McDermott v. Kerr (In re Kerr)

In Re: Jeremy Lynn Kerr, Debtor(s).

Daniel M. McDermott, United States Trustee, Plaintiff(s), v. Jeremy Lynn Kerr, Defendant(s).

Case No. 15-30531

Adv. Pro. No. 15-03085

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO WESTERN DIVISION

March 6, 2017

The court incorporates by reference in this paragraph and adopts as the findings and analysis of this court the document set forth below. This document has been entered electronically in the record of the United States Bankruptcy Court for the Northern District of Ohio.

Chapter 7

Judge John P. Gustafson

MEMORANDUM OF DECISION AND ORDER REGARDING MOTIONS IN LIMINE

This adversary proceeding is before the court on Defendant's Motion in Limine ("Defendant's Motion") [Doc. # 63], Plaintiff's "Motion in Limine Seeking Order (1) Precluding the Defendant's Relitigation of Factual Findings Determined During the Defendant's State Court Criminal Proceedings and (2) Adopting the State Court's Findings by Judicial Notice" ("Plaintiff's Motion") [Doc. # 72], and Defendant's Opposition to the Trustee's Motion ("Defendant's Opposition"). [Doc. # 72]. Defendant (or "Mr. Kerr") is the debtor in the underlying Chapter 7 case. He is currently incarcerated and appearing pro se. Plaintiff (or "UST") is the duly-appointed United States Trustee.

This adversary proceeding is scheduled for trial on March 23, 2017 on Plaintiff's Complaint to Deny Defendant-Debtor's Discharge Pursuant to 11 U.S.C.§§ 727(a)(2)(A) and (B), 727 (a)(4)(a), and 727(a)(5). Plaintiff alleges in his complaint that Defendant concealed possessory and equitable interests in four different properties within one year before the petition date, concealed the same possessory and equitable interests in the four properties after the petition date, knowingly and fraudulently made one or more false oaths or accounts in connection with his bankruptcy case, and failed to satisfactorily explain the loss of assets or deficiency of assets.

In his instant motion, Defendant seeks an order granting his motion "in Limine Defendant's alleged criminal actions on March 15 and 20 of 2012." [Doc. # 63, p. 1]. According to Defendant, in relation to Counts One and Two of the Complaint, Plaintiff's Exhibits 8-11 "clearly establish the disposition of properties never took place on March 15 or 20 of 2015." [Id., p. 2].¹ Defendant further argues "the alleged actions. . .in March, 2012" having no bearing on Count Three's allegations that Defendant knowingly and fraudulently made one or more false oaths or accounts. Regarding Count 4's claim brought pursuant to § 727(a)(5), Defendant believes that the Ohio Sixth District Court of Appeals' decision, which upheld his previous criminal convictions, "lack[s] any activity at the Office of the Wood County Recorder where properties [sic] transfers take place . . . [and] should bar extending the time period for which [Defendant] must 'explain satisfactorily' the disposition of his assets." [Doc. # 63, p. 2-3].

Plaintiff's Motion seeks an order in limine that: 1) adopts by judicial notice the factual findings supporting the Defendant's guilty verdict, entered in the Wood County Common Pleas Court and upheld by the Ohio Court of Appeals for the Sixth District; 2) precludes Defendant from introducing any evidence at trial that would propose to re-litigate the factual findings made by the aforementioned state courts; and 3) provides whatever relief may be required in law and equity. [Doc. # 72].

In his Motion, Plaintiff reiterates that the "heart of the [UST's] case is the Defendant's long-standing efforts to shelter four parcels of real estate in his wholly-owned limited liability company, Beaver Creek Development, LLC ("Beaver Creek")". [Doc. # 72, p. 8]. The four properties are located at 13926 Defiance Pike, Rudolph, Ohio ("Defiance"), 13345 Ash Street, Weston, Ohio ("Ash"), 10730 Cygnet Road, Cygnet, Ohio ("Cygnet"), and 28926 Simmons Road, Perrysburg, Ohio ("Simmons").

Plaintiff refers to the court's Memorandum and Order Denying the Defendant's Motion for Summary Judgment ("Order Denying Summary Judgment") [Doc. # 46], wherein the court preliminarily adopted as fact findings contained within the Sixth District Court of Appeal's opinion that affirmed the criminal conviction against Defendant of the Wood County Court of Common Pleas. After the court denied Defendant's Motion for Summary Judgment, the court held a hearing on Defendant's motion for leave to file a second motion for summary judgment. [Doc. ## 50, 53, 55]. At that hearing, the UST orally moved for leave to file a motion in limine to preclude relitigation of the findings of fact of the Wood County Court of Common Pleas that convicted Defendant of forgery and tampering with evidence.

