DR v. Andrea (In re Andrea), Bankruptcy Case 18-80357

597 B.R. 626

IN RE Joshua J. ANDREA, Debtor.

Michael Dr aka, Plaintiff,

v.Joshua J. Andrea, Defendant.

Bankruptcy Case 18-80357

Adversary No. 18-96014

United States Bankruptcy Court, N.D. Illinois, Western Division.

Signed February 1, 2019

Christopher N. Cronauer, Burns, Cronauer, Brown, LLP, Sycamore, IL, for Plaintiff.

Paul M. Bach, Bach Law Offices, Northbrook, IL, for Defendant.

MEMORANDUM DECISION

Thomas M. Lynch, United States Bankruptcy Judge

Michael Draka was thrown from his motorcycle in a collision with Joshua Andrea on Route 25 one summer evening.¹ Eventually, Mr. Draka obtained a $ 1 million default judgment in state court for his injuries. After Mr. Andrea filed for relief under Chapter 7 of the Bankruptcy Code, Mr. Draka commenced this adversary proceeding to seek a determination that the judgment is non-dischargeable under Section 523(a)(6) of the Bankruptcy Code.

Now before the court is the Plaintiff's motion for summary judgment. Mr. Draka asserts that the undisputed record presents no genuine issue of material fact and that the state court judgment estops the Debtor from now challenging the Plaintiff's allegations of Debtor's willfulness and malice. For the reasons discussed below, we disagree.

JURISDICTION

Discharge is a right that is expressly created by title 11 and would have no existence if not created by the Bankruptcy Code. Thus, proceedings on an objection to a debtor's discharge or to object to the dischargeability of a debt arise in a case under title 11. Kontrick v. Ryan , 540 U.S. 443, 447-48, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004). Therefore, this Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. This is a core proceeding under 28 U.S.C. § 157(b)(2)(I) in which this court has constitutional authority to enter final orders. See, e.g. , In re Yotis , 521 B.R. 625, 631 (Bankr. N.D. Ill. 2014) (citing Stern v. Marshall , 564 U.S. 462, 131 S.Ct. 2594, 2618, 180 L.Ed.2d 475 (2011) ).

PROCEDURAL BACKGROUND

The Debtor lists in his bankruptcy schedules a general unsecured claim of Michael Draka for $ 1,033,141.17, described as "McHenry County Case No. 2016 LA 280." Mr. Draka commenced this adversary proceeding on April 2, 2018, to determine the non-dischargeability of that debt under 11 U.S.C. § 523(a)(6).² Attached to his complaint is a certified copy of an order entered by the Twenty-Second Judicial Circuit Court (McHenry County) in favor of Mr. Draka and against the Debtor (the "McHenry Court Order"). The bottom of the form order contains the following handwritten notation: "Judgment is hereby entered for Plaintiff Michael Draka and against Joshua Andrea, Defendant, for his wilfull [sic] and malicious conduct on 8/14/14 that harmed the [plaintiff] and his property after hearing [plaintiff's] evidence for liability : damages." (ECF 1-1 at Pgs. 1-2.) In his adversary complaint the Plaintiff alleges that the "basis for the willful and malicious finding was from an occurrence on or about August 14, 2014, wherein it was adjudicated that Josh Andrea willfully drove his motorcycle into the rear tire of Michael Draka's motorcycle while riding upon Route 25 in Kane County, Illinois." (Compl. ¶ 8.)

The Debtor denied several of Draka's material allegations in his answer. After the expiration of the discovery deadline, the Plaintiff filed this motion. Asserting that there is no genuine dispute as to the material facts, Mr. Draka further relies on the McHenry Court Order to argue that the state court's judgment determined that the debt is for willful and malicious injury to him and his property so as to preclude this court's further consideration of that issue. Together with the certified copy of the order, the Plaintiff submitted an undated, signed declaration of an alleged eye witness to the accident in support of his motion.³ (ECF Nos. 15, 15:2 (Exhibit B).) In his reply brief (ECF No. 27) and at oral argument, the Plaintiff further argues that the McHenry Court Order contained an express finding that the Debtor's conduct was "willful and malicious," which collaterally estops the Debtor from contesting summary judgment.

