Hendricks v. Griffin (In re Griffin)

615 B.R. 911

IN RE: John Casey GRIFFIN and Brittany R. Griffin, Debtors.

Derrick E. Hendricks and Kimberly L. Hendricks, Plaintiffs,

v.John Casey Griffin And Brittany R. Griffin, Defendants.

Case No. 18-12568-tr7

Adv. No. 19-01053-t

United States Bankruptcy Court, D. New Mexico.

Signed February 28, 2020

R. Matthew Bristol, Roswell, NM, for Debtor.

OPINION

Hon. David T. Thuma, United States Bankruptcy Judge

Plaintiffs Derrick and Kimberly Hendricks leased a house to Defendants John and Brittany Griffin. Two years into a five-year lease, the Griffins moved out of the house, leaving it in disrepair. The Hendrickses sued the Griffins in state court for breach of lease and obtained a $24,735 judgment. They now ask the Court to declare the judgment nondischargeable under § 523(a)(6).^{1 ,2} Before trial, the Court allowed the lawyer for Mr. Griffin to withdraw, due to lack of communication. Mr. Griffin did not appear at trial or otherwise defend, so the Court will enter a default judgment against him. However, the Hendrickses failed to prove their case against Mrs. Griffin, who did appear at trial and defend against the claim. Her judgment debt to the Hendrickses will be declared dischargeable.

I. FACTS

The Court finds:

The Hendrickses met the Griffins in 2007. The Hendrickses owned and lived in a house in Roswell, New Mexico, with a street address of 1107 E. 19th Street. The house is adjacent to a roofing company owned by members of the Griffin family. Mr. Griffin worked at the roofing company for a time. In 2008 the Hendrickses agreed to let the Griffins and their two small children move a mobile home onto land near the house. The parties thus became next-door neighbors.

Beginning in 2014, the Hendrickses had to leave town frequently to care for aging parents. They moved out of the house. The parties disagree about whose idea it was, but in 2015 the Griffins rented the house from the Hendrickses and moved in. Rental negotiations culminated in a Residential Lease Agreement with Option to Purchase, which the parties signed on or about September 1, 2015. The lease gave the Griffins the option to buy the house for $190,000. During the first year or so of the lease term, the Griffins intended to buy the house.

When the Griffins moved in the house was old³ but in good condition; it had been in the Hendrickses' family for many years and they took pride in its upkeep. The first seventeen months of the Griffins' tenancy passed without incident. On February 14, 2017, however, Mrs. Griffin moved out, citing marital problems and concern for her safety. On March 26, 2017, Mr. Griffin threatened to commit suicide. Mrs. Griffin and her father-in-law were alerted to the threat and rushed the house. It was locked, so they broke a window and forced the back door, damaging the door and the frame. Mr. Griffin, who was uninjured, had to spend time under psychiatric care and stopped contributing to the marital income.

In May 2017 Mrs. Griffin moved into an apartment with the children. She paid rent on the house through August 2017. Mr. Griffin moved out of the house before August 2017.

On August 5, 2017, an acquaintance of the Hendrickses went by the house, saw it was vacant, and notified the Hendrickses. When the Hendrickses inspected the house they found:

• A broken HVAC heat pump;

• A broken refrigerator;⁴

• Broken windows;

• Stained carpets and wooden floors;

• Ripped wallpaper and sheetrock damage;

• Damage to a garage wall;

• Damage to interior doors;

• Damage to an exterior door and door frame;

• Damage to some of the soffits;

• Damage to an above-ground swimming pool;

• An electric service pole in the back yard that was leaning over;

• Damage to a natural gas line between the gas meter and the house;

• Grass in large portions of the yard had not been watered and had died; and

• A substantial amount of junk, debris, and trash.

The Griffins and the Hendrickses discussed the condition of the house several times after August 5, 2017. The Griffins agreed they would clean up the house and yard. Aside from mowing, Mr. Griffin never did anything. Then, on August 17, 2017, the Griffins' son became seriously ill. He was flown by air ambulance to Lubbock, Texas for emergency treatment and was hospitalized for several weeks. During that time Mrs. Griffin focused solely on her son, stayed with him in Lubbock, and made no attempt to clean or repair the house. After her son was out of danger and they were both back in Roswell, Mrs. Griffin essentially washed her hands of the matter. The upshot was that the Hendrickses were forced to do all of the cleaning, repairing, and junk-hauling.

The Hendrickses sued the Griffins in state court on October 6, 2017. The state court held a trial on September 5, 2018, and entered a money judgment in the Hendrickses' favor for $24,735.34. Although the Hendrickses provided this Court with two pages of the trial transcript, none of the court's findings of fact or conclusions of law are in evidence.

