Shriners Hosp. for Children v. Bauman (In re Bauman)

461 B.R. 34

In re James George BAUMAN, Debtor.Shriners Hospital for Children, Plaintiff,

v.James George Bauman, Defendant.

Bankruptcy No. 10 B 45250.

Adversary No. 11 A 1083.

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

Dec. 23, 2011.

Jeffrey C. Dan, Crane Heyman Simon Welch & Clar, Chicago, IL, for Plaintiff.

John V. Delgaudio, Jr., John V. Del Gaudio Jr., LTD, Markham, IL, for Defendant.

MEMORANDUM OPINION

JACK B. SCHMETTERER, Bankruptcy Judge.

This Adversary Proceeding is related to the Chapter 7 Bankruptcy Case filed by Debtor–Defendant James George Bauman (the “Defendant”). The two-count Amended Complaint filed in this Adversary by Plaintiff Shriners Hospital for Children (the “Plaintiff”) seeks a determination barring dischargeability of debt assertedly owed by the Defendant to the Plaintiff pursuant to section 523(a)(4) and (a)(6) of the Bankruptcy Code, 11 U.S.C. §§ 523(a)(4), (a)(6). The Defendant has now moved to dismiss the Amended Complaint for failure to state a claim upon which relief can be granted under Rule 12(b)(6) Fed.R.Civ.P. [made applicable by Rule 7012(b) Fed. R. Bankr.P.] or, in the alternative, for summary judgment under Rule 56 Fed.R.Civ.P. [made applicable by Rule 7056 Fed. R. Bankr.P.]. The Motion was considered under Summary Judgment standards and procedures. For reasons set forth below, the Motion for Summary Judgment will be granted on both counts of the Amended Complaint.

I. JURISDICTION

The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b) and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. The proceeding concerns a determination of the dischargeability of a particular debt and is therefore a core proceeding under 28 U.S.C. § 157(b)(2)(I). Venue is properly placed in this court pursuant to 28 U.S.C. § 1409(a).

II. UNDISPUTED FACTS AND BACKGROUND

All of the material facts in this case either are undisputed or have been deemed admitted pursuant to Local Bankruptcy Rule 7056–2(B). Those facts, gleaned from the pleadings and summary judgment materials, are as follows.

At all times relevant to the Complaint, the Plaintiff was a charitable organization that provided hospital and medical care to ill and injured children. (Def. L.R. 7056–1 Stmt. ¶ 1; Compl. ¶ 2.) ¹ On December 3, 1964, Grace Ellis (“Ellis”) executed a will (the “1964 Will”) designating her elderly parents as the primary beneficiaries of her estate and designating her descendants and the Plaintiff as contingent beneficiaries.² (Def. L.R. 7056–1 Stmt. ¶ 3 & Ex. 5 to Ex. F; Compl. ¶ 8.) She appointed her father, Franklin Ellis, as executor of the will and, if he was unable or unwilling to act, her mother, Grace S. Ellis, an individual named Edward W. Saunders, and the Continental Illinois National Bank and Trust Company as successor executors. (Def. L.R. 7056–1 Stmt., Ex. 5 to Ex. F.)

Both of Ellis' parents predeceased her. (Compl.¶ 8.) After the death of her mother in 1991, Ellis moved into the Howard Johnson Hotel in Skokie, Illinois, where she lived until her own death in 2003. (Def. L.R. 7056–1 Stmt., Ex. 4A ¶ 7 & Ex. 4B ¶ 8.) It was at that hotel where Ellis met the Defendant in 1994. ( Id., Ex. 4A ¶ 9 & Ex. 4B ¶ 11.) At the time of their meeting, the Defendant was a Lutheran minister and pastor of St. John's Lutheran Church (“St. John's”) in Glenview, Illinois. ( Id., Ex. 4A ¶ 8.) The Defendant became friends with Ellis, went out to meals with her, drove her to appointments, and provided her with spiritual guidance and counseling. ( Id., Ex. 4A ¶¶ 11, 14 & Ex. 4B ¶¶ 21, 22.) In 1997, Ellis became a member of St. John's, where the Defendant was the pastor. ( Id., Ex. 4A ¶ 13.) Subsequently, Ellis gave the Defendant power of attorney over both her health care and her property, transferred title to more than $1 million of her assets over to the Defendant, and bought him an automobile and other gifts. ( Id. ¶ 6.)

On August 9, 1999, Ellis executed a new will (the “1999 Will”), which “revoke[d] all prior wills and codicils.” ( Id. ¶ 3 & Ex. 2 to Ex. F.) The 1999 Will designated the Defendant as the sole primary beneficiary of Ellis' estate and her surviving heirs at law as contingent beneficiaries. ( Id.; Compl. ¶ 12.) The Defendant was named executor of the new will. (Def. L.R. 7056–1 Stmt., Ex. 2 to Ex. F; Compl. ¶ 12.)

About four years later, on October 8, 2003, Ellis died at the age of 86, leaving no direct descendants. (Def. L.R. 7056–1 Stmt. ¶ 4.) Her estate at that time was worth more than $2 million. ( Id.) The 1999 Will was filed the following day with the Clerk of the Circuit Court of Cook County and admitted to probate on October 29, 2003. ( Id.)

