The Farmers & Merchants State Bank v. Perry et al

OCR transcription for search; preserved printed pages are authoritative

UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF OHIO

In Re: )
) JUDGE RICHARD L. SPEER
David and Cindy Perry )
' ) Case No. 10-3096
Debtor(s) )
») (Related Case: 10-31078)
The Farmers & Merchants State Bank )
)
Plaintiff(s) )
)
v. )
)
David and Cindy Perry )
)
Defendant(s) )
DECISION AND ORDER

Before this Court is the Motion of the Plaintiff, The Farmers & Merchants State Bank, to
Alter or Amend Judgment. (Doc. No. 31). Said Motion is directed at this Court’s Decision, as
entered on March 17, 2011, wherein the Court found in favor of the Plaintiff, ordering that “for
purposes of 11 U.S.C. § 523(a)(2)(A), any claim, as the term is defined in 11 U.S.C. § 101, be, and
is hereby determined to be a NONDISCHARGEABLE DEBT.” (Doc. No. 30). By way ofits Motion
to Alter or Amend, the Plaintiff does not seek to disturb this determination, but asks the Court to
“enter a monetary judgment in favor of F&M and against Defendants, jointly and severally, in the

amount of $49,238.47, plus interest.” (Doc. No. 31). The Court declines.

AUTHENTICATE
U.S. GOVERNMENT

Bs Doc 33. FILED 04/15/11 ENTERED 04/15/11 15:37:53 Page1of5

GPO

The Farmers & Merchants State Bank v. David and Cindy Perry
Case No. 10-3096

DISCUSSION

Before this Court is the Motion of the Plaintiff to Alter or Amended Judgment pursuant to
Bankruptcy Rule 9023. Subject to a couple of limited exceptions, not applicable in this matter,
Bankruptcy Rule 9023 provides that “Rule 59 F. R. Civ. P. applies in cases under the Code.” For this

purpose, paragraph (e) of Rule 59 governs a motion brought to alter or amend a judgment.

Under Rule 59(e), no specific grounds are prescribed naming the conditions upon which a
court may alter or amend a judgment. Courts, however, have generally recognized four grounds as
warranting amending or altering a previously entered judgment: (1) it is necessary to correct manifest
errors of law or fact upon which the judgment is based; (2) newly discovered or previously
unavailable evidence; (3) an intervening change in the controlling law; and (4) to prevent manifest
injustice. GenCorp, Inc. v. Am. Int’l Underwriters, 178 F.3d 804, 834 (6" Cir. 1999); Inre Bunting
Bearings Corp., 321 B.R. 420, 422 (Bankr. N.D.Ohio 2004). While not specifically stated, the
Plaintiff's Motion to Alter or Amend can be construed so as to rely on the first and last of these

grounds — the existence of a mistake and the need to prevent a manifest injustice.

In seeking to have this Court’s decision amended, so as to include a monetary judgment, the
Plaintiff relies on this Court’s authority to enter such a judgment and the judicial economy that
would be served thereby. For this position, the Plaintiff cites to the Sixth Circuit’s decision in Longo
v. McLaren (Inre McLaren), 3 F.3d 958 (6" Cir. 1993). In this case, the Sixth Circuit recognized that
a “bankruptcy court has jurisdiction to adjudge the validity and amount of a claim together with its
dischargeability.” Jd. at 965.

Yet, nothing in Jn re McLaren actually mandates that a court make such an award as a part
of a dischargeability determination. In fact, while the issues are often intertwined, a determination

regarding dischargeability is not necessarily contingent upon the liquidation of the underlying claim.

Page 2

10-03096-rls Doc 33 FILED 04/15/11 ENTERED 04/15/11 15:37:53 Page 2 of 5

The Farmers & Merchants State Bank v. David and Cindy Perry
Case No. 10-3096

To the contrary, the provision of the Bankruptcy Code addressing dischargeability determinations,
§ 523(a), is solely concerned with the dischargeability of the debt, not its amount, with a debt being
defined under the Code as simply any “liability on a claim[.]” In turn, claim is defined as a “right to

2

payment, whether or not such right is reduced to judgment, ... .’

