Maldonado v. Ramirez
| Decision Date | 06 March 1985 |
| Docket Number | No. 84-3147,84-3147 |
| Citation | 757 F.2d 48 |
| Parties | Maria C. MALDONADO, Appellant v. Orlando RAMIREZ. |
| Court | U.S. Court of Appeals — Third Circuit |
Allan A. Christian (Argued), Frederiksted, St. Croix, V.I., for appellant.
Mark L. Milligan (Argued), Christiansted, St. Croix, V.I., for appellee.
Before SEITZ, GIBBONS and SLOVITER, Circuit Judges.
Defendant Orlando Ramirez, doing business as Omicron Construction Company, contracted to construct a three bedroom house for plaintiff Maria Maldonado. Pursuant to the applicable Farmer's Home Administration (FHA) construction contract, Ramirez executed a one-year builder's warranty promising to take necessary corrective action within 30 days of written notice of any defective condition. Soon after the completion of the residence on August 22, 1977, Maldonado experienced problems with the roof. There is undisputed evidence that the house leaked in all of the rooms except the bathroom. Maldonado notified defendant orally of the complaints on several occasions.
On June 21, 1978 attorney Allan A. Christian, on behalf of Maldonado, sent Ramirez written notification of the deficiencies caused by improper construction of the roof or inferior products used, and demanded action under the warranty provisions of the contract. On August 4, 1978 Ramirez and attorney Christian, on behalf of Maldonado, signed a written agreement pursuant to which Ramirez undertook to repair the roof "in a workmanlike manner." Maldonado's problems with the roof continued, and she notified Ramirez orally that the roof continued to leak. Ramirez returned to the premises at least twice to make repairs. In 1981 Maldonado applied for and was granted an additional loan from FHA in the amount of $10,280 to be used for replacement of the roof.
On March 24, 1982 Maldonado, through Allan A. Christian acting as her counsel, filed this action in the Territorial Court of the Virgin Islands seeking to recover from Ramirez the cost of the roof replacement. In his answer, Ramirez interposed several defenses including his discharge in bankruptcy, the statute of limitations, and failure to mitigate damages. The parties filed cross motions for summary judgment. Defendant's motion for summary judgment was based upon the defense of discharge in bankruptcy. The territorial court denied the motions for summary judgment and the matter proceeded to trial. At the conclusion of plaintiff's case, defendant filed a Rule 41 motion based on his statute of limitations defense. The court denied the motion and defendant rested without putting on any evidence. Thereafter, the court found that Ramirez breached the agreement of August 4, 1978 to undertake to repair the roof in a workmanlike manner and that Maldonado was unable to mitigate the damages without undue burden. The court awarded Maldonado damages of $10,280 plus costs, interest and attorney's fees.
On appeal, the district court reversed the judgment and directed entry of judgment in favor of Ramirez on the ground that he had been discharged from this debt by virtue of his discharge in bankruptcy. 37 B.R. 219 (V.I. 1984). The court held that the territorial court erred as a matter of law when it denied defendant's motion for summary judgment. We have plenary review of the record to determine "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).
It is undisputed that on April 19, 1979 Ramirez filed a voluntary petition for bankruptcy, and that his debts were discharged when the bankruptcy proceeding concluded on January 16, 1981. A discharge in bankruptcy operates to discharge all debts that were the personal liability of the debtor and that have been scheduled by the debtor, 11 U.S.C. Sec. 524 (1982), as long as the debtor has listed or scheduled the debt, 11 U.S.C. Sec. 523(a)(3) (1982). Ramirez, notwithstanding Maldonado's complaints to him about the numerous leaks on the property, failed to list Maldonado as a creditor and failed to send her notice of the bankruptcy. Ordinarily therefore his liability to Maldonado would not be discharged by the bankruptcy.
However, the Bankruptcy Code further provides that even if a debt has not been scheduled as required by 11 U.S.C. Sec. 521(1) (1982), it will be discharged where the creditor has "notice or actual knowledge of the case in time for [filing a proof of claim]." 11 U.S.C. Sec. 523(a)(3)(A) (1982). The district court recognized that there is no claim here that Maldonado had actual knowledge of the proceeding. Thus, it considered whether she was chargeable with notice.
To support his motion for summary judgment, defendant filed the affidavit of his attorney, Mark L. Milligan. That affidavit states, in relevant part:
4. On May 1, 1979, Counsel for Plaintiff, Allan A. Christian, represented Christian Building Supplies, and had initiated garnishment proceedings against Defendant's wages. (See Exhibit "B".) At that same time, Counsel for Plaintiff, Allan A. Christian continuously represented Plaintiff (See letter of June 21, 1978, as Exhibit "A" attached hereto).
5. In reply thereto the undersigned intervened and served Virgin Islands Energy Office and Attorney Christian with Notice of the Bankruptcy Action. (See Exhibit "C").
6. On July 6, 1979, Attorney Christian acknowledged receipt of the Bankruptcy Notice. (See Exhibit "D" attached hereto).
7. Consequently, in July of 1979, Allan A. Christian, Counsel for Christian Building Supplies (a listed creditor) who was also Counsel to Plaintiff at that time, had full knowledge of the pending bankruptcy matter.
8. The bankruptcy records clearly indicate that, despite this knowledge, Allan A. Christian, failed to file a bankruptcy claim on behalf of the Plaintiff.
Based solely upon this affidavit, which represents the only record evidence on this issue, the district court held that judgment should be given for the defendant Ramirez. The court stated that because Maldonado's counsel knew of the action in bankruptcy "while he continually represented his client in this dispute", "such knowledge on counsel's part is sufficient to bind the client." App. at 7a. The court concluded that Christian's knowledge of the bankruptcy proceeding could be imputed to Maldonado, and therefore her claim was discharged notwithstanding Ramirez' failure to correctly schedule the debt.
We conclude that the district court erred. Even if the district court had correctly stated the law, the motion for summary judgment should not have been granted.
We note at the outset that Christian did not file a contrary affidavit stating that he did not represent Maldonado at the relevant period in 1979, nor did Maldonado supplement her earlier affidavit to so state. However, Rule 56 only requires a response to those motions for summary judgment made and supported as required. If "evidentiary matter in support of the motion does not establish the absence of a genuine issue, summary judgment must be denied even if no opposing evidentiary matter is presented." Fed.R.Civ.P. 56(e) advisory committee note (1963). Although the...
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