Opinion
No. 7-95-11923 MA, Adv. No. 00-1248 M.
November 19, 2004
Mr. John L. Salazar, Central NM Correctional Facility, Los Lunas, NM, for Plaintiff.
P. Diane Webb, Albuquerque, NM, Attorney for McCormick.
MEMORANDUM OPINION
THIS MATTER is before the Court on Defendant James A. McCormick's Motion Summary Judgment (the "Motion for Summary Judgment") filed on August 15, 2003 by and through his counsel, P. Diane Webb ("Webb"). The Plaintiff, pro se, filed a Memorandum in Opposition to Memorandum in Support of Defendant Trustee, James A. McCormick's Motion for Summary Judgment (the "Response") on September 3, 2003.
Plaintiff is the president of the Debtor, Crestview Funeral Home, Inc. ("Crestview") and is a creditor of Crestview. Defendant, James A. McCormick ("McCormick"), is the Trustee of the Debtor's Chapter 7 bankruptcy estate. Crestview's Chapter 11 bankruptcy proceeding was filed on July 5, 1995 and was converted to Chapter 7 on April 17, 1998. Plaintiff filed this Complaint (the "Complaint") on July 12, 2000 against McCormick in the U.S. District Court for the District of New Mexico alleging fraud, tortious interference with contractual relations, violation of fiduciary duty, defamation, and prima facie tort. The District Court referred several of the causes of action to this Court. After reviewing the Motion for Summary Judgment, the Response, the pleadings, and the supporting documentation submitted by both parties, and, being otherwise sufficiently informed, the Court finds that summary judgment is appropriate and will grant the Defendant's Motion for Summary Judgment.
UNDISPUTED MATERIAL FACTS
1. This Complaint against McCormick and P. Diane Webb, ("Webb") was originally filed in the United States District Court for the District of New Mexico. Civ. 00-989BB/WWD.
2. Two months prior to the filing of this adversary proceeding, Plaintiff filed a Complaint in this Court against McCormick for fraud and breach of fiduciary duty in managing the Crestview bankruptcy estate both as Chapter 11 trustee and as Chapter 7 trustee. Adv. Proc. No. 00-1091M.
3. In this pending proceeding, the District Court dismissed the Complaint against Webb. The District Court also dismissed the libel, slander and defamation claims and referred the remaining claims to this Court.
4. On April 27, 2001, Plaintiff filed another Complaint for Libel, Slander and Defamation, D-1333-CV 2-00-10105, against McCormick and other defendants (the "State Court Complaint") in the Thirteenth Judicial District Court for the County of Cibola, State of New Mexico (the "State Court"). See Exhibit 4 to Motion for Summary Judgment. The State Court dismissed the Complaint against all the defendants, including McCormick, finding that Plaintiff was "libel proof" because he had pleaded guilty to criminal charges of forgery in connection with the management of Crestview's pre-need funeral accounts. Alternatively, the State Court found that based on the Plaintiff's prior convictions, the statements at issue were not defamatory because they were substantially true. Order, D1333-CV 2-00-10105, Exhibit 5 to Motion for Summary Judgment.
5. Plaintiff appealed the State Court's dismissal to the New Mexico Court of Appeals. The Court of Appeals affirmed the decision on grounds that Plaintiff's guilty plea was sufficient to support a finding that the statements were substantially true. See New Mexico Court of Appeals Memorandum Opinion, No 22,852, Exhibit 6 to Motion for Summary Judgment. Plaintiff's petition for writ of certiorari to the New Mexico Supreme Court was denied on December 12, 2002. See Exhibit 7 to Motion for Summary Judgment.
6. In this adversary proceeding, Plaintiff filed a Motion to Compel the Department of Justice to Provide John L. Salazar With The Remaining Sixty-Two Documents In His File on February 10, 2003 (the "Motion to Compel"). The Court denied the motion for lack of jurisdiction. See Docket # 44.
