Markut v. Micic (In re Micic)

In re: DRAGAN MICIC, Debtor.

TOMASZ MARKUT, Plaintiff, v. DRAGAN MICIC, Defendant.

Bankruptcy No. 19-10717

Adversary No. 19-00887

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

ENTERED: December 9, 2020

December 8, 2020

Chapter 7

Honorable Judge Jack B. Schmetterer

MEMORANDUM OPINION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 50]

Debtor-Defendant Dragan Micic ("Defendant") seeks summary judgment against Plaintiff Tomasz Markut ("Plaintiff"). For reasons that follow, Defendant's Motion for Summary Judgment (the "Motion") will be DENIED by separate order to be entered concurrently herewith.

UNCONTESTED FACTS

The facts set forth below are derived from the statements of fact submitted by the parties to the extent they comport with Local Bankruptcy Rule 7056. Other documents submitted by the parties in this case were considered, when relevant, and judicial notice of this docket and the underlying bankruptcy docket is hereby taken.¹

Plaintiff is a creditor in Defendant's underlying bankruptcy and an individual who resides in Cook County, Illinois. Defendant is also an individual who resides in Cook County, Illinois. On or about December 11, 2017, Plaintiff filed a lawsuit in the Circuit Court of Cook County, Illinois against Defendant (hereinafter the "State Court Action") for claims sounding in, inter alia, negligence, breach of contract, and intentional tort arising out of an alleged physicalaltercation that took place between the parties on or about December 11, 2015. The State Court Action, still pending in the Circuit Court of Cook County, was stayed when Defendant filed for Chapter 7 bankruptcy on April 12, 2019.

On August 6, 2019, Plaintiff filed the present adversary complaint to determine dischargeability of a debt under 11 U.S.C. § 523(a)(6). Then, on August 9, 2019, in the bankruptcy, Plaintiff filed a motion to modify the discharge injunction "to resume prosecuting his state court cause of action for injuries sustained out of [Defendant's] negligent conduct."² Plaintiff stated in his motion to modify that "[he] will only prosecute the count arising out of [Defendant's] negligence, because, upon information and belief, damages for [Defendant's] negligent conduct maybe covered by [Defendant's] home insurance policy."³

On August 15, 2019, an order was entered modifying the discharge injunction (the "Discharge Modification Order") "to allow [Plaintiff] to resume his cause of action for negligence against [Defendant in the State Court Action] to establish [Defendant's] liability for negligence and to recover damages from [Defendant's] insurer to the extent of available insurance proceeds."⁴

On August 29, 2019, Defendant moved to dismiss the adversary proceeding. The motion to dismiss was denied on November 14, 2019, and Defendant filed its first Answer on November 29, 2019. A later amended Answer (the "Amended Answer") was filed on March 17, 2020. Now, Defendant has moved for summary judgment.

JURISDICTION AND VENUE

Subject matter jurisdiction lies under 28 U.S.C. § 1334. The district court may refer bankruptcy proceedings to a bankruptcy judge under 28 U.S.C. § 157 and 28 U.S.C. § 1334, and this proceeding was thereby referred here by the District Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a). Venue lies under 28 U.S.C. § 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I).

DISCUSSION

A. Standard for Summary Judgment

"A motion for summary judgment is a contention that the material facts are undisputed and the movant is entitled to judgment as a matter of law." Hotel 71 Mezz Lender LLC v. Nat'l Ret. Fund, 778 F.3d 593, 601 (7th Cir. 2015); see Fed. R. Civ. P. 56(a) (made applicable to adversary proceedings by Fed. R. Bankr. P. 7056). The moving party seeking summary judgment has the initial burden to establish that there is no genuine dispute as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A genuine dispute as to any material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In ruling on a motion for summary judgment, courts must construe all admissible evidence in the light most favorable to the non-moving party. Turner v. The Saloon, Ltd., 595 F.3d 679, 683 (7th Cir. 2010).

