Opinion
Case No. 01-21606, Adversary No. 02-6038
January 15, 2003
MEMORANDUM OF DECISION
I. INTRODUCTION
Robin Vessey ("Vessey") filed a chapter 7 petition for bankruptcy on November 6, 2001 and listed Jack Huntley, Katharine Huntley and Anna Huntley (the "Huntleys") as creditors who held criminal restitution and civil judgments against him. The Huntleys filed this adversary proceeding on February 19, 2002, claiming Vessey's debts to them were nondischargeable. Both parties have moved for summary judgment.
After oral argument at hearings on October 7, 2002 and November 18, 2002, the Court took the matter under advisement. The Court has reviewed the parties' submissions and applicable authority, and the following constitutes the Court's disposition of the pending motions. F.R.Bankr.P. 7036; Fed.R.Civ.P. 56.
II. BACKGROUND AND FACTS
On July 28, 1995, Robin Vessey and Katherine and Anna Huntley were involved in an automobile accident on Highway 13 in Kooskia, Idaho. Katherine and Anna Huntley were driving in the northbound lane when Vessey's vehicle, originally traveling southbound, crossed over into their lane. In an attempt to avoid an accident, Katherine Huntley swerved into an unpaved parking lot. Vessey turned the same direction and struck Katherine Huntley's vehicle. Both Katherine and Anna Huntley were severely injured in the accident.
Vessey was cited for reckless driving, but ultimately pleaded guilty to inattentive driving. Doc No. 28. He was sentenced to sixty days in jail, fifty-five of which were suspended. Doc. No. 35, Ex. D. A separate criminal restitution order was entered against Vessey, ordering him to pay Katherine Huntley $49,493.00, for herself and her daughter, Anna. Doc. No. 1 ("Complaint"), Ex. B. The amount was calculated based on Katherine's and Anna's injuries.
The order states that the Huntleys may "record this Order as a Judgment against [Vessey]." The affidavits of both parties indicate that the Huntleys did in fact record the order. As this Court is only concerned with the "debt" under § 523(a)(7), for ease of reference both the order and the recordation of that order will hereafter be referred to as the "criminal restitution order."
The Huntleys sought assistance from the Crime Victims Compensation Program. See I.C. §§ 72-1001 to 72-1026. In order to qualify for assistance, the Huntleys were required to prove by a preponderance of the evidence that Vessey's conduct violated Idaho Code § 18-8004 ("Persons under the influence of alcohol, drugs or any other intoxicating substance"). See I.C. § 72-1003(4)(d) ("criminally injurious conduct [for purposes of the Crime Victims Compensation Act] does not include conduct arising out of the ownership, maintenance, or use of a motor vehicle except when intended to cause personal injury or death; provided that criminally injurious conduct shall include violations of the provisions of section. 18-8004"), and § 72-1018 (noting that the Industrial Commission must be satisfied by a preponderance of the evidence that the requirements for compensation have been met).
After holding a hearing in which the Huntleys presented evidence, a referee determined that the Huntleys had met their burden. The Industrial Commission ("Commission") agreed. It therefore compensated Katherine and Anna from the Crime Victims Compensation Program. Complaint, Ex. C. Vessey did not participate in the Huntleys' application for benefits or the hearing before the Commission's referee to prove eligibility for benefits.
In addition to the criminal charges arising from the accident, Vessey faced a civil action brought by the Huntleys for damages due to his negligent operation of his vehicle. Doc. No. 28, Certified Attachments. Vessey chose not to respond to the civil complaint, and a default judgment for $775,000.00 was entered against him on April 22, 1999. Complaint, Ex. D.
Both parties seek summary judgment concerning the dischargeability of the Huntleys' claims against Vessey. The Huntleys request that the issues be "bifurcated" and the Court decide the issue of dischargeability of the criminal restitution order before addressing dischargeability of the civil judgment. Doc. No. 13 and 15. They also request "remand" to state court of the criminal restitution obligation and that the state court be allowed to address its dischargeability. In the alternative, if the Court refuses to "remand" the case, the Huntleys ask that this Court find the criminal restitution order to be nondischargeable pursuant to § 523(a)(7) (and possibly § 523(a)(9)). Further, the Huntleys ask that the Court apply principles of collateral estoppel and find the civil judgment to be nondischargeable under § 523(a)(9). Doc. No. 23.
