Matter of Gill
| Citation | 181 BR 666 |
| Decision Date | 14 April 1995 |
| Docket Number | Bankruptcy No. N94-11879-WHD. Adv. No. 94-1082N. |
| Parties | In the Matter of Delores L. GILL, Debtor. Jere F. MOORE, Plaintiff, v. Delores L. GILL, Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia |
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Gary C. Harris, Clayton, GA, Robert P. Wilson, Decatur, GA, for plaintiff.
Jacquelyn L. Kneidel, Newnan, GA, for defendant.
This matter comes before the Court on the Motion for Summary Judgment filed on December 27, 1994, by the plaintiff Jere F. Moore (hereinafter "Moore"). Moore's Motion arises in an adversary proceeding he commenced against the debtor Delores L. Gill (hereinafter "Gill") as a Complaint to Determine Dischargeability of Fraud Judgment. As such, the matters involved herein constitute a core proceeding over which this Court has jurisdiction. See 28 U.S.C. § 157(b)(2)(I). Based upon the reasons set forth in the following discussion, the Court will grant this Motion.1
A contract between Moore and Gill's former husband, Grady R. Vaughan (hereinafter "Vaughan"), is the source of the dispute that is currently before the Court. Vaughan and Gill were married in 1988. At the time of their marriage, Vaughan owned and operated a wholesale tire business in Forsyth, Georgia, under the corporate name of B & R Tires, Inc. Moore expressed an interest in purchasing Vaughan's business, and the two parties entered into a $250,000.00 sales agreement in December of 1989. The contract obligated Moore to pay Vaughan $125,000.00 in cash at closing, with the remainder of the sales price payable by a promissory note repayable in 180 monthly installments of $1343.26. Included in the contract was a covenant by which Vaughan agreed not to compete, directly or indirectly, with Moore by operating a wholesale tire business in competition with B & R Tires.2 Of importance to Gill, the covenant made specific reference to the retail tire business she owned and operated in Haralson, Georgia, under the name G & L Tire Company. The agreement stated that as long as the character of that business remained retail in nature, G & L would not violate the covenant. After the sale of B & R Tires was completed, Gill allowed Vaughan to participate in running G & L Tire.3
In 1990, the business deal between Moore and Vaughan soured as Moore failed to make the monthly payments on the promissory note as required by the contract. As a result, Vaughan commenced a civil action against Moore in the Superior Court of Lamar County, Georgia. Moore responded by filing a counterclaim against Vaughan, which he amended in 1992 to include Gill and another party, Terry W. Wade (hereinafter "Wade"), as counterclaim defendants. This counterclaim contained multiple counts alleging breach of contract, fraud, and constructive trust.
Of significance to this Court is the second count of the counterclaim which alleged that Moore was fraudulently induced to purchase B & R Tires from Vaughan. Through the counterclaim and fraud count, Moore alleged that Vaughan, Gill, and Wade operated as a partnership, and that they entered into a conspiracy to defraud Moore. Specifically, Moore claimed that the three "partners" entered into the noncompete agreement with full knowledge and intention to operate a business in direct competition with Moore. The alleged operation of a wholesale tire business in violation of the contract occurred at Gill's G & L Tire Company. The counterclaim further alleged that the "partnership" planted Wade as an employee in Moore's business for the purpose of undermining and disrupting the business and insuring its failure. Throughout all relevant times, Moore claimed that Gill, Vaughan, and Wade intended to bring about the failure of Moore's business so Vaughan could repurchase the assets at a foreclosure sale.
Four years after Vaughan commenced the state court action, the dispute finally was tried before a jury. The trial lasted two weeks and involved more than 1,000 pages of documentary evidence obtained from over 50 nonparties. Judgment was rendered on June 22, 1994, in favor of Moore against Gill, Vaughan, and Wade in the amount of $550,935.00. The verdict form utilized by the jury in reaching its decision included special interrogatories, all of which were answered in favor of Moore. In particular, the jury found that both B & R Tires and G & L Tire Company were actually partnerships composed of Gill, Vaughan, and Wade, and that G & L Tire Company was merely a continuation of B & R Tires. Moreover, the jury found in favor of Moore in the amount of $238,500.00 and against Gill, Vaughan, and Wade on Moore's fraud claim. After judgment was entered on the jury's verdict, Gill and the other counterclaim defendants made a request for a new trial, but the state court denied their motion on December 9, 1994. Gill since has brought her case before the Georgia Court of Appeals where the matter is currently pending.
