King v. Huizar (In re Huizar)

Citation609 B.R. 482
Decision Date02 October 2019
Docket NumberCASE NO. 18-52743-CAG,ADVERSARY NO. 19-05007-CAG
Parties IN RE: Francisco Garcia HUIZAR III, Debtor. James Keith King, Plaintiff. v. Francisco Garcia Huizar III, Defendant.
CourtUnited States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Western District of Texas

Jennifer Francine Wertz, Jackson Walker, L.L.P., Austin, TX, for Plaintiff.

Paul S. Hacker, Hacker Law Firm, San Antonio, TX, for Defendant.

MEMORANDUM OPINION ON JAMES KEITH KING'S MOTION FOR SUMMARY JUDGMENT (ECF NO. 21)

CRAIG A. GARGOTTA, UNITED STATES BANKRUPTCY JUDGE

Came on to be considered the above-numbered adversary proceeding and Plaintiff James Keith King's Motion for Summary Judgment (ECF No. 21) ("Summary Judgment Motion") filed on July 12, 2019, the parties' responses, and supporting evidence. 1

For the reasons stated herein, the Motion will be granted. A separate Order will be entered granting Plaintiff's Motion for Summary Judgment.

JURISDICTION

The Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b). This is a core proceeding under 28 U.S.C. § 157(b)(2)(I) relating to this Court's determination of the discharge of certain debts. Venue is proper under 28 U.S.C. § 1409. Both parties have consented to this Court's authority to enter a final order. (ECF Nos. 9 and 10). Determining the scope of a debtor's discharge is a fundamental part of the bankruptcy process. Farooqi v. Carroll (In re Carroll) , 464 B.R. 293, 312 (Bankr. N.D. Tex. 2011). As the Farooqi court explained:

Congress clearly envisioned that bankruptcy courts would hear and determine all core proceedings, 28 U.S.C. § 157(b)(1), which include, as relevant here, "determinations as to the dischargeability of particular debts." 28 U.S.C. § 157(b)(2)(I). The Supreme Court has never held that bankruptcy courts are without constitutional authority to hear and finally determine whether a debt is dischargeable in bankruptcy. In fact, the Supreme Court's decision in Stern clearly implied that bankruptcy courts have such authority when it concluded that bankruptcy courts had the constitutional authority to decide even state law counterclaims to filed proofs of claim if the counterclaim would necessarily be decided through the claims allowance process.

Id. (citing Stern v. Marshall , 564 U.S. 462, 504, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) ). Because this case involves a determination as to the dischargeability of particular claims, this Court has both statutory and constitutional authority to enter a final judgment.

LEGAL STANDARD FOR SUMMARY JUDGMENT

Federal Rule of Bankruptcy Procedure 7056 applies Rule 56(c) of the Federal Rules of Civil Procedure to adversary proceedings. Summary judgment is appropriate "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. Civ. P. 56(c) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If summary judgment is appropriate, the Court may resolve the case as a matter of law. Celotex Corp. , 477 U.S. at 323, 106 S.Ct. 2548 ; Blackwell v. Barton , 34 F.3d 298, 301 (5th Cir. 1994). The Fifth Circuit has stated "[t]he standard of review is not merely whether there is a sufficient factual dispute to permit the case to go forward, but whether a rational trier of fact could find for the non-moving party based upon evidence before the court." James v. Sadler , 909 F.2d 834, 837 (5th Cir. 1990) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ).

To the extent that the non-moving party asserts the existence of factual disputes, the evidence offered by the non-moving party to support those factual contentions must be of a quality sufficient so that a rational fact finder might, at trial, find in favor of the non-moving party. Matsushita , 475 U.S. at 585–87, 106 S.Ct. 1348 (1986) (non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts"); Anderson v. Liberty Lobby , Inc. , 477 U.S. 242, 249–50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ("adverse party's response ... must set forth specific facts showing that there is a genuine issue for trial"). If the record "taken as a whole, could not lead a rational trier of fact to find for the non-moving party, then there is no genuine issue for trial." LeMaire v. Louisiana , 480 F.3d 383, 390 (5th Cir. 2007). In determining whether a genuine issue of material fact exists, the non-moving party must respond to a proper motion for summary judgment with specific facts demonstrating that such genuine issue exists. A genuine issue of material fact is not raised by mere conclusory allegations or bald assertions unsupported by specific facts. Leon Chocron Publicidad Y Editora, S.A. v. Jimmy Swaggart Ministries , 990 F.2d 1253 (5th Cir. 1993).

