Miller v. Johnson (In re Miller)

• Decision Date: 08 March 2021
• Docket Number: Adv. Pro. No. 20-2013,Case No. 19-56778
• Parties: IN RE: Emery J. MILLER, Debtor. Emery J. Miller, Plaintiff, v. Gordon E. Johnson, et al., Defendants.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Southern District of Ohio

626 B.R. 503

IN RE: Emery J. MILLER, Debtor.Emery J. Miller, Plaintiff,

v.Gordon E. Johnson, et al., Defendants.

Case No. 19-56778

Adv. Pro. No. 20-2013

United States Bankruptcy Court, S.D. Ohio, Eastern Division.

Signed March 8, 2021

Gerald L Roderick, Columbus, OH, for Debtor.

MEMORANDUM OPINION AND ORDER ON MOTION TO DISMISS (Doc. # 15)

C. Kathryn Preston, United States Bankruptcy Judge

This cause came on for consideration of the Defendants Gordon E. Johnson's and Clydena Karen Johnson's Motion to Dismiss Amended Complaint of Debtor and Plaintiff (Doc. #15) ("Motion"), and the Plaintiff's Memorandum Contra to Defendants' Motion to Dismiss (Doc. #16) ("Response") filed by Plaintiff Emery J. Miller ("Debtor") in the above captioned adversary proceeding.

Gordon E. Johnson and Clydena Karen Johnson ("Defendants") seek dismissal of the Amended Complaint in this adversary proceeding (Doc. # 10) on the basis that Debtor's causes of action are barred by res judicata, having already been litigated through a final appealable order in the Court of Common Pleas of Madison County, Ohio.

By Notice entered on October 15, 2020 (Doc. # 17), the Court alerted the parties that pursuant to Federal Rules of Bankruptcy Procedure (Fed. R. Bankr. P.) 7012 and 7056, which make applicable Federal Rules of Civil Procedure (Fed. R. Civ. P.) 12(d) and 56(f), the Court intended to treat the Motion as a motion for summary judgment. The parties were directed to file all such additional materials pertinent to the Motion as they wished the Court to consider (subject to the requirements of Fed. R. Civ. P. 56 ). Defendants and Debtor filed supplements to their previous filings on November 5, 2020 (Doc. #19 and Doc. # 20, respectively).

The Court, having considered the record and the arguments of the parties, makes the following findings and conclusions.

I. Jurisdiction

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and General Order 05-02 entered by the United States District Court for the Southern District of Ohio, referring all bankruptcy matters to this Court. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I). Venue is properly before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

II. Background

Upon the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, the undisputed facts may be summarized as follows: In 2007, Debtor and one William Todd Drown executed and delivered to Defendants a Promissory Note in the amount of $95,000.00. At about the same time, Debtor executed and delivered to Defendants a Statutory Mortgage (the "Mortgage"), granting Defendants a mortgage on certain real property of Debtor located on State Route 29 in Madison County, Ohio.

In December 2013, Defendants filed a complaint in the Court of Common Pleas of Madison County, Ohio (the "State Court") seeking judgment for the outstanding balance of the Promissory Note and for foreclosure of the Mortgage. Debtor defended the action, alleging that he was coerced into executing the Promissory Note and was under duress during the transaction, rendering the Promissory Note and the Mortgage invalid. See Decision & Entry, Johnson v. Miller, No. CVE 20130262 (Ct. Com. Pl. Madison Co., OH Nov. 13, 2017) (Doc. #11, Exhibit C).¹ After a trial on the merits, the State Court issued its Decision & Entry on November 13, 2017, finding that Debtor had "failed to establish duress or coercion," and entering judgment in favor of Defendants on the Promissory Note and the Mortgage. See id. at 7-8. On September 17, 2018, the State Court Judgment was affirmed by the Court of Appeals, Twelfth Appellate District of Ohio, Madison County, Ohio. Opinion, Johnson v. Miller, No. CA2017-12-021, 2018 WL 4440562 (Ct. App. Madison Co., OH Sept. 17, 2018) (Doc. #11, Exhibit D).

Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code in October 2019. On February 11, 2020, Debtor filed a complaint in this Court, followed by an amended complaint (the "Amended Complaint") (Doc. # 10), objecting to Defendants' claims on the same Mortgage and Promissory Note, and seeking a determination of validity of Defendants' lien.