The Court had previously granted the Plaintiff's Motion to Compel on October 9, 2003. The Court later granted the Justice Department's Motion to Reconsider, set aside its previous order and denied the Plaintiff's Motion to Compel. The Court concluded that it lacked jurisdiction to adjudicate the Motion to Compel because it was in fact a re-submission of a previous request for documents to be released under the Freedom of Information Act, and such requests must be brought in U.S. District Court.
7. On December 15, 2003, the Court entered a separate order in this adversary proceeding allowing Plaintiff access to all of Crestview's bankruptcy and business files that were held in storage by McCormick. The records were delivered to Plaintiff for inspection.
8. After allowing Plaintiff several months to inspect the documents delivered to him, the Court set a deadline of August 4, 2004 for Plaintiff to file any additional pleadings in response to the Motion for Summary Judgment. McCormick was given a deadline of August 16, 2004 to reply to any additional responsive pleading.
9. On August 2, 2004, Plaintiff filed a Supplement to Plaintiff's Response to the Motion for Summary Judgment and Memorandum in Opposition of Defendant James A. McCormick, Trustee (the "Supplement"). McCormick timely filed a Response to the Supplement. In the Supplement, Plaintiff argues that he should be allowed additional time to obtain the documents requested under the Freedom of Information Act ("FOIA") stating that he had filed a FOIA Complaint and Motion to Compel Discovery, In Camera Inspection On [sic] The Alternative a Motion for Vaughn Index (the "FOIA Complaint") in the United States District Court for the District of New Mexico. No. 01-CV00869. Plaintiff asks this Court for a continuance of its ruling on the Motion for Summary Judgment until the FOIA Complaint is adjudicated in District Court.
A "Vaughn index" is a compilation prepared by a government agency in a FOIA case, listing each of withheld documents and explaining the reason for its non-disclosure. See 5 U.S.C.A. § 552; Public Employees for Environmental Responsibility (Peer), Rocky Mountain Chapter v. U.S.E.P.A., 978 F. Supp. 955, 960 (D. Colo. 1997).
DISCUSSION
I. Continuance Under Rule 56(f).
The Court must first determine whether it should postpone its consideration of the Motion for Summary Judgment pursuant to Rule 7056(f), Fed.R.Bankr.P. until Plaintiff's FOIA Complaint is adjudicated. The Rule provides as follows:
Should it appear from the affidavits of a party opposing the [summary judgment] motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just. Fed.R.Bankr.P. 7056(f).
To invoke the protection of Rule 56(f), the party requesting a continuance must specify how "the desired time would enable [the party] to meet its burden in opposing summary judgment." Pasternak v. Lear Petroleum Exploration, Inc., 790 F.2d 828, 833 (10th Cir. 1986). Rule 56(f) may not be invoked by the mere assertion that discovery is incomplete or that specific facts necessary to oppose summary judgment are unavailable. The requesting party must demonstrate how additional time will enable him to rebut the movant's allegations that there is no genuine issue of fact. Id. citing, Weir v. Anaconda Co., 773 F.2d 1073, 1083 (10th Cir. 1985) and Patty Precision v. Brown Sharpe Manufacturing Co., 742 F.2d 1260, 1264 (10th Cir. 1984). Plaintiff states that the discovery for purposes of this Motion for Summary Judgment is incomplete and that he needs the additional documents from the Department of Justice ("DOJ") to justify his opposition to the Motion for Summary Judgment. However, Plaintiff does not indicate what information he expects to obtain from these documents in support of his opposition to the Motion for Summary Judgment.
McCormick argues that any information in the DOJ documents would be irrelevant to opposing his Motion for Summary Judgment because the Motion for Summary Judgment argues that Plaintiff is precluded from pursuing these causes of action as a matter of law based on principles of res judicata. The Court agrees.
