Pausch v. DiPiero (In re DiPiero)

553 B.R. 122
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedJuly 5, 2016
DocketNo. 15 B 5807; No. 15 A 337
StatusPublished
Cited by5 cases

This text of 553 B.R. 122 (Pausch v. DiPiero (In re DiPiero)) is published on Counsel Stack Legal Research, covering United States Bankruptcy 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
Pausch v. DiPiero (In re DiPiero), 553 B.R. 122 (Ill. 2016).

Opinion

MEMORANDUM OPINION

A. Benjamin Goldgar, United States Bankruptcy Judge

Lauren Pausch alleges in this adversary proceeding that chapter 7 debtor Todd DiPiero sexually assaulted her, she obtained a $2.5 million judgment against him in Wisconsin state court, and his debt to her is non-dischargeable under section 523(a)(6). of the Bankruptcy Code, 11 U.S.C. § 523(a)(6). In his answer, DiPiero neither admitted nor denied that Pausch’s adversary proceeding is a core proceeding. He also asserted as affirmative defenses that the bankruptcy court lacked subject matter jurisdiction because the adversary proceeding is a “personal injury tort” claim under 28 U.S.C. § 157(b)(5), and the Wisconsin state court violated several of his federal constitutional rights. At the end of his answer, he demanded a jury trial.

Pausch has moved to strike the answer, these affirmative defenses, and the jury demand. For the reasons that follow, Pausch’s motion will be granted in part and denied in part.

1. Jurisdiction

The court has subject matter jurisdiction of this case under 28 U.S.C. § 1334(b) and the district court’s Internal Operating Procedure 15(a). As explained below, this is a core proceeding. See 28 U.S.C. § 157(b)(2)(I); Wilson v. Walker (In re Walker), 515 B.R. 725, 740 (Bankr.W.D.Mo.2014).

2. Facts

The facts are taken from the complaint, the answer, the docket in this adversary proceeding (cited as “Adv. Dkt.”), and the docket of the Circuit Court of Milwaukee County, Wisconsin in Pausch v. Cormier, et al., NO.2008CV017208 (cited as “Wis. Dkt.”).1

Those facts are disturbing to say the least. In June 2007, Pausch alleges, DiPiero and two other men drugged her and took her to a hotel. (Comply 4). There, they physically and sexually assaulted her repeatedly. (Id.). Not only did they gang-rape her, but they videotaped the “hours-long rape” and made a DVD of it. (Id. ¶ 29). They also used Pausch’s own cell phone to take pictures during the ordeal, sending a picture of her face with a penis in her mouth to everyone on her cell phone’s contact list. (Id.).

In 2008, Pausch brought an action for damages in Wisconsin state court against DiPiero and his accomplices. (Id. ¶ 6). When DiPiero failed to answer or appear, Pausch moved - for a default judgment. (Id. ¶ 7). On the date her motion was to be heard, DiPiero and the others appeared without an attorney and asked for time to retain' one. (Id. ¶ 8). The court granted their request. (Id. ¶ 9). At the next hearing, however, only DiPiero appeared, no lawyer in tow. (Id. ¶ 10). The court therefore granted Pausch’s motion for default judgment and set the matter for a prove-up of damages. (Id. ¶ 11). DiPiero and his co-defendants then retained lawyers and moved for relief from the judgment. (Id. ¶ 13). But the court denied the motion and proceeded to conduct the prove-up (id. ¶¶ 14-15), awarding Pausch [126]*126$1 million in compensatory damages “joint and several as to all three defendants” and $500,000 in punitive damages “per defendant” (WisDkt. No. 21).

DiPiero and the other defendants appealed. The Wisconsin Court of Appeals affirmed the judgment in part, finding the circuit court had not abused its discretion in refusing to vacate the default judgment and had properly awarded both compensatory and punitive damages. See Pausch v. Cormier, 337 Wis.2d 90, 2011 WL 3055347, at *2-5 (Wis.Ct.App. July 26, 2011). Because the court of appeals was uncertain whether the punitive damages award was joint and several, the matter was remanded to the circuit court for clarification. Id. at *5. DiPiero and the others could have .petitioned for further review in the Wisconsin Supreme Court. See Wis. Stat. Ann. §§ 808.10(1), 809.62; see, e.g., Hommel v. Hommel, 162 Wis.2d 782, 471 N.W.2d 1 (1991). They did not. (See Wis. Dkt. Nos. 31-46 (reflecting activity on remand immediately after the decision on appeal)).

On remand, the circuit court clarified that the defendants were jointly and severally liable for $1,000,000 in compensatory damages, $1,500,000 in punitive damages, and $30,847.59 in fees. (Wis.Dkt. No. 37). On April 17, 2012, separate judgments were against each defendant. (Id. Nos. 41-46). Judgment was entered against DiPiero for $2,531,630.49. (Id. No. 42). Neither DiPiero nor any of his co-defendants appealed. (See generally Wis. Dkt. (reflecting no entries after the judgments)).

In February 2015, DiPiero filed a chapter 7 bankruptcy case in this district. Pausch then commenced this adversary proceeding. Her complaint has a single count alleging that DiPiero’s debt to her is non-dischargeable under section 523(a)(6) because it arises from a willful and malicious injury.

DiPiero answered, demanding a trial by jury.2 In his answer, DiPiero neither admitted nor denied Pausch’s allegation that her adversary proceeding was a core matter, stating only “that 28 U.S.C. § 157(b)(2) describes core proceedings as the allowance or disallowance of claims or determinations as to their dischargeability.” (Answer ¶ 2).

DiPiero also asserted five affirmative defenses.3 The first contests subject matter jurisdiction because 28 U.S.C. § 157(b)(5) requires Pausch’s claim to be tried in the district court rather than the bankruptcy court. (Answer ¶¶ 34-36). The second is that the complaint fails to state a claim on which relief can be granted. (Id. ¶ 37). The third defense is not entirely clear, but DiPiero appears to suggest that only the Wisconsin court’s punitive damages award, not the award of compensatory damages, is potentially non-dischargeable under section 523(a)(6). (Id. ¶¶ 38-41). The fourth asserts that the Wisconsin court violated both DiPiero’s Fourteenth Amendment right to due process and his Seventh Amendment right to [127]*127a jury trial when the court entered'a default judgment against him. (Id. ¶¶42-43). The fifth asserts that the Wisconsin court violated DiPiero’s Fourteenth Amendment right to equal protection because the court was prejudiced against DiPiero, an Illinois resident. (Id. ¶44).

Pausch has moved to strike the answer as a whole on the ground that DiPiero’s equivocal response to her allegation that this is a core proceeding fails to comply with Rule 7012(b) of the Federal Rules of Bankruptcy Procedure, Fed. R. Bankr.P. 7012(b).

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Cite This Page — Counsel Stack

Bluebook (online)
553 B.R. 122, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pausch-v-dipiero-in-re-dipiero-ilnb-2016.