Vessey also seeks partial summary judgment. Doc. No. 25. He asks this Court to find that the Huntleys' criminal restitution order was partially satisfied by virtue or reason of a $48,686.47 payment to them by Vessey's liability insurance carrier. In addition, Vessey asks this Court to treat the criminal restitution order as a civil judgment and then rule that the Huntleys are barred from collecting any amounts still owing because five years have elapsed and the Huntleys have failed to timely renew that judgment. Vessey also asks the Court to apply the doctrine of res judicata and declare the Huntleys' civil judgment dischargeable. In the alternative, Vessey seeks summary judgment because there is "no evidence of intoxication in the record." Doc. No. 26 at 11.
III. DISCUSSION AND DISPOSITION
A. Summary Judgment Standards
Summary judgment may be granted if, when the evidence is viewed in a light most favorable to the non-moving party, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(e); incorporated by F.R.Bankr.P. 7056; Far Out Prods. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001); Anguiano v. Allstate Ins. Co., 209 F.3d 1167, 1169 (9th Cir. 2000); Massie v. Pate (In re Pate), 01.2 I.B.C.R. 59, 60 (Bankr. D. Idaho 2001).
The Court does not weigh the evidence in considering summary judgment. Rather, it determines only whether a material factual dispute remains for trial. Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir. 1997). An issue is "genuine" only if there is sufficient evidence for a reasonable fact finder to find in favor of the non-moving party, and a fact is "material" if it might affect the outcome of the case. Far Out Prods., 247 F.3d at 992 (citing Anderson v. Liberty Lobby, 477 U.S. 242, 248-49 (1986)).
The initial burden to show there is no genuine issue of fact rests on the moving party. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc), Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998). The party opposing the motion may not rest on the pleading but must by its own evidence "set forth specific facts showing that there is a genuine issue for trial." Far Out Prods., 247 F.3d at 997 (quoting Fed.R.Civ.P. 56(e)). The non-moving party is required to "identify with reasonable particularity the evidence which precludes summary judgment." Id., (quoting Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996)).
Moreover, if the non-moving party bears the ultimate burden of proof on an element at trial, that party must make a showing sufficient to establish the existence of that element in order to survive a motion for summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Devereaux, 263 F.3d at 1076; Nissan Fire Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). Failure to sustain this burden as to any required element of a cause of action is fatal to that cause, even if issues are show to exist as to other elements. A complete failure on one element necessarily renders the other elements "immaterial," whether factually disputed or not. Celotex, 477 U.S. at 323.
B. The Criminal Restitution Order
The first issue posed is dischargeability of the criminal restitution order under § 523(a)(7) which provides:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—
(7) to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty—1. Jurisdiction and Abstention
The Huntleys urge this Court to "remand" to state court the questions concerning the dischargeability in bankruptcy of the criminal restitution order. The use of the term "remand" is not strictly accurate. Remand generally applies in the context of sending back to state court an action which had been previously removed from that state court to federal court.
However, the Huntleys' motion can be read in a slightly different manner. Stripped of legal terminology, the Huntleys simply contend that the state court should be the one to determine whether or not Vessey's bankruptcy discharge will be effective to eliminate his liability for the criminal restitution order. They urge this Court to conclude that dischargeability issues of this sort should be adjudicated by the state court that issued the criminal restitution order. They, thus, would like this Court to abstain from exercising jurisdiction over the issue.
This Court's jurisdiction is founded on 28 U.S.C. § 1334(a), which gives the district court original and exclusive jurisdiction over "all cases under title 11," and on § 1334(b) which gives the district court original but non-exclusive jurisdiction over "all civil proceedings arising under title 11, or arising in or related to cases under title 11." The district court refers all cases under title 11 and all proceedings arising under title 11 or arising in or related to a case under title 11, to the bankruptcy court. See 28 U.S.C. § 157(a) (giving the district court the authority to refer); Amended General Order No. 38 (referring bankruptcy cases to the bankruptcy court). Further, § 157(b)(1) gives bankruptcy courts the authority to hear and determine all "core proceedings" arising under or in cases under title 11. A determination as to the dischargeability of a particular debt, as the Court is asked to do in this case, is a core proceeding. 28 U.S.C. § 157(b)(2)(1).