First, Plaintiff has not shown the Court that he would gain information from the FOIA Complaint that could be reasonably expected to create an issue of fact. Martin v. O'Conner, 225 B.R. 283, 286 (N.D.N.Y. 1998) (denying Plaintiff's request for Rule 56(f) continuance because no explanation given as to how the additional discovery would counter the Defendants' assertion of collateral estoppel). Plaintiff began requesting these documents from the DOJ over two years ago. The Executive Office of the United States Trustee (the "EOUST"), a division of the DOJ, released several documents to Plaintiff but denied Plaintiff's request as to a portion of the documents in July of 2002. Two years later Plaintiff filed his FOIA Complaint in U.S. District Court. This Court will not further delay this proceeding, which has been pending since 2000, to allow Plaintiff to prosecute his FOIA Complaint without any reason stated as to what he hopes to gain from the DOJ. More importantly, any information that Plaintiff might obtain from the FOIA request would be irrelevant to whether this Complaint is legally barred under the doctrine of res judicata. In the Motion for Summary Judgment, the Court is only asked to determine whether the claims asserted here are based on the same circumstances that were analyzed in the previous adversary proceeding, a determination unaffected by additional evidence. Therefore, the Court denies the request for a continuance of the Court's consideration of the Motion for Summary Judgment.
II. Motion for Summary Judgment
Summary Judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Rule 7056, Fed.R.Bankr.P. When the movant asserts res judicata as the basis for summary judgment, the Court may grant summary judgment as a matter of law. King v. Union Oil Company of California, 117 F.3d 443, 445 (10th Cir. 1997) (citations omitted). Nevertheless, the Court must examine the record and make all reasonable inferences in the light most favorable to the non-movant. Munoz v. St. Mary Corwin Hospital, 221 F.3d 1160, 1164 (10th Cir. 2000).
The District Court dismissed the slander, libel and defamation claims. Those claims, therefore, are not before this Court.
McCormick argues that all of the remaining claims in this proceeding are the claims that were or could have been brought in the previous adversary proceeding; therefore, Plaintiff is barred from litigating those claims under the doctrine of res judicata. Res judicata, or claim preclusion, precludes party or its privies from asserting claims that were or could have been raised in an earlier action, provided that the earlier action proceeded to final judgment on the merits. King, 117 F.3d at 445. To apply the doctrine of res judicata, three elements must exist: (1) a judgment on the merits in an earlier action; (2) identity of parties or privies in the two suits; and (3) identity of the cause of action in both suits. Id. In this proceeding, the parties are the same, and the previous adversary proceeding ended in a final judgment after a trial on the merits. Therefore, the Court must consider whether the claims asserted in this proceeding are sufficiently related to the claims adjudicated in the previous adversary proceeding to conclude that Plaintiff is barred from re-litigating those claims here.
McCormick also argues that the Plaintiff is barred from bringing the claims in this adversary proceeding under the collateral estoppel doctrine. The doctrine of collateral estoppel, also known as issue preclusion, bars the re-litigation of issues that have been tried in a prior lawsuit. In re Jordana, 232 B.R. 469, 475 (10th Cir.BAP 1999). However, the Court finds that res judicata, not collateral estoppel, is applicable to this case because Plaintiff is asserting causes of action based on the same set of circumstances and factual basis as the previous adversary proceeding.
The Tenth Circuit applies the transactional approach to determine whether the later claims are barred as part of the previous "cause of action" under the doctrine of res judicata. King, 117 F.3d at 445. The "transactional" approach provides that:
[A] final judgment extinguishes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. What constitutes a "transaction" or a "series" is to be determined pragmatically considering whether the facts are related in time, space, origin, or motivation, and whether they form a convenient trial unit.
Id., quoting, Lowell Staats Mining Co., 878 F.2d 1271, 1274 (10th Cir. 1989). See also, Petromanagement Corp., 835 F.2d 1329, 1335 (10th Cir. 1988), and Restatement (Second) of Judgments § 24 (1982)) (analyzing transactional approach).
In the previous adversary proceeding, the Plaintiff asserted claims against McCormick for breach of fiduciary duty, fraud, and misrepresentation, urging that McCormick was liable to the Crestview estate for wrongdoing while managing the Crestview bankruptcy estate as both the Chapter 11 and Chapter 7 trustee of Crestview. A bankruptcy trustee can be held liable for breach of fiduciary duty if the trustee willfully and deliberately violates his fiduciary duties. Sherr v. Winkler (In re Sierra Trading Corp.), 552 F.2d 1367, 1375 (10th Cir. 1977), citing, Mosser v. Darrow, 341 U.S. 267, 71 S.Ct. 680, 95 L.Ed. 927 (1951). The Court concluded that the Plaintiff had not proven that the Trustee violated his fiduciary duty. See Memorandum Opinion, 00-1091M at p. 7.