After receiving the aforementioned adverse judgment in state court, Gill filed a voluntary petition for relief in this Court under Chapter 11 of the Bankruptcy Code on August 31, 1994. Moore is listed on her schedules as a judgment creditor. In response to Gill's bankruptcy, Moore commenced this adversary proceeding on November 16, 1994. By his Motion for Summary Judgment, Moore relies upon the doctrines of collateral estoppel and res judicata to argue that $238,500.00 of his overall judgment claim against Gill is a nondischargeable debt for fraud according to 11 U.S.C. § 523(a)(2)(A). Gill strenuously opposes the Motion and contends that the Court is not bound by the state court judgment. Specifically, she claims that the issues under consideration in the state court were not identical to the current dispute and that the facts do not support the findings of the jury. For these reasons, Gill wishes to relitigate the fraud issues in this Court, and requests that Moore's Motion be denied.
In accordance with Federal Rule of Civil Procedure 56 (), this Court will grant summary judgment only if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is material if it might affect the outcome of a proceeding under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute of fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The moving party has the burden of establishing the right of summary judgment, Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991); Clark v. Union Mut. Life Ins. Co., 692 F.2d 1370, 1372 (11th Cir.1982), and the Court will read the opposing party's pleadings liberally. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510-11.
In determining whether there is a genuine issue of material fact, the Court must view the evidence in the light most favorable to the party opposing the motion. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Rosen v. Biscayne Yacht & Country Club, Inc., 766 F.2d 482, 484 (11th Cir.1985). The moving party must identify those evidentiary materials listed in Rule 56(c) that establish the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); see also Fed.R.Civ.P. 56(e). Once the motion is supported by a prima facie showing that the moving party is entitled to judgment as a matter of law, the party opposing the motion must go beyond the pleadings and demonstrate that there is a material issue of fact which precludes summary judgment. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553; Martin v. Commercial Union Ins. Co., 935 F.2d 235, 238 (11th Cir.1991).
The Court first will consider Moore's argument that the doctrines of collateral estoppel and res judicata preclude Gill's discharge of the fraud portion of the state court judgment he received against her. These related doctrines prevent the relitigation of an issue already litigated and determined by a valid and final judgment in another court. United States v. Irvin, 787 F.2d 1506, 1515 (11th Cir.1986); Sorrells Constr. Co. v. Chandler Armentrout & Roebuck, P.C., 214 Ga.App. 193, 193-94, 447 S.E.2d 101 (1994). Their purposes are to protect "litigants from the burden of relitigating an identical issue with the same party or his privy and to promote judicial economy by preventing needless litigation." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552 (1979).
In raising this issue before the Court, Moore makes several references to both collateral estoppel and res judicata. Collateral estoppel, also known as issue preclusion, differs in application from res judicata in that the latter operates as a defense when there exists an identity of claim or cause of action in successive court proceedings. A party invokes collateral estoppel when the successive causes of action are different. One commentator has explained as follows:
The essential element in the application of collateral estoppel is not that the action is barred by res judicata, but that some matter that is put at issue has been finally decided by the judgment in a previous action. In most cases the reason that the action is not barred is the fact that it is upon a different claim or cause of action, but in cases in which parties are permitted to split a single cause of action, the principles of collateral estoppel govern the second action to the extent of overlapping issues.
1B MOORE'S FEDERAL PRACTICE 2D, ¶ 0.4412, at 517 n. 2 (1995); see also Parklane Hosiery, 439 U.S. at 326 n. 5, 99 S.Ct. at 649 n. 5.
A state court fraud action...
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