Launder v. Doll (In re Doll)
| Decision Date | 28 September 2018 |
| Docket Number | Case No. 16-33793,Adv. Pro. No. 17-03027 |
| Parties | In Re: Randall Doll, Debtor. James Launder Plaintiff, v. Randall Doll, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
The court incorporates by reference in this paragraph and adopts as the findings and analysis of this court the document set forth below. This document has been entered electronically in the record of the United States Bankruptcy Court for the Northern District of Ohio.
MEMORANDUM OF DECISION
This Adversary Proceeding is before the court for decision after trial on Plaintiff James Launder's ("Plaintiff") Complaint [Doc. #1] against Defendant Randall Doll ("Defendant-Debtor"). In the Complaint, Plaintiff seeks a determination that the debt owed to 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).
This Memorandum of Decision constitutes the court's findings of fact and conclusions of law pursuant to Fed R. Civ. P. 52, made applicable to this adversary proceeding by Fed. R. Bankr. P. 7052. Regardless of whether specifically referred to in this Memorandum of Decision, the court has examined all the submitted materials, weighed the credibility of witnesses, considered all of the admitted evidence,1 and reviewed the entire record of the case. Based upon that review, and for the reasons discussed below, the court finds that only a portion of Defendant-Debtor's debt owed Plaintiff, as reflected in Plaintiff's Proof of Claim, is nondischargeable and that the remainder is subject to Defendant-Debtor's discharge.
Many of the following facts were previously set forth in the court's Memorandum of Decision and Order [Doc. #16] that denied Plaintiff and Defendant-Debtor's cross-motions for summary judgment. 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 through which Defendant-Debtor agreed to perform repairs and improvements on a 1937 Ford replica kit car ("Ford Automobile Project" or "Ford kit car") in exchange for payment. [Doc. #12-1, p. 1; Doc. #13-2, p. 3]. As Defendant-Debtor performed work on the kit car, the terms of the underlying agreement came into dispute and on October 5, 2015, the Ford Automobile Project fell apart. At trial, the parties presented evidence on their very different views as to specifically how and why that happened.
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. . 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]. 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].
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 lists a debt owed to Plaintiff and describes it as a nonpriority unsecured claim with an unknown value. [Id., p. 19]. Plaintiff timely filed an Adversary Complaint on April 3, 2017, seeking to have the debt of $22,109.50 owed him held nondischargeable. [Doc. #1].
Plaintiff's Adversary Complaint seeks relief on three counts. [Id.]. First, Plaintiff alleged 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 argued 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 contended 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.2 [Id., p. 5].
In his timely filed Answer, Defendant-Debtor asserted 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 contended that this Adversary Proceeding should be dismissed for Plaintiff's failure to state a claim upon which relief can be granted. [Id.].
Plaintiff and Defendant-Debtor filed cross-Motions for Summary Judgment [Doc. ##12, 13], both of which the court denied in a Memorandum of Decision and Order entered on March 6, 2018. [Doc. #16]. In that Decision, this court held that the Default Judgment could not be given preclusive effect in these proceedings and that genuine issues of fact rendered summary judgmentinappropriate. [Id.]. The court then scheduled a trial to be held on July 18, 2018.
At the July 18th trial, Plaintiff, Plaintiff's counsel, Defendant-Debtor, and Defendant-Debtor's counsel attended in person. Two witnesses for Plaintiff were also in attendance. After the parties waived their opening statements, Plaintiff's counsel presented testimony from his first witness, David Rice ("Mr. Rice").
Mr. Rice testified that he had prior experience with automobile work, that he was a friend of both Plaintiff and Defendant-Debtor for over ten years, and that he had personal knowledge of what led to their dispute over the Ford Automobile Project.
After learning that Plaintiff wanted to find someone to perform work on a Ford kit car, Mr. Rice recommended that Plaintiff contact Defendant-Debtor, a man Mr. Rice knew to possess knowledge of, and skill in, automobile body and paint work. However, Mr. Rice also recommended that Plaintiff only work with Defendant-Debtor if the two agreed to a flat, fixed price for the Ford Automobile Project. Mr. Rice stated that he previously heard Defendant-Debtor complain about other customers that took issue with Defendant-Debtor's charging at an hourly rate. Defendant-Debtor had stated to Mr. Rice that if he were to give prospective customers a flat price quote, he would never get any business. Thus, Mr. Rice explained that while he wanted to help Defendant-Debtor obtain work through connecting him with Plaintiff and the Ford Automobile Project, he nevertheless recommended that Plaintiff get a flat price quote from Defendant-Debtor given Mr. Rice's prior conversations with Defendant-Debtor about his billing practices.
Mr. Rice connected Plaintiff with Defendant-Debtor via an exchange of telephone numbers and then accompanied Defendant-Debtor to Plaintiff's house in Findlay so that Defendant-Debtor could see the Ford kit car that he would be working on before the parties agreed to a deal. According to Mr. Rice, while the parties looked at the Ford kit car, Plaintiff told Defendant-Debtor that he would not pay an hourly rate and that Defendant-Debtor should look the car over, contemplate a fair flat fee, and then get back to Plaintiff with a price. After Defendant-Debtor visited Plaintiff's house and first saw the Ford kit car, Mr. Rice called Defendant-Debtor and asked what he thought about the Ford Automobile Project. According to Mr. Rice, Defendant-Debtor told Mr. Rice that he couldn't do the job for any less than $5,000.00.
Mr. Rice further testified that he was present when Plaintiff and Defendant-Debtor discussed and agreed to a price for the Ford Automobile Project. Specifically, Mr. Rice statedthat he accompanied Plaintiff to Defendant-Debtor's body shop a second time, during which Plaintiff dropped off the first batch of Ford kit car parts. Mr. Rice asserted that, while there, he personally saw3 Defendant-Debtor and Plaintiff shake hands and verbally agree to a flat $5,500.00 fee for the Ford Automobile Project, an amount that included $5,000.00 for the car and an extra $500.00 for undercoating work. According to Mr. Rice, the Ford kit car was practically "paint-ready" when Defendant-Debtor began work on it, though Mr. Rice admitted that he did not have knowledge of the Ford Automobile Project's timeline or payment plan details.
At some point after work on the Ford kit car had begun, Defendant-Debtor called Mr. Rice and informed him that his deal with Plaintiff had run into trouble and that the two had a falling out.
Plaintiff's next witness, Steve Russell, testified that he had been friends with Plaintiff for about ten years and that he accompanied him to Defendant-Debtor's body shop to drop off Ford kit car parts and pick up finished ones. Mr. Russell stated that he went to Defendant-Debtor's body shop alongside Plaintiff four or five times during September and early October of 2015. Mr, Russell averred that during each visit, Defendant-Debtor would complain about something having gone wrong with the parts that he had been working on....
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