Launder v. Doll (In re Doll)

• Decision Date: 06 March 2018
• Docket Number: Case No.: 16–33793,Adv. Pro. No. 17–03027
• Citation: 585 B.R. 446
• Parties: IN RE: Randall DOLL, Debtor. James Launder Plaintiff, v. Randall Doll, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Ohio

585 B.R. 446

IN RE: Randall DOLL, Debtor.

James Launder Plaintiff,

v.Randall Doll, Defendant.

Case No.: 16–33793

Adv. Pro. No. 17–03027

United States Bankruptcy Court, N.D. Ohio, Western Division.

Signed March 6, 2018

William L. Swope, Findlay, OH, for Plaintiff.

Edward L. Schimmel, Schimmel Law Office, Oregon, OH, for Defendant.

MEMORANDUM OF DECISION AND ORDER REGARDING CROSS MOTIONS FOR SUMMARY JUDGMENT

John P. Gustafson, United States Bankruptcy Judge

This Adversary Proceeding is before the court on Defendant–Debtor Randall Doll's ("Defendant–Debtor") Motion to Dismiss Adversary Proceeding & Motion for Summary Judgment [Doc. # 12], Plaintiff James Launder's ("Plaintiff") Motion for Summary Judgment [Doc. # 13], Plaintiff's Objection to Defendant's Motion [Doc. # 14], and Defendant–Debtor's Response to Plaintiff's Motion [Doc. # 15]. In the Complaint, Plaintiff seeks a determination that the debt owed him by Defendant–Debtor is nondischargeable under 11 U.S.C. § 523(a)(2) and (a)(6). [Doc # 1, pp 3–4].

The Court has jurisdiction over Defendant–Debtor's underlying Chapter 7 case and this adversary proceeding pursuant to 28 U.S.C. §§ 1334, 157(a), and Local General Order 2012–7 of the United States District Court for the Northern District of Ohio. Actions to determine dischargeability are core proceedings that this Court may hear and determine. 28 U.S.C. § 157(b)(1) and (b)(2)(I).

For the following reasons, Plaintiff's Motion for Summary Judgment will be denied and Defendant–Debtor's Motion for Summary Judgment¹ will be denied.

Factual Background

Defendant–Debtor owned and operated an automobile improvement business under the name "Randy's Body and Paint" located at 118 East Front Street, Pemberville, Ohio. [Doc. # 13–2, p. 3]. On July 13, 2015, Defendant–Debtor and Plaintiff entered into an oral business agreement though which Defendant–Debtor agreed to perform repairs and improvements on a 1937 Ford replica kit car ("Ford Automobile Project"). [Doc. # 12–1, p. 1; Doc. # 13–2, p. 3]. In exchange, Plaintiff alleges that he paid Defendant–Debtor a $3,500 deposit, with a definite total cost of $5,500 due upon completion of the improvement work. [Doc. # 13, p. 2; Doc. # 13–2, pp. 3–4]. Defendant–Debtor, on the other hand, alleges that Plaintiff paid a deposit of $1,500, with an estimated total cost ranging from $5,500 to $6,500 due upon completion. [Doc. # 12, pp. 1–2; Doc. # 12–1, p. 2]. Defendant–Debtor further alleges that he did not give Plaintiff a definite total cost because Defendant–Debtor charged an hourly rate and could thus only provide Plaintiff with a cost estimate. [Id. ]. Per Defendant–Debtor's version of events, Defendant–Debtor completed work on the first batch of Ford parts, after which Plaintiff picked up the finished parts, paid Defendant–Debtor with two separate checks amounting to $2,000, and dropped off a second batch of Ford parts. [Doc. # 12–1, p. 2].

Defendant–Debtor asserts that he informed Plaintiff in October of 2015 that the total cost of the Ford Automobile Project would exceed the earlier estimate of $5,500 to $6,500, that $1,801.54 was due for work already performed, and that additional funds were needed for Defendant–Debtor to continue the project. [Id. ]. Plaintiff refused Defendant–Debtor's request for additional funds and in response, Defendant–Debtor demanded that Plaintiff remove the unfinished automobile from Defendant–Debtor's premises and pay the outstanding balance. [Id. ; Doc. # 13–2, p. 2]. The parties agree that Plaintiff removed some of the parts from the premises, but could not fit all of the parts into his truck. [Doc. # 12–1, pp. 2–3; Doc. # 13–2, p. 4]. Though Plaintiff intended to return and pick up the remaining parts, Defendant–Debtor asserts that he informed Plaintiff over the phone that he refused to turn the parts over "[u]nder Ohio common law provisions." [Doc. # 13–2, p. 4; Doc. # 12–1, p. 3]. Defendant–Debtor's Motion for Summary Judgment also avers that the retained parts have already been removed from Defendant–Debtor's possession by the Wood County Sheriff's Department. [Doc. # 12, p. 7].

Plaintiff's version of events surrounding the breakdown of the Ford Automobile Project differs from Defendant–Debtor's in the following respects: 1) Plaintiff alleges that Defendant–Debtor said, "get your f–––ing parts out of my shop and you don't owe me a dime," once Plaintiff refused Defendant–Debtor's request for additional funds [Doc. # 13–2, p. 4]; 2) Plaintiff further alleges that Defendant–Debtor refused to turn over Plaintiff's remaining parts while stating, "if you don't give me an additional $1,800.00, you won't get your remaining parts," [Id. ]; and, 3) Plaintiff also alleges total damages amounting to $20,647.00 "as a result of Defendant's breach of our initial agreement...." [Id. ].

