Link v. Mauz (In re Mauz), Bankruptcy No. 1:12–bk–06672–RNO.

• Decision Date: 28 August 2013
• Docket Number: Bankruptcy No. 1:12–bk–06672–RNO.,Adversary No. 1:13–ap–00053–RNO.
• Citation: 496 B.R. 777
• Parties: In re Joseph P. MAUZ, Debtor. William A. Link, and Kimberly A. Link, Plaintiff v. Joseph P. Mauz, Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Pennsylvania

496 B.R. 777

In re Joseph P. MAUZ, Debtor.William A. Link, and Kimberly A. Link, Plaintiff

v.Joseph P. Mauz, Defendant.

Bankruptcy No. 1:12–bk–06672–RNO.

Adversary No. 1:13–ap–00053–RNO.

United States Bankruptcy Court, M.D. Pennsylvania.

Aug. 28, 2013.

Barry A. Solodky, Nikolaus & Hohenadel, LLP, Lancaster, PA, for Plaintiff.

Sara A. Austin, Austin Law Firm LLC, York, PA, for Defendant.

OPINION¹

ROBERT N. OPEL, II, Bankruptcy Judge.

In this non-dischargeability action, both the Plaintiffs/Creditors and the Defendant/ Debtor have moved for summary judgment. The Creditors ground their Motion on the purported collateral estoppel effect of a prepetition state court judgment which was entered after a bench trial. The Debtor bases his summary judgment Motion upon an alleged lack of proof concerning a necessary element for non-dischargeability. For the reasons stated below, the judgment Creditors' Motion for Summary Judgment is granted in part and denied in part. The Debtor's Motion for Summary Judgment is denied.

I. JURISDICTION

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding under 28 U.S.C. § 157(b)(2)(I).

II. FACTS AND PROCEDURAL HISTORY

Joseph Mauz (“Debtor”) filed his petition for Chapter 7 bankruptcy relief on November 19, 2012. On March 7, 2013, this Adversary Proceeding was commenced by the filing of a Complaint to Determine Dischargeability of Debt. The Complaint prays that the claim of $217,000.00 by William A. and Kimberly A. Link (“Links”) be held nondischargeable on the theory of willful and malicious injury pursuant to 11 U.S.C. § 523(a)(6)². This claim originates from a State Court judgment in which the Links were awarded $217,100.00 in damages, including $50,000.00 in punitive damages. The majority of the damages were awarded for the Debtor's intentional infliction of emotional distress upon the Links.

The Debtor and the Links were neighbors who lived on adjoining properties in York County, Pennsylvania. There was friction between the neighbors which took the form of several criminal and civil complaints, a boundary dispute, an assault and battery event, and a trespass event. These ill-fated interactions ultimately resulted in a civil action (“State Court Action”) brought by the Links against the Debtor and his spouse in the Court of Common Pleas of York County, Pennsylvania (“State Court”) on November 9, 2007. The matter went to trial on September 24, 2012.

The original complaint in the State Court Action contained three alleged causes of action which are relevant here: (1) assault and battery; (2) trespass; and, (3) intentional infliction of emotional distress. Compl. to Determine Dischargeability of Debt Ex. A; Compl. to Determine Dischargeability of Debt Ex. B, at 11.

The non-dischargeability complaint filed herein consists of only twelve numbered paragraphs and is three pages in length (“Adversary Complaint”).

The Adversary Complaint was filed with four exhibits. Exhibit A is a copy of the twenty-two-page State Court complaint. Exhibit B is a copy of the twenty-three-page non-jury trial verdict entered in the State Court Action. Exhibit C is a two-page punitive damages order entered in the State Court Action. Exhibit D is a three-page post-trial motion order entered in the State Court Action.

The Adversary Complaint alleges that the Debtor is liable to the Links, “... in the amount of $217,000.00 on account of intentional infliction of emotional distress as more fully set forth in the proceeding [sic] paragraphs.” Compl. to Determine Dischargeability of Debt ¶ 11. The Debtor filed a timely answer to the Adversary Complaint largely denying its allegations as legal conclusions.

On May 21, 2013, the Links filed a Motion for Summary Judgment. The Links' Motion for Summary Judgment contends that the judgment entered in the State Court Action should be afforded collateral estoppel effect in this Adversary Proceeding. On June 27, 2013, the Debtor filed his Motion for Summary Judgment alleging that the State Court judgment did not contain a necessary element for finding that the Links' claim is non-dischargeable pursuant to § 523(a)(6). Briefs and Statements of Material Fact have been filed by both parties and the matters are now ripe for decision.

