Leathem v. Von Volkmar (In Re Von Volkmar)Leathem v. Von Volkmar (In Re Von Volkmar)
AMENDED MEMORANDUM OPINION
This matter comes before the Court on Plaintiffs demand for a trial by jury and Defendant’s denial thereof. For reasons set forth herein, the Court strikes and denies the demand as a matter of right as it applies to the equitable determination of whether Plaintiffs claims against Defendant are discharge-able under 11 U.S.C. § 523(a)(6). Because all the underlying claims which Plaintiff seeks to have liquidated are in the nature of alleged personal injuries, the Court lacks subject matter jurisdiction under 28 U.S.C. § 157(b)(5) to make such liquidation and award. Plaintiff may forthwith move to withdraw the District Court’s reference of this matter under 28 U.S.C. § 157(d) in order to preserve his claimed right to have a jury assess Defendant’s liability and award the damages claimed appropriate for Plaintiffs alleged personal injuries.
I. JURISDICTION AND PROCEDURE
This Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. § 1334 and Local General Rule 2.33(A) of the United States District Court for the Northern District of Illinois. The determination of the issue of whether Plaintiff’s claims against Defendant are dischargeable or not under 11 U.S.C. § 523(a)(6) is a core proceeding under 28 U.S.C. § 157(b)(2)®. The Court, however, lacks subject matter jurisdiction to try or liquidate Plaintiff’s personal injury claims against either the bankruptcy estate or Defendant under 28 U.S.C. § 157(b)(5).
II. FACTS AND BACKGROUND
Defendant, Richele von Volkmar ffk/a Richele Leathern (“Defendant”), filed for bankruptcy protection under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq., on February 14,1997. Prior to Defendant’s bankruptcy filing, Plaintiff, William Leathern (“Plaintiff”), filed two state court actions against Defendant involving various claims. Plaintiff initiated this adversary proceeding, pursuant to 11 U.S.C. § 523(a)(6), to determine dischargeability of various alleged debts based on the allegations presented in the state court actions. Because the state court actions were unresolved at the time of Defendant’s bankruptcy filing, Plaintiff also seeks liquidation and awards of damages for the claims underlying his dischargeability complaint as well as the dischargeability determination.
Plaintiff’s complaint includes the following allegations. Plaintiff and Defendant are former husband and wife. During the course of their marriage, the parties had two children. Defendant allegedly had threatened that she would “destroy [Plaintiffs] life and good reputation” if Plaintiff ever filed a dissolution of marriage petition (Plaintiffs Complaint, ¶ 10), which he did. Since their marital dis-' solution, Defendant has allegedly done exactly as she threatened. Plaintiffs complaint in this matter consists of the following six counts brought under 11 U.S.C. § 523(a)(6) and references his underlying state tort claims: (1) Count I: malicious prosecution of a criminal battery proceeding; (2) Count II: malicious prosecution of a civil proceeding for
It is the Court’s opinion that the jurisdictional limits created by 28 U.S.C. § 157(b)(5) effectively preclude this Court from determining the amounts of Plaintiffs various claims for damages against the Defendant and his demand for a jury trial on those issues can only be heard in the District Court for this District pursuant to § 157(b)(5). Consequently, in light of the limited subject matter jurisdiction of the Court, this opinion need not further extensively discuss the parties’ dispute over Plaintiffs claimed right to trial by jury and any related Seventh Amendment implications or application of 28 U.S.C. § 1411(a).
III. DISCUSSION
A. Jury Trials in Dischargeability Actions
In
N.I.S. Corp. v. Hallahan (In re Hallahan),
After determining that no Seventh Amendment right to a jury trial existed on the equitable issue of whether the claim should be discharged under the Bankruptcy Code, the Hallahan court discussed whether 28 U.S.C. § 1411 conferred a right to a jury trial in a dischargeability proceeding. Section 1411 states as follows:
(a) Except as provided in subsection (b) of this section, this chapter and title 11 do not affect any right to trial by jury that an individual has under applicable nonbankruptcy law with regard to a personal injury or wrongful death tort claim.
