Cozzone v. Ingui

UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 7
:
JOHN INGUI, 	: 	Bankruptcy No. 04-16847DWS
dba John Ingui, M.D., 	:
:
Debtor. 	:
:
VICTOR COZZONE, 	: 	Adversary No. 04-0868
:
Plaintiff, 	:
:
v. 	:
:
JOHN INGUI, 	:
:
Defendant. 	:
MEMORANDUM OPINION
BY: 	DIANE WEISS SIGMUND, Chief Bankruptcy Judge
Before the Court is the Complaint of Victor Cozzone (“Plaintiff”) seeking to have a
judgment he secured in the Court of Common Pleas of Philadelphia County (“State Court”)
excepted from the Debtor’s discharge pursuant to 11 U.S.C. § 523(a)(6). As the Plaintiff’s
only evidence was the civil action he filed against the Debtor in the State Court and the
admission by the Debtor of the debt based on the judgment entered, I granted the Debtor’s
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motion under Fed.R.Civ.P. 52(c) (incorporated in bankruptcy proceedings by Fed.R.Bank.P.
7052) for judgment against Plaintiff at the conclusion of his case. 	My reasons for so
doing follow.
BACKGROUND
On August 30, 2005 Plaintiff filed a six paragraph complaint (the “Adversary”)
averring that Debtor willfully and maliciously injured him as evidenced by the allegations
of the foregoing civil action (the “Civil Action”) and the jury’s finding of compensatory and
punitive damages in the amount of $3.8 million. Adversary ¶¶ 5, 6. Rather than plead any
of the facts which he believes give rise to the non-dischargeability of the debt, he attached
a copy of the Civil Action, Exhibit P-1, and jury award. In response, Debtor averred that a
cancer related illness caused him to fail to timely respond to discovery and “the judgment
was virtually entered by default as Defendant was precluded from participating in his own
defense and having counsel represent him.” 	Answer ¶ 5. 	I have since learned from
dispositive motions filed in the Adversary that the judgment was based on deemed
admissions which, as discussed below, Plaintiff has sought to utilize in lieu of making a
further evidentiary record in this case.
On January 10, 2004 Plaintiff filed a motion for summary judgment (the “SJ Motion”)
contending that I should give collateral estoppel effect to the Civil Action to conclude that
the Debtor willfully and maliciously caused injury to the Plaintiff so as to render the
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1 That subsection 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--
(6) for willful and malicious injury by the debtor to another entity or
to the property of another entity;
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judgment entered by the State Court non-dischargeable under § 523(a)(6).1 The Debtor
argued that collateral estoppel was inappropriate since the Civil Action asserted three
grounds for recovery, only one of which presented the issue framed by the Adversary.
In response, Plaintiff attached answers to jury interrogatories which I examined. Disagreeing
with what those documents revealed, I denied the SJ Motion concluding that one of the
necessary elements for application of the doctrine of collateral estoppel, i.e., that the issue
decided in the prior adjudication was identical to the issue in the later action, was absent.
Plaintiff 	then 	filed 	a 	motion 	for 	reconsideration 	(“Reconsideration 	Motion”)
contending that I erred in my legal conclusion by failing to give proper recognition to the
decision of the Superior Court of Pennsylvania (“Superior Court Opinion”). As I noted in
my Order dated May 20, 2005, Doc. No. 33 (the “May 20 Order”), “the portions of the
Superior Court Opinion to which the Plaintiff refers the Court as dispositive are (1) its
recognition that the Plaintiff alleged that “defendant intentionally, willfully and maliciously
lied about his treatment and diagnosis of [plaintiff] and fabricated reports to bolster his
lies...;” (2) defendant’s failure to respond to requests for admission which then were treated
as admissions at trial; (3) the trial court’s entry of a directed verdict on the issue of liability
finding, based on the admissions, that defendant “intentionally lied about his diagnosis of
plaintiff” in documents he prepared. I went on to state:
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2 “The word “wilful’ in (a)(6) modifies the word “injury” indicating that non-
dischargeability takes a deliberate or intentional injury, not merely a deliberate or intentional act that
leads to injury.” “The (a)(6) formulation triggers in the lawyer’s mind the category “intentional
torts,” as distinguished from negligent or reckless torts. Intentional torts generally require that the
actor intend ‘the consequences of an act’, not simply ‘the act itself.’” Id. at 977.