In his response, the Debtor denies certain material facts asserted by the Plaintiff and alleges additional facts, supporting both with his declaration.⁴ (ECF No. 25.) Among other things, the Debtor alleges that his motorcycle "contacted" the Plaintiff's vehicle "as a result of Michael Draka moving into [his] part of the lane" and denies that his actions were intentional. (ECF No. 25-2 (Decl. ¶¶ 5,9).) The Debtor also disputes the collateral estoppel argument, asserting that the issues of willfulness and maliciousness were not "actually litigated" in the state court, and submits a copy of the state court complaint and the transcript of the state court proceeding after which the McHenry Court Order was entered. (ECF No. 25-5.) Following submission of the Plaintiff's reply brief and response to the Debtor's statement of facts this court conducted a hearing on the motion during which, as discussed above, the Plaintiff's counsel clarified his motion, withdrawing certain claims and arguments.

FACTS

The court has closely reviewed the parties' respective statements of facts and responses pursuant to Local Rules 7056-1 and 7056-2. It finds that the following material facts are not in dispute.

On August 14, 2014, the Debtor and the Plaintiff were among a group of persons riding motorcycles on Route 25 in Kane County, Illinois. At some point, they accelerated and Andrea's motorcycle "came into contact" with Draka's. Both drivers lost control of their motorcycles and were ejected. Michael Klatka, the third-party declarant here, was an eyewitness to the event.

In 2017, Mr. Draka brought suit against Mr. Andrea in the McHenry County court seeking money damages for personal injuries sustained as a result of the collision. His complaint averred that certain alleged negligent acts or omissions of Mr. Andrea caused the collision and the resulting personal injuries and pain and suffering. That pleading did not assert that the defendant's conduct was willful or malicious. The records of the circuit court disclose that Mr. Andrea entered his own appearance and that he never responded to the state court complaint. The limited court record does not show that an attorney appeared for the Defendant in the McHenry County proceedings.

The state court scheduled a final pre-trial hearing for October 6, 2017 and conducted an evidentiary hearing on October 10, 2017. The Defendant did not attend the evidentiary hearing which began with the judge defaulting the Defendant after taking note that no answer had been filed. The court then took up the damages and heard the testimony of Mr. Draka. The Plaintiff briefly described seeing the headlights of the Debtor's and Mr. Klatka's motorcycles in his rear-view mirror and then "just flying through the air." (Tr., ECF 25-5, p. 4:1-5.) Recalling hitting the ground and receiving aid from responders, the Plaintiff then proceeded to testify about his injuries and the medical attention, diagnoses and treatments he received, his medical expenses, his current mental and physical condition, and his overall well-being. (Id. at 4-1-20 et seq. ) At the court's prompting, Mr. Draka also testified about his lost wage claim. (Id. at 15:12-21.) The court concluded the evidentiary portion of the hearing stating "[s]o liability has already been established on the defendant by virtue of the default" and asked Plaintiff's counsel for his request. (Id. at 1616-18.) Counsel answered that $ 2-1/2 million is sufficient "given the severity of the crash, the injuries, Mr. Draka's age, [and] the likelihood of spinal problems." (Id. at 1619-22.) The court then concluded the proceeding stating: "All right. I will award - and round it off - $ 1,000,000 by way of judgment. Okay." (Id. at 17:2-3.) The transcript does not refer to nor reveal evidence of willful or malicious conduct, or that the court made or was asked to make a finding whether the Defendant so acted.⁵

After the hearing the Debtor's attorney used a court form to prepare the proposed judgment order. (ECF No. 15-1 (Ex. A).) The form stated, without checking the accompanying selection "box", "Defendant(s) having failed to appear or otherwise respond to the summons, is found in default. Judgment for Plaintiff(s) against Defendant(s) for $ 1,000,000 plus interest of $ _____ plus attorney fees of $ _____ for a total of $ 1,000,000 plus court costs." (ECF No. 25-4 at Pg. 31.) At the bottom of the form, Plaintiff's counsel additionally wrote in that the judgment was entered for Defendant's "wilfull and malicious conduct." (Id. ) There were no further proceedings before the court before the judge signed and entered the order on October 10, 2017.

DISCUSSION

The court shall grant a motion for summary judgment where "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), as incorporated by FED. R. BANKR. P. 7056. On a request for summary judgment, "the court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial," Johnson v. Advocate Health & Hosps. Corp. , 892 F.3d 887, 893 (7th Cir. 2018) (quoting Payne v. Pauley , 337 F.3d 767, 770 (7th Cir. 2003) ). "The party that bears the burden of proof for an issue at trial must cite the facts which it believes [would] satisf[y] that burden and demonstrate why the record is so one-sided as to rule out the prospect of a finding in favor of the non-movant." Bunch v. United States , 880 F.3d 938, 941 (7th Cir. 2018) (alteration in original) (internal quotations omitted) (quoting Hotel 71 Mezz Lender LLC v. Nat'l Ret. Fund , 778 F.3d 593, 601 (7th Cir. 2015) ). "Once the moving party meets its...