(b) The district court may order the issues arising under section 303 of title 11 to be tried without a jury.
28 U.S.C. § 1411. The dischargeability proceeding in
Hallahan
arose from a claim for a breach of covenant not to compete in a contract and, therefore, did not stem from a personal injury or wrongful death claim. The corporate plaintiff in
Hallahan
sued for injunctive relief claiming tortious interference with a business relationship. The Seventh Circuit only addressed subsection (b) of § 1411 and found that this statutory provision also did not confer the right to a jury trial in a dischargeability action.
Hallahan,
In addition, bankruptcy courts did not yet possess the express authority to conduct jury trials when the Seventh Circuit, decided the
Hallahan
case.
2
Therefore, the .Seventh Cir
Requiring the empaneling of a jury in bankruptcy court in the midst of the dischargeability proceedings, or perhaps referring the matter back to district court for a jury trial there, creates a cumbersome process. More importantly, however, allowing the bankruptcy judge to settle both the dischargeability of the- debt and the amount of the money judgment accords with the
rule generally followed by courts of equity that having jurisdiction of the parties to controversies brought before them, they will decide all matters in dispute and decree complete.relief.
Alexander v. Hillman, 296 U.S. [222,] 242,56 S.Ct. 204 [211,]80 L.Ed. 192 [ (1935) ]. Once properly before a court of equity, a party subjects himself or herself “to all the consequences that attach to an appearance[.]” id. at 241 [56 S.Ct. at 210 ]____
Id.
B. Dischargeability Actions and Personal Injury Claims
This Court has previously held that the umbrella of § 523(a)(6) can cover a variety of state tort based claims.
See Casey v. Transport Life Ins. Co. (In re Dorsey),
More recently, in
Mincey v. Frederick (In re Frederick),
the United States District Court for the Southern District of Indiana addressed a “more arduous issue” left unanswered in
Hallahan.
The more difficult issue than that addressed by the court in
Frederick
is squarely present here, however. That is whether a person seeking to liquidate his or her personal injury claim has a right to a jury trial and, if so, whether a bankruptcy court can preside over the trial. It seems clear that notwithstanding
Hallahan’s
judicial economy discussion and the bankruptcy court’s ability to now conduct jury trials pursuant to 28 U.S.C. § 157(e), the plain language of 28 U.S.C. § 157(b)(5) flatly prohibits a bankruptcy court from adjudicating and liquidating personal injury claims even when brought within a dischargeability proceeding.
See In the Matter of Grabill Corp.,
Th[e] special status [afforded personal injury and wrongful death claims] apparently stems from Congress’s recognition that most personal injury tort and wrongful death victims stand in a somewhat different relationship with the bankruptcy debt- or because they did not voluntarily enter into dealings with the debtor (and accept the risk of loss) in the same sense as traditional bankruptcy claimants.
Id. (citation omitted).
Therefore, if this Court determines that the tort claims underlying Plaintiff’s discharge-ability complaint are personal injury in nature, this matter must be transmitted back to the District Court for a complete adjudication and liquidation of the damages claimed by Plaintiff for which he seeks to hold the Defendant liable.
C. Personal Injury Tort Claims
What constitutes a “personal injury tort” claim for purposes of 28 U.S.C. § 157(b)(5) has relatively rarely been the subject of debate among courts. There does not appear to be a clear direction from the Seventh Circuit as to what is exactly encompassed within a personal injury claim for purposes of § 157(b)(5), notwithstanding
Grabill.
Not surprisingly, some courts have narrowly interpreted “personal injury tort” while others have applied a broader definition.
