Van Dexter v. Barr (In re Barr)

606 B.R. 210

IN RE: Scott A. BARR and Dana E. Barr, Debtors.

Erik Van Dexter, Plaintiff,

v.Scott A. Barr and Dana E. Barr, Defendants.

Case No.: 18-32869 (JNP)

Adv. Pro. No. 19-01090

United States Bankruptcy Court, D. New Jersey.

Signed September 30, 2019

Paul Stadler Pflumm, Joseph A. McCormick, Jr., P.A., Haddonfield, NJ, Thomas H. Ward, Ward, Shindle & Hall, West Deptford, NJ, for Plaintiff.

Lee Martin Perlman, Lee M. Perlman, Cherry Hill, NJ, for Defendants.

OPINION GRANTING THE PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS

JERROLD N. POSLUSNY, JR., U.S. BANKRUPTCY COURT JUDGE

Prior to the petition date, Erik Van Dexter ("Plaintiff") obtained a judgment (the "State Court Judgment") against Debtors/Defendants Scott A. Barr and Dana E. Barr (collectively the "Debtors") for abuse of process and against Dana Barr only for malicious prosecution. After the Debtors filed their Chapter 7 petition, Plaintiff filed a complaint seeking a determination the State Court Judgment is nondischargeable as a willful and malicious injury under section 523(a)(6) of Title 11 of the United States Code (the "Bankruptcy Code"). The Debtors answered the Complaint and then the Plaintiff filed a motion for judgment on the pleadings (the "Motion"). Plaintiff argues he is entitled to judgment because the state court necessarily determined the injuries to be willful and malicious, and therefore the Debtors are collaterally estopped from relitigating those issues here.

For the reasons stated herein, the Motion will be granted.

Background

In 2011, the Debtors filed criminal complaints alleging that the Plaintiff had sexually abused their daughter. Dkt. No. 4. Plaintiff was arrested and charged by the Gloucester County Prosecutor's Office with criminal sexual contact and was indicted. Following a polygraph test and the Plaintiff's voluntary testimony, all charges were dropped. Id.

In 2015, the Debtors' daughter filed a civil lawsuit against the Plaintiff in the Superior Court of New Jersey, Gloucester County (the "State Court"), alleging causes of action for assault and battery and emotional distress. Dkt. No. 1. The Plaintiff denied the allegations, and filed a counterclaim against the daughter, and a Third-Party Complaint against the Debtors alleging abuse of process and malicious prosecution (the "State Court Action"). Id. In June 2017, following a jury trial, the State Court dismissed the daughter's civil complaint with prejudice. Id. A Judgment (the "State Court Judgment") was also entered against Scott Barr for $65,000 for abuse of process and against Dana Barr for $195,000 for abuse of process and malicious prosecution. Id.

On November 19, 2018, the Debtors filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. Plaintiff is scheduled as a judgment creditor with a total claim of $260,000 from the State Court Judgment. Case No. 18-32869 (the "Main Case") Dkt. No. 1. Plaintiff filed an adversary complaint (the "Complaint") seeking a determination that the State Court Judgment is nondischargeable under section 523(a)(6) of the Bankruptcy Code.¹ Dkt. No. 1. The Debtors' answer (the "Answer"), admits in part and denies in part the allegations in the Complaint. Dkt. No. 3. Plaintiff then filed the Motion, arguing that the State Court Judgment necessarily decided the elements for nondischargeablity under section 523(a)(6) of the Bankruptcy Code. Dkt. No. 4. The Debtors' response (the "Response") argues that there are remaining issues of fact to be tried regarding nondischargeablity. Dkt. No. 7. The Plaintiff's reply (the "Reply"), reiterating the arguments in the Motion. Dkt. No. 8. A hearing on the Motion was held on May 28 (the "Hearing") at which both parties presented argument.

Jurisdiction and Venue

This Court has jurisdiction over this adversary proceeding under 28 U.S.C. §§ 1334(a) and 157(a) and the Standing Order of the United States District Court dated July 10, 1984, as amended September 18, 2012, referring all bankruptcy cases to the bankruptcy court. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(I). Venue is proper in this Court pursuant to 28 U.S.C. § 1408.

Judgment on the Pleadings

A motion for judgment on the pleadings is authorized by Federal Rule of Civil Procedure 12(c) (the "Rules"), made applicable by Federal Rule of Bankruptcy Procedure 7012 (the "Bankruptcy Rules"). The standard of review for a motion under Rule 12(c) is a summary judgment standard, unless the motion is based on a failure to state a claim. Marchand v. Whittick (In re Whittick), 547 B.R. 628, 633 (Bankr. D.N.J. 2016) (citing Perez v. Griffin, 304 Fed. Appx. 72, 74 (3d Cir. 2008) ). Therefore, the Court applies the summary judgment standard when considering the Motion.