On January 25, 2016, Plaintiff filed a complaint against Defendant–Debtor and "Randy's Body and Paint" in the Hancock County Court of Common Pleas, Case No. 2016 CV 30 ("State Court Action"), for money damages stemming from Defendant–Debtor's allegedly improper handling of the Ford Automobile Project. [Doc. # 13, Pl. Ex. A]. Relevant here, Count Six of Plaintiff's complaint ("Count Six") alleged violations of the Ohio Consumer Sales Practices Act ("OCSPA"), a statute that, among other things, authorizes an award of treble damages and attorney's fees to a prevailing litigant. [Id. , pp. 4–5; Ohio Rev. Code Ann. §§ 1345.09(B), (F)(2) ]. Following Defendant–Debtor's failure to timely file a response to the complaint, Plaintiff filed a motion for default judgment. [Doc # 13, Pl. Ex. B]. Plaintiff attached two affidavits to the motion, one describing Plaintiff's damages estimate and the other Plaintiff's attorney's fee estimate. [Id. , pp. 6–8].

Defendant–Debtor again failed to timely respond and on March 16, 2016, the Hancock County Court of Common Pleas entered a Default Judgment ("Default Judgment") against Defendant–Debtor. [Doc. # 1, Pl. Ex. C]. The Default Judgment contains the following pertinent language:

The Court finds that Plaintiff's Complaint herein was filed on or about January 25, 2016. Service was perfected on both Defendants via certified mail on or about February 3, 2016, pursuant to Ohio Civil Rule 4.1(A)(1)(a).

Twenty–eight (28) days has passed since the service upon the Defendants, and the Defendants have otherwise failed to plead or appear herein.

The Plaintiff further submitted evidence by and through the Affidavit of James Launder and Bradley S. Warren, supporting Plaintiff's claims for damages herein.

Accordingly, it is hereby ORDERED as follows:

1. Judgment shall be issued in favor of the Plaintiff, and against the Defendants, Randy Doll, aka Randall Doll and Randy's Body and Paint, jointly and severally, in the aggregate amount of $22,109.50 ($20,647.00 pursuant to Plaintiff's Exhibit ‘A’ and $1,462.50 in attorney fees, pursuant to Count Six of the Complaint and ‘Exhibit B’ of the Plaintiff Motion for Default)...

[Id. ].

Defendant–Debtor attempted to file an Answer on March 22, 2016, but the Hancock County Court of Common Pleas vacated the late-filed Answer. [Id. , Pl. Ex. D, E]. Defendant–Debtor also filed a Motion for Relief from Judgment that was denied by the Hancock County Court of Common Pleas on June 13, 2016. [Id. , Pl. Ex. F, H].

On December 8, 2016, Defendant–Debtor filed a Chapter 7 Bankruptcy Petition. [Case No. 16–33793, Doc. # 1]. Defendant–Debtor's Schedule E/F listed Plaintiff's Default Judgment as a nonpriority unsecured claim with an unknown value. [Id. , p. 19]. Plaintiff timely filed an Adversary Complaint objecting to discharge of the Hancock County judgment debt on April 3, 2017. [Doc. # 1].

Plaintiff's Adversary Complaint seeks relief on three counts. [Id. ]. First, Plaintiff alleges that Defendant–Debtor's handling of the Ford Automobile Project constituted the taking of Plaintiff's money and property by false pretenses, false representation, or actual fraud under 11 U.S.C. § 523(a)(2) and (a)(6). [Id. , p. 4]. Second, Plaintiff argues that Defendant–Debtor's retention of the body panels was willful, malicious, and a cause of economic injury under 11 U.S.C. § 523(a)(6). [Id. ]. Third, Plaintiff contends that the Hancock County Court of Common Pleas' Default Judgment binds the parties and entitles Plaintiff to a nondischargeability determination on theories of res judicata and collateral estoppel. [Id. , p. 5].

In his Motion for Summary Judgment, Plaintiff focuses solely on res judicata² and argues that this court must give preclusive effect to the Default Judgment and determine that Defendant–Debtor's debt owed Plaintiff is nondischargeable under 11 U.S.C. § 523(a)(2) and (a)(6). [Doc. # 13, pp. 4–6].

In his Answer, Defendant–Debtor asserts that the Hancock County Court of Common Pleas' Default Judgment does not contain any findings of fact or law and is thus not due preclusive effect under theories of res judicata or collateral estoppel. [Doc. # 4, p. 3]. Defendant–Debtor further contends that this Adversary Proceeding should be dismissed for Plaintiff's failure to state a claim upon which relief can be granted. [Id. ]. In his Motion to Dismiss and for Summary Judgment, Defendant–Debtor asserts three bases for relief. [Doc. # 12]. First, Defendant–Debtor argues that res judicata does not apply to the Default Judgment because it contains no findings of fact and did not give Defendant–Debtor an opportunity to present evidence regarding the Ford Automobile Project dispute. [Id. , p. 4]. Second, Defendant–Debtor contends that Plaintiff has failed, in this case, to meet his burden of proving that Defendant–Debtor made false representations with an intent to deceive under 11 U.S.C. § 523(a)(2)(A). [Id. , p. 4–6]. Third, Defendant–Debtor argues that his retention of the Ford automobile body panels was supported by Ohio repairman's lien law, was not wrongful and malicious, and that Plaintiff suffered no irreparable economic harm as a result. [Id. , pp. 6–7]...