There are certain dischargeability issues which are very clearly within the "exclusive" jurisdiction of the bankruptcy court. See Rein v. Providian Fin. Corp, 270 F.3d 895, 904 n. 15 (9th Cir. 2001) (dischargeability issues under § 523(a)(2), (4), (6), and (15) are exclusively for the federal court). When this Court has "exclusive" jurisdiction, no other court can properly adjudicate the controversy, and this Bankruptcy Court would therefore have no reason or ability to abstain from deciding dischargeability issues under those exclusive subsections of § 523(a). Id. at 904.
This Court has not, however, located direct authority indicating that its federal bankruptcy jurisdiction is exclusive over matters concerning dischargeability under § 523(a)(7). Nor has it found any such authority discussing "concurrent jurisdiction" (i.e., mutual state and federal jurisdiction) over § 523(a)(7) issues.
Assuming, without deciding, that state and federal courts have concurrent jurisdiction to determine dischargeability under § 523(a)(7), the question becomes whether this Court must, or should, defer to a state court. In some circumstances a bankruptcy court must "abstain" from hearing a particular cause, in others it should do so:
(c)(1) Nothing in this section prevents a district court in the interest of justice, or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under title 11 or arising in or relating to a case under title 11.
(2) Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction.
28 U.S. § 1334(c)(1), (2).
The abstention addressed in § 1334(c)(1) is generally known as "permissive" or discretionary abstention. The matter addressed in § 1334(c)(2) is known as mandatory abstention. Inasmuch as the instant adversary proceeding is one to consider the reach of the bankruptcy discharge under 11 U.S.C. § 523(a), it is not a proceeding "based upon a State law claim or State law cause of action, related to [the bankruptcy case] but not arising under title 11." Thus, the Court concludes that mandatory abstention under § 1334(c)(2) is not implicated or at issue.
Section 1334(d) indicates that any abstention decision of a bankruptcy court, other than a decision not to abstain in a proceeding described in § 1334(c)(2), is not reviewable by appeal or otherwise.
Permissive abstention generally concerns questions of comity with the state courts. See 1 L. King, Collier on Bankruptcy ¶ 3.05[1], p. 3-63 to 3-66 (rev. 15th ed. 2001) (noting that § 1334(c)(1) gives the bankruptcy court discretion to abstain in the interest of justice or in the interest of comity with state courts). Therefore, the Court must determine if justice or comity compel deferral to state court.
Comity is a "willingness to grant a privilege, not as a matter or right, but out of deference and good will." Black's Law Dictionary, 267 (6th ed. 1990).
The Ninth Circuit has listed several factors a bankruptcy court should consider in exercising discretionary abstention:
(1) the extent to which state law issues predominate over bankruptcy issues; (2) the difficulty or unsettled nature of the applicable law; (3) the presence of a related proceeding commenced in state court or other nonbankruptcy court; and (4) the likelihood that the commencement of the proceeding in bankrutpcy court involved forum shopping by one of the parties.
Siragusa v. Siragusa (In re Siragusa), 27 F.3d 406, 408 (9th Cir. 1994). With these factors in mind, the Court has considered the parties' arguments concerning the propriety of allowing the state court to resolve the dischargeability of the underlying debt. It concludes that abstention furthers neither justice nor comity.
Accord Collier, at ¶ 3.05[1], p. 3-66 (noting that "all though one could conceive of a court deciding to abstain from hearing. an action to determine dischargeability of a debt . . . such results cannot be expected to be reached with any regularity").
The issues in this case involve the scope and extent of the bankruptcy discharge, which is purely a matter of federal law. This Court is the repository of direct federal jurisdiction over such questions, and the authorities relevant to the issue are federal in nature. Bankruptcy issues clearly predominate. This Court is well positioned to address dischargeability of the criminal restitution order under § 523(a)(7) on the merits, can do so in a prompt and efficient manner, and should do so. Abstention could also expose the parties to additional delay and expense as there is no pending proceeding in state court in which such issues are presented.
For all these reasons and in the exercise of its informed discretion, the Court concludes that permissive abstention is not warranted.
2. Dischargeability of the Criminal Restitution Order
The state court entered an order for restitution in the criminal action which provided:
The Court being fully advised concludes that the Defendant's [Vessey's] actions of inattentive driving proximately caused [the Huntleys'] economic loss . . .
IT IS THERE FOR ORDERED the Defendant pay restitution to Katharine Huntley, for herself and for her daughter, Anna Huntley, in the amount of $49,393.00.
