Owens v. Coffey (In re Coffey)

Decision Date01 March 2018
Docket NumberA.P. NO. 17-3040,CASE NO. 17-31506
CourtU.S. Bankruptcy Court — Western District of Kentucky



This adversary proceeding comes before the Court on the Motion for Judgment on the Pleadings and in the Alternative Partial Summary Judgment (the "Motion") filed by the Defendant, Loretta Coffey ("Coffey"). The Plaintiff, William Owens ("Owens"), opposes Coffey's motion. Upon consideration of the Motion, the supporting documentation, and the response, the Court holds that the Motion should be denied.


This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, and it is a core proceeding under 28 U.S.C. § 157(b)(2)(I). Venue of this adversary proceeding in this Court is proper under 28 U.S.C. §1409(a), as this proceeding arises in and relates to Coffey's Chapter 13 case pending in this District.


On a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), the Court employs the same standard as a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6).6 Forgues v. Select Portfolio Servicing, Inc., 2016 WL 543186, at *2 (N.D. Ohio 2016). Thus, "'[f]or purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.' " Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549 (6th Cir. 2008). In particular, when a party moves for judgment on the pleadings, the motion should be granted if, on the undenied facts alleged in the complaint and assuming as true all the material allegations of fact in the answer, the party is entitled to judgment as a matter of law. When reviewing a motion for judgment on the pleadings, the Court assumes that well-plead facts alleged by the non-movant are true. Finisar Corp. v. Cheetah Omni, LLC., 2012 WL 6949236 at *1 (E.D. Mich. 2012); Maher v. Federated Service Insurance Company, 143 F.Supp.3d 663, 664 (E.D. Mich. 2015).

The Court can render summary judgment only when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). Summary judgment is appropriate when the record taken as a whole, and viewed in the light most favorable to the nonmoving party, could not lead a rational trier of fact to find for the nonmoving party. Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 289 (1968)). The party seeking summary judgment bears the burden initially of showing that there is no genuine issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323 (1986). The moving party may rely on the pleadings, depositions, answers to interrogatories, and admissions on file. Id. When a party fails to make a showing sufficient to establish the existence of an element essential to that party's case, summary judgmentshould be granted. Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 805 (1999) (quoting Celotex, 477 U.S. at 322).

Once the moving party has made a proper motion for summary judgment, the nonmoving party may not rely upon mere allegations to rebut the motion, but instead must set forth specific facts demonstrating that a genuine issue of material fact exists for trial. Fed. R. Bankr. P. R. Civ. P. 56(e). The nonmoving party must produce more than a "mere scintilla" of evidence to support its claim, once a properly supported motion for summary judgment has been made.


To properly consider the Motion, some background facts must be set forth. Coffey and Owens were engaged in a relationship beginning in 2013. They planned to be married in June 2013. While engaged, Owens made several transfers of money and property to Coffey. Eventually, the relationship soured and ultimately ended in the Fall of 2015.

On November 25, 2015, Owens filed suit against Coffey in Boyle County Kentucky Circuit Court. This complaint contained seven counts, two of which alleged Coffey had committed fraud on Owens. Count I alleged that Coffey, through fraud, had induced Owens to tender to her the sum of $10,000.00. Count IV alleged that Coffey, through fraudulent conduct, had induced Owens to purchase for her a 2011 Toyota Four-Runner in the approximate value of $36,938.79. The remaining counts made no mention of fraud.

Coffey filed an answer to this complaint, a motion to dismiss, and a counterclaim on March 17, 2016. Written discovery was propounded on Coffey on April 13, 2016 and her answers were due 30 days later. Coffey failed to completely comply with these discovery requests, and on March 28, 2017 Owens filed a motion to compel. The state court set this motion to compel for hearing tobe heard on April 5, 2017. Because of financial troubles, Coffey was unable to continue her defense of this civil suit, so she filed for bankruptcy protection under Chapter 13 of the Bankruptcy Code on May 3, 2017.

