, is not relevant to the determination of this matter and acts only to divert attention from the fact that the joint account proceeds were being held in trust for the plaintiff.5 A trust is "a fiduciary relationship which respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it." Norris v. Norris, 40 Ohio Law Abs. 293, 296, 57 N.E.2d 254, 258 (1943). That the parties did not themselves characterize the joint savings account as a trust does not preclude a finding that an express trust was created. An express trust may be created even though the parties may not understand what a trust is, and whether it is so created will be determined from all circumstances surrounding the transaction. Id.; In re Amos, 201 B.R. 184, 186 (Bankr.N.D.Ohio 1996).6
In the case at bar, it is without dispute that although legal title to the joint account was held by both the plaintiff and the defendant-debtor, the proceeds in that account were being held for the plaintiff's benefit with disbursement to be made upon completion of the reconstruction work. Such a separation of the...
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