Doc. No. 20, Certified Attachments.
As noted earlier, the issue presented is whether or not the obligation set forth in this criminal restitution order would fall within § 523(a)(7) which excepts from discharge any debt
to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty[.]
The Huntleys argue that the state criminal restitution order is exempt from discharge. Vessey disagrees. Both believe summary judgment is warranted in their favor. There are no genuine issues of material fact regarding the criminal restitution order. The parties simply disagree as to the legal issues and analysis.
Bankruptcy courts are often instructed to defer to the statutory language of the Code and to follow its "plain meaning." See United States v. Ron Pair Enters., 489 US. 235, 241 (1989) (instructing that if the Bankruptcy Code's "language is plain, `the sole function of the courts is to enforce it according to its terms'"); see also Leonard v. St. Rose Dominican Hospital (In re Alajewski), 310 F.3d 653 (9th Cir. 2002) (same); Gardenhire v. United States Internal Revenue Serv. (In re Gardenhire), 209 F.3d 1145, 1148 (9th Cir. 2000) (recognizing that "[c]lose adherence to the text of the relevant statutory provisions and rules is especially appropriate in a highly statutory area such as bankruptcy").
But bankruptcy statutory language is not always easily parsed, and the legislative "intention" that underlies some Bankruptcy Code provisions is not always easy to fathom. On occasion, this leads to judicial interpretations of the Code which might be viewed as being at odds with the "plain language" of the Code. See, e.g., United States Tr. v. Garvey, Schubert Barer (In re Century Cleaning Services, Inc.), 195 F.3d 1053 (9th Cir. 1999), disagreed with by In re American Steel Prod, Inc., 197 F.3d 1354, 1356-57 (11th Cir. 1999).
Not all are enamored with the Supreme Court's focus on the "plain meaning" of statutory language. See e.g, Walter A. Effross, Grammarians at the Gate: The Rhenquist Court's Evolving "Plain Meaning" Approach to Bankruptcy Jurisprudence, 23 Seton Hall L. Rev. 1636 (1993) (analyzing the development of the "plain meaning" approach over the course of 13 Supreme Court decisions and stating that "[a]lthough ostensibly a significant step towards judicial predictability, the `plain meaning' approach has proven to be less a cohesive, coherent method of statutory interpretation than a loose collection of principles, which themselves may often be breached.")
In analyzing § 523(a)(7), this Court does not simply rely on its own independent reading. It instead starts with the United States Supreme Court's interpretation of § 523(a)(7) in the context of state criminal restitution orders in Kelly v. Robinson, 479 U.S. 36 (1986).
Kelly did not limit itself to a "grammarian's" reading of the Code. After reviewing the history of similar provisions under the Bankruptcy Act, which was supplanted by the Bankruptcy Code in 1978, Justice Powell, writing for the Court, considered the question of statutory construction, noting that
Congress enacted the Code in 1978 against the background of an established judicial exception to discharge for criminal sentences, including restitution orders, an exception created in the face of a statute drafted with considerable care and specificity.
Id. at 46. The opinion further states:
Our interpretation of the Code also must reflect the basis for this judicial exception, a deep conviction that federal bankruptcy courts should not invalidate the results of state criminal proceedings. The right to formulate and enforce penal sanctions is an important aspect of the sovereignty retained by the States. This Court has emphasized repeatedly "the fundamental policy against federal interference with state criminal prosecutions."
Id. at 47 (citation omitted).
After considering additional arguments, the Supreme Court rejected a focus on the language of § 523(a)(7) to the exclusion of history, policy, and prior established precedent:
In one of our cases interpretating the [bankruptcy] Act, Justice Douglas remarked: "[W]e do not read these statutory words with the ease of a computer. There is an overriding consideration that equitable principles govern the exercise of bankruptcy jurisdiction." Bank of Marin v. England, 385 U.S. 99, 103 (1966).
Id. at 49. The Court recognized that "the States' interest in administering their criminal justice systems free from federal interference is one of the most powerful of the considerations that should influence a court considering equitable types of relief." Id. Kelly therefore concluded and expressly held "that § 523(a)(7) preserves from discharge any condition a state criminal court imposes as a part of a criminal sentence." Id. at 50. This is true even if the restitution is ultimately paid to the victim rather than the state and notwithstanding the fact that the restitution amount is equivalent to the victim's loss. Id. at 51-52. The Court stated "in our view, neither of the qualifying clauses of § 523(a)(7) allows the discharge of a criminal judgment that takes the form of restitution." Id. at 52.