See Memorandum Opinion, Adv.Proc. No. 00-1091 M, Doc. 586.
The Complaint in this adversary proceeding alleges that McCormick committed fraud, misrepresentation and breach of fiduciary duty during his tenure as both the Chapter 11 and Chapter 7 trustee of Crestview, that McCormick's actions caused intentional infliction of emotional harm to Plaintiff, that McCormick tortiously interfered with Plaintiff's contractual relations and that McCormick committed prima facie torts against Plaintiff. All of these claims concern McCormick's actions as trustee of Crestview during the same time period and under the same circumstances as the previous adversary proceeding.
As the Magistrate Judge observed, the Complaint in this adversary proceeding consists mainly of citations from case law and treatises grouped roughly under headings of the listed torts. The Court has considered the facts alleged in support of these claims from Plaintiff's proposed findings of fact and conclusions of law and from Plaintiff's Response to the Motion for Summary Judgment.
A. Fraud, Misrepresentations and Breach of Fiduciary Duty.
Specifically, Plaintiff contends that McCormick had a conflict in interest due to his service as Special Master in the Plaintiff's divorce proceeding because he had an improper relationship with Plaintiff's ex-wife, and through McCormick's ownership of a debt collection business. In the previous adversary proceeding, the Court found that Plaintiff failed to show that the Trustee had any improper relationship with Plaintiff's ex-wife and that the Trustee had no other conflicts of interest. Plaintiff next asserts that McCormick misrepresented to Plaintiff that he had a viable plan in the Chapter 11 proceeding and that Plaintiff would regain control of Crestview under the plan. Plaintiff further alleges that McCormick fraudulently took control of Crestview's business because McCormick intentionally failed to serve Plaintiff with the Motion to Convert the case from a Chapter 11 to a Chapter 7 bankruptcy. Finally, Plaintiff alleges that McCormick failed to pursue antitrust claims against the company that purchased the business property of Crestview. Plaintiff asserted all of these allegations in the previous proceeding, and the Court found that Plaintiff failed to prove that McCormick acted improperly in his administration of the Crestview bankruptcy estate. The Court also found no evidence that McCormick made misrepresentations to Plaintiff. In this adversary proceeding Plaintiff is reasserting the claims of fraud, misrepresentation and breach of fiduciary duty. He had a full and fair opportunity to litigate all of these claims against McCormick in the previous adversary proceeding. Under principles of res judicata, Plaintiff may not now raise the claims that were fully tried and found meritless. Plotner v. ATT Corp., 224 F.3d 1161, 1170 (10th Cir. 2000) (applying res judicata to hold that prior adjudication of propriety of sale of property precluded relitigation of claims that wrongdoing reduced price received in sale).
B. Intentional Infliction of Emotional Distress, Tortious Interference With Contractual Relations and Prima Facie Tort.
To establish a prima facie claim of intentional infliction of emotional distress, the claimant must prove the defendant's conduct that was extreme and outrageous; was intentional or in reckless disregard of the plaintiff; and the mental distress was extreme and severe and causally connected to the conduct. Hakkila v. Hakkila, 812 P.2d 1320, 1330 (N.M.App. 1991) (citations omitted). Plaintiff alleges that McCormick committed this tort by illegally converting the Chapter 11 bankruptcy to Chapter 7. Additionally, Plaintiff alleges that McCormick attempted to extort $50,000.00 from him with the threat to de-rail the Chapter 11. In the previous adversary proceeding, Plaintiff made the same allegations and failed to prove them. Plaintiff cannot repackage his previous claims into a different tort claim. See Plotner, 224 F.3d at 1170 (res judicata bars relitigation of claims that were or could have been raised and parties cannot defeat its application by simply alleging new legal theories).