Under Rule 56(a), made applicable by Bankruptcy Rule 7056, a court should grant summary judgment if the movant shows that there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Knauss v. Dwek, 289 F. Supp. 2d 546, 549 (D.N.J. 2003) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). When reviewing facts under a summary judgment standard, a court's function is "to determine whether there is a genuine issue for trial." Knauss, 289 F.Supp.2d at 549 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). Once the movant has met this initial burden, the burden shifts to the non-moving party to "present evidence establishing that a genuine issue of material fact exists, making it necessary to resolve the difference at trial." Id. (citing Celotex, 477 U.S. at 324, 106 S.Ct. 2548 ; Jersey Cent. Power & Light Co. v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985) ). Facts are to be viewed in a light most favorable to the non-moving party. Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir. 1999) (citing Coolspring Stone Supply, Inc. v. Am. States Life Ins. Co., 10 F.3d 144, 146 (3d Cir. 1993) ). Summary judgment is proper if, after all facts are viewed and inferences are made in the non-moving party's favor, the moving party is nevertheless entitled to judgment as a matter of law. Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

Discussion

Section 523(a)(6) provides that "[a] discharge ... does not discharge an individual debtor from any debt – (6) for willful and malicious injury by the debtor to another entity ...." 11 U.S.C. § 523(a)(6). Both willfulness and malice need to be found for the debt to be declared nondischargeable. Cochran v. Reath (In re Reath), 368 B.R. 415, 426 (Bankr. D.N.J. 2006). Under section 523(a)(6), a "willful" act is one that occurs "when the actor purposefully inflicts injury or acts in such a manner that he is substantially certain that injury will result." In re Fisher, 2017 WL 590306 at *8 (Bankr. D.N.J. 2017) (quoting Jersey Cent. Power & Light v. Breslow, 2013 WL 632124 at *2 (D.N.J. 2013) (citing In re Conte, 33 F.3d 303, 305 (3d Cir. 1994) ). The injury must be intentional and deliberate; reckless or negligent injuries do not meet the standard. Kawaauhau v. Geiger, 523 U.S. 57, 64, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998). A "malicious" act, refers to "a wrongful act done consciously and knowingly in the absence of just cause or excuse." Fisher, 2017 WL 590306 at *8 (quoting In re Winn, 1998 WL 34069150 at *1 (Bankr. S.D. Ill. 1998) ). In Geiger, the Supreme Court also noted that "the (a)(6) formulation triggers in the lawyer's mind the category ‘intentional torts’ " Geiger, 523 U.S. at 61, 118 S.Ct. 974 (citing Restatement (Second) of Torts § 8A, cmt. a (1964)).

Plaintiff argues that the issue of whether the Debtors' actions were "willful and malicious" were necessarily decided by the State Court Judgment, and that the Debtors are therefore estopped from relitigating these issues. Dkt. No. 4. It is settled law that issue preclusion applies to bankruptcy proceedings. Grogan v. Garner, 498 U.S. 279, 284-86, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). Issue preclusion in bankruptcy applies when the issue was previously adjudicated by a state court. Baldino v. Wilson (In re Wilson), 116 F.3d 87, 90 (3d Cir. 1997). Issue preclusion applies when "(1) the issue sought to be precluded [is] the same as that involved in the prior action; (2) that issue [was] actually litigated; (3) it [was] determined by a final and valid judgment; and (4) the determination [was] essential to the prior judgment ...."

Graham v. IRS (In re Graham), 973 F.2d 1089, 1097 (3d Cir. 1992) (quoting In re Braen, 900 F.2d 621, 628-29 n. 5 (3d Cir. 1990) ).

In this case, there is no dispute that the second and third requirements are met. The State Court Action was litigated at trial before a jury, and the jury rendered specific findings of fact in response to its charge from the State Court. Those findings were the basis for the State Court Judgment, which is a final judgment. Dkt. No. 1. Accordingly, the remaining issues before this Court are whether: (a) the jury found willfulness and maliciousness as those terms are used in section 523(a)(6) ; and (b) the determination of those elements was essential to the State Court Judgment.

Malicious Prosecution

Plaintiff argues that the portion of the State Court Judgment against Dana Barr finding malicious prosecution is nondischargeable under section 523(a)(6).

To find malicious prosecution in New Jersey, a jury must find that "(1) a criminal action was instituted by this defendant against this plaintiff; (2) the action was motivated by malice; (3) there was an absence of probable cause to prosecute; and (4) the action was terminated favorably to the plaintiff." Lind v. Schmid, 67 N.J. 255, 262, 337 A.2d 365 (1975) (citing Prosser, Law of Torts, § 119 (4th ed. 1971)). "Malice" is defined under New Jersey law as "the intentional commission of a wrongful act without just cause or excuse." Mayflower Indus. v. Thor Corp., 15 N.J. Super. 139, 152, 83 A.2d 246 (Ch....