Several courts have analyzed § 523(a)(7) post-Kelly For example, In re Towers, 162 F.3d 952 (7th Cir. 1999), applied § 523(a)(7) to a civil restitution judgment arising out of a state consumer fraud and deception lawsuit. That court focused on the qualifying clause of § 523(a)(7), read Kelly narrowly, and determined that the debt was not excepted from discharge under § 523(a)(7) because it was not "payable to and for the benefit of a governmental unit." Id. at 955-56.
Similarly, in Rashid v. Powel (In re Rashid), 210 F.3d 201 (3rd Cir. 2000), the Third Circuit applied § 523(a)(7) to a federal criminal restitution judgment which was imposed prior to the addition of § 523(a)(13). There, the court distinguished Kelly because its federalism analysis was inapplicable in a federal restitution case, focused on § 523(a)(7)'s qualifying clauses, and discharged the debt because the restitution was not "payable to and for the benefit of" a governmental unit.
Congress added § 523(a)(13) in 1994 to expressly except federal restitution orders from discharge. Although § 523(a)(13) is silent as to state restitution orders, this Court has previously reviewed the effect of § 523(a)(13) on § 532(a)(7) and Kelly. See Mabey v. Ellis (In re Ellis), 224 B.R. 786, 789 (Bankr. D. Idaho 1998) (discussed further below). It there determined that such silence merely showed Congress' satisfaction with the Supreme Court's interpretation of § 523(a)(7) in Kelly. Id. Therefore, state criminal restitution orders continue to be governed by § 523(a)(7) and Kelly.
Neither Towers nor Rashid were strictly bound by Kelly. They dealt with either state civil restitution judgments or federal criminal restitution judgments, making Kelly arguably distinguishable. Here, on the other hand, the Court is faced with an order of restitution that was entered by a state court in a criminal proceeding. Kelly appears controlling.
The Ninth Circuit Bankruptcy Appellate Panel has addressed similar issues in Warfel v. City of Saratoga (In re Warfel), 268 B.R. 205 (9th Cir. BAP 2001) and Steiger v. Clark County, Washington (In re Steiger), 159 B.R. 907 (9th Cir. BAP 1993).
Although the decisions of the Bankruptcy Appellate Panel are not binding on this Court, they are accorded a great deal of deference. See, In re DeBoer, 99.3 I.B.C.R. 101, 103, n. 4. (citing Bank of Maui v. Estate Analysis, Inc., 904 F.2d 470 (9th Cir. 1990); Philadelphia Life Ins. Co., v. Proudfoot (In re Proudfoot), 144 B.R. 876, 878-89 (9th Cir. BAP 1992)); see also Zimmer v. PSB Lending Corp. (In re Zimmer), No. 01-56950, 2002 WL 31866219, n. 3 (9th Cir. Dec. 24, 2002); Crain v. PSB (In re Crain), 243 B.R. 75 (Bankr. C.D. Cal. 1999).
In Warfel, the Panel followed Kelly and upheld the nondischargeability of a restitution obligation even though it existed in regard only to a debtor's probationary status. The Panel emphasized that "[t]o allow a debtor to discharge this [state-imposed criminal] obligation would be abhorrent to the standards of federalism expressed in Kelly that bankruptcy statutes should not be interpreted so as to remit state criminal judgments." Warfel, 268 B.R. at 212.
In Warfel, the debtor contended that the civil restitution judgment was entered after his criminal probation and jail time had expired and that it therefore no longer held a penal purpose but only a pecuniary purpose, i.e. to compensate the City of Saratoga. Id at 209.
Judge Klein's concurrence in Warfel relies in part on § 1328(a)(3) to support the continued vitality and broad scope of Kelly as applied to state criminal restitution orders. Congress added § 1328(a)(3) after the Kelly decision; it excludes any debt for restitution from a chapter 13 super-discharge. Unlike § 523(a)(7), the identity of the payee, the beneficiary of the payment, and the compensatory nature of the restitution are irrelevant in § 1328(a)(3). Therefore, Judge Klein reasoned that § 1328(a)(3) merely enacted into law the "legal fictions established in Kelly," and to read Kelly narrowly would create the anomaly of a more powerful discharge available to a debtor in a chapter 7 than in a chapter 13. Warfel, 268 B.R. at 217.
