Opinion
Case No. 8:20-bk-03244-RCT Adv. No. 8:20-ap-00426-RCT
04-12-2021
In re Matthew James Curry and Kristin Lee Curry, Debtors. Bartholomew Webb and Jonathan R. Webb, Plaintiffs, v. Matthew James Curry, Defendant.
Chapter 13 ORDER DENYING PLAINTIFFS' MOTION FOR JUDGMENT ON THE PLEADINGS
Plaintiffs Bartholomew and Jonathan R. Webb move for judgment on the pleadings on their non-dischargeability complaint against Debtor-Defendant Matthew James Curry ("Debtor"). Plaintiffs assert their Motion should be granted notwithstanding Debtor's general denial of their allegations on collateral estoppel grounds. Specifically, Plaintiffs argue Debtor is estopped from disputing the factual allegations in their complaint because of a state-court default entered against Debtor. For the reasons that follow, Plaintiffs' Motion is denied.
Doc. 13 (Plaintiffs' Motion for Judgment on the Pleadings (the "Motion")). Debtor failed to respond to the Motion.
Background
Plaintiffs' non-dischargeability complaint is based on and incorporates factual allegations made against Debtor in an eight-count Florida state court complaint. Debtor failed to answer the complaint after being granted an extension of time to respond. As a consequence, the state court judge entered a default against him. Shortly thereafter, Plaintiffs moved for final judgment. Apparently, at the hearing on the motion Debtor requested a jury trial to decide damages. A pre-trial hearing and trial were set, but about two-weeks before the hearing Debtor filed for chapter 13 bankruptcy. Debtor voluntarily dismissed that bankruptcy case but filed another chapter 13 case before the state court litigation could be resolved. Plaintiffs subsequently initiated this adversary proceeding seeking a determination that the debt owed to them by Debtor is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2), (4), and (6). Debtor answered the complaint with a general denial. Plaintiffs now seek judgment on the pleadings, contending the underlying facts are not in dispute because Debtor is estopped from denying the state-court allegations.
Doc. 13 Ex. A. Case No. 2018-CA-002452 filed in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County. The Court takes judicial notice of the state court docket pursuant to Fed. R. Evid. 201(b).
Doc. 13 Exs. C & F.
Doc. 13 Ex. F.
Doc. 13 Ex. D at 2.
Doc. 1 ¶ 14.
Id.
Doc. 1 ¶ 15.
Doc. 1 ¶¶ 15 & 17.
Doc. 1.
Doc. 8.
Judgment on the Pleadings Standard
Pursuant to Federal Rule of Civil Procedure 12(c) "[a]fter the pleadings are closed — but early enough not to delay trial — a party may move for judgment on the pleadings." At the judgment on the pleadings stage, the Court considers the complaint, the answer, documents attached as exhibits, and any judicially noticed facts. "Judgment on the pleadings is appropriate where no issue of material fact remains unresolved and the moving party is entitled to judgment as a matter of law." Put another way, judgment on the pleadings "only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the ... court."
Fed. R. Civ. P. 12(C) made applicable here by Fed. R. Bankr. P. 7012.
See Cunningham v. District Attorney's Office for Escambia County, 592 F.3d 1237, 1255 (11th Cir. 2010); Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000).
Dunn v. Mercantil Commercebank, N.A. (In re GPC Miami Inc.), 582 B.R. 534, 537 (Bankr. S.D. Fla. 2018) (quoting Mergens v. Dreyfoos, 166 F.3d 1114, 1117 (11th Cir.1999)).
5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1367 (3d ed. 2004).
Discussion
Understanding Debtor denied their allegations in this proceeding, Plaintiffs invoke collateral estoppel as the means by which their motion for judgment on the pleadings can be granted. Collateral estoppel, also known as estoppel by judgment, applies in actions to declare a debt non-dischargeable. As in other contexts, it prevents re-litigation of issues decided in a prior judicial proceeding. In assessing whether a state court decision should be given collateral estoppel effect, "the collateral estoppel law of that state must be applied to determine the judgment's preclusive effect." Under Florida collateral estoppel law, Plaintiffs must establish the following elements to successfully invoke the doctrine:
Lasky v. Itzler (In re Itzler), 247 B.R. 546, 552 (Bankr. S.D. Fla. January 20, 2000) ("[U]nder Florida law, the terms 'estoppel by judgment' and 'collateral estoppel' are synonymous." (citing Starr Tyme, Inc. v. Cohen, 659 So. 2d 1064 (Fla. 1995) ("Collateral estoppel, which is also known as estoppel by judgment, serves as a bar to relitigation of issues that have been determined by a valid judgment."))).
