Matter of Dohm, Bankruptcy No. 81 B 00252

• Decision Date: 13 August 1981
• Docket Number: Adv. No. 81 A 0108.,Bankruptcy No. 81 B 00252
• Citation: 19 BR 132
• Parties: In the Matter of John P. DOHM and Ingrid Dohm, Debtors. USLIFE TITLE INSURANCE COMPANY OF NEW YORK, Plaintiff, v. J. Patrick DOHM, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

19 B.R. 132 (1981)

In the Matter of John P. DOHM and Ingrid Dohm, Debtors USLIFE TITLE INSURANCE COMPANY OF NEW YORK, Plaintiff, v. J. Patrick DOHM, Defendant.

Bankruptcy No. 81 B 00252, Adv. No. 81 A 0108.

United States Bankruptcy Court, N.D. Illinois, W.D.

August 13, 1981.

Michael O'Brien, Rockford, Ill., for USLife Title Ins. Co. of N.Y.

David Shair, Rockford, Ill., for Dohm.

MEMORANDUM OPINION

RICHARD N. DeGUNTHER, Bankruptcy Judge.

This matter came before the Court for oral argument on the Motion of the Plaintiff, USLife Title Insurance Company of New York, for Summary Judgment as to Count I of its Dischargeability Complaint against the Debtor, J. Patrick Dohm. Attorney Michael O'Brien represents USLife and Attorney David Shair represents Dohm.

BACKGROUND

On April 11, 1980, USLife filed a civil action against Dohm, seeking to recover $226,000. (Exhibit # 1)

On April 17, 1980, Dohm filed a Petition for Relief under Chapter 13 of the Bankruptcy Code, thereby staying the civil action of USLife. On September 11, 1980, Dohm's Chapter 13 case was dismissed.

Thereafter, the civil action was resumed with certain motions, hearings and pleadings. Dohm was represented at this time by Attorney Robert Roman, Jr., as he had been during the Chapter 13 proceedings. On November 21, 1980, a judgment for "Wilful and Malicious Embezzlement" in the amount of $203,025.27 was entered in favor of USLife and against Dohm.

QUESTION

The question, essentially, is whether the Court may find Dohm's judgment non-dischargeable in bankruptcy based solely on the record of the state court proceedings.

ANALYSIS

The issue raised here takes this Court back over familiar ground. Previously, this Court had allowed a Motion for Summary Judgment in the Rees case cited by counsel. The District Court affirmed. Thereafter, Brown v. Felsen, 442 U.S. 127, 99 S.Ct. 2205, 60 L.Ed.2d 767 was decided by the U.S. Supreme Court and a rehearing of the Rees' appeal was granted by the District Court, which then reversed both itself and this Court and granted Rees a new trial on the dischargeability issue.

Brown v. Felsen holds that a bankruptcy court may look behind a state court judgment in determining dischargeability. In the first sentence of the Opinion, Mr. Justice Blackmun states "The issue here is whether a bankruptcy court may consider evidence extrinsic to the judgment and record of a prior state suit when determining whether a debt previously reduced to judgment is dischargeable . . .". No one, surely, quarrels with the unanimous decision of the U.S. Supreme Court that a bankruptcy court may do so.

But Brown v. Felsen does not hold that a bankruptcy court must look behind a state court judgment. Where a state court judgment is obtained fairly by the plaintiff; and where due process is accorded at all times to the defendant; and where the complaint and judgment order are unambiguous that the judgment debt is of a non-dischargeable nature, the court may find on the basis of the evidence of the state...