Mexico Constr. v. Thompson (In re Melvin)

• Citation: 511 B.R. 20
• Decision Date: 22 May 2014
• Docket Number: Bankruptcy No. 11–32924 (JAM).,Adversary No. 12–0365.
• Court: United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — District of Connecticut
• Parties: In re Melvin a/k/a Mel THOMPSON, Debtor. Mexico Construction and Paving and Martin Mendoza, Plaintiffs v. Melvin Thompson, Defendant.

511 B.R. 20

In re Melvin a/k/a Mel THOMPSON, Debtor.Mexico Construction and Paving and Martin Mendoza, Plaintiffs

v.Melvin Thompson, Defendant.

Bankruptcy No. 11–32924 (JAM).

Adversary No. 12–0365.

United States Bankruptcy Court, D. Connecticut.

Signed May 22, 2014.

Elio C. Morgan, Esq., The Law Office of Elio C. Morgan, Shelton, CT, for the Plaintiffs.

Gregory F. Arcaro, Esq., Grafstein & Arcaro LLC, Farmington, CT, Attorney for the Defendant.

MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT AND CROSS–MOTION FOR SUMMARY JUDGMENT

JULIE A. MANNING, Bankruptcy Judge.

I. Introduction

In this adversary proceeding, the plaintiffs, Mexico Construction and Paving and Martin Mendoza (hereinafter, collectively the “plaintiffs”), seek to have declared nondischargeable a debt owed to them by the debtor Melvin a/k/a “Mel” Thompson (hereinafter, the “defendant”) pursuant to various subsections of 11 U.S.C. § 523(a). The plaintiffs have moved for summary judgment on all counts of their adversary complaint in reliance upon the allegedly preclusive effect of a prior jury verdict rendered in Connecticut Superior Court on April 13, 2010. The defendant has filed a cross-motion for summary judgment with respect to specific counts of the adversary complaint. For the reasons discussed below, the plaintiffs' motion is GRANTED IN PART AND DENIED IN PART and the defendant's cross-motion is DENIED.

II. Jurisdiction

The United States District Court for the District of Connecticut has jurisdiction over the instant proceedings pursuant to 28 U.S.C. § 1334(b), and the Bankruptcy Court derives its authority to hear and determine this matter on reference from the District Court pursuant to 28 U.S.C. §§ 157(a) and (b)(1). This is a “core proceeding” pursuant to 28 U.S.C. § 157(b)(2)(I).

III. Procedural History

On November 21, 2011, the defendant filed a voluntary petition under the provisions of Chapter 7 of the Bankruptcy Code.

On August 10, 2012, the plaintiffs initiated this adversary proceeding by filing a three-count complaint (the “Adversary Complaint”).¹ The Adversary Complaint seeks a declaration that the plaintiffs' debt is nondischargeable, in whole or in part, under the provisions of 11 U.S.C. §§ 523(a)(2), (a)(4) and/or (a)(6).

On December 12, 2012, the defendant filed an answer denying the allegations in the Adversary Complaint and asserting affirmative defenses.

On June 26, 2013, the plaintiffs filed a response to the defendant's affirmative defenses, denying all the allegations contained therein and arguing that several of the affirmative defenses do not apply to the claims in the Adversary Complaint.

On July 31, 2013, the plaintiffs filed a motion for summary judgment on all three counts set forth in the Adversary Complaint.

On September 30, 2013, the defendant filed an objection to the plaintiffs' summary judgment motion and also simultaneously filed a cross-motion for summary judgment on certain counts in the Adversary Complaint.

On January 14, 2014, oral argument on both the plaintiffs' motion for summary judgment and the defendant's cross-motion for summary judgment was held before the court. In light of certain issues raised at the hearing, the parties were invited to submit supplemental briefs to address the potential collateral estoppel effects of the verdict entered in the Connecticut Superior Court. On January 22, 2014, the defendant filed a supplemental brief addressing these issues and on February 7, 2014, the plaintiffs filed their supplemental brief.

IV. Undisputed Facts

A review of the plaintiffs' motion for summary judgment and documents appended thereto, the defendant's cross-motion for summary judgment and documents appended thereto, the parties' Rule 56(a) Statements, the supplemental briefs, and the examination of the record in the bankruptcy case and adversary proceeding, establishes the following undisputed facts for the purposes of the pending motions for summary judgment:

In March of 2006, the plaintiffs and the defendant entered into an agreement (hereinafter the “Settlement Agreement”) to settle a previously-initiated Connecticut Superior Court case captioned Mel Thompson v. Mendoza, et al., AAN–CV–05–4005125–S.

On April 18, 2007, a second action was filed in the Connecticut Superior Court, this time by the plaintiffs against the defendant, captioned Mexico Construction, et al. v. Mel Thompson, which was assigned docket # UWY–CV–07–5011712–S (the “Superior Court Action”). The complaint in the Superior Court Action (the “Superior Court Complaint”) alleged eleven separate counts concerning, among other things, the enforceability of the Settlement Agreement. The Superior Court Action was tried to a jury in April of 2010.

