Storick v. CFG LLC (In re Storick)
| Decision Date | 13 January 2020 |
| Docket Number | Case No.: 18-15728-MAM,Adv. Proc. No. 18-01455-MAM |
| Parties | In re: SCOTT STORICK, Debtor. SCOTT STORICK, Plaintiff, v. CFG LLC, Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Southern District of Florida |
THIS MATTER initially came before the Court upon Defendant CFG LLC's Motion to Dismiss Adversary Complaint, or in the Alternative Motion for Summary Judgment and Incorporated Memorandum of Law in Support Thereof (ECF No. 13) (the "Converted Motion")1 filed by creditor CFG LLC ("CFG"), the Joint Stipulation of Facts Regarding Defendant's Motion for Summary Judgment [ECF No. 13] (ECF No. 24) (the "Joint Stipulation"),2 the response [ECF No. 25] (the "Response") to the Converted Motion filed by the above-captioned debtor-plaintiff ("Storick"), and the Reply Brief in Support of CFG LLC's Motion for Summary Judgment (ECF No. 27) (the "Reply").
Immediately (one day) after the parties completed briefing upon the Converted Motion, Storick submitted a cross-motion for summary judgment (ECF No. 28) (the "Cross-Motion"). The Court directed the parties to submit additional briefing upon the Cross-Motion (ECF No. 30). After agreed extensions, the parties submitted CFG LLC's Response in Opposition to Plaintiff's Motion for Summary Judgment (ECF No. 52) (the "Cross-Response") and the Reply in Support of Plaintiff's Motion for Summary Judgment [ECF No. 28] (ECF No. 58) (the "Cross-Reply").3
This opinion and order address the arguments raised in both the Converted Motion and the Cross-Motion. For the reasons stated herein, the Court grants the Converted Motion and denies the Cross-Motion.
Nine years before the filing of Storick's current bankruptcy case (Case No. 18-15728, the "2018 Bankruptcy Case"), on September 3, 2009, Storick filed a petition under chapter 7 of the Bankruptcy Code, Case No. 09-28716-JKO (the "2009 Bankruptcy Case"). Storick scheduled CFG as a creditor in the 2009 Bankruptcy Case. After participating in mediation, the parties consensually resolved issues relating to CFG's debt (the "CFG Debt") and the ensuing litigation in the 2009 Bankruptcy Case by entering into a settlement agreement on April 23, 2010 (the "April 2010 Settlement"). The April 2010 Settlement resolved multiple areas of litigation between CFG and Storick, including CFG's then-pending motion to dismiss the 2009 Bankruptcy Case, as well as CFG's anticipated objections to Storick's claimed exemptions, discharge under 11 U.S.C. § 727, and dischargeability of the CFG Debt pursuant to 11 U.S.C. § 523.
Shortly before the hearing (the "Settlement Hearing") upon the motion to approve the April 2010 Settlement, Storick and CFG slightly revised their agreement, as reflected by Exhibit L to the Joint Stipulation (the "Amended Settlement"). Accordingly, the parties presented the Amended Settlement to the Court for approval at the Settlement Hearing.
Paragraph 4 of the Amended Settlement (the "Nondischargeability Provision") provides as follows:
CFG DEBT NON-DISCHARGEABLE: The Debtor agrees that the CFG Debt is a non-dischargeable debt pursuant to the provisions of 11 U.S.C. Section 523(a), which debt shall be excepted from theDebtor's discharge granted pursuant to the provisions of 11 U.S.C. Section 727 in this Bankruptcy Case or any future bankruptcy case in which Storick is a debtor. Any order entered by the Bankruptcy Court approving this Agreement shall include a provision excepting the CFG Debt from the Debtor's discharge in his Bankruptcy Case in accordance with the foregoing sentence.
In addition to the Nondischargeability Provision, the Amended Settlement contained a provision (the "Judgment Provision") outlining the terms by which CFG could reduce the CFG Debt to a post-petition judgment. Paragraph 5 of the Amended Settlement provides:
CONFESSION OF JUDGMENT: Debtor hereby irrevocably appoints and constitutes CFG as Debtor's duly appointed attorney-at-law to appear in open court in the Superior Court for the City of Wilmington, Delaware, or in any other court of competent jurisdiction, and to confess judgment pursuant to the provisions of Title 10 Section 4732 of the Delaware Code, as amended, against Debtor for all principal and interest and any other amounts due and payable under this Agreement. This power of attorney is coupled with an interest and may not be revoked and/or terminated by the Debtor. This power of attorney shall not be revoked and/or terminated by virtue of the death or disability of the Debtor. No single exercise of the power to confess judgment shall be deemed to exhaust this power of attorney.