The Clerk of Court scheduled the first Meeting of Creditors for June 14, 2017. Pursuant to Fed. R. Bankr. P. 4007(c), the deadline to file a complaint objecting the dischargeability of a debt under 11 U.S.C. § 523(c)1 is sixty (60) days after the first date set for the meeting of creditors. Applied to this case, the deadline to file a nondischargeability complaint was set at August 13, 2017.

Coffey's proposed amended plan called for monthly payments of $100.00 for 60 months. With these payments, the plan anticipated paying unsecured creditors approximately 7% of the unsecured claims. No specific provision for the payment Owens' claim was made in the plan. Nor did the plan contain a specific provision calling for the discharge of Owens' claim. Owens did not object to Coffey's Chapter 13 Plan and did not appear at the 341 Meeting of Creditors. The Plan was confirmed by Order of this Court on July 10, 2017, and Owens did not appeal this Order.

Owens was listed in Schedule F "for notice purposes only" and the debt was marked as disputed. Owens availed himself of the Bankruptcy Court and filed Proof of Claim Number 4 for $85,119 on July 7, 2017. Coffey objected to Owens' claim on the day it was filed. Owens did not respond to Coffey's objection to his claim. Without objection, on August 14, 2017, the Courtentered an order sustaining the Objection to Claim and disallowed Owens' claim.

On August 17, 2017, Owens moved to vacate the order sustaining the objection to claim. After the first hearing on this motion, Owens withdrew the motion to vacate. As it stands now, Owens has no allowed claim in this Chapter 13 case.

On July 17, 2017, within the time allowed by Fed. R. Bankr. P. 4007(c), Owens filed this adversary proceeding pursuant to 11 U.S.C. § 523(a)(2)(A) seeking to except from discharge the debts incurred by Coffey's alleged false pretenses, false representations or actual fraud. Coffey answered the complaint and denied the material allegations. Section 523 (a)(2)(A) prohibits the discharge of any debt obtained by false pretenses, false representations, or actual fraud.

On December 13, 2017, Owens filed a motion for stay relief in the main bankruptcy case. In the motion, Owens sought relief from the automatic stay so that the litigation in Boyle Circuit Court can be completed. Specifically, Owens moved the Court for permission to continue to pursue litigation against Coffey in state court based on the notion that Coffey obtained property and money from Owens by fraud. Coffey opposed the motion. As discussed more fully in the main bankruptcy case, by order entered this same date in the main bankruptcy case, this Court is granting the motion for stay relief and directing the parties to return to Boyle Circuit Court so that this debt can be liquidated.


In the Motion, Coffey makes two arguments. First, she seeks a Judgment on the Pleadings arguing that this adversary proceeding is barred by the doctrine of res judicata. Alternatively, she argues that summary judgment should be entered in her favor because, as a whole, Owens' underlying cause of action sounds in a tort (breach of promise to marry) which is no longerrecognized in Kentucky. Owens contests both these arguments.

A. Res Judicata

Coffey contends that she is entitled to a Judgment on the Pleadings based upon res judicata. Kentucky recognizes two kinds of preclusion—claim preclusion (or res judicata) and issue preclusion (or collateral estoppel). See Miller v. Administrative. Office of Courts, 361 S.W.3d 867, 871-73 (Ky. 2011). "Claim preclusion bars a party from relitigating a previously adjudicated cause of action and entirely bars a new lawsuit on the same cause of action. Issue preclusion bars the parties from relitigating any issue actually litigated and finally decided in an earlier action." Yeoman v. Commonwealth Health Policy Bd., 983 S.W.2d 459, 465 (Ky.1998); In re Nageleisen, 523 B.R. 522, 527-28 (Bankr. E.D. Ky. 2014).

Coffey argues that the issues in this case are controlled by the United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010). In Espinosa, the confirmed Chapter 13 plan contained an express provision to pay the principal of a student loan debt while discharging the accrued interest on that student loan debt. The debtor did not file an adversary proceeding seeking to determine the dischargeability of this debt as required by Bankruptcy Rule 7001(6) nor did he obtained an "undue hardship" determination as required for discharge student loan debt under § 523(a)(8). Id. at 1374-75. Despite notice of the provision of the proposed plan, the creditor did not object to the plan's proposed discharge of the student loan interest nor did it object to the debtor's failure to initiate an...

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