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In re Minix

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

July 25, 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., has 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] The parties have fully briefed the matter, and having considered their respective positions, the undersigned concludes that the bankruptcy court's denial of discharge and denial of reconsideration should be affirmed.

         I.

         Appellee Charity Stone was awarded $40, 000 in damages after obtaining a default judgment against Minix in the Floyd Circuit Court (the “state court”). The judgment was based on a claim of battery. Minix asserts that he did not receive proper service and appealed the judgment (the “state court appeal”). Minix then filed a petition for Chapter 7 bankruptcy relief while the state court appeal was pending. Bankr. E.D. Ky. No. 17-51915-tnw, ECF No. 1. Stone responded with an adversary proceeding, asking that the state court judgment be excepted from discharge under 11 U.S.C. § 523. Bankr. E.D. Ky. No. 18-05003-tnw, ECF No. 1.

         Following a period of discovery in the adversary proceeding, Minix moved to dismiss the action while Stone moved for summary judgment. Applying the doctrine of collateral estoppel, the bankruptcy court determined that Stone was entitled to summary judgment on her claim under 11 U.S.C. § 523(a)(6). Minix then filed a motion to alter, amend, or reconsider the judgment. He claimed 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 the motion to alter, amend, or reconsider and Minix filed the present appeal. He now challenges the bankruptcy court's denial of discharge and its denial of his motion to reconsider.

         II.

         A district court reviewing a bankruptcy court's decision functions as an appellate court, applying the standards of review normally applied by federal appellate courts. In re H.J. Scheirich Co., 982 F.2d 945, 949 (6th Cir. 1993). Findings of fact are reviewed under a clearly erroneous standard. In re Gardner, 360 F.3d 551, 557 (6th Cir. 2004). A bankruptcy court's findings of fact will not be disturbed absent the “most cogent evidence of mistake or miscarriage of justice”. In re Edward M. Johnson and Assoc., Inc., 845 F.2d 1395, 1401 (6th Cir. 1988) (internal quotations omitted).

         Additionally, a reviewing court will not overturn the bankruptcy court's decision denying discharge unless it is clearly erroneous. Westerfield v. World Inv. Corp., No. 6:06-cv-020-DCR, 2006 WL 1206386, at *2 (E.D. Ky. May 2, 2006) (citing In re D'Agnese, 86 F.3d 732, 734 (7th Cir. 1996)). “A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).

         Conclusions of law made by the bankruptcy court are reviewed de novo. In re Gardner, 360 F.3d at 557. Issue preclusion[1] is a question of law. Therefore, a bankruptcy court's decision regarding issue preclusion is reviewed de novo. Stemler v. City of Florence, 350 F.3d 578, 585 (6th Cir. 2003). This Court will also apply a de novo standard of review to the bankruptcy court's decision regarding a motion for reconsideration of a grant of summary judgment. Smith v. Wal-Mart Stores, Inc., 167 F.3d 286, 289 (6th Cir. 1999). A de novo review requires a court to review the legal conclusions reached without regard to the bankruptcy court's prior findings of law. In re Eubanks, 219 B.R. 468, 469 (B.A.P. 6th Cir. 1998).

         III.

         This appeal challenges the bankruptcy court's denial of Minix's motion to alter, amend, or reconsider in the adversary proceeding. [Record No. 2] However, documents filed by pro se litigants are liberally construed. Erickson v. Pardus, 551 U.S. 89, 94 (2007). As a result, the appeal will be viewed as a challenge to the bankruptcy court's order granting Stone's motion summary judgment and its denial of Minix's motion to alter, amend, or reconsider. However, Minix has not explained why he believes the bankruptcy court erred in denying his motion to reconsider. Therefore, the Court will briefly address the issue. See McPherson v. Kelsey, 125 F.3d 989, 995-96 (6th Cir. 1997) (“It is not sufficient for a party to mention a possible argument in the most skeletal way, leaving the court to . . . put flesh on its bones”). Instead, the undersigned will focus on Minix's claim that the bankruptcy court erred by concluding, in the first instance, that Stone's state court judgment against him was non-dischargeable.

         i. Validity of Default Judgment

         Minix argues that the state court default judgment is void and should not be relied upon for collateral estoppel because he did not receive notice of state court filings. But this argument ignores the previous order clearly explaining why the state court judgment is “valid and in effect for purposes of determining the issues of collateral estoppel and non-dischargeability on appeal in this Court.” [Record No. 10, p. 3] As the Court further explained, “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.” [Id.] (citing Small v. Reeves, 76 S.W. 395, 397 (Ky. 1903). Thus, the state court default judgment is valid for the purposes of determining collateral estoppel and non-dischargeability on appeal.

         ii. ...


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