In the Order Denying Defendant's Motion for Leave to File Revised Summary Judgment, the court recorded the following stipulation between the parties: "The parties stipulate that the factual findings of the state court decisions regarding Mr. Kerr will not be re-litigated at trial." Any objections to the stipulation were to be made no later than November 30, 2016. [Doc. # 56]. On November 23, 2016, Defendant filed his Opposition to the Trustee's oral motion in limine. [Doc. # 60]. The UST argues that the court should refuse to admit any evidence offered by the Defendant that would attempt to re-litigate his state court convictions, and instead adopt the state court findings "as conclusive and binding for purposes of adjudicating the Complaint." [Doc. # 72, p. 6].

In his Opposition filed in response to Plaintiff's written Motion in limine, Defendant argues that collateral estoppel should not apply to the case at hand, as "Ohio Law . . . states if the outcome of the trial can be overturned on review, then Collateral Estopple [sic] cannot apply. " Defendant contends that a "Federal Habeas Review can overturn the outcome of a State Court Criminal Trial." [Doc. # 81, p. 2].

For the reasons that follow, the court will deny Defendant's Motion and grant in part and deny in part Plaintiff's Motion.

A motion in limine is "any motion, whether made before or during trial, to excludeanticipated prejudicial evidence before the evidence is actually offered." Luce v. United States, 469 U.S. 38, 40 n. 2, 105 S.Ct. 460, 83 L.Ed.2d 443 (1984). "Unlike a summary judgment motion, which is designed to eliminate a trial in cases where there are no genuine issues of material fact, a motion in limine is designed to narrow the evidentiary issues for trial and to eliminate unnecessary trial interruptions." Bradley v. Pittsburgh Bd. of Educ., 913 F.2d 1064, 1069 (3d Cir.1990). In other words, the motion in limine is an evidentiary device that "provides a useful adjunct to other devices for truncating the trial such as motions for summary judgment." 21 Charles Alan Wright & Kenneth W. Graham, Jr., Federal Practice and Procedure § 5037.10 (2005). "In light of their limited purpose, motions in limine should not be used to resolve factual disputes, which remains the function of a motion for summary judgment, with its accompanying and crucial procedural safeguards." Williams v. Johnson, 747 F.Supp.2d 10, 14 (D.D.C. 2010).

The crux of both Plaintiff's and Defendant's Motions in limine appear to be the extent to which collateral estoppel applies to the judgment of conviction against Defendant entered in state court. Defendant argues that the disposition of certain properties, which was described in detail in the Sixth District Court of Appeal's opinion [Doc. #1-2], and again in this court's Order Denying Summary Judgment [Doc. # 46], "never took place on March 15 or 20 of 2015." [Doc. # 63, p. 2]. He also argues that collateral estoppel should not apply. Plaintiff urges the court to adopt the state court findings as conclusive, and therefore preventing Defendant from re-litigating his state court convictions.

When an issue before a federal court was previously litigated under state law, a bankruptcy court applies the law of collateral estoppel of that state. Under 28 U.S.C. § 1738, the federal full faith and credit statute, a federal court must accord a state court judgment the same preclusive effect the judgment would have in state court. Corzin v. Fordu (In re Fordu), 201 F.3d 693, 703 (6th Cir. 1999). See generally, 4 Collier on Bankruptcy ¶ 523.06 (Alan N. Resnick & Henry J. Sommer, 16th ed. rev. 2016).

In Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1, 79 L. Ed. 2d 56, 104 S. Ct. 892 (1984), the United States Supreme Court expressed its preference for usage of the terms "issue preclusion" and "claim preclusion" to refer to the preclusive effect of a judgment in foreclosing future litigation, rather than the more common terms of "collateral estoppel" and "res judicata." Both issue and claim preclusion fall under the broad umbrella of full faith and credit. See,Knutson v. City of Fargo, 600 F.3d 992, 996 (8^th Cir. 2010) (citing, Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005)).

The case at hand deals with state law criminal convictions. In determining whether a prior state court criminal conviction should be given preclusive effect in a federal action, the federal court must apply the law of the state in which the prior judgment was rendered. Corzin v. Fordu (In re Fordu), 201 F.3d 693, 703 (6th Cir. 1999). Thus, the court must apply Ohio issue preclusion principles in this case.

Collateral estoppel, or "issue preclusion", "precludes the relitigation, in a second action, of an issue that had been actually and necessarily litigated and determined in a prior action that was based on a different cause of action." State ex rel. Nickoli v. Erie Metroparks, 124 Ohio St. 3d 449, 923 N.E.2d 588, 592 (2010). "There is no question that collateral estoppel principles apply to bankruptcy proceedings, and can be used . . . to prevent re-litigation of issues already decided in a state court." In re Chapman, 228 B.R. 899, 904 (Bankr. N.D. Ohio 1998) (citing, Grogan...