Section 1328(a)(3) states that "the court shall grant the debtor a discharge of all debts provided for by the plan . . . except any debt . . . (3) for restitution, or a criminal fine, included in a sentence on the debtor's conviction of a crime."
The Court finds Warfel persuasive. The Panel's decision in Steiger is equally persuasive. There, as in this case, the Panel confronted a state criminal restitution order payable to the benefit of a non-governmental entity. The Panel stated that "it makes no difference [to the nondischargeability of the debt] that the victim may be empowered to enforce the restitution order" because the state court imposed the order as part of a criminal sentence. 159 B.R. at 911-12. Citing Kelly, the Panel held that any condition imposed by a state criminal court as part of a criminal sentence is excepted from discharge pursuant to § 523(a)(7). Id. at 912.
Similar to the Washington statute at issue in Steiger, Idaho Code § 19-5305 allows the victim of a crime to collect a criminal restitution judgment through civil process and execution. Idaho Code § 19-5305 states:
After forty-two (42) days from the entry of the order of restitution or at the conclusion of a hearing to reconsider an order of restitution, whichever occurs later, an order of restitution may be recorded as a judgment and the victim may execute as provided by law for civil judgments.
The debtor in Warfel also argued that because the debt was subject to civil process and enforcement, it was not penal in nature nor subject to Kelly and § 523(a)(7). Vessey has noted and argued, in a different context, that the restitution order is subject to civil process and enforcement. To the extent Vessey's summary judgment motion can be read to pursue Warfel's argument, the issue was persuasively analyzed and rejected by the Warfel Panel. The Panel held that "[t]he fact that California law allows enforcement of the restitution obligation as a civil judgment did not divest the restitution obligation of its identity as part of the criminal sentence." Warfel, 268 B.R. at 211. As Judge Klein's concurrence notes, "[a] state can provide for collection of a criminal fine by any means it wishes, including civil process." Id. at 216; see also Steiger, at 911.
This Court has also had occasion to consider § 523(a)(7). See Mabey v. Ellis (In re Ellis), 224 B.R. 786 (Bankr. D. Idaho 1998). In a detailed and thorough decision, Chief Bankruptcy Judge Pappas analyzed a § 523(a)(7) contention by a creditor holding a claim against the debtors, who were the parents of a minor whose conduct had caused injury. See Idaho Code § 20-520(3). The Court held that the policy announced in Kelly was sound and that Kelly remained good law, but noted that the case before it was distinguishable from Kelly in that the debtors were not the criminal offenders, but instead the parents of the criminal offender. Ellis, 224 BR. at 790. Ellis ultimately determined that the restitution obligation was dischargeable because application of Idaho Code § 20-520(3) was "more a device to provide the victim with an opportunity to recover any economic loss, than a means to punish or rehabilitate the parent." Id.
Like Bankruptcy Appellate Panel decisions, decisions of bankruptcy courts, including decisions of bankruptcy judges of this same Court, are not binding but are accorded significant weight. DeBoer, 99.3 I.B.C.R. at 103.
Idaho Code § 20-520(3) allows a court to enter a restitution order against a juvenile or his parents or both when economic loss is a result of the juvenile's criminal conduct. In Ellis, the juvenile burglarized the claimant's residence, and the state court chose to enter a restitution order against the juvenile and his parents.
While some, including Vessey, might be tempted to argue that Ellis supports a determination that the Huntleys' claim should be dischargeable, this Court disagrees. Ellis concerned a narrow factual situation which included the statutory financial liability of parents for the criminal liability of their minor child. Ellis recognized the unique issue presented, and it also acknowledged the continued importance of Kelly, which leads this Court to believe that the intent in Ellis was to limit the holding to the facts there presented. Id. at 788-89.
The Court expressly acknowledged that, in some circumstances, the restitution provisions of Idaho Code § 20-520(3) might advance the interest of the state as well as the victim and render an obligation against a juvenile's parents nondischargeable. 224 B.R. at 792.
