Piazza v. Piazza (In re Re)
| Decision Date | 07 March 2019 |
| Docket Number | Case No.: 5-18-bk-02300 RNO,Adversary No.: 5-18-ap-00101 RNO |
| Parties | IN RE: VINCENT A. PIAZZA, III PATRICIA ELLIOTT Plaintiff(s) v. VINCENT A. PIAZZA, III Defendant(s) |
| Court | U.S. Bankruptcy Court — Middle District of Pennsylvania |
Chapter: 7
Nature of Proceeding: Motion to Dismiss Adversary Proceeding
OPINION1The Plaintiff seeks a finding of non-dischargeability for her claim against the Debtor/Defendant (incorrectly identified as "Plaintiff" in the Complaint case caption) for charges he incurred on her credit card as an authorized user. Upon Motion, I will dismiss the Complaint, with leave to amend.
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b)(2)(I).
Vincent A. Piazza, III ("Piazza") filed a voluntary petition under Chapter 7 of the Bankruptcy Code on May 31, 2018. The required schedules and statements were filed with the bankruptcy petition.
On September 4, 2018, Patricia Elliott ("Elliott") commenced this Adversary Proceeding seeking non-dischargeability of her claim against Piazza. The case was commenced by a Complaint ("Complaint"). ECF No. 1.
The Complaint contains a total of thirty-four numbered paragraphs. While the Complaint only contains one count, it makes reference to two different subsections of the Bankruptcy Code each of which can provide for non-dischargeability of a claim. Namely, 11 U.S.C. § 523(a)(2)(A) and 11 U.S.C. § 523(a)(2)(B).2
Piazza filed a Motion to Dismiss the Complaint on October 5, 2018 ("Motion"). The Motion has been briefed and a hearing was held on January 31, 2019.
Generally, a motion must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2) made applicable to adversary proceedings by Fed. R. Bankr. P. 7008.
The Federal Rules of Civil Procedure establish a system of notice, rather than fact pleading. Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1985 (2007); In re Bernard L. Madoff Inv. Securities LLC, 458 B.R. 87, 113 (Bankr. S.D.N.Y. 2011) ().
However, pleading some special matters requires more particularity. There is a heightened pleading standard for averments of fraud, which is part of the gravamen of this Complaint. Rule 8(a)'s simplified pleading standard applies to all civil actions with limited exceptions. Rule 9(b), for example, provides for greater particularity in all averments of fraud or mistake. Swierkiewicz v. Sorema N.A., 122 S. Ct. 992, 998 (2002). Where fraud is alleged, thecomplainant should accompany a pleading with the first paragraph of any newspaper story - that is, the who, what, when, where, and how of the events at issue. In re Rockefeller Center Properties, Inc. Securities Litigation, 311 F.3d 198, 217 (3d Cir. 2002) (internal citations omitted). The heightened pleading standard for fraud allegations furthers important purposes: (1) due notice to defendants, (2) increased protections from possibly defamatory statements, and, (3) decreasing the number of frivolous suits. In re Adalian, 481 B.R. 290, 294 (Bankr. M.D. Pa. 2012); In re Glunk, 343 B.R. 754, 757 (Bankr. E.D. Pa. 2006) (). Part of my review of the Complaint will consider the heightened pleading requirement for allegations of fraud.
To withstand the Motion, the Complaint must contain enough factual content to allow me to draw the reasonable inference that any claim Elliott holds against Piazza is non-dischargeable. This plausibility standard requires more than the sheer possibility that a defendant acted unlawfully. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
When considering a motion to dismiss, I view the complaint's factual allegations and its pled legal conclusions differently. The Third Circuit has explained:
The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "plausible claim for relief." In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to "show" such an entitlement with its facts.
Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (internal citations omitted); In re Brown, 591 B.R. 587, 591 (Bankr. M.D. Pa. 2018); see also In re EP Liquidation, LLC, 583 B.R. 304, 314 (Bankr. D. Del. 2018).
When considering a motion to dismiss, a court considers the complaint as well as attached exhibits and matters of public record. Fed. R. Bankr. P. 7010 (incorporating Fed. R.Civ. P. 10(c)); Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993); Taylor v. Henderson, 2015 WL 452405, at *1 (D. Del. Jan. 30, 2015).
Federal Rule of Evidence 201 allows a court to take judicial notice of facts that are not subject to reasonable dispute. A bankruptcy court may take judicial notice of the docket entries in a case and the contents of the bankruptcy schedules to determine the timing and status of case events, and other facts which are not reasonably in dispute. In re Harmony Holdings, LLC, 393 B.R. 409, 413 (Bankr. D.S.C. 2008); In re Paolino, 1991 WL 284107, at *12, n.19 (Bankr. E.D. Pa. Jan. 11, 1991).