B. Summary Judgment Is Not Appropriate on Any Ground

a. Subject Matter Jurisdiction

Defendant first argues that summary judgment is appropriate as Plaintiff cannot establish a debt and this Court lacks subject matter jurisdiction to adjudicate the adversary. This argument is without merit and will not be considered, as this issue was previously ruled on in the prior Memorandum Opinion denying Defendant's motion to dismiss. [See Dkt. No. 16]. But seeing as it need be restated due to Defendant's renewed arguments in this Motion, as ruled on in the Memorandum Opinion, the fact that Plaintiff's debt remains unliquidated does not prevent it from being a valid debt. Further noted in that Memorandum Opinion is the holding that while a bankruptcy court does not have the subject matter jurisdiction to liquidate or try the personal injury claim, this Court does have jurisdiction to determine whether Plaintiff's claim is non-dischargeable. See e.g., In re Passialis, 292 B.R. 346, 348 (Bankr. N.D. Ill. 2003). Should any of the parties want to determine the merits of or liquidate the claim, they may forthwith move to withdraw the district court's reference of this matter. See 28 U.S.C. § 157(d). But, since neither party has done so, including Defendant who has so far voluntarily chosen to not withdraw the action, summary judgment is inappropriate on Defendant's repeated, unfounded arguments.

b. Law of the Case Doctrine

Defendant next argues that summary judgment is appropriate under the law of the case doctrine, given that this Court modified the discharge order to allow Plaintiff to resume his cause of action for negligence against the Debtor in the State Court Action. Defendant points to the fact that Plaintiff, in seeking to modify the discharge injunction, stated that he would only prosecutethe count arising out of Defendant's negligence should relief be granted. Accordingly, Plaintiff argues that the law of the case precludes Plaintiff from "changing directions and prosecuting claims that he has already advised the Court that he will not pursue in the state court action (namely, any claim other than his negligence claim)." [Dkt. No. 50, at 8].

As no ruling was ever made on any of the issues implicated in this adversary proceeding, summary judgment is denied on this ground. Law of the case doctrine describes a rule of practice that "when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 816 (1988) (citing Arizona v. California, 460 U.S. 605, 618 (1983)). "[L]aw of the case only applies where a court actually decided the issue in question." Universal Guar. Life Ins. Co. v. Coughlin, 481 F.3d 458, 462 (7th Cir. 2007). Therefore, "[c]onversely, if a question has not been previously decided, the law of the case doctrine has no role to play." Nucap Indus., Inc. v. Robert Bosch LLC, 273 F. Supp. 3d 986, 1002 (N.D. Ill. 2017).

While the Discharge Modification Order involved the same parties and the same case, the issue previously argued and ruled in in Discharge Modification Order was whether Plaintiff was entitled to a modification of the discharge order to allow him to resume his cause of action for negligence against Defendant in the State Court Action only to establish liability for negligence and to recover damages from Debtor's insurer to the extent of available insurance proceeds. This ruling was made pursuant to Illinois law, which prohibits direct actions against insurers; instead, plaintiffs must first obtain judgments against defendants personally as a prerequisite to recovering from insurers. See In re Shondel, 950 F.2d 1301, 1308 (7th Cir., 1991).

In contrast, the current issue to be ruled on is whether Plaintiff is entitled to a determination of nondischargeability for an alleged willful and malicious action. Therefore, the prior ruling resulting in the Discharge Modification Order has no bearing with the current matter. Accordingly, because Defendant cannot point to any prior ruling justifying the law of the case doctrine, summary judgment is denied.

c. Estoppel

Defendant's next argument is that Plaintiff's claims of willful and malicious injury should be equitably estopped. In so arguing, Defendant claims, based on Plaintiff's representations that Plaintiff was only seeking to pursue the negligence claim in the State CourtAction when Plaintiff sought to modify the discharge injunction, Defendant relied on that representation and changed positions based upon that representation to its detriment.

Summary judgment is not appropriate. A question is raised as to whether this doctrine should even be applied in this case. The applicability of judicial estoppel is "intended to 'induce debtors to be truthful in their bankruptcy filings.'" Spaine v. Cmty. Contacts, Inc., 756 F.3d 542, 547 (7th Cir. 2014) (quoting Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006)). "Courts do not apply judicial estoppel for the benefit of the defendant but try to protect courts and creditors from deception and manipulation." Id. Here, Defendant seeks judicial estoppel not to protect this Court nor other Creditors, but rather himself. This fact therefore suggests, given that "[j]udicial estoppel is a matter of equitable judgment and discretion," it may not be appropriate for this Court to apply it here. In re Knight-Celotex, LLC, 695 F.3d 714, 721 (7th Cir. 2012).

Even if so applicable, there are issues with Defendant's judicial estoppel argument. Judicial estoppel "is...