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Lepore v. Kerner

October 20, 2010

MICHAEL J. LEPORE APPELLANT,
v.
SIMON KERNER, APPELLEE.



The opinion of the court was delivered by: Joel A. Pisano United States District Judge

OPINION

PISANO, District Judge

Appellant and Chapter 13 debtor Michael Lepore appeals or, in the alternative, moves for leave to appeal, a March 15, 2010 Order of the bankruptcy court denying Lepore's motion for summary judgment*fn1 in an adversary proceeding brought by Appellee Simon Kerner. Kerner's action challenged the dischargeability of Kerner's claim for personal injury damages against Lepore. The issue presented on appeal involves the question of the dischargeability of a debt arising out of "willful and malicious injury" caused by a Chapter 13 debtor. For the reasons below, the ruling of the bankruptcy court is affirmed.

I. Background

On July 15, 2006, Lepore allegedly entered the pizza restaurant at which Kerner worked and assaulted Kerner. Lepore was subsequently arrested and charged with aggravated assault. A grand jury indicted Lepore with one count of aggravated assault in the second degree and one count of making terroristic threats in the third degree. Ultimately, Lepore pled guilty to one count of aggravated assault in the third degree.

In July 2007, after disposition of the criminal action, Kerner filed a civil action against Lepore for the injuries he sustained as a result of the assault. Prior to the conclusion of that matter, Lepore filed a Chapter 13 bankruptcy petition, thereby staying Kerner's civil action. Lepore listed Kerner in his bankruptcy petition as an unsecured creditor with a disputed debt of an unknown amount.

Kerner filed an adversary complaint in the bankruptcy case challenging the dischargeability of his claim, asserting that the debt was non-dischargeable as provided by 11 U.S.C. § 1328(a)(4). That section excepts from discharge debts "for restitution, or damages, awarded in a civil action against the debtor as a result of willful or malicious injury by the debtor that caused personal injury to an individual or the death of an individual." 11 U.S.C. § 1328(a)(4).

Lepore sought summary judgment in the adversary proceeding, arguing that the plain language of the statute contemplates only restitution and damages awarded prior to the filing of a bankruptcy petition. He asserted that because restitution or damages had not been "awarded" in Kerner's civil action prior to the filing of the Chapter 13 petition, Kerner's claim was subject to discharge. The bankruptcy court rejected this argument, and by Order dated March 15, 2010, the court denied Lepore's motion for summary judgment. The court found that the exception to discharge found in § 1328(a)(4) was not limited to prepetition awards of restitution or damages but included restitution or damages "awarded" after the filing of a bankruptcy petition and prior to discharge. Finding, however, that § 1328(a)(4) required that restitution or damages be awarded before the debt could be deemed non-dischargeable, the bankruptcy court dismissed the adversary proceeding. Transcript of Decision dated February 25, 2010 at 5-6. This appeal followed.

II. Legal Discussion

A. Jurisdiction

Appeals from the bankruptcy court to the District Court are governed by 28 U.S.C. § 158. Pursuant to § 158(a), the District Court may hear appeals from "final judgments, orders, and decrees of the bankruptcy court; or with leave of court, from other interlocutory orders and decrees." 28 U.S.C. § 158(a)(1) and (3). Lepore contends that he may appeal the March 15 Order of the bankruptcy court as a matter of right because it is a final order for the purposes of this Court's review. Alternatively, Lepore has moved for leave to appeal.

Denial of a motion for summary judgment ordinarily is not a final order and would typically not be appealable as of right. See, e.g., In re Smith, 735 F.2d 459, 461 (11th Cir.1984) (denial of summary judgment by a bankruptcy judge is not a final order). Traditionally, an order is considered final and appealable only if it "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." Bethel v. McAllister Bros., Inc., 81 F.3d 376, 381 (3d Cir. 1996). Thus, in an individual adversary proceeding, an order of the bankruptcy court is not final unless it likewise "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." In re Truong, 513 F.3d 91 (3d Cir. 2008). Here, as noted above, the bankruptcy court found that a prepetition award of restitution or damages was not a prerequisite to a finding of nondischargeability, and therefore denied the debtor's summary judgment motion on that question. The bankruptcy court further found, however, that § 1328(a)(4) required that damages or restitution be "awarded" prior to discharge, and, consequently, the bankruptcy court dismissed the adversary proceeding. As such, the court fully adjudicated the issues raised by Kerner's complaint and, therefore, the order appealed from is a final order.

However, even if the Court were to have found the decision of the bankruptcy court was not final, it would grant Lepore's motion for leave to appeal. Section 158 does not set forth the criteria for granting leave to file interlocutory appeals, but it is well-established that district courts will apply the standard set forth in 28 U.S.C. ยง 1292(b). See, e.g., Baron & Budd, P.C. v. Unsecured Asbestos Claimants Comm., 321 B.R. 147, 156 (D.N.J. 2005); In re Bertoli, 58 B.R. 992, 995 (D.N.J. 1986). This section provides that a district court should grant leave for an interlocutory appeal of an order when the court is "of the opinion that such order involves [1] a controlling question of law [2] as to which there is substantial ground for difference of opinion and [3] ...


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