Stackhouse v. Hudson (In Re Hudson)

73 B.R. 649, 16 Collier Bankr. Cas. 2d 1414, 1987 Bankr. LEXIS 790, 15 Bankr. Ct. Dec. (CRR) 1308
CourtUnited States Bankruptcy Appellate Panel for the Ninth Circuit
DecidedMay 15, 1987
DocketBAP No. WW 86-1853 EAsMe, Bankruptcy No. 85-05471 W7, Adv. No. A 86-01857
StatusPublished
Cited by13 cases

This text of 73 B.R. 649 (Stackhouse v. Hudson (In Re Hudson)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stackhouse v. Hudson (In Re Hudson), 73 B.R. 649, 16 Collier Bankr. Cas. 2d 1414, 1987 Bankr. LEXIS 790, 15 Bankr. Ct. Dec. (CRR) 1308 (bap9 1987).

Opinion

ELLIOTT, Bankruptcy Judge:

Gregory and Esther Stackhouse appeal from an order granting summary judgment in favor of David Rock Hudson on a complaint to determine dischargeability of a pending drunk driving lawsuit against Hudson. We affirm.

On March 28, 1982, Gregory Stackhouse was riding his motorcycle westbound on LaPush Road in Clallum County, Washington. David Rock Hudson was driving his truck eastbound on the same road, when he crossed over the center divider and hit Stackhouse head on. Stackhouse sustained serious injuries. A Washington State Trooper administered a breathalyzer test to Hudson immediately after the collision. Hudson was cited for and later convicted of driving while intoxicated.

Stackhouse and his wife filed suit against Hudson in the Clallum County Superior Court, for personal injuries to Gregory Stackhouse and loss of consortium to Esther Stackhouse. On December 12, 1985, one day before the trial was to begin, Hudson filed a Chapter 7 petition in bankruptcy. The state court action was stayed.

The bankruptcy court set April 7, 1986, as the last day for filing complaints to determine dischargeability under § 523(c). On March 24, 1986, Hudson filed a complaint to determine the dischargeability of the Stackhouses’ claims against him under § 523(a)(9). The Stackhouses had until April 28, 1986, to respond. On April 24, 1986, after the deadline for filing § 523(c) *651 nondischargeability complaints, the Stack-houses filed an answer to the complaint, with counterclaims against Hudson.

On April 23, 1986, Judge Steiner granted a discharge to Hudson on the grounds that no complaint objecting to discharge had been filed within the allowed time. On June 20, 1986, Hudson filed a motion for summary judgment on his complaint, based on the discharge already granted. Hudson also argued that the Stackhouses could not recover under § 523(a)(9) because they did not have a judgment or consent decree as required by the statute.

The bankruptcy judge, at a hearing on September 9, 1986, gave summary judgment for Hudson on the ground that the debt was already discharged. This judgment was not entered until September 16, 1986. The Stackhouses filed their notice of appeal on September 12, 1986. On or about October 3, 1986, the Stackhouses brought a motion before the bankruptcy court to modify the judgment. The judge modified the order to clarify certain facts and set forth the reasons the court granted summary judgment for Hudson.

Issues

1. Is the notice of appeal timely where the appellants filed a motion to amend the judgment after the notice of appeal was filed, and where the notice of appeal was filed prior to entry of the judgment?

2. Is it a condition precedent to recovery under § 523(a)(9) that the creditor obtain a judgment for damages before the debtor files bankruptcy?

3. If the debtor files a complaint seeking determination of dischargeability under 11 U.S.C. § 523(a)(9), but the creditor does not answer seeking affirmative relief until after the bar date set by § 523(c), is the creditor’s request for relief under § 523(a)(6) nevertheless timely?

Discussion

1. Timeliness of Appeal

We first review the procedural history to determine if the Stackhouses may bring this appeal. Hudson claims that the Stackhouses did not file a timely notice of appeal. Hudson asserts that under Bankruptcy Rule 8002(b), a notice of appeal filed before a motion to amend under Bankruptcy Rule 7052, has no effect, and must be refiled after the motion to alter or amend. Here, the Stackhouses did not file a new notice of appeal after the motion to modify the judgment was granted.

The controlling case on this issue is FTC v. Minneapolis-Honeywell Regulator Co., 344 U.S. 206, 73 S.Ct. 245, 97 L.Ed. 245 (1952). The Supreme Court held that the time for filing an appeal is tolled only when the court changes the legal rights and obligations in a modified order. Absent a change in rights, the time for filing an appeal is not tolled. The rationale of Minneapolis-Honeywell applies to the present case. A new notice of appeal is not required except where the court changes rights and obligations by the modified order. Here, the modified judgment still granted summary judgment for Hudson. Therefore, we hold that the modified judgment did not require the refiling of the notice of appeal. The Stackhouses’ notice of appeal was timely filed.

Hudson also claims that the appeal should be dismissed because the notice of appeal was filed before the judgment was entered. It is well-settled in the Ninth Circuit that a notice of appeal filed after the decision, but before the order is signed, filed or served, is timely. Matter of Brickyard, 735 F.2d 1154 (9th Cir.1985).

2. Necessity for a judgment under § 523(a)(9)

We review the order granting summary judgment under the de novo standard of review, as the issues are questions of law. This panel must view the evidence and draw factual inferences in the manner most favorable to the Stackhouses as the non-moving party. Then, a grant of summary judgment will be affirmed only if there are no genuine issues of material fact, and the moving party is entitled to prevail as a matter of law. In re Stephens, 51 B.R. 591 (9th Cir. BAP 1985). Here, the parties agree on the facts. The dispute centers *652 around the interpretation of § 523(a)(9) and the timeliness of the complaint. We review the bankruptcy court’s judgment to determine if Hudson is entitled to prevail as a matter of law.

Hudson argues that the Stackhous-es’ claims are dischargeable because they have not been reduced to a judgment as required by § 523(a)(9). Numerous bankruptcy courts have confronted this situation, and have uniformly held that Congress could not have meant to foreclose a victim of a drunk driver who has not had time to obtain a judgment in state court before the drunk driver files bankruptcy.

One of the earliest cases to make this finding was In re Thomas, 51 B.R. 187 (Bankr.E.D.Va.1985). In this case, the administrator of the estate of a motorist killed in a collision filed a complaint to determine dischargeability of the drunk driving claim against the debtor. The debt- or moved to strike the complaint on the ground that § 523(a)(9) requires a judgment. The court acknowledged that the literal language of the statute required a judgment. The court held, “[a]s worded, the legislation gives quick-thinking drunks or their attorneys an out. If they can race to the U.S. Bankruptcy Court before the injured can obtain a state court judgment, the intoxicated debtor can still prevail.... Really, absent a dilatory debtor, one injured can still not prevail.” Id. at 188-89. (emphasis in original).

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73 B.R. 649, 16 Collier Bankr. Cas. 2d 1414, 1987 Bankr. LEXIS 790, 15 Bankr. Ct. Dec. (CRR) 1308, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stackhouse-v-hudson-in-re-hudson-bap9-1987.