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In re Minix

United States District Court, E.D. Kentucky, Central Division, Lexington

April 17, 2019

In re M. STEPHEN MINIX, SR., Debtor.
v.
CHARITY STONE, Appellee. M. STEPHEN MINIX, SR., Appellant,

          MEMORANDUM OPINION AND ORDER

          Danny C. Reeves United States District Judge.

         Appellant M. Stephen Minix, Sr., filed a pro se appeal of a United States Bankruptcy Court judgment, excepting a state court judgment against him from discharge under 11 U.S.C. § 523(a)(6). [Record No. 1] Minix later filed a motion to hold the bankruptcy appeal and non-dischargeability judgment in abeyance pending the appeal of the state court judgment. [Record No. 4] Because Minix failed to comply with Rule 8007 of the Federal Rules of Bankruptcy Procedure, the Court will not hold the non-dischargeability judgment in abeyance. Further, holding the bankruptcy appeal in abeyance is not appropriate because the state court judgment remains in full force and effect for purposes of bankruptcy appealability.

         I.

         Appellee Charity Stone obtained a judgment against Minix in the Floyd Circuit Court (the “state court”) for battery. She was awarded $40, 000.00 in damages. Minix appealed the judgment and alleges that he did not receive proper service (the “state court appeal”). While the state court appeal was pending, Minix filed a bankruptcy petition for Chapter 7 bankruptcy relief. Bankr. E.D. Ky. No. 17-51915-tnw, ECF No. 1. Stone subsequently filed an adversary proceeding, requesting that the state court judgment be excepted from discharge in accordance with 11 U.S.C. § 523. Bankr. E.D. Ky. No. 18-05003-tnw, ECF No. 1.

         The parties conducted discovery in the adversary proceeding initiated by Stone. At the close of discovery, Minix filed a motion to dismiss and Stone moved for summary judgment. The bankruptcy court applied the doctrine of collateral estoppel in the adversary proceeding and determined that Stone was entitled to summary judgment on her claim under 11 U.S.C. § 523(a)(6). Minix then moved to alter or amend the judgment, claiming that: (i) the bankruptcy court lacked jurisdiction to enter the judgment; (ii) there was an issue of fact regarding notice of the state court's judgment; and (iii) he did not receive notice of various orders and motions in the state court proceeding. Bankr. E.D. Ky. No. 18-05003-tnw, ECF No. 97. The bankruptcy court denied Minix's motion and he subsequently filed the present appeal, challenging the bankruptcy court's denial of his motion to reconsider in the adversary proceeding. Minix now moves to hold the bankruptcy appeal in abeyance pending the outcome of the state court appeal.

         II.

         Pleadings filed by pro se litigants must be liberally construed and are held to a less stringent standard than pleadings drafted by lawyers. Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, pro se litigants are not exempt from complying with the relevant rules of procedural and substantive law. See Jordan v. Jabe, 951 F.2d 108, 110 (6th Cir. 1991); see also Hulsey v. State of Texas, 929 F.2d 168, 171 (5th Cir. 1991) (citations omitted).

         Minix first requests that this Court hold the bankruptcy appeal in abeyance “to save judicial resources because there is potential that this appeal may be rendered moot by the ruling by the Kentucky appellate courts.” [Record No. 4, p. 6] Next, he contends that the Court should hold enforcement of the bankruptcy judgment in abeyance pending the outcome of the state court appeal. Finally, Minix asserts that the Court should suspend the parties' briefing schedule because their arguments on appeal regarding dischargeability and collateral estoppel are dependent on the validity of the debt. The Court will address Minix's last argument first.

         A. Suspending the Briefing Period

         The application of collateral estoppel in a non-dischargeability action depends upon whether the applicable state law would give collateral estoppel effect to the judgment. See In Re Sarff, 42 B.R. 620');">242 B.R. 620, 624 (B.A.p. 6th Cir. 2000). In Kentucky, a judgment that is unreserved and unmodified remains “in full force and effect, constituting a bar to the institution of [a] second suit between the same parties upon the same issues, ” despite its pendency in the court of appeals. Small v. Reeves, 76 S.W. 395, 397 (Ky. 1903). Accordingly, while Minix is appealing the state court default judgment against him, the judgment of the state court is valid and in effect for purposes of determining the issues of collateral estoppel and non-dischargeability on appeal in this Court. Because Kentucky law views the judgment in the state court as in full force and effect, this Court must apply that view and determine that the parties' arguments regarding dischargeability and collateral estoppel are not dependent on the outcome of the state court appeal. Therefore, the Court will not suspend the briefing period for the pending bankruptcy appeal.

         B. Holding the Bankruptcy Judgment in Abeyance

         Rule 8007 of the Federal Rules of Bankruptcy Procedure governs motions to stay pending appeal. This rule states “[o]rdinarily, a party must move first in the bankruptcy court for … a stay of a judgment, order, or decree of the bankruptcy court pending appeal.” Fed.R.Bankr.P. 8007.[1] A party may file a motion to stay in the district court on direct appeal, but the “motion must (A) show that moving first in the bankruptcy court would be impracticable; or (B) if a motion was made in the bankruptcy court, either state that the court has not yet ruled on the motion, or state that the court has ruled and set out any reasons given for the ruling.” Id.

         Minix filed his motion to hold the bankruptcy judgment in abeyance directly in the district court. [Record No. 4] He contends in his reply that he filed a motion to abate the “bankruptcy process” in May 2018 which the bankruptcy court denied in June 2018. As an initial matter, the judgment of the adversary proceeding was not entered until January 18, 2019. Accordingly, Minix's previous motion to abate the “bankruptcy process” does not comply with Rule 8007(a) or Rule 8007 (b)(2)(B) because it was not a motion to stay the judgment of the adversary proceeding which is the relief he presently requests. To the extent that Minix is asking the Court to consider his motion under Rule 8007(b)(2)(A), he does not comply because he failed to show that moving first in the bankruptcy court would be impracticable. Therefore, his motion failed to comply with Rule 8007 of the Federal Rules of Bankruptcy Procedure.

         Finally, the Court cannot suspend the requirements of Rule 8007. Fed.R.Bankr.P. 8028. Because Minix failed to comply with Rule 8007, his motion to hold the bankruptcy judgment in abeyance will be denied. See In re Royal Manor Mgmt. Inc., 525 B.R. 338, 387 (B.A.p. 6th Cir. 2015); see ...


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