The Court therefore finds and concludes that, in the circumstances presented by the instant case, Kelly, Steiger, and Warfel provide the appropriate rule of decision. Here, the criminal restitution order was entered as part of Vessey's criminal sentence, and it will be held nondischargeable. Summary judgment will be entered for the Huntleys, and Vessey's summary judgment motion will be denied.
The Court renders no determination on Vessey's arguments regarding the application of insurance proceeds and the allegedly expired civil judgment. Those issues can be and are best left to the state court if and when efforts are made to collect on the restitution order. The Court today decides only that the state criminal restitution order is not dischargeable in bankruptcy.
C. The Civil Judgment
The Huntleys also ask this Court to enter summary judgment declaring that their civil default judgment is nondischargeable under § 523(a)(9). Section 523(a)(9) exempts from discharge any debt "for death or personal injury caused by the debtor's operation of a motor vehicle if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance."
To prevail under this discharge exception, the Huntleys must prove by a preponderance of the evidence that:
See Grogan v. Garner, 498 U.S. 279 (1991) (holding that a preponderance of the evidence standard of proof is used for dischargeability exceptions in § 523(a)); Wiggins v. Harper (In re Wiggins), 180 B.R. 676, 680 (M.D. Ala. 1995) (preponderance of the evidence standard in § 523(a)(9) actions).
(1) there [is] a debt for death or personal injury;
(2) the death or personal injury [was] caused by debtor's unlawful operation of a motor vehicle; and
(3) the operation of the motor vehicle [was] unlawful because the debtor was intoxicated pursuant to state law.
United Servs. Auto. Assn. v. Pair (In re Pair), 264 B.R. 680, 684, 01.3 I.B.C.R. 99, 100 (Bankr. D. Idaho 2001).
1. Collateral Estoppel (Civil Default Judgment and Victims Compensation Award)
The Huntleys look to their civil suit, in which they obtained a default judgment, and their successful application for victims compensation benefits from the Industrial Commission to meet their burden. In essence, the Huntleys are asking this Court to apply principles of collateral estoppel or issue preclusion and find that prior litigation meets their burden of proving that Vessey's injurious operation of a motor vehicle was unlawful because of his intoxication.
Collateral estoppel stems from 28 U.S.C. § 1738, which instructs federal courts to give a state court judgment the same preclusive effect it would receive from the courts of the state that rendered the judgment. In Idaho, the answers to five questions will determine if collateral estoppel applies:
(1) Did the party "against whom the earlier decision is asserted . . . have a `full and fair opportunity to litigate that issue in the earlier case.'" (2) Was the issue decided in the prior litigation "identical with the one presented in the action in question?" (3) Was the issue actually decided in the prior litigation? This may be dependent on whether deciding the issue was "necessary to [the prior] judgment." (4) "Was there a final judgment on the merits?" (5) "Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?"
Anderson v. City of Pocatello, 731 P.2d 171, 178-79 (1986) (citations omitted); see also Pate, 01.2 I.B.C.R. at 60 (citing Anderson).
The civil judgment is an established and liquidated debt for personal injury. Doc. No. 28, Certified Attachments. Therefore the Huntleys have met their burden on the first Pair element. However, satisfying the second and third Pair elements through collateral estoppel is not as easily accomplished.
Although Pair delineates three elements, the final two must be analyzed together because unlawful operation of a vehicle, absent intoxication, does not create a nondischargeable debt.
Vessey was served and thus given an opportunity to litigate the civil action, but he elected not to participate. Moreover, there was a final judgment entered on the merits. See In re Coryell, 97.1 I.B.C.R. 11, 12 (Bankr. D. Idaho 1997) (holding default judgment satisfies the "on the merits" requirement of collateral estoppel). However, as Coryell notes, "if a judgment is entered by default, none of the issues determined in the case are `actually adjudicated.'" Id. at 12. Therefore, the civil judgment cannot be used to prove that Vessey illegally operated, by virtue of his intoxication, a motor vehicle.
In addition to the fact that the issues in the civil lawsuit were not "actually adjudicated" because resolution of the lawsuit was by default, intoxication was never an issue in that lawsuit. The Huntleys claimed in their lawsuit that Vessey operated his vehicle "in a negligent and/or reckless manner so as to cause it to collide with [their] vehicle." Doc. No, 28, Certified Attachments. The Huntleys made no allegations of illegal intoxication in the civil lawsuit, and therefore, that lawsuit's issues are not identical to what are now presented by this § 523(a)(9) adversary proceeding.
