Hynard v. Merkman (In re Merkman)

604 B.R. 122

Sheena L. MERKMAN and Troy D. Merkman, Debtors

Paul O. Hynard, Plaintiff

v.Sheena L. Merkman and Troy D. Merkman, Defendants

Case. No. 17-31908 (AMN)

Adv. No. 18-03001 (AMN)

United States Bankruptcy Court, D. Connecticut, New Haven Division.

Signed July 31, 2019

APPEARANCES¹

Counsel for the Plaintiff: Scott A. Garver, 21 West Main Street, 4th Floor, Waterbury, CT 06702

Counsel for the Defendants: Gregory F. Arcaro, 114 West Main Street, Suite 105, New Britain, CT 06051

MEMORANDUM OF DECISION AFTER TRIAL

Ann M. Nevins, United States Bankruptcy Judge Paul O. Hynard ("Plaintiff") seeks to except a $17,232.01 debt from the Chapter 7 discharge of Sheena L. Merkman² and Troy D. Merkman (collectively, "Defendants") pursuant to 11 U.S.C. § 523(a)(6)³ on the grounds that Defendants moved out of Plaintiff's rental property at 232 Waterville Street, Unit No. 6, Waterbury, Connecticut (the "Rental Property") without notice and willfully and maliciously damaged and failed to maintain the Rental Property. Defendants deny Plaintiff's allegations and argue that any damage to the Rental Property occurred after Defendants moved out.

The Court held a trial in this adversary proceeding on April 30, 2019, after which the Court took the matter under advisement. For the reasons that follow, the Court will deny the relief sought by Plaintiff.

I. JURISDICTION

This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. § 1334(b) and 28 U.S.C. § 157(b), and the United States District Court for the District of Connecticut's General Order of Reference dated September 21, 1984. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(I). Pursuant to Fed.R.Bankr.P. 7008 and 7012(b), the parties consent to the entry of final orders by the Bankruptcy Court. AP-ECF Nos. 36, 40. This adversary proceeding arises under bankruptcy case number 17-31908 (the "Main Case") pending in this District and venue is proper pursuant to 28 U.S.C. § 1409.

II. PROCEDURAL HISTORY AND FINDINGS OF FACTProcedural Background and Nature of the Proceedings

In 2013, Plaintiff obtained a default judgment against Defendants in the District Court of the Commonwealth of Massachusetts in the amount of $16,755.66 (the "Massachusetts Judgment"), which was domesticated to a Connecticut Judgment on January 30, 2015, in the amount of $17,232.01. AP-ECF No. 41. The Massachusetts Judgment is comprised of both contractual and tort damages for damage to the Rental Property and to the Plaintiff.⁴

Defendants commenced the Main Case with a voluntary Chapter 7 bankruptcy petition filed on December 19, 2017. On Schedule E/F, a list of unsecured creditors, Defendants identified an unsecured claim by Plaintiff in the amount of $17,232.01. ECF No. 1, p. 35.⁵ On February 28, 2018, Plaintiff commenced this Adversary Proceeding seeking a determination that the debts to Plaintiff are not dischargeable under 11 U.S.C. § 523(a)(6). AP-ECF No. 1. The Court held a trial on April 30, 2019 (the "April 30th Trial"), when both sides presented witnesses and exhibits.

Findings of Fact After Trial

On March 29, 2011, Defendants and Plaintiff executed a residential lease agreement for the Rental Property. The lease was for a term from April 8, 2011, to May 31, 2012.⁶ AP-ECF No. 41 (Statement of Undisputed Facts); Ex. 101.⁷ The Rental Property was clean and undamaged when Defendants took possession. AP-ECF No. 41. The Rental Property came furnished with a wall unit air conditioner on the second floor, a dining room table with chairs, and two chests of drawers. AP-ECF No. 62, pp. 10-11.

The parties' undisputed facts state that Plaintiff visited the Rental Property in late June 2012, at which time the Rental Property was not damaged. AP-ECF No. 41.

Plaintiff's testimony at trial was different from the statement of undisputed facts in several ways. Plaintiff testified that he visited the Rental Property twice during the fourth week of June 2012. AP-ECF No. 62, p. 22. On the first visit, a Monday, he observed the front door ajar, and "damage, like rear kitchen door, damaging the interior door in way of utility room, and then broken chair." AP-ECF No. 62, p. 22. Plaintiff testified that Defendants were not present, that they had taken out everything except a cooking pot and some food, but that "the AC was still there" and was turned on. AP-ECF No. 62, p. 21. During his second visit in June, on a Thursday, Plaintiff testified that he saw a queen size mattress, a stand lamp, a blue sofa, "like a flower type design sofa", and love seat that he claimed Defendants had brought back at some point between Monday and Thursday. AP-ECF No. 62, pp. 22, 28. He also testified that on the second visit both a window in the kitchen⁸ and the air conditioner were broken, and that "the sliding door in [the] bedroom, they were remove[d]." AP-ECF No. 62, pp. 22, 29, 44. On cross-examination, Plaintiff testified that during the first visit in June he did not see any of Defendants' furniture or personal effects, and only saw two articles of clothing. AP-ECF No. 62, pp. 51-52.