The jury returned a verdict (the “Superior Court Verdict”) in favor of the plaintiffs on the following counts of the Superior Court Complaint: Count One—Breach of Contract; Count Two—Common Law Vexatious Litigation; Count Three—Statutory Vexatious Litigation; and Count Four—Fraudulent Misrepresentation.

In reaching the Superior Court Verdict, the jury completed jury interrogatories (the “Jury Interrogatories”), a judicial form on which the jury records the basis for its conclusions and verdict in a given case. The Jury Interrogatories and the Superior Court Verdict were both appended to the plaintiffs' motion for summary judgment and their authenticity, accuracy and admissibility is not disputed by the parties.

The jury in the Superior Court Action made the following damages awards to the plaintiffs: $23,160.00 on Count One (breach of contract); $15,000.00 on Count Two (common law vexatious litigation); $45,000.00 on Count Three (statutory vexatious litigation); and $1.00 on Count Four (fraudulent misrepresentation). The jury's award of $15,000.00 on Count Two was vacated by the Connecticut Superior Court in order to avoid a double award of damages.

On May 21, 2010, an order for payment of costs in the amount of $1,698.20 was entered in Superior Court Action. On June 2, 2010, judgment was entered on Superior Court Verdict in the total amount of $68,661.00 (the “Superior Court Judgment”).

On October 20, 2010, the Connecticut Superior Court entered an order directing the defendant to make weekly payments on the Superior Court Judgment. Following the entry of the Superior Court Judgment and the order to make weekly payments, the defendant refused to comply with a further order of the Connecticut Superior Court that he be examined as a judgment debtor.

As noted above, the defendant filed a Chapter 7 case with this court on November 11, 2011. The plaintiffs commenced this Adversary Proceeding on August 10, 2012.

V. Discussion

A. Summary Judgment Standard

“Federal Rule of Civil Procedure 56(a), made applicable to these proceedings by the Fed. R. Bankr.P. 7056, directs that ‘[t]he court shall grant summary judgment 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.’ ” Parris v. Delaney (In re Delaney), 504 B.R. 738, 746 (Bankr.D.Conn.2014) (internal quotations and alteration in original), quoting Fed.R.Civ.P. 56(a). When considering a motion for summary judgment “the judge's function ... is not to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id., quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Furthermore, the court “cannot try issues of fact; it can only determine whether there are issues to be tried.” Flaherty v. Lang, 199 F.3d 607, 615 (2d Cir.1999), quoting Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 36 (2d Cir.1994).

At the summary judgment stage, the moving party bears the burden of showing that there are no material facts in dispute and the court is to draw all reasonable inferences, and resolve all ambiguities, in favor of the non-moving party. United Transp. Union v. Nat'l R.R. Passenger Corp., 588 F.3d 805, 809 (2d Cir.2009). Once the moving party has met its burden, in order to defeat the motion, the “party opposing summary judgment ... must set forth ‘specific facts' demonstrating that there is ‘a genuine issue for trial.’ ” In re Affinity Health Care, Mgmt., Inc., 499 B.R. 246, 251 (Bankr.D.Conn.2013), quoting Wright v. Goord, 554 F.3d 255, 266 (2d Cir.2009). “[A] non-moving party must point to more than a mere ‘scintilla’ of evidence in order to defeat a motion for summary judgment.” Id., quoting Havey v. Homebound Mortg., Inc., 547 F.3d 158, 163 (2d Cir.2008).

B. General Collateral Estoppel Standards

In their respective motions for summary judgment, both parties argue that the Superior Court Verdict should be given preclusive effect in this adversary proceeding. “It is well settled that preclusion principles apply in bankruptcy proceedings.” Evans v. Ottimo, 469 F.3d 278, 281 (2d Cir.2006); In re Delaney, 504 B.R. 738 (Bankr.D.Conn.2014), citing, Grogan v. Garner, 498 U.S. 279, 284, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). In cases “[w]here the debt in question is a judgment entered after a claim of fraud has been adjudicated,either party to a subsequent adversary proceeding on nondischargeability can invoke collateral estoppel to establish that the debt is or is not dischargeable under the relevant nondischargeability provision.” Giaimo v. DeTrano (In re DeTrano), 326 F.3d 319, 322 (2d Cir.2003); accord, Control Module, Inc. v. Dybowski (In re John C. Dybowski), No. 07–21152, 2012 WL 1945503 at *8 (Bankr.D.Conn. May 30, 2012). “When determining the preclusive effect of a state court judgment, a court must apply the preclusive law of the rendering state.” Faraday v. Blanchette, 596 F.Supp.2d 508 (D.Conn.2009), citing Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir.1996). As the Connecticut Supreme Court stated in Cumberland Farms, Inc. v. Town of Groton, 262 Conn. 45, 58, 808 A.2d 1107 (2002), under Connecticut law “[i]ssue preclusion arises when an...