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff seeks a determination that a North Carolina state court judgment, including an award of damages, against Defendant may be given preclusive effect and that this Court should find on the basis of that judgment that the judgment debt is non-dischargeable under 11 U.S.C. § 523(a)(6) (West 2019).2 Plaintiff alleges in his Complaint the following uncontested material facts:

James Keith King is a resident of North Carolina. (Complaint, ECF No. 1, ¶ 5). Huizar is a resident of the State of Texas with an address listed in San Antonio, Texas. (Id. at ¶ 6). King is the largest creditor of Huizar in this case pursuant to a judgment in the General Court of Justice, Superior Court Division, Durham County, North Carolina that was rendered on August 22, 2018 (the "Judgment"). (Id. at ¶ 7).

King was married to his wife, Danielle Swords King, on April 3, 2010. A former X-Games performer, King is the owner of King BMX Productions and, after their marriage, his wife assisted him in running the business. King and his wife traveled together extensively for business to host stunt shows all over the United States. (Id. at ¶ 8) The Kings have a young minor child. (Id. at ¶ 9).

Mrs. King met Huizar, who was working as a marketing agent at a Geico Insurance booth at a BMX show in New York. Unbeknownst to King, the relationship between Huizar and Mrs. King began that weekend. (Id. at ¶ 10). During the months of August - December 2015, following the New York show, Huizar and Mrs. King spent over 6,000 minutes of time on the telephone and in text messages with each other. Huizar also rented a room within one mile of the Kings' home for at least one or more nights on eight separate occasions between August 31, 2015, and November 16, 2015. King was unaware that there was any ongoing relationship between Mrs. King and Huizar until late November 2015 when King received a Facebook message from Huizar's then current girlfriend advising him of Huizar's relationship with Mrs. King. Mrs. King reassured King that there was no relationship with Huizar and what he had been told was not true. (Id. at ¶ 11). Mrs. King did not tell Plaintiff that she was still meeting with Defendant and that their minor child would accompany her in her affair with Defendant. (Id. at ¶¶ 14, 15).

On January 20, 2017, Mrs. King moved into an apartment in North Carolina, which was funded by Huizar and leased by Huizar and Mrs. King. Huizar paid full rent for the apartment leased with Mrs. King and remained on the lease at least through May 2017. King and his wife remained separated for a year and officially divorced on December 15, 2017. (Id. at ¶ 16). King filed a lawsuit in North Carolina state court against Huizar on April 6, 2017, in which King asserted claims for alienation of affection, criminal conversation, assault, battery, intentional infliction of emotional distress, and negligent infliction of emotional distress (the "Lawsuit") under applicable North Carolina law. The Lawsuit was based on the extramarital affair between Huizar and King's wife. (Id. at ¶ 19).

Huizar failed to file an answer after being served. As a result, an Entry of Default was entered. On April 11, 2018, Huizar filed a Motion to Set Aside Entry of Default. (Id. at ¶ 21). The North Carolina court denied the request and set for hearing the issues of damages related to King's claims on June 28, 2018. (Id. at ¶¶ 19–21). A five-day trial was held on the damage's component to the Judgment and the parties were afforded the opportunity to put on evidence. (Id. at ¶ 22).

The North Carolina Court rendered the Judgment for $1,215,312.00 in economic damages under applicable state law to include the present value of business loss, loss of assistance and costs not already reimbursed in the domestic suits, and $1,000,000 in noneconomic damages to include loss of love, affection and consortium, loss of sexual relationship, loss of society, companionship and comfort, loss of favorable mental attitude, mental anguish and decline in health and shame and humiliation for a total actual/compensatory damages award of $2,215,32.00. (Complaint Ex. A, ECF No. 1-1, ¶ 98).

In the Judgment, the North Carolina Court held that Huizar engaged in "malice and willful and wanton conduct" with the conscious and intentional disregard of and indifference to the rights and safety of others, which Huizar knew or should have known was reasonably likely to result in damage, injury, or other harm. (Id. at ¶ 99). The North Carolina Court rendered an award of punitive damages to King in the amount of three times the compensatory award for a total punitive damages award of $6,645,936.00. (Id. at ¶ 100). The North Carolina Court stated that the "indignity and harm done to [King] by [Huizar] in this case was great and that [Huizar's] conduct during the King's marriage was reprehensible and malicious." (Id. at ¶ 101). The North Carolina Court ordered costs assessed against Huizar, including...

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    ...effect of a state court order or judgment, the Court applies the issue preclusion rules of that state. King v. Huizar (In re Huizar), 609 B.R. 482, 489 (Bankr. W.D. Tex. 2019) (citing Marrese v. Am. Acad. of Orthopedic Surgeons, 470 U.S. 373, 380 (1985)). Mazzara obtained the Judgment again......
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