Hood v. Bennitt (In Re Bennitt)

348 B.R. 820, 2006 Bankr. LEXIS 2014, 2006 WL 2474852
CourtUnited States Bankruptcy Court, N.D. Alabama
DecidedAugust 28, 2006
Docket19-00457
StatusPublished
Cited by8 cases

This text of 348 B.R. 820 (Hood v. Bennitt (In Re Bennitt)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hood v. Bennitt (In Re Bennitt), 348 B.R. 820, 2006 Bankr. LEXIS 2014, 2006 WL 2474852 (Ala. 2006).

Opinion

Memorandum Opinion Regarding Cross Motions for Summary Judgment

BENJAMIN COHEN, Bankruptcy Judge.

The matters before the Court are:

1. The Motion for Summary Judgment for the Debtor, Robyn Bennitt filed on January 9, 2006 (Proceeding No. 31); and
2. The Creditor Hood’s Motion for Summary Judgment filed on January 9, 2006 (Proceeding No. 33), as revised by Creditor Hood’s Revised Motion for Summary Judgment filed on January 16, 2006 (Proceeding No. 35).

After notice, a hearing was held on February 23, 2006. Appearing were Mr. Henry Lagman, the attorney for the defendant; the plaintiff Rhonda Steadman *824 Hood; and one of her attorneys Mr. James McFerrin. The matters were submitted on the record in this proceeding, briefs, stipulations and arguments of counsel, and a complete record of the proceedings from the state Circuit Civil Court of Jefferson County, Alabama, Civil Action No. CV 99-7128.

I. Facts

The plaintiff and the defendant are both lawyers. The plaintiff referred several cases to the defendant. In return, the defendant promised to pay the plaintiff referral fees equal to one-third of the entire attorney fees collected in those cases. The defendant settled or otherwise obtained a recovery in all of the cases referred to her by the plaintiff, and, in the process, collected $59,000 in attorney’s fees. But, the defendant paid the plaintiff only $7,500 of the promised referral fees. In response, the plaintiff filed suit against the defendant in state court claiming breach of contract and fraud. At trial, the state court provided instructions to the jury regarding the elements and requirements of both of those types of actions under Alabama law. They were also specifically instructed that they could award punitive damages against the defendant on the plaintiffs fraud count only if they were to find by clear and convincing evidence that the defendant intentionally deceived the plaintiff.

The jury delivered a general verdict awarding the plaintiff undesignated damages in the amount of $90,000. The judgment entered by the trial court on the jury’s verdict was affirmed by the Alabama Court of Civil Appeals without opinion.

The plaintiff contends that the debt represented by the state court judgment is nondisehargeable pursuant to section 523(a)(2)(A) of the Bankruptcy Code. That section exempts debts resulting from, “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition ...” from discharge. 11 U.S.G. § 523(a)(2)(A).

The parties filed cross motions for summary judgment. Each contends that all of the issues required for resolution of this adversary proceeding have already been considered and resolved by the state court. Consequently, each argues that application of the doctrine of collateral estoppel precludes relitigation of those same issues by this Court, and each believes she is therefore entitled to a judgment in her favor. 1

II. Legal Framework

A. Summary Judgment Standards

Rule 56(c) of the Federal Rules of Civil Procedure, applicable to the pending matters by Rule 7056 of the Federal Rules of Bankruptcy Procedure, provides that a moving party is entitled to summary judgment if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The framework for determining whether there is a genuine issue of material fact that would preclude summary judgment is outlined in the Eleventh Circuit Court of Appeals decision in Fitzpatrick v. City of Atlanta, 2 F.3d 1112 (11th Cir.1993). The Court has followed that framework here.

*825 B.Collateral Estoppel

Collateral estoppel prevents the relitigation of issues already litigated and determined by a valid and final judgment in another court. HSSM # 7 Limited Partnership v. Bilzerian (In re Bilzerian), 100 F.3d 886, 892 (11th Cir.1996), cert. denied, 523 U.S. 1093, 118 S.Ct. 1559, 140 L.Ed.2d 791 (1998). And it is well-established that the doctrine of collateral estop-pel applies in a proceeding to determine the dischargeability of a debt in bankruptcy. Id.

The decision rendered by the Supreme Court in Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985) requires bankruptcy courts, in dis-chargeability proceedings, to utilize a state’s principles of collateral estoppel to determine the issue preclusive effect of a judgment rendered by a court of that state. “If the prior judgment was rendered by a state court, then the collateral estoppel law of that state must be applied to determine the judgment’s preclusive effect.” St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 676 (11th Cir. 1993).

Under Alabama law, a prior judgment may be accorded collateral estoppel effect if: (1) the issue involved in the prior proceeding was identical to the issue involved in the present proceeding; (2) the issue was “actually litigated” in the prior proceeding; (3) the resolution of the issue was necessary to the prior judgment; and (4) the parties in the present proceeding are the same as those involved in the prior proceeding. Lott v. Toomey, 477 So.2d 316, 319 (Ala.1985).

C.Section 523(a)(2)(A)

Section 523(a)(2)(A) of the Bankruptcy Code makes nondisehargeable debts for money, property, services or credit obtained by a debtor by “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.” 11 U.S.C. § 523(a)(2)(A). To have a debt declared nondisehargeable pursuant to 523(a)(2)(A), a creditor must prove:

1. The debtor made a false statement;
2. With the purpose and intention of deceiving the creditor;
3. The creditor relied on such false statement;
4.

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Cite This Page — Counsel Stack

Bluebook (online)
348 B.R. 820, 2006 Bankr. LEXIS 2014, 2006 WL 2474852, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hood-v-bennitt-in-re-bennitt-alnb-2006.