Compare In re Atron Inc. of Michigan,
An obvious and easily applied definition of “personal injury tort” is one which only in-
Broadly defined, however, the term “personal injury” encompasses “any injury which is an invasion of personal rights, and in this signification it may include such injuries to the person as libel or slander, criminal conversation, malicious prosecution, false imprisonment, and mental suffering.” Black’s Law Dictionary 786 (6th ed.1990);
In re Webb,
Although this Court concludes that the better view is that the term “personal injury tort” is not limited only to physical bodily harm, Plaintiffs complaint alleges personal injury tort claims no matter how the term is defined. Plaintiff alleges in each count of the complaint at bar that Defendant’s’ actions caused him to:
suffer great anxiety and pain of body and mind, and [he] continues to suffer the same today, in that Plaintiff did and continues to suffer from (a) the stress and anxiety of being subjected to arrest, trial, and possible imprisonment, (b) aggravation of a gastric disorder, (c) loss of weight, (d) loss of sleep, (e) loss of appetite, (f) hair loss, (g) nervousness, (h) an inordinate number of head aches [sic], and (i) an inordinate number of upset stomach [sic] and stomach aches.
(Plaintiffs Complaint, Count I, ¶ 32). See also Count II, ¶ 47; Count III, ¶ 71; Count IV, ¶ 83; Count V, ¶ 96; Count VI, ¶ 111. As such, Plaintiffs complaint asserts a plethora of physical injuries allegedly caused by Defendant’s acts. ■
In addition to the above-listed injuries, Plaintiff also contends, among other things, that he “did and continues to suffer from” “the stress and anxiety of being subjected to [an] Emergency Order, the hearing thereon, and the possibility of being further subjected to a. two-year plenary Order of protection” (Plaintiffs Complaint, ¶ 47); “the stress and anxiety of ... not being able to see or talk to his children” (Plaintiffs Complaint, ¶¶ 47, 71, 83), and “the stress and anxiety of the [State of Illinois Department of Children and Family Services] and Police investigations.” (Plaintiffs Complaint, ¶111). At the very least, Plaintiffs allegations are well beyond claims of mere shame and humiliation. Hence, this Court concludes that all of Plaintiffs underlying claims seek recovery for personal injuries and cannot be liquidated or
IV. CONCLUSION
Although neither Plaintiff nor Defendant has moved the District Court to withdraw the reference of this matter, 28 U.S.C. § 157(b)(5) precludes this Court from completely adjudicating all of Plaintiffs claims. Unless Plaintiff wishes this Court at a bench trial to make only a bankruptcy discharge-ability determination under 11 U.S.C. § 528(a)(6), all other issues raised in Plaintiffs complaint must be decided in the District Court. As explained above, however, Plaintiff is not entitled to a jury trial in this Court should he choose to litigate only the dischargeability determination here. Further, the Seventh Circuit clearly stated in
Hallaban
that bifurcation of a dischargeability proceeding is judicially uneconomical.
This Opinion constitutes the Court’s findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052. A separate order shall be entered pursuant to Federal Rule of Bankruptcy Procedure 9021.
Notes
. The Supreme Court stated the two-part inquiry as follows: "[fjirst, we compare the statutory action to 18th-century actions brought in courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature.”
Granfinanciera,
. As part of the Bankruptcy Reform Act of 1994, however. Congress amended 28 U.S.C. § 157(e)
. Section 157(b)(2)(B) of Title 28 of the United States Code also limits a bankruptcy court’s jurisdiction over personal injury claims. Section 157(b)(2)(B) states that core proceedings include "allowance or disallowance of .claims against the estate from property of the estate, ... but not liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under Title 11.” 28 U.S.C. § 157(b)(2)(B) (emphasis added). As the Trustee filed a No Asset Report on March 20, 1997, no distribution will be made in this case. Hence, 28 U.S.C. § 157(b)(2)(B) is not implicated here.
. It should also be noted that this Court is likewise prohibited from resolving Defendant’s affirmative defenses.
See Pettibone,