Grogan v. Garner, 498 U.S. 279, 285 n. 11, 111 S. Ct. 654, 658 n. 11, 112 L. Ed. 2d 755 (1991).
Bush v. Balfour Beatty Bahamas, Ltd., 62 F.3d 1319, 1322 (11th Cir. 1995).
Accel Motorsports Inc. v. Rosario (In re Rosario), No. 14-01382-KSJ, Adv. No. 14-00044-KSJ, 2015 WL 232427, at *2 (Bankr. M.D. Fla. Jan. 13, 2015) (citing St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 676 (11th Cir. 1993)).
(1) the issue at stake must be identical to the one decided in the prior litigation;
(2) the issue must have been actually litigated in the prior proceeding;
(3) the prior determination of the issue must have been a critical and necessary part of the judgment in that earlier decision; and
(4) the standard of proof in the prior action must have been at least as stringent as the standard of proof in the later case.
St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672, 676 (11th Cir. 1993); see also Quinn v. Monroe County, 330 F.3d 1320, 1329 (11th Cir. 2003) ("Under Florida law, collateral estoppel applies if (1) an identical issue, (2) has been fully litigated, (3) by the same parties or their privies, and (4) a final decision has been rendered by a court of competent jurisdiction.").
Plaintiffs fail to address these elements in their Motion. Instead, Plaintiffs contend Debtor is collaterally estopped from denying the factual allegations in the state-court complaint because, as a matter of law, Debtor's default is entitled to preclusive effect. In support of this proposition, Plaintiffs cite three cases where courts found collateral estoppel could be applied to default judgments (so long as the other elements were met). Indeed, under Florida collateral estoppel law this is not controversial.
See Doc. 13 ¶¶ 11-14.
In re Bush, 62 F.3d 1319, 1325 (11th Cir. 1995); In re Itzler, 247 B.R. 546, 551 (Bankr. S.D. Fla. 2000); Accel Motorsports Inc. v. Rosario (In re Rosario), No. 14-01382-KSJ, Adv. No. 14-00044-KSJ, 2015 WL 232427, at *2 (Bankr. M.D. Fla. Jan. 13, 2015).
Masciarelli v. Maco Supply Corp., 224 So. 2d 329 (Fla. 1969); Avant v. Hammond Jones, Inc., 79 So. 2d 423 (Fla. 1955).
But there is a key difference between those cases and this case. Namely, those cases were resolved by judgments. Here, Plaintiffs would have the Court apply collateral estoppel to a default. Plaintiffs do not cite, nor has this Court found, authority that supports such an application. This is not surprising considering the third element of collateral estoppel requires the prior determination of the issue to be a critical and necessary part of the judgment in the earlier decision.
A default is not a judgment. Rather, it is a procedural device used to prevent "a dilatory or procrastinating defendant from impeding the plaintiff in the establishment of his[, her, or its] claim."
Henry Trawick, Trawick's Florida Practice and Procedure § 26-2 (2020-2021 ed.) (citing Pan Am. World Airways, Inc. v. Gregory, 96 So. 2d 669 (Fla. 3d DCA 1957)).
Contreras v. Stambul, LLC, 306 So.3d 1143, 1144 (Fla. 3d DCA 2020) (quoting Coggin v. Barfield, 8 So. 2d 9, 11 (Fla. 1942)).
Certainly, the facts deemed admitted by Debtor's default must be taken as true for purposes of the state court proceeding. However, Plaintiffs have not offered a basis for those facts to cross-over to this proceeding absent an accompanying judgment. Accordingly, Plaintiffs' Motion for Judgment on the Pleadings (Doc. 13) is denied.
See Fla. R. Civ. P. 1.110(e); Pro-Art Dental Lab, Inc. v. V-Strategic Group, LLC, 986 So. 2d 1244, 1256 (Fla. 2008); Days Inns Acquisition Corp. v. Hutchinson, 707 So. 2d 747, 749 (Fla. 4th DCA 1997) ("On entry of default, the defaulting party admits ... the well-ple[d] factual allegations of the complaint against it."). --------
It is so ORDERED.
ORDERED. Dated: April 12, 2021
/s/_________
Roberta A. Colton
United States Bankruptcy Judge Clerk's office to serve.