According to Plaintiff's trial testimony, he visited the Rental Property again in July 2012, and found an unknown woman who appeared to be living in the Rental Property. AP-ECF No. 62, pp. 53-54. Plaintiff believed that Defendants attempted to sublet the Rental Property to the unknown woman. AP-ECF No. 62, pp. 67-68. He also testified that there were more clothes in the Rental Property during his July visit. AP-ECF No. 62, p. 76 (Trial Transcript).⁹

Plaintiff visited the Rental Property on August 10, 2012, at which time the Rental Property was damaged. AP-ECF No. 41. The pictures admitted as evidence at trial, taken by Plaintiff in August 2012, show the Rental Property with a broken rear glass kitchen window, an empty sleeve for a wall air conditioning unit, soiled carpet, damaged kitchen cabinets, unwanted furniture and personal items, and trash throughout the property. Ex. 102; Ex. 103.

Defendants deny they damaged the Rental Property or brought any of their belongings back to the apartment. AP-ECF No. 62, pp. 82, 90-91. They also deny allowing any third-party access to the apartment. AP-ECF No. 62, pp. 83-84, 91. Instead, Ms. Merkman testified that when Defendants moved out of the Rental Property, they locked the door and left the keys on the kitchen table. AP-ECF No. 62, p. 88.¹⁰ Ms. Merkman also testified that she left two or three voicemails for Plaintiff but did not send any written notices. AP-ECF No. 62, p. 86.¹¹ While Plaintiff denies receiving any voicemails from Defendants regarding their move-out date, Plaintiff admitted he has a voice message machine but does not use it. AP-ECF 62, pp. 98-99.

Defendants testified that they moved into a new apartment on May 28, 2012, and did not return to the Rental Property after that date. AP-ECF No. 62, pp. 81-82, 90-91. Defendants executed a lease on a new apartment with a separate landlord on June 1, 2012, with a lease beginning that same day. AP-ECF 62, pp. 80-81; Ex. 501 (signed lease agreement). Defendants admitted leaving the blue floral pattern couch and a matching armchair when they moved out. AP-ECF 62, pp. 82, 84-85.¹² There is no evidence that Defendants returned to the Rental Property after May 31, 2012. Plaintiff testified that he did not know the exact day Defendants moved out of the Rental Property, but claimed it was "[a]round the end of July or beginning of August." AP-ECF No. 62, pp. 10-11, 17. Plaintiff admitted that he did not witness Defendants damage the Rental Property. AP-ECF No. 62, pp. 68-72.

III. APPLICABLE LAW

Burden of Proof

Exceptions to discharge "are strictly and narrowly interpreted so as to promote the Bankruptcy Code's purpose of providing a fresh start to debtors." Orr v. Marcella (In re Marcella) , 463 B.R. 212, 219 (Bankr. D. Conn. 2011) ; In re Bonnanzio , 91 F.3d 296, 300 (2d Cir. 1996). "Furthermore, the burden of proof in a nondischargeability proceeding is on the creditor seeking an exception to discharge to prove, by a preponderance of the evidence, that its claim satisfies the requirements of one of the discharge exceptions enumerated in Bankruptcy Code § 523(a)." Vaughn v. Williams (In re Williams) , 579 B.R. 314, 323 (S.D.N.Y. 2016) (citation omitted); see also Grogan v. Garner , 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) ; Giminiani v. Cesar , 536 F.App'x. 85, 87 (2d Cir. 2013) ("To warrant an exception from discharge, a creditor must prove each statutorily enumerated element of fraud by a preponderance of the evidence.") (summary order).

Nondischargeability Under 11 U.S.C. § 523(a)(6)

Section 523(a)(6) excepts from discharge any debt "for willful and malicious injury by the debtor to another entity or to the property of another entity." 11 U.S.C. § 523(a)(6). "The requirements of ‘willfulness’ and ‘maliciousness’ are distinct requirements in the statutory text an d are usually treated as such by the courts." 4 Collier on Bankruptcy ¶ 523.12. This exception to discharge requires a plaintiff to prove three elements: (1) "debtor acted willfully," (2) "debtor acted maliciously," and (3) "debtor's willful and malicious actions caused injury to the plaintiff or the plaintiff's property." In re Margulies , 721 F. App'x 98, 101 (2d Cir. 2018).

"The word ‘willful’ in [ § 523 ](a)(6) modifies the word ‘injury,’ indicating that nondischargeability takes a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury." Kawaauhau v. Geiger , 523 U.S. 57, 61-62, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998). "The Supreme Court has rejected an expansive interpretation of § 523(a)(6), analogizing, that while ‘intentionally rotating the wheel of an automobile to make a left-hand turn without first checking oncoming traffic’ is itself an intentional act, the resulting injury of an innocent bystander is not intentional, and therefore, not ‘willful’ to render the debt nondischargeable under § 523(a)(6)." Heritage...