I take judicial notice of the dockets in Piazza's underlying Chapter 7 case and in this Adversary Proceeding. I will also take notice of the contents of the bankruptcy schedules and statements, which are not in dispute.
One of the underlying purposes of the Bankruptcy Code is to allow a debtor a fresh start. Thus, exceptions to discharge are strictly construed against creditors and liberally construed in favor of debtors. Ins. Co. of N. Am. v. Cohn (In re Cohn), 54 F.3d 1108, 1113 (3d Cir. 1995); In re Gotwald, 488 B.R. 854, 865 (Bankr. E.D. Pa. 2013); Customers Bk. v. Osadchuk, 2018 WL 4562403, at *2 (D.N.J. Sept. 24, 2018); In re Adalian, 474 B.R. 150, 160 (Bankr. M.D. Pa. 2012).
Generally, in a non-dischargeability action, the bankruptcy court addresses two separate questions. First, has Elliott pled an enforceable obligation under state law? If she has, is the debt non-dischargeable under either § 523(a)(2)(A) or § 523(a)(2)(B) of the Bankruptcy Code? Black v. Gigliotti, 514 B.R. 439, 444 (E.D. Pa. 2014); In re August, 448 B.R. 331, 346 (Bankr. E.D. Pa. 2011).
As to the first question, a bankruptcy court looks to state law to determine whether there is an enforceable claim against a debtor. Grogan v. Garner, 498 U.S. 279, 282-84, 111 S. Ct. 654, 657-58 (1991); In re Hazelton, 304 B.R. 145, 150 (Bankr. M.D. Pa. 2003).
Concerning the second question, the issue of the alleged non-dischargeability of a creditor's valid claim is a matter of federal law governed by the provisions of the Bankruptcy Code. Grogan, 498 U.S. at 284; In re Pulvermacher, 567 B.R. 881, 886 (Bankr. W.D. Wis. 2017); In re Guest, 193 B.R. 745, 747 (Bankr. E.D. Pa. 1996).
The Complaint is not a model of clarity. In part, the Complaint alleges that Elliott and Piazza entered into an "agreement" whereunder Piazza and his wife, Brittney, would have use of one of Elliott's credit cards. The Complaint does not allege whether the purported agreement was written or oral. No written agreement is attached as an exhibit to the Complaint. In Pennsylvania, in order to be enforceable, certain agreements must be in writing. For example, an agreement which evidences an interest in land. 33 P.S. § 1; Bozzi v. Greater Del. Valley Sav. & Loan Ass'n, 389 A.2d 122, 124 (Pa. Super. 1978). Also, a promise to answer for the debt of another must be in writing. 33 P.S. § 3; Biller v. Ziegler, 593 A.2d 436, 440-41 (Pa. Super. 1991).
Exhibit F1 to the Complaint appears to be a February 13, 2014, email from Piazza to Elliott which refers to a "verbal agreement" allowing Piazza access to Elliott's Alaska Airlines credit card. At this stage, I will assume that any agreement between Elliott and Piazza was oral. Pennsylvania courts have held that the proof establishing an oral contract must not only be credible but be of such weight and directness as to make out facts beyond a doubt. Brown v. City of Philadelphia, 2008 WL 9405070, at *3 .
At the motion to dismiss stage, I view the facts pled in the light most favorable to Elliott, the non-moving party. The Complaint does allege that, as noted above, Elliott allowed Piazza to make charges on one of her credit cards as an authorized user. The Complaint, in part, provides,"Defendants [sic] agreed to pay Plaintiff or Plaintiff's bank for the purchases made on the credit cards; . . ." Compl. ¶ 7.c., p. 3, ECF No. 1.
The Complaint also includes, "Defendant has not upheld his obligation to pay off the debts he incurred on Plaintiff's credit cards [sic]." Compl. ¶ 29, p. 8, ECF No. 1. The Complaint fails to allege any agreed terms for Piazza to repay charges which he incurred on Elliott's credit card. Were such payments to be made within a certain term? Or, were the credit card charges to be repaid upon demand?
In Pennsylvania, a breach of contract claim generally requires the showing of three elements: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and, (3) resultant damage. Stark v. White, 2013 WL 11266157, at *5 (Pa. Super. Apr. 4, 2013) (internal citations omitted).
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