The Griffins filed their chapter 7 case on October 15, 2018, prompting this adversary proceeding. The Griffins' bankruptcy attorney answered the complaint on their behalf but later withdrew from representing Mr. Griffin, citing an inability to communicate with him (he moved to Tennessee after the § 341 meeting and stopped responding to counsel). Mr. Griffin did not appear at trial or make any other effort to defend.

II. DISCUSSION

A. The Hendrickses Are Entitled to a Default Judgment Against Mr. Griffin.

Fed. R. Civ. P. 55⁵ governs defaults and default judgments and states in part:

(a) Entering a Default. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.

(b) Entering a Default Judgment.

(1) By the Clerk. If the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, the clerk—on the plaintiff's request, with an affidavit showing the amount due—must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person.

(2) By the Court. In all other cases, the party must apply to the court for a default judgment....If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings or make referrals—preserving any federal statutory right to a jury trial—when, to enter or effectuate judgment, it needs to:

(A) conduct an accounting;

(B) determine the amount of damages;

(C) establish the truth of any allegation by evidence; or

(D) investigate any other matter.

Most circuits have interpreted "or otherwise defend" in Fed. R. Civ. P. 55(a) to mean that a defendant's conduct after answering the complaint, and in particular the failure to appear at trial, can be grounds for default. Hoxworth v. Blinder, Robinson & Co., Inc. , 980 F.2d 912, 917–19 (3d Cir. 1992) (citing Farzetta v. Turner & Newall, Ltd. , 797 F.2d 151 (3d Cir. 1986) ); Goldman, Antonetti, Ferraiuoli, Axtmayer & Hertell v. Medfit Intern., Inc. , 982 F.2d 686, 692–93 (1st Cir. 1993) ; City of New York v. Mickalis Pawn Shop, LLC , 645 F.3d 114, 127–31 (2d Cir. 2011) ; see generally Gregory A. Kendall, Defendants' Burdens Under Fed. R. Civ. P. 55: Post-Answer Defaults and Jurisdictional Waivers in City Of New York v. Mickalis Pawn Shop, 81 U. Cin. L. Rev. 1079 (2013) (citing additional caselaw).

Courts in this district have held that they, as well as the clerk, may enter a party's default. See Nevada General Insurance Co. v. Anaya , 326 F.R.D. 685, 690–91 (D.N.M. 2018) (citing Mickalis Pawn Shop ); Tratt Industries, LLC v. Patterson , 2019 WL 4919098, at *4 (D.N.M.) (same). When a default is entered, all well-pled allegations in the complaint other than damages allegations are accepted as true. Anaya , 326 F.R.D. at 693 (citing U.S. v. Craighead , 176 F. App'x 922 (10th Cir. 2006) ). Further, where the damages requested are a sum certain, the court need not "receive evidence on the claimed damages amount before entering a default judgment; rather, the Rule [55(b) ] simply allows the district court to conduct a hearing if it believes that additional investigation or evidence is necessary."

Marcus Food Co. v. DiPanfilo , 671 F.3d 1159, 1172 (10th Cir. 2011) ; see also Adkins v. Manning , 2018 WL 6436057, at *1 (D. Kan.).

Mr. Griffin knew the nature of the Hendrickses' complaint against him and the relief sought. He knew of the trial date, time, and location and that his counsel had withdrawn. Mr. Griffin never contacted the Court about the trial date, to ask for a continuance or similar relief, or to appear by telephone. Because Mr. Griffin decided not to appear at trial, the Court will enter a default against him. The consequence of the default is that the Hendrickses' § 523(a)(6) claim against Mr. Griffin is established. As the amount of the debt is certain, the Court will enter a default declaratory judgment that the debt is nondischargeable.^{6 ,7}

B. Mrs. Griffin's Judgment Liability to the Hendrickses is Dischargeable.

1. The Court has Exclusive Jurisdiction to Determine the Dischargeability of the Judgment. As a general principle, state court judgments have preclusive effect on subsequent actions in federal court. 28 U.S.C. § 1738 ;⁸ Allen v. McCurry , 449 U.S. 90, 95, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). The "full faith and credit" statute "requires federal courts to give the same preclusive effect to state court judgments that those judgments would be given in the state courts from which they emerged." Strickland v. City of Albuquerque , 130 F.3d 1408, 1411 (10th Cir. 1997). By obtaining the state court judgment, the Hendrickses established a valid claim against Mrs. Griffin for the judgment amount. See Welch v. Giron (In re Giron) , 610...