Additionally, the Amended Complaint requests that the Court avoid Defendants' lien pursuant to 11 U.S.C. § 544 for defects in the notary's acknowledgment of Debtor's signature on the Mortgage. Defendants filed an answer to the Amended Complaint asserting that the "promissory note and mortgage executed by [Debtor] in favor of Defendants have been authoritatively determined to be valid and subsisting" in State Court, and that Debtor's causes of action before this Court are barred.

On August 13, 2020, Defendants filed the Motion. Defendants assert that Debtor's claims, as set forth in Amended Complaint, are barred under the principles of res judicata, issue preclusion, and claim preclusion, having already been litigated through a final appealable order in the State Court. Additionally, Defendants argue that, under the facts of this case, § 544 does not avail Debtor under current law. Debtor filed a Response to the Motion. Debtor theorizes that issue preclusion and claim preclusion should not be applied to dismiss his claims, asserting equitable powers of this Court, and that current Ohio law does not apply to Debtor's avoidance action.

III. Discussion

A. Standard of Review for Motions for Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Fed. R. Bankr. P. 7056, provides that a 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." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial burden of "informing the ... court of the basis for its motion, and identifying those portions of the [record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

If the movant satisfies this burden, the nonmoving party must then assert that a fact is genuinely disputed and must support the assertion by citing to particular parts of the record. See Fed. R. Civ. P. 56(c)(1). The mere allegation of a factual dispute is not sufficient to defeat a motion for summary judgment; to prevail, the non-moving party must show that there exists some genuine issue of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When deciding a motion for summary judgment, all justifiable inferences must be viewed in a light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Anderson , 477 U.S. at 255, 106 S.Ct. 2505.

The Sixth Circuit Court of Appeals has articulated the following standard to apply when evaluating a motion for summary judgment:

[T]he moving [party] may discharge its burden by "pointing out to the ... court... that there is an absence of evidence to support the nonmoving party's case." The nonmoving party cannot rest on its pleadings, but must identify specific facts supported by affidavits, or by depositions, answers to interrogatories, and admissions on file that show there is a genuine issue for trial. Although we must draw all inferences in favor of the nonmoving party, it must present significant and probative evidence in support of its [position]. "The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]."

Hall v. Tollett, 128 F.3d 418, 422 (6th Cir. 1997) (citations omitted). A material fact is one whose resolution will affect the determination of the underlying action. See Tenn. Dep't of Mental Health & Mental Retardation v. Paul B., 88 F.3d 1466, 1472 (6th Cir. 1996). An issue is genuine if a rational trier of fact could find in favor of either party on the issue. See Schaffer v. A.O. Smith Harvestore Prods., Inc., 74 F.3d 722, 727 (6th Cir. 1996). "The substantive law determines which facts are ‘material’ for summary judgment purposes." Hanover Ins. Co. v. Am. Eng'g Co., 33 F.3d 727, 730 (6th Cir.1994). In determining whether each party has met its burden, the court must keep in mind that "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses ...." Celotex , 477 U.S. at 323 24, 106 S.Ct. 2548.

B. The Rooker-Feldman Doctrine

Defendants did not raise the Rooker-Feldman doctrine in the Motion. However, every federal court has an obligation to confirm that it has subject matter jurisdiction over the case before it, irrespective of whether raised by the parties. Singleton v. Fifth Third Bank (In re Singleton) , 230 B.R. 533, 536 (6th Cir. BAP 1999) (citations omitted). The Rooker-Feldman doctrine² is jurisdictional in nature. The doctrine generally provides that lower federal courts may not engage in appellate review of state-court decisions. Isaacs v. DBIASG Coinvestor Fund, III, LLC (In re Isaacs), 895 F.3d 904, 912 (6th Cir. 2018).

Count One of Debtor's Amended Complaint falls squarely within the Rooker-Feldman doctrine. Count One seeks to avoid the Mortgage, that this Court declare the Mortgage "void, unenforceable and subject to rescission and avoidance" due to alleged duress, undue influence, collusion, and/or fraud. Amended Complaint at 6. As discussed in more detail below, Debtor raised or could have raised these issues before the State Court. The State Court's Decision & Entry found the Mortgage valid and enforceable and ordered that it be foreclosed. Count One of the Amended Complaint is barred by Rooker-Feldman because Count One demands this Court's reconsideration of the issues tried before and decided by the State Court, essentially an...