Catrambone v. Adams

498 B.R. 839, 2013 WL 4854370, 2013 U.S. Dist. LEXIS 129338
CourtDistrict Court, N.D. Illinois
DecidedSeptember 10, 2013
DocketNo. 13 C 3877
StatusPublished
Cited by1 cases

This text of 498 B.R. 839 (Catrambone v. Adams) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Catrambone v. Adams, 498 B.R. 839, 2013 WL 4854370, 2013 U.S. Dist. LEXIS 129338 (N.D. Ill. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

ELAINE E. BUCKLO, District Judge.

A bankruptcy court held that Richard Catrambone, Sr. (“Catrambone”) cannot discharge a debt he owes to his former business partner, Thomas Adams [843]*843(“Adams”), based on two exceptions to discharge in the Bankruptcy Code.

On appeal, Catrambone seeks reversal of the bankruptcy court’s judgment on two separate grounds: (1) Adams should have been confined to the evidence he disclosed during discovery, which was insufficient as a matter of law to exclude Catrambone’s debt to Adams from discharge in bankruptcy and (2) Adams failed to establish that the debt owed to him was non-dis-chargeable even if the bankruptcy court’s evidentiary ruling was not an abuse of discretion.

Catrambone’s arguments are not persuasive. I affirm the bankruptcy court’s judgment for the reasons stated below.

I.

On December 2, 2002, Adams filed suit against Catrambone and Great Lakes Building Materials, Inc. (“Great Lakes”)— a business in which Adams and Catram-bone each held a fifty percent interest— alleging violation of the Illinois Wage Payment and Collection Act, 820 ILCS 115/1 et seq., breach of fiduciary duty, and tor-tious interference with prospective economic advantage.1 See Adams v. Catram-bone, No. 02 C 8700 (N.D.Ill.).

On April 23, 2003, the district court dismissed Adams’s suit for failure to state a claim upon which relief could be granted. Id. at Dkt. No. 20. Adams appealed to the Seventh Circuit, which reversed and remanded for further proceedings. Adams v. Catrambone, 359 F.3d 858 (7th Cir.2004).

On remand, the parties agreed that a jury would decide liability while a magistrate judge, presiding with consent of the parties, would calculate damages in the event of a jury verdict for Adams on one or more of his claims.

On March 23, 2007, following a four day trial, a jury found in favor of Adams on his breach of fiduciary duty and loss of prospective economic advantage claims.2 ROA part 3 at 20-21.3 The jury also determined that punitive damages were appropriate because Catrambone’s misconduct was willful and wanton. Id. at 21. One of the central issues in this appeal is whether the jury’s findings, which are entitled to preclusive effect, are sufficient to exclude the resulting monetary judgment against Catrambone from discharge in bankruptcy.

After conducting a two day bench trial, the district court issued findings of fact and conclusions of law on damages. The court determined that Adams was entitled to $575,507.37 in damages for his breach of fiduciary duty and tortious interference with prospective economic advantage claims against Catrambone.4 Adams v. Catrambone, No. 02 C 8700, 2010 WL 3893800, at *6 (N.D.Ill. Sept. 30, 2010). The district court entered a judgment re-[844]*844fleeting this damages award on the same day. ROA part 3 at 23.

Approximately one year later, on September 28, 2011, Catrambone filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. See In re Catrambone, No. 11 B 39311 (Bankr.N.D.Ill.). On December 23, 2011, Adams filed an adversary complaint seeking a determination that the $575,507.37 judgment against Ca-trambone was non-dischargeable under Sections 523(a)(2), (a)(4), and/or (a)(6) of the Code. See Adams v. Catrambone, No. 11 AP 02673 (Bankr.N.D.Ill.) (the “discharge exception proceeding”). Adams attached three documents to his adversary complaint: (1) a copy of Adams’s complaint in the litigation resulting in the $575,507.37 judgment against Catrambone; (2) a copy of that judgment; and (3) the district court’s findings of fact and conclusions of law regarding damages. ROA part 1 at 17-18.

On March 8, 2013, the parties submitted a pre-trial statement in the discharge exception proceeding. Catrambone argued below — and reiterates at length in this appeal — that Adams disclosed for the first time in his pre-trial submission that he intended to introduce evidence beyond the three documents attached to his complaint. The specific documents Catrambone objected to were (1) the jury instructions and jury verdict from the previous Adams v. Catrambone litigation and (2) an affidavit signed by Catrambone and submitted in opposition to Adams’s previously filed motion for summary judgment, which the bankruptcy court had denied.5 Catram-bone also objected to Adams’s intention to testify in support of his claims.

On March 18, 2013, when the discharge exception proceeding was originally set for trial, Catrambone argued against the admission of the documents and testimony referenced above. The bankruptcy court agreed that Adams’s discovery responses were deficient. As an alternative to excluding highly relevant evidence, the court reset the trial date to March 27, 2013 to give Catrambone additional time to review the evidence or engage in further discovery.

On March 27, 2013, Catrambone urged the bankruptcy court to reconsider its decision to admit the evidence listed in Adams’s pre-statement. The court reiterated that it would consider granting Ca-trambone additional time for discovery. However, Catrambone failed to explain what he intended to accomplish through more fact discovery or why it would be prejudicial to try the case based on the evidentiary record disclosed in Adams’s pre-trial submission. Accordingly, the bankruptcy court denied Catrambone’s motion for reconsideration and moved forward with trial. Tr. of Hr’g on Mar. 27, 2013 (“Mar. 27 Hr’g”) at 16:14-16.

At trial, Adams introduced eight exhibits6 and testified for approximately five [845]*845minutes in support of his claims. Catram-bone’s counsel did not cross examine Adams and moved instead for a directed finding on all three discharge exceptions at issue. The bankruptcy court took Catram-bone’s motion under advisement. Catram-bone then declined to present any evidence in support of his defense.

On April 11, 2013, the bankruptcy court held that Adams had established an exception to discharge of the $575,507.37 judgment against Catrambone under Sections 523(a)(4) and (a)(6), but not under Section 523(a)(2)(A) for debts resulting from false pretenses, a false representation, or actual fraud. Adams v. Catrambone, No. 11 AP 02673, Dkt. No. 69 (“Op.”) (Bankr.N.D.Ill. Apr. 10, 2013).

On appeal, Catrambone argues that the bankruptcy court abused its discretion by admitting evidence that was not disclosed during discovery and erred in holding that the monetary judgment against him is non-dischargeable under Sections 523(a)(4) and (a)(6).

I have jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a).

II.

The Bankruptcy Code “limits the opportunity for a completely unencumbered new beginning to the honest but unfortunate debtor.” Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (internal quotation omitted).

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Cite This Page — Counsel Stack

Bluebook (online)
498 B.R. 839, 2013 WL 4854370, 2013 U.S. Dist. LEXIS 129338, Counsel Stack Legal Research, https://law.counselstack.com/opinion/catrambone-v-adams-ilnd-2013.