The Plaintiff first became aware of its possible interest in the 1964 Will in 2006 when the Defendant filed that Will with the Circuit Court as part of a will contest brought by some of Ellis' heirs at law. ( Id. ¶ 5.) Thereafter, on August 8, 2006, the Plaintiff filed a petition to contest the 1999 Will in the Circuit Court. ( Id. ¶ 6 & Ex. 4A.) Counts I and II of the petition contested the validity of the 1999 Will based on theories of undue influence and mental incapacity, respectively. ( Id. ¶ 7 & Ex. 4A.) Those counts requested both the vacation of the order admitting the 1999 Will to probate and the admission to probate of the 1964 Will. ( Id.) Count III of the petition alleged a tort claim for intentional interference with an expectancy of inheritance and requested, inter alia, the entry of judgment against the Defendant and more than $2 million in compensatory damages. ( Id., Ex. 4A.)

In addition to the Plaintiff's will contest, two groups of Ellis' heirs filed separate will contests that were substantially similar to the Plaintiff's ( Id. ¶ 11 & Exs. 4B & 4C), but they have not participated in this Adversary proceeding. During the probate litigation of all three will contests, testimony from Ellis' attending physician, friends, and lawyers was taken in four depositions.³ ( Id. ¶ 12 & Exs. D–G.) In all four depositions, the deponents testified that Ellis was of sound mind and memory and did not suffer from diminished mental capacity when the 1999 Will was executed. ( See id. ¶¶ 13–17.)

In response to the Plaintiff's petition, the Defendant filed a motion to dismiss, asserting that filing of the petition more than six months after the 1999 Will was admitted to probate was volatile of section 8–1 of the Probate Act of 1975 (755 ILCS 5/1–1 et seq. (West 2006)). (Def. L.R. 7056–1 Stmt. ¶ 8.) A judge of the Circuit Court granted the Defendant's motion, dismissed the petition in its entirety with prejudice, and denied the Plaintiff leave to amend. ( Id. ¶ 9.) On appeal to the Illinois Appellate Court, the Plaintiff challenged dismissal of only the tort claim. ( Id.) The order of dismissal was subsequently affirmed. ( Id.) On October 29, 2009, the Illinois Supreme Court reversed the judgments of the Appellate and Circuit Courts and remanded the case to the Circuit Court for further proceedings. ( Id. ¶ 10 & Ex. K.) The sole issue decided by the Supreme Court was the timeliness of the Plaintiff's tort claim. In re Estate of Ellis, 236 Ill.2d 45, 337 Ill.Dec. 678, 923 N.E.2d 237, 240 (2009).

On October 8, 2010, the Defendant filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. (Def. L.R. 7056–1 Stmt. ¶ 2; Compl. ¶ 4.) About seven months later, on May 13, 2011, the Plaintiff filed a two-count Complaint in this Adversary proceeding seeking a determination to bar dischargeability pursuant to section 523(a)(4) and (a)(6) of the Bankruptcy Code. The Plaintiff filed a substantially similar Amended Complaint on August 11, 2011. About a month later, on September 19, 2011, the Defendant filed the instant Motion.

Additional undisputed facts are set forth in the Discussion below.

III. SUMMARY JUDGMENT STANDARD

Under Rule 56 Fed.R.Civ.P. [applicable under Rule 7056 Fed. R. Bank. P.] “[t]he court shall grant summary judgment if 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); see also Trentadue v. Redmon, 619 F.3d 648, 652 (7th Cir.2010).

The summary judgment procedure may avoid unnecessary trials when no genuine issues of material fact are in dispute. Vukadinovich v. Bd. of Sch. Trustees of N. Newton Sch. Corp., 278 F.3d 693, 699 (7th Cir.2002); Trautvetter v. Quick, 916 F.2d 1140, 1147 (7th Cir.1990). Thus, on a motion 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.” Kodish v. Oakbrook Terrace Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir.2010) (internal quotation omitted). Where the material facts are not in dispute, the sole issue is whether the moving party is entitled to judgment as a matter of law. ANR Advance Transp. Co. v. Int'l Bhd. of Teamsters, Local 710, 153 F.3d 774, 777 (7th Cir.1998).

All reasonable inferences drawn from the underlying facts must be viewed in a light most favorable to the nonmoving party. Smeigh v. Johns Manville, Inc., 643 F.3d 554, 560 (7th Cir.2011); McKinney v. Cadleway Props., Inc., 548 F.3d 496, 499–500 (7th Cir.2008). The existence of a factual dispute is material only if the disputed fact is determinative of the outcome under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Fritcher v. Health Care Serv. Corp., 301 F.3d 811, 815 (7th Cir.2002). “ ‘[S]ummary judgment is not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial.’ ” Zamora v. Jacobs (In re Jacobs), 448 B.R. 453, 462 (Bankr.N.D.Ill.2011) ( quoting Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990)).

The “ ‘party seeking summary judgment always bears the initial...