Reed v. Griffin
Filing
11
ORDER DISMISSING CASE signed by Judge Rudolph T. Randa on 3/22/2016. Reed's appeal DENIED, Bankruptcy Court's 7/17/2015 order AFFIRMED. 10 Griffin's motion to dismiss GRANTED. Appeal DISMISSED. (cc: via mail to both parties)(cb)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
LINDA REED,
Appellant-Plaintiff,
-vs-
Case No. 15-C-920
(Bankruptcy Case No. 15-24529)
(Adversary No. 15-02259)
JOSEPH L. GRIFFIN, JR.,
Appellee-Debtor.
DECISION AND ORDER
Pro se Appellant Linda Reed appeals the July 17, 2015, Order of the
bankruptcy court, which dismissed her adversary complaint in the abovecaptioned action. Pro se appellee Joseph L. Griffin, Jr. filed a motion to
dismiss the appeal (ECF No. 10), contending that any debt he owed to Reed
was discharged in an earlier bankruptcy proceeding.
Standard of Review
This Court has jurisdiction over this matter pursuant to 28 U.S.C.
§ 158, which allows district courts to hear appeals from final judgments,
orders, and decrees of the bankruptcy courts. District courts apply a dual
standard of review in bankruptcy appeals—the bankruptcy judge’s findings
of fact are reviewed for clear error, while conclusions of law are reviewed
de novo. In re Midway Airlines, 383 F.3d 663, 668 (7th Cir. 2003); In re
Smith, 286 F.3d 461, 464-65 (7th Cir. 2002).
However, where the
bankruptcy code commits a decision to the discretion of the bankruptcy
court, that decision is reviewed only for an abuse of discretion. See Wiese v.
Cmty Bank of Cent. Wis., 552 F.3d 584, 588 (7th Cir. 2009). “[A] court
abuses its discretion when its decision is premised on an incorrect legal
principle or a clearly erroneous factual finding, or when the record contains
no evidence on which the court rationally could have relied.” Id. (Citation
omitted.)
Background1
This matter involves two bankruptcy filings in the Eastern District
of Wisconsin by Appellee-Debtor Joseph L. Griffin, Jr. and his wife,
Latoya. The first case, No. 05-27208 (Griffin I), was filed under chapter 13
in April 2005 and converted to chapter 7 in April 2008.
Reed had a 2005 small claims money judgment against the Griffins.
The Griffins listed Reed and the debt owed her on Schedule F in the
Griffin I bankruptcy.
Reed did not file a complaint seeking a
determination that the debt owed to her was nondischargeable, and the
Griffins received a chapter 7 discharge of indebtedness on August 8, 2008.
The following facts are taken from the Bankruptcy Court’s June 15 and July 17,
2015, Orders.
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The second case, No. 15-24529 (Griffin II), was filed in April 2015.
In June, Reed filed an adversary complaint (No. 15-2259) in relation to
Griffin II, seeking declaration that the small claims debt the Griffins owed
her was nondischargeable under 11 U.S.C. § 523(a)(2). (Bankr. R. #1.)
Reed also requested that the bankruptcy court waive her filing fee.
(Bankr. R. #2.)
By a June 15, 2015, Order, the bankruptcy court informed Reed that
the debt she sought to have determined nondischargeable appeared to have
been discharged in Griffin I and therefore Reed’s motion to waive the filing
fee was denied for lack of success on the merits of her complaint. (Bankr.
R. # 6.) The order also stated that the court would not issue a summons
and would dismiss Reed’s complaint with prejudice on July 14 unless she
showed a good faith basis to maintain that the debt owed to her was not
discharged in Griffin I.
On July 8, Reed filed a response to the court’s order. (Bankr. R. # 8.)
The gist of Reed’s response was that the debt owed to her was not
discharged in Griffin I because her claim had not accrued yet, and she
relied on Wisconsin’s discovery rule for torts, which states that a claim
accrues when the victim first discovers her injury. She contended that her
claim first arose when she discovered that the debt owed to her was the
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result of fraud, which she stated was not until the filing of the 2015
bankruptcy.