The liquidation of a claim in a dischargeability, thus, could be viewed as collateral to the
dischargeability determination, making Rule 59(e) inapplicable under the precedent set down by the
Supreme Court in White v. New Hampshire Dept. of Employment Sec., 455 U.S. 445, 451, 102 S.Ct.
1162 (1982) (Rule 59(e) was never intended to apply to legal issues collateral to the main cause of |
action). Even if not the case, the Court is not persuaded that altering or amending this Court’s prior

decision is necessary so as to correct a mistake or to prevent a manifest injustice.

First, in its complaint, the Plaintiff did not specifically ask for the Court to enter a monetary
judgment. Instead, the Plaintiff only set forth that it sought a determination that the sum of certain
checks written by the Defendants, totaling $49,238.47, “be excepted from discharge under 11 U.S.C.
§ 523(a)(2)(A) of the Bankruptcy Code. .. .” (Doc. No. 1). Thus, in giving the Defendants the benefit
of the doubt, it could have been assumed that the Plaintiff was not seeking to liquidate its claim in

this Court.

To be sure, the Court recognizes that, from the Plaintiff's perspective, judicial economy
would be served by this Court amending its prior decision so as to enter a monetary judgment.
Moreover, as the Plaintiff points out, FED.R.CIV.P. 54(c), made applicable to this proceeding by
FED.R.BANK.P. 7054, provides that a “final judgment should grant the relief to which each party is
entitled, even if the party has not demanded that relief in its pleadings.” However, in this particular
matter, these points do not warrant amending or altering this Court’s prior decision because all

matters relating to the liquidation of the Plaintiff's claim were not fully explored.

Page 3

10-03096-rls Doc 33 FILED 04/15/11 ENTERED 04/15/11 15:37:53 Page 3 of 5

The Farmers & Merchants State Bank v. David and Cindy Perry
Case No. 10-3096

In the prior decision, the Court recognized that the Defendant, Mr. Perry, did perform
services related to the fraudulent transfers which gave rise to the Plaintiffs claim. The value of such
services, however, was not ascertained. Such a determination is a necessary prerequisite as a

judgement on a fraudulent transfer can only be obtained to the extent that value was not given.

Thus, without a further hearing, the Court has no way to actually liquidate the claim. For this
purpose, comity dictates, for a couple of reasons, that the liquidation of the Plaintiff's claim be
accomplished in an Ohio state court. First, the value of the fraudulent transfers will be ascertained
according to Ohio law. Second, prior to the commencement of their case, the Plaintiff had already

commenced a suit against the Defendants in an Ohio state court.

For these reasons, the Court declines to grant the Plaintiffs Motion to Alter or Amend under
Rule 59(e) of the Federal Rules of Civil Procedure.

Accordingly, it is

ORDERED that the Motion of the Plaintiff, The Farmers & Merchants State Bank, to Alter
or Amend Judgment pursuant to Bankruptcy Rule 9023, be, and is hereby, DENIED.

Dated: April 15, 2011

aw.

Richard L ser
char Ser hes
Bankruptcy Judge

Page 4

10-03096-rls Doc 33 FILED 04/15/11 ENTERED 04/15/11 15:37:53 Page 4 of 5

CERTIFICATE OF SERVICE

Copies were mailed this 15" day of April, 2011 to:

Cindy A. Perry
506 Maplewood St
Delta, OH 43515

David P. Perry
506 Maplewood St
Delta, OH 43515

Elliot H Feit
420 Madison Ave, #1010
Toledo, OH 43604

Jeffrey D Levy
520 Madison Ave, #840
Toledo, OH 43604

Farmers & Merchants State Bank
307-11 N. Defiance Street

P.O. Box 216

Archbold, OH 43502

Tiffany E. Cavanaugh
One SeaGate, 24th Floor
PO Box 10032

Toledo, OH 43604

James L Rogers
PO Box 10032

1 Seagate, 24th F1
Toledo, OH 43699

/s/Diana Hernandez
Deputy Clerk, U.S. Bankruptcy Court

10-03096-rls Doc 33 FILED 04/15/11 ENTERED 04/15/11 15:37:53 Page 5of5