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I did not consider the Superior Court Opinion as related to the admissions
because Plaintiff did not argue this point nor did he make the admissions part
of the record on summary judgment. Rather he has supplemented the record
now to include the admissions as well as the trial judge’s ruling on Plaintiff’s
request for a directed verdict. Exhibit G and H to Reconsideration Motion.
This is in reality a second attempt to prove his point. 	“The purpose of a
motion for reconsideration is to correct manifest errors of law or fact or to
present newly discovered evidence.” Harsco Corp. v. Zlotnicki, 779 F.2d 906,
908 (3d Cir. 1985), cert. denied, 476 U.S. 1171 (1986). 	A party may not
submit evidence that is not newly discovered in support of a motion for
reconsideration. Id. at 909. The court in Durkin v. Taylor, 444 F.Supp. 879,
889 (E.D. Va. 1977) stated that “[w]hatever may be the purpose of Rule 59(e)
it ... [was not] ... intended to give the unhappy litigant one additional chance
to sway the judge.”
That being said I will nonetheless address the merits of his argument because
Plaintiff is not foreclosed from filing another summary judgment motion, and
it would be a colossal waste of judicial resources to try a case where the
outcome had been determined by a prior proceeding.
May 20 Order at 2.
Reviewing the newly submitted documents, I affirmed my conclusion that the issue
decided by the State Court was not identical to the issue presented in the Adversary. I stated
that a cause of action under § 523(a)(6) requires proof of intentional harm, not merely an
intentional act with unintended injury. Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974
(1998). 2 The sole admission that determined liability in the Civil Action was that Debtor
intentionally lied about his diagnosis of plaintiff which the State Court concluded was
sufficient to direct a verdict as that admission established, inter alia, the tort of “injurious
falsehood.” 	May 20 Order at 3. 	Since none of the findings (including the admissions)
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3 The Civil Action states that Debtor, a psychiatrist, treated Plaintiff and in that connection
created certain medical records that Plaintiff sought to utilize as evidence of intentional infliction
of emotional distress in a defamation action by Plaintiff against Sidney Wolgin. 	The Wolgin
litigation resulted in a defense verdict which Plaintiff attributes to Debtor’s intentional failure to
provide the subpoenaed records or support for his claim.
4 Plaintiff filed a motion for leave to appeal this decision which was denied. Doc. No. 56.
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established that Debtor’s intentional act of lying was committed with the intention of causing
the injury for which the judgment was entered,3 the second element of § 523(a)(6) was not
proven. I also found that the jury’s finding that “the defendant’s actions were outrageous
and demonstrated a reckless indifference to the rights of the plaintiff” so as to impose
punitive damages fell short of the findings necessary for § 523(a)(6) which requires an
intentional act.
Defendant had objected to my consideration of the admissions and all documents
that relied on the admissions, arguing that pursuant to Pa.R.Civ.P. 4014 they were
inadmissible for collateral estoppel purposes in a proceeding separate from the Civil Action.
Having concluded that the documents did not prove Plaintiff’s case, I did not reach that
procedural issue. 	However, as I then set the matter for trial and Plaintiff indicated his
intention to rely on the same record, Debtor filed a motion in limine to preclude use of
the admissions and the documents that relied on the admissions on these grounds.
That matter was briefed and argued as well and once again decided adversely to Plaintiff.
See Memorandum Opinion and Order dated July 6, 2005. 	Doc. No. 42. (the “July 6
Opinion”). Finding that Pa.R.Civ.P. 4014(d) and Fed.R.Civ.P. 36 bar the use of admissions
in a subsequent proceeding, I held that Plaintiff may not use the admissions or the findings
of the State Court Action premised thereon as substantive evidence in this Adversary. 4
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5 Exhibit P-1, the Civil Action, was admitted as it was not subject to the preclusion order.
6 Rather than reiterate the applicable law upon which I based my conclusion, I will
incorporate the July 6 Opinion in this Memorandum Opinion as if set forth in full. As the earlier
Opinion was not published, I have attached it hereto as an addendum.