Plaintiff also asserts that McCormick made defamatory statements about Plaintiff and Crestview with the intent to cause emotional distress to Plaintiff. The Plaintiff's allegations of defamation were fully litigated in the State Court proceeding and the statements were found to have been non-defamatory because they were substantially true. Therefore, Plaintiff is barred from using allegations of defamation to support this tort claim.
As for the claim of tortious interference with contractual relations, this tort can be asserted against, "[o]ne who intentionally and improperly interferes with another's prospective contractual relation . . ." M M Rental Tools, Inc. v. Milchem, Inc., 612 P.2d 241 (N.M.App. 1980). Plaintiff alleges that during the Chapter 11 proceeding, McCormick failed to attend meetings with Crestview's landlord to reduce the rent on the business property and that McCormick failed to pursue an antitrust action against the purchaser of Crestview's previous business location. Again, Plaintiff asserts that due to the failures and the conflicts of interest described above, McCormick committed tortious interference with Plaintiff's contractual relations. Plaintiff cannot prevail on this cause of action for these reasons. First, Plaintiff makes no allegation that he was a party to the contracts. Therefore, as a matter of law, Plaintiff cannot assert this claim against McCormick for actions involving Crestview contracts. L.R. Property Management, Inc. v. Grebe, 98 N.M. 22, 23, 627 P.2d 864, 865 (N.M. 1981) (stating that one who is not a party to a contract cannot maintain a suit upon it). Additionally, in the previous adversary proceeding, the Court found that McCormick did not negligently carry out his duties as operator of the Crestview business by failing to pursue renegotiation of the lease or by failing to assert anti-trust claims on Crestview's behalf. Therefore, this cause of action arises out of the same set of circumstances that were raised in the previous proceeding, and Plaintiff is barred from further litigation by res judicata.
Plaintiff alleges that McCormick committed prima facie torts by failing to serve Plaintiff with the Motion to Convert leading to an illegal conversion, by destroying documents needed for Plaintiff's defense and by withholding information when McCormick failed to answer all of Plaintiff's interrogatories in the previous adversary proceeding. In the previous adversary proceeding several discovery issues were raised by Plaintiff and decided by the Court. See e.g., Order on Completion of Discovery and Deadline for Objections to Opposing Parties' Trial Exhibits, filed on February 7, 2002 (Doc. 498). Plaintiff cannot now raise a claim involving discovery in that proceeding. Plaintiff has given no other factual basis for this claim except to state that several documents were not released to Plaintiff by the EOUST under FOIA. Plaintiff has stated no basis upon which to impute this failure to McCormick.
Plaintiff's claims of intentional infliction of emotional distress, tortious interference with contractual relations and prima facie torts all stem from the same circumstances that were previously litigated. As stated above, all claims or legal theories of recovery that arise from the same transaction, event, or occurrence must be presented in the initial proceeding or be barred from subsequent litigation. B-S Steel of Kansas, Inc. v. Texas Industries, 327 F.Supp.2d 1252, 1260 (D.Kan. 2004). The final judgment in the previous adversary proceeding extinguished the Plaintiff's right to seek these remedies against McCormick because they all relate to his administration of Crestview. See King, 117 F.3d at 445 (holding that plaintiff was barred from bringing a second suit against his former employer for discrimination in connection with his termination of employment because the employer's decision to terminate King's employment and its refusal to pay severance benefits were part of a "series of connected transactions.").
In the previous adversary proceeding, the Court heard testimony over a six-day period concerning many aspects of McCormick's administration of the Crestview business and bankruptcy estate. The Court found no evidence of negligence or violation of McCormick's fiduciary duty as bankruptcy trustee. Moreover, the Court ruled that there were no improprieties in the conversion and closure of Crestview's business. That same factual basis cannot be reasserted as different causes of action in subsequent litigation. These causes of action have all previously been decided, and res judicata bars their relitigation.
For the reasons stated, the Motion for Summary Judgment will be granted. An appropriate order will be entered dismissing this adversary proceeding.