Jackson v. Meyers (In re Meyers)
| Decision Date | 29 April 2022 |
| Docket Number | 21-10493-7,Adversary 21-27 |
| Parties | In re: THOMAS JAMES MEYERS, Debtor. v. THOMAS JAMES MEYERS, Defendant. SUSAN JACKSON, Plaintiff, |
| Court | U.S. Bankruptcy Court — Western District of Wisconsin |
DECISION
Plaintiff Susan Jackson ("Jackson") contracted with Debtor Thomas James Meyers ("Meyers") related to repairs improvements, and construction at her residence in Columbia County, Wisconsin (the "Property"). She paid $109 404.15 to Meyers as a down payment on the contract. Meyers did not complete the construction, and almost three years after contracting, Jackson sued Meyers seeking rescission. She claimed he breached the contract, failed to cure the breach or return her down payment, negligently or intentionally or strictly misrepresented facts, and that his actions were a theft by contractor. Claiming his actions were malicious or an intentional disregard of Jackson's rights, she also asked for punitive damages.
At first, Meyers was pro se in that state court suit. After a motion for summary judgment was filed, he retained a lawyer. The lawyer responded to the summary judgment motion by filing a brief seeking dismissal with no supporting affidavits.
Jackson had served discovery requests on Meyers including requests to admit. Because Meyers didn't respond, Jackson asked the court to deem the failure to answer to be admissions of a list of statements. The circuit court decision contains a list of the allegations Jackson said should be considered admissions. It does not, however, say those allegations are facts.
Instead, the circuit court held the response did not raise material issues of fact. Doing so, the court said:
After entry of the judgment against Meyers in state court, Meyers filed bankruptcy. The matter is before the Court because Jackson moves for summary judgment. She asks for a decision that the state court judgment is binding and that claim preclusion addresses all issues in this adversary. She asserts the state law causes of action satisfy the elements under 11 U.S.C. § 523(a)(4). Meyers answered the adversary complaint but has not responded to the motion before the Court.
The federal district courts have "original and exclusive jurisdiction" of all cases under title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. ("Bankruptcy Code"). 28 U.S.C. § 1334(a). The federal district courts also have "original but not exclusive jurisdiction" of all civil proceedings arising under the Bankruptcy Code or arising in or related to cases under the Bankruptcy Code. 28 U.S.C. § 1334(b). District courts may refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Western District of Wisconsin has referred all of its bankruptcy cases to the Bankruptcy Court for the Western District of Wisconsin.
A bankruptcy judge to whom a case has been referred has statutory authority to enter final judgment on any proceeding arising under the Bankruptcy Code or arising in a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Bankruptcy judges must therefore determine, on motion or sua sponte, whether a proceeding is a core proceeding or is otherwise related to a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(3). As to the former, the bankruptcy court may hear and determine such matters. 28 U.S.C. § 157(b)(1). As to the latter, the bankruptcy court may hear the matters, but may not decide them without the consent of the parties. 28 U.S.C. § 157(b)(1), (c).
This is a core proceeding. No party has objected to the court entering final orders. The Complaint is based on section 523(a)(4) of the Bankruptcy Code. This section is a bankruptcy cause of action. While some claims may turn on state law, determining the scope of a debtor's discharge is a fundamental part of the bankruptcy process. See Deitz v. Ford (In re Deitz), 469 B.R. 11, 20 (B.A.P. 9th Cir. 2012). See also Dragisic v. Boricich (In re Boricich), 464 B.R. 335, 337 (Bankr. N.D.Ill. 2011).
Summary judgment is governed by Rule 56(c) of the Federal Rules of Civil Procedure, made applicable to bankruptcy proceedings by Rule 7056 of the Federal Rules of Bankruptcy Procedure. "Under Rule 56(c), 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 judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56). The moving party has the burden of establishing the nonexistence of a "genuine issue." 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2727, p. 121 (4th ed.).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). All justifiable inferences are to be drawn in favor of the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 158 (1970). "However, the non-movant must set forth 'specific facts showing that there is a genuine issue for trial' which requires more than 'just speculation or conclusory statements.'" Elbing v. Blair (In re Blair), 359 B.R. 233, 237 (Bankr. E.D. Wis. 2007) (quoting Heft v. Moore, 351 F.3d 278, 283 (7th Cir. 2003)).
Courts must grant summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Bank. P. 7056, adopting Fed.R.Civ.P. 56. At the summary judgment stage, the court's role is to determine whether there is a genuine issue for trial. The court need not weigh the evidence to determine the truth. See Anderson, 477 U.S. at 249.
The moving party "always bears the initial responsibility" to establish the lack of a genuine issue of material fact. Celotex, 477 U.S. at 323. "When the moving party has carried its burden . . . its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Instead, the non-movant must establish specific facts that show a genuine issue for trial. See id. at 587. The inferences drawn from the facts must be viewed in the light most favorable to the non-movant party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
The Court cannot consider facts that are not in the record. Summit Credit Union v. Goldbeck (In re Goldbeck), 590 B.R. 881, 887 (Bankr. W.D. Wis. 2018). But federal courts "may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue." United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992) (quoting St. Louis Baptist Temple, Inc. v. Federal Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir. 1979)). A court may also take judicial notice of its "own records of prior litigation closely related to the case before it." St. Louis Baptist Temple, 605 F.2d at 1172.
For summary judgment determinations, the materiality of facts must be determined based on the governing substantive law. In her adversary complaint, Plaintiff seeks an order that Defendant's debt is nondischargeable under 11 U.S.C. § 523(a)(4). The Court must determine whether any genuine issues of material fact exist to except this debt from discharge.
Under section 523, a plaintiff must first establish that the debtor owes him or her a debt. See Zirkel v. Tomlinson (In re Tomlinson), Adv. No. 96 A 1539, 1999 WL 294879, at *7 . Second, a plaintiff must show that the debt falls within one of the specified grounds under a provision of section 523.
The Seventh Circuit has held that the creditor bears the burden of proving a debt nondischargeable, and the quantum of proof required is a preponderance of the evidence. See In re Bero, 110 F.3d 462, 465 (7th Cir. 1997) (citing Grogan v. Garner, 498 U.S. 279, 287 (1991)). Courts must construe exceptions to discharge strictly against the creditor and in favor of the debtor. Id. at 465; In re Scarlata, 979 F.2d 521, 524 (7th Cir. 1992). See also In re Crosswhite, 148 F.3d 879, 881 (7th Cir. 1998); Meyer v. Rigdon, 36 F.3d 1375, 1385 (7th Cir. 1994).
Plaintiff bases her claim on one subsection of 523 to provide a basis for a determination of nondischargeability in this case. The subsection is (a)(4):
Plaintiff does not plead fraud. For that reason, the elements of fraud need not be addressed under this section.
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