On June 30, 2010, Judge Olson, the bankruptcy judge who presided over the 2009 Bankruptcy Case, entered an order approving the Amended Settlement and granting stay relief to CFG to pursue all available remedies in Delaware. See ECF No. 189 in the 2009 Bankruptcy Case, attached to the Joint Stipulation as Exhibit N (the "Settlement Order"). Approval of the Amended Settlement expressly permitted CFG to pursue entry of judgment on the CFG Debt in Delaware. On August 4, 2010, Storick received his discharge in the 2009 Bankruptcy Case. See ECF No. 201 in the 2009 Bankruptcy Case (attached as Exhibit O to the Joint Stipulation).
On July 16, 2010, CFG sought a confessed judgment against Storick on account of the CFG Debt in the Superior Court of the State of Delaware in and for New Castle County (the "Delaware Trial Court").4 CFG provided notice to Storick of CFG's request for entry of confessed judgment. The notice informed Storick of the basis for the confessed judgment and the scheduled date and time of a hearing (the "Judgment Hearing") to determine whether judgment should be entered.5 Storick failed to appear at the Judgment Hearing.
On August 20, 2010, the Delaware Trial Court entered a final order of judgment (the "Delaware Judgment") in favor of CFG.6 CFG subsequently sought to enforce the Delaware Judgment by garnishing Storick's wages.7 In response, Storick moved to vacate the Delaware Judgment.8 As a basis for vacatur, Storick argued that paragraph 13 of the Amended Settlement provided that Florida law controlled operation of the Judgment Provision. Storick further contended that Florida lawprohibits confessed judgments, rendering the Delaware Judgment a legal nullity.9
Storick did not argue that the CFG Debt was or should have been discharged in the 2009 Bankruptcy.
While the Delaware Litigation remained pending, Storick filed a complaint (the "2012 Complaint") against CFG on February 17, 2012 in the United States District Court for the Southern District of Florida (the "Florida District Court").10 Initially, the 2012 Complaint set forth only one count: a request for declaratory relief regarding whether Florida Statute § 222.11 ("§ 222.11") protected Storick's wages from CFG's efforts to collect upon the Delaware Judgment via garnishment.
Storick later amended the 2012 Complaint (the "Amended 2012 Complaint") to include an additional count for declaratory judgment as to entry of the Delaware Judgment. By way of the Amended 2012 Complaint, Storick thus sought declaratory relief from the Florida District Court on issues that were still pending before the Delaware Trial Court.11 As in the Delaware Litigation, Storick did not argue that the CFG Debt was or should have been discharged in the 2009 Bankruptcy.
CFG moved to dismiss Storick's Amended 2012 Complaint. In a detailed seven-page order (the "Florida District Court Order"), the Florida District Court carefullywalked through each element of a nine-factor test12 to evaluate discretionary dismissal where a parallel state court proceeding exists concerning the same parties and the same issues of state law.13 After meticulously examining all factors, the District Court concluded that dismissal of the Florida Litigation was appropriate.14
On January 31, 2013, the Eleventh Circuit Court of Appeals affirmed the District Court's dismissal of the 2012 Complaint, effectively rubber-stamping the Florida District Court's declination of jurisdiction over Storick's declaratory judgment action.15 Basing affirmance upon the reasons stated in the Florida District Court's "well-reasoned" order, the Eleventh Circuit Opinion pointed out that "although Storick accuses CFG of 'procedural fencing' by obtaining a confession of judgment in Delaware, Storick expressly agreed to allow CFG to confess judgment in Delaware for a long-standing debt he admits he owes."16
Storick did not appeal the Eleventh Circuit Opinion.
Approximately six months later, the Delaware Trial Court entered an order (the "Delaware Order") with a thorough and thoughtful analysis of the DelawareLitigation, addressing all arguments raised by Storick and CFG.17 The Delaware Order denied Storick's motion to vacate the Delaware Judgment and resolved all issues in the Delaware Litigation in favor of CFG. The Delaware Order describes the CFG Debt as "non-dischargeable", a factual finding that Storick does not appear to have challenged at that time.18
Storick moved for reconsideration of the Delaware Order, arguing that (i) Florida Statute § 222.11 should be applied extraterritorially to the Delaware Judgment,19 and (ii) even if § 222.11 did not apply, the attachment of his wages by CFG was improper pursuant to 10 Del. C. § 4913. A little over one year later, on July 29, 2014, the Delaware Trial Court entered a lengthy memorandum opinion (the "Delaware Opinion") denying reconsideration of the Delaware Order.20
Storick appealed the Delaware Order to the Delaware Supreme Court. On March 30, 2015, the Delaware...
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