The bankruptcy court held that the basis for Reed’s claim was the
money judgment she obtained in state court in 2005, establishing that
Reed discovered her injury — the loss of money due to the Griffins’ failure
to repay her loan to them — before the Griffins’ 2005 bankruptcy. The
court further noted that Reed did not argue nor did the record show that
she was not listed as a creditor in Griffin I or that she did not receive
notice of that bankruptcy. Additionally, the court indicated that Reed had
conceded her debt was discharged, quoting Reed’s statement: “[t]he new
filing of the Griffins[’] 2015 bankruptcy has triggered [Reed] to investigate
their current bankruptcy and the previous one [in] which the wrongdoers
discharged [Reed’s] debt.” (Bankr. R. #9, 2-3.) The court held that the facts
Reed presented confirmed that her debt was discharged on August 8, 2008,
because she failed to timely file an adversary complaint in Griffin I to
contest its dischargeability, citing 11 U.S.C. § 523(c)(1) and Fed. R. Bankr.
P. 4007(c).
On July 17, the bankruptcy court dismissed Reed’s adversary
proceeding, holding that she failed to show a good faith basis to maintain
that the debt owed to her was not discharged in Griffin I and that she did
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not make any allegation that would have afforded her standing to allege
that the Griffins were not entitled to a discharge in Griffin II.
The
bankruptcy court held “now that her debt has been discharge[d] she is
forever enjoined from seeking to collect on it. 11 U.S.C. § 524(a)(1) & (2).”
(Id. at 3.)
Analysis
Reed contends that the bankruptcy court erred when it did not
provide her relief.2 (Appellant Opening Br. 4, ECF No. 5.) Griffin seeks
dismissal of the appeal for the following reasons: (1) the debt was
discharged in 2008, as reflected by the July 2015, satisfaction of judgment
in Reed’s underlying state small claims action; (2) Reed has used the legal
process to harass the Griffins and their friends and family, which can be
verified by a search of Illinois and Wisconsin state court records; and (3)
Reed is retaliating against the Griffins by delaying the bankruptcy
proceedings in Griffin II. Griffin also states that he awaits documentation
requested from his former attorney.
Section 524(a), which governs the effect of a discharge, states:
A discharge in a case under this title:
Page one of Reed’s opening brief also lists issues presented (ECF No. 5);
however, those issues are not before this Court because they relate to the merits of her
adversary complaint which were not addressed by the decision that Reed is appealing.
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(1) voids any judgment at any time obtained, to the extent that
such judgment is a determination of the personal liability of
the debtor with respect to any debt discharged under section . .
. 727 . . . of this title, whether or not discharge of such debt is
waived;
(2) operates as an injunction against the commencement or
continuation of an action, the employment of process, or an
act, to collect, recover or offset any such debt as a personal
liability of the debtor, whether or not discharge of such debt is
waived . . .
11 U.S.C. § 524(a)(1)-(2).3 See In re Bahary, 528 B.R. 763, 769 (Bankr. N.D.
Ill. 2015).
The bankruptcy court dismissed Reed’s attempt to file an adversary
proceeding in Griffin II to pursue her discharged claim. She argues that
her claim was timely based on the “discovery rule” as used in Wisconsin
tort cases, whereby tort claims “accrue on the date the injury is discovered
or with reasonable diligence should be discovered, whichever occurs first.”
Hansen v. A.H. Robins, Inc., 335 N.W.2d 578, 583 (Wis. 1983).
The
bankruptcy court did not address the merits of Reed’s objections to
discharge under 11 U.S.C. §§ 523 or 727 because it found that (a) her debt
had been discharged and (b) she lacked a legal basis (also referred to as
Pursuant to § 103(a) of the Bankruptcy Code, chapters 1, 3, and 5 of the Code
apply in cases filed under chapters 7, 11, 12 or 13. For that reason, § 524’s discharge
injunction applies to the Griffins’ 2005 chapter 7 case.
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standing) to pursue her contentions.
The bankruptcy court’s factual
findings which are uncontested support that legal conclusion.
The Bankruptcy Code “discharges the debtor from all debts that
arose before the date of the order for relief under this chapter.” § 727(b).
The purpose of the Code is to permit an honest debtor “to start afresh free
from the obligations and responsibilities consequent upon business
misfortunes.” Vill. San Jose v. McWilliams, 284 F.3d 785, 790 (7th Cir.
2002) (quoting Williams v. United States Fid. & Guar. Co., 236 U.S. 549,
554-55 (1915)) (internal quotation marks omitted).