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Having so ruled, I allowed the parties to amend their joint pretrial statement so that
Plaintiff could set forth the evidence he would elicit in support of his claim. Surprisingly
Plaintiff chose not to put on a case but rather to once again rely on the deemed admissions
that gave rise to the State Court judgment. At the trial of this matter, he once again moved
the admission of Exhibits P-2, P-4 and P-5.5 Debtor objected on the grounds that I had
precluded their use by the July 6 Opinion. I concurred and denied admission of Exhibits P-2,
P-4 and P-5. With only the Civil Action complaint and the Debtor’s admission to the debt
and judgment to support the Adversary, Plaintiff failed to establish his cause, and I entered
judgment for Debtor.
DISCUSSION
This is the fourth time I have considered Plaintiff’s position that he is entitled to a
non-dischargeable judgment of $3.8 million based on a state court jury’s reliance on
admissions that Debtor intentionally lied about his diagnosis of Plaintiff and therefore
committed the tort of injurious falsehood. After full briefing and legal argument, I concluded
in the July 6 Opinion that the sole evidence that Plaintiff relies upon is not admissible.
While the deemed admission could be utilized in the Civil Action, it cannot be used in this
subsequent proceeding for the reasons set forth in the July 6 Opinion which is incorporated
herein.6
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Plaintiff was made aware of the Court’s view in this regard and has determined to put
all his eggs in the collateral estoppel basket. With a view towards an appeal, he has offered
nothing new at the trial of this matter. 	A central purpose of the Bankruptcy Code is to
provide a procedure by which the poor but honest debtor can reorder his affairs, make peace
with his creditors, and enjoy “a new opportunity in life with a clear field for future effort,
unhampered by the pressure and discouragement of preexisting debt.” Local Loan Co. v.
Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699 (1934). Accord Insurance Co. of America v.
Cohn (In re Cohn), 54 F.3d 1108, 1113 (3d Cir. 1995) (“The overriding purpose of the
Bankruptcy Code is to relieve debtors from the weight of oppressive indebtedness and
provide them with a fresh start.”) 	For this reason, exceptions to discharge are strictly
construed against creditors and liberally interpreted in favor of debtors. Id.;United States v.
Stelweck, 108 B.R. 488, 495 (E.D. Pa. 1989). As the party objecting to discharge, Plaintiff
must prove all of the elements of fraud by a preponderance of the evidence. 	Grogan v.
Garner, 498 U.S. 279, 288-89, 111 S.Ct. 654, 660 (1991). While I recognize that Plaintiff
was able to secure a $3.8 million judgment without a trial on the merits and is particularly
loathe to concede that bankruptcy could deprive him of his award, an exception to the
discharge of the judgment cannot be proven in a similar summary manner.
Moreover, and as I stated in the May 20 Order, even if admissible, the jury’s findings
did not establish the elements of § 523(a)(6) which require both proof of intentional harm
and an intention to cause the injury resulting from the intentional act. Kawaauhau v. Geiger,
523 U.S. 57, 118 S.Ct. 974 (1998). The admission upon which the jury relied, i.e., Debtor’s
intentional lie, only addressed the first element of proof. There is nothing in the documents
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that Plaintiff sought to introduce to prove his case that addresses whether Debtor intended
to cause the injury that the jury found resulted from Debtor’s failure to provide the records.
Thus, even if the admissions and findings that flow therefrom were competent evidence in
this proceeding, Plaintiff’s proofs fall short of what is necessary to prove the elements of
§ 523(a)(6) by a preponderance of the evidence.
An Order consistent with the foregoing Memorandum Opinion shall issue.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Dated: 	March 10, 2006
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UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 7
:
JOHN INGUI, 	: 	Bankruptcy No. 04-16847DWS
dba John Ingui, M.D., 	:
:
Debtor. 	:
:
VICTOR COZZONE, 	: 	Adversary No. 04-0868
:
Plaintiff, 	:
:
v. 	:
:
JOHN INGUI, 	:
:
Defendant. 	:
ORDER
AND NOW, this 10th day of March 2006, upon trial of the Complaint of Victor
Cozzone and for the reasons stated in the accompanying Memorandum Opinion;
It is hereby ORDERED and DECREED that judgment is entered in favor of the
debtor/defendant John Ingui and against the plaintiff Victor Cozzone.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
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Copies to:
Kenneth L. Mirsky, Esquire
2033 Walnut Street
Philadelphia, PA 19103
Matthew R. Nahrgang, Esquire
35 Evansburg Road
Collegeville, PA 19426
Dave P. Adams, Esquire
Office of the U.S. Trustee
833 Chestnut Street
Suite 500
Philadelphia, PA 19107
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