Vessey in turn claims the Court should apply claim preclusion to bar the Huntleys from asserting intoxication because they failed to do so in their civil lawsuit. However, he has not provided any authority that requires intoxication to be separately pleaded as an element in the civil cause of action, which would appear prerequisite to giving its absence preclusive effect.
In order to prove that Vessey illegally operated his vehicle while intoxicated, the Huntleys also rely on their successful ex parte application to the Industrial Commission for victim compensation benefits. The Huntleys point out that, in order to qualify for those benefits, they were required to prove by a preponderance of the evidence that Vessey had violated Idaho Code § 18-8004 which makes it unlawful for any person under the influence of alcohol to drive a vehicle. See Idaho Code § 72-1078 and § 72-1003(4)(d). That hearing, however, cannot be given collateral estoppel effect by this Court.
First, the ex parte application for benefits did not create sufficiently adversarial litigation. While the Commission's referee held a hearing and considered evidence, the Idaho Code makes it clear that "[h]earings held under this section are not contested case hearings under the Idaho administrative procedures act." See Idaho Code § 72-1013 (allowing the Commission to hold informal hearings in order to make determinations regarding compensation claims).
In addition, Vessey was not a party to the application for benefits, a necessary element for collateral estoppel to apply. See Pate, 01.2 I.B.C.R. at 60; Anderson, 731 P.2d at 178-79. The Commission's decision did not effect his liability in any way. Therefore, even though the Commission was convinced that Vessey was illegally intoxicated and operating a vehicle, its decision does not satisfy the Huntleys' burden to prove to this Court by a preponderance of the evidence that § 523(a)(9) applies to their claim.
2. Summary Judgment
Because claim preclusion and issue preclusion do not apply, the Court is left to determine whether summary judgment is appropriate for either party. There are conflicting factual statements regarding the accident that gave rise to the Huntleys' claim. On the one hand, Vessey claims that the accident was caused by a dangerous game of "chicken," in which both vehicles participated. On the other, the Huntleys claim just as strenously that Vessey's intoxication caused the accident. It appears there are genuine issues of material fact and summary judgment is not appropriate.
Vessey argues that there is no evidence of intoxication in the record, and thus, summary judgment should be granted in his favor. But while there were no forensic tests of Vessey's breath, blood, or urine conducted, driving under the influence may be established by direct or circumstantial evidence of impairment of ability to drive due to the influence of alcohol. See State v. Edmondson, 867 P.2d 1006, 1008 (Idaho Ct. App. 1994); State v. Andrus, 800 P.2d 107, 109 (Idaho Ct.App. 1990). Here, there are several direct references to Vessey's alcohol consumption.
The Huntleys have provided the Court with sworn affidavits from Patty Whitten stating that she observed Vessey consuming alcohol the day of the accident, and from Ronald Deal stating that he observed Vessey staggering as he existed the Selway Bar on the day of the accident and that Vessey seemed to be having a hard time keeping his balance. Doc. No. 35, Attached Affidavit. In addition, Jack Huntley stated in his sworn affidavit that Vessey was glassy-eyed, smelled of alcohol and, directly after the accident, could not sit without falling. Doc. No. 34.
Vessey himself admits he consumed two beers the day of the accident, though he contends that he was not intoxicated. Doc. No. 28. In addition, his two passengers confirm that Vessey consumed alcohol prior to the accident, though they too maintain that Vessey was not intoxicated. Doc. Nos. 27 and 30.
The lack of a blood alcohol or similar forensic test is not determinative. The affidavits create a genuine issue of material fact over whether Vessey was illegally operating a vehicle while intoxicated. The § 523(a)(9) issue cannot be decided on summary judgment. A trial is required.
IV. CONCLUSION
No genuine issue of material fact exists concerning the § 523(a)(7) issues involving the criminal restitution order. The Court determines that the Huntleys' motion for summary judgment shall be granted, and the state criminal restitution order will be held nondischargeable pursuant to § 523(a)(7). Vessey's motion for summary judgment on this cause will be denied.
There exists, however, a genuine issue of material fact concerning the civil judgment and whether that debt was caused by Vessey's illegal operation of a motor vehicle while intoxicated Therefore, both motions for summary judgment on the § 523(a)(9) cause will be denied, and that matter will proceed to trial.
An appropriate order will be entered.