Exceptions to
discharge are to be construed strictly against a creditor and liberally in
favor of the debtor, Stamat v. Neary, 635 F.3d 974, 979 (7th Cir. 2011);
however, consistent with the Code, bankruptcy protection and discharge
may be denied to a debtor who was less than honest. Grogan v. Garner,
498 U.S. 279, 286-87 (1991).
The bankruptcy court found that Reed did not allege any basis upon
which she would have standing to object to the discharge.
A plaintiff
bears the burden of establishing that she meets the required elements of
standing. Retired Chi. Police Assoc. v. City of Chi., 76 F.3d 856, 862 (7th
Cir. 1996) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).
“If standing is challenged as a factual matter, the plaintiff must come
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forward with ‘competent proof’. . . that standing exists.” Lee v. City of
Chi., 330 F.3d 456, 468 (7th Cir. 2003).
“Competent proof” requires a
plaintiff to show that standing exists “by a preponderance of the evidence,
or proof to a reasonable probability.” Retired Chi. Police Assoc., 76 F.3d at
862.
To challenge dischargeability under §§ 523(a) and 727(a), a plaintiff
must first be a creditor of the debtor. See generally In re Volpert, 175 B.R.
247, 255-58 (Bankr. N.D. Ill. 1994). With respect to the 2015 bankruptcy,
although Reed was listed as a creditor, her debt had been previously
discharged in Griffin I. Under Wisconsin law, Reed no longer has any
outstanding judgment, as reflected by the July 6, 2015, satisfaction of
judgment filed in her underlying small claims case.4 See id. Therefore,
this Court concludes that the bankruptcy court did not err as a matter of
law when it determined that Reed failed to show her debt was not
discharged in Griffin I, and that she made no allegation that would afford
her standing to object to the discharge in Griffin II.
In contending that the bankruptcy court erred when it declined to
provide her relief, Reed also maintains that although § 524(a) creates a
Pursuant to Rule 201 of the Federal Rules of Evidence, the Court takes judicial
notice that Reed’s judgment in Reed v. Griffin, 2004 SC 41178 (Milwaukee Cnty. Cir.
Ct.) was satisfied on July 6, 2015, due to bankruptcy.
See https://wcca.wicourts.gov/(last visited March 3, 2016).
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permanent injunction that prevents a debtor from being liable for
prepetition debts once they are discharged, Rule 60(b) of the Federal Rules
of Civil Procedure, made applicable by Bankr. R. 9024, provides for relief
from judgment. While Rule 60(b) relief is an extraordinary remedy and is
only granted under exceptional circumstances, C.K.S. Engineers, Inc. v.
White Mountain Gypsum Co., 726 F.2d 1202, 1204-05 (7th Cir. 1984),
under the proper circumstances such relief may be available, see Disch v.
Rasmussen, 417 F.3d 769, 778-79 (7th Cir 2005); see also, IRS v. Murphy,
No. 2:14-CV-340-DBH, 2015 WL 790075, at *1 (D. Me. Feb. 24, 2015),
appeal dismissed, No. 15-1514 (1st Cir. Nov. 04, 2015).
Request seven on the last page of Reed’s response to the bankruptcy
court’s order is that the bankruptcy court reopen Griffin I. That request
was not accompanied by any argument or citation to legal authority.5 It is
not the role of the court to develop arguments for parties. See Fabriko
Acquisition Corp. v. Prokos, 536 F.3d 605, 609 (7th Cir. 2008). Thus, Reed
has not demonstrated that the bankruptcy court erred as a matter of law
with respect to her summary request to reopen the case.
In light of the foregoing, the bankruptcy court’s decision is affirmed,
The bankruptcy court’s decision does not mention Reed’s summary request to
reopen Griffin I or her mental health problems and disability status as detailed in her
July 8, 2015 bankruptcy court filing, which could be considered as basis for relief under
Rule 60(b) and/or as a basis for equitable tolling.
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and this appeal is dismissed.
Consistent with that determination,
Griffin’s motion to dismiss is also granted.
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS
HEREBY ORDERED THAT:
Reed’s appeal is DENIED and the bankruptcy court’s July 17, 2015,
Order is AFFIRMED;
Griffin’s motion to dismiss (ECF No. 10) is GRANTED;
This appeal is DISMISSED; and
The Clerk of Court is DIRECTED to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 22nd day of March, 2016.
BY THE COURT:
HON. RUDOLPH T. RANDA
U.S. District Judge
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