III. DISCUSSIONA. Standard to Decide a Motion for Summary Judgment Under F.R.B.P. 7056

Federal Rule of Bankruptcy Procedure 7056 incorporates and makes applicable to bankruptcy proceedings Rule 56 of the Federal Rules of Civil Procedure. Pursuant to Rule 56, the court shall grant summary judgment to the moving party “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.Civ.P. 56(a). Therefore, the movant has the burden to prove the absence of genuine issues of material fact. In re Madera, 363 B.R. 718, 724 (Bankr.E.D.Pa.2007); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In evaluating the evidence, the court must view the facts in the light most favorable to the non-moving party and draw all inferences in favor of that party. In re Shull, 493 B.R. 453, 455 (Bankr.M.D.Pa.2013) (internal citations omitted).

Throughout my analysis, I must view the facts in the light most favorable to the subject non-moving party. The Debtor, for purposes of the Links' Motion; and the Links for purposes of the Debtor's Motion.B. Collateral Estoppel

The Links state in their Motion for Summary Judgment that they are entitled to judgment as a matter of law based on collateral estoppel grounds. Collateral estoppel prohibits the relitigation of issues that have been adjudicated in a prior lawsuit. Witkowski v. Welch, 173 F.3d 192, 198–199 (3d Cir.1999) (internal citations omitted). The doctrine of collateral estoppel is applicable in bankruptcy non-dischargeability proceedings. In re Bertolotti, 470 B.R. 356, 359–360 (Bankr.W.D.Pa.2012). The Links maintain that the issues already decided in the State Court should not be relitigated here. Pls.' Br. in Supp. of Mot. for Summ. J. 5.

Whether to apply Federal or State collateral estoppel principles to a particular issue is well-trodden ground and I agree with the parties that Pennsylvania collateral estoppel rules should apply. See Delaware River Port Authority v. Fraternal Order of Police, 290 F.3d 567, 573 (3d Cir.2002) ( “A federal court looks to the law of the adjudicating state to determine its [the State Court judgment's] preclusive effect.”); Smith v. Cowden (In re Cowden), 337 B.R. 512, 529 (Bankr.W.D.Pa.2006) (“The Court ... must apply corresponding state principles with respect to decisions rendered by a state court.”).

Although similar to Federal principles, the Third Circuit has described the Pennsylvania doctrine of collateral estoppel to apply when:

(1) An issue decided in a prior action is identical to one presented in a later action; (2) The prior action resulted in a final judgment on the merits; (3) The party against whom collateral estoppel is asserted was a party to the prior action, ... (4) The party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior action.

Jones v. United Parcel Service, 214 F.3d 402, 405–06 (3d Cir.2000) citing Rue v. K–Mart Corp., 552 Pa. 13, 713 A.2d 82, 84 (Pa.1998).

Here, the prior action was actually litigated and resulted in a final judgment on the merits after a bench trial. Both the Debtor and the Links were parties to the prior action, and each had a full and fair opportunity to litigate the issue in the prior action. No appeal was taken from the State Court judgment and it is undisputed that the judgment became final. Def.'s Br. (1) in Opp'n to Pls.' Mot. for Summ. J. and (2) in Supp. of Def.'s Mot. for Summ. J. 2. A central question remains, was the issue of “willful and malicious injury” decided in State Court?

C. Non–Dischargeability Under § 523(a)(6)

The standard of proof for the dischargeability exceptions in § 523(a), including that for willful and malicious injury claims, is the preponderance-of-the-evidence standard. See Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); Insurance Company of North America v. Cohn (In re Cohn), 54 F.3d 1108, 1114 (3d Cir.1995); In re Branam, 226 B.R. 45, 52 (9th Cir. BAP 1998).

Section 523(a)(6) excepts the discharge of a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity”.

Section 523(a)(6) requires that the injury by the debtor be both willful and malicious. The United States Supreme Court in Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998) narrowly defined the phrase “willful and malicious” as limited to intentional torts. The Court held that the word “willful” modifies the word “injury,” so that non-dischargeability requires that the debtor intended “the consequences of the act” and not simply “the act itself”. Id. at 61–62, 118 S.Ct. 974. The Third Circuit has held that actions are willful and malicious if “... they either have the purpose of producing injury or have a substantial certainty of producing injury”. In re Glenn, 470 B.R. 731, 736 (Bankr.M.D.Pa.2012); In re Conte, 33 F.3d 303, 308–309 (3d Cir.1994); In re Elwood, 319 B.R. 371, 373–374 (E.D.Pa.2005).

D. Issues Decided in the State Court Action

i. Assault and Battery

The State Court's decision includes a finding that there is, “[n]o doubt in the Court's mind Mr. Mauz assaulted and battered Mr. Link.” Compl. to Determine Dischargeability of Debt Ex. B, at 11. The details of the assault are sparse, but it is apparent from the State Court decision that the Debtor caused some injury upon William Link, and that there was visible scratching and bruising. Compl. to Determine Dischargeability of Debt Ex. B, at 14.

Under Pennsylvania law, an assault is an intentional attempt to use injurious force and a battery is a completion of...