Ohio Dep't of Job & Family Servs. v. Miller (In re Miller)

Burton Perlman

________

Burton Perlman

United States Bankruptcy Judge

Debtor, Jennifer Ann Miller (hereafter "Defendant"), filed a chapter 7 bankruptcy case. Ohio Department of Job and Family Services (hereafter "Plaintiff") filed the present adversary proceeding against Defendant. In Plaintiff's Complaint, there are two Counts. Count I is based on § 523(a)(2)(A). Count II is based on § 523(a)(6). In both Counts, Plaintiff seeks to recover benefits paid to Defendant which were allegedly improperly paid. Defendant appears in the case pro se and filed a document which the Court regards as an Answer to the Complaint. In her Answer, Defendant appears to be questioning the basis upon which Plaintiff's computation of unemployment benefits was made.

In Count I of the Complaint, Plaintiff alleges the following:

6. During the time period spanning August 29, 2010 (Benefit Year Beginning Date) to August 27, 2011 (the Benefit Year Ending Date) (together the Benefit Period), Defendant received unemployment compensation benefits totaling $3,7250.00 (Fraud Overpayment Determination 035-1) and Defendant received unemployment compensation benefits totaling $300.00 (Fraud Overpayment Determination 660-1) for an overpayment of unemployment compensation benefits in the amount of $4,025.00.
7. During the Benefit Period, and while collecting unemployment compensation, Defendant worked at Toward Independence Inc. and earned a regular paycheck for services rendered.
8. Defendant was required to report as a condition of receiving unemployment compensation benefits that Defendant sought employment during each bi-weekly period that benefits were received and that Defendant was not employed either full or part-time during each bi-weekly period that benefits were received.
9. Prior to the Petition Date, the Director of ODJFS (the Director) determined that Debtor obtained the Benefits through fraudulent misrepresentation pursuant to Ohio Revised Code (O.R.C.) § 4141.35. Specifically, the Director determined that Debtor worked and had earnings that Debtor failed to report while receiving Benefits under Ohio's unemploymentcompensation system.
10. The Director issued an order for Fraud Overpayment Determination 035-1 on March 15, 2011 and the Director issued an order for Fraud Overpayment Determination 660-1 on April 11, 2011 finding that the Debtor obtained Benefits to which Debtor was not entitled through fraudulent misrepresentation and requiring that the Debtor repay the total amount of the Benefits to which Debtor was not entitled through fraudulent misrepresentation and requiring that the Debtor repay the total amount of the Benefits to ODJFS.
11. The Director issued the Order pursuant to Ohio law regarding the overpayment of benefits to Debtor based on fraud. Pursuant to O.R.C. § 4141.28(A), Debtor had 21 days to appeal the Orders.
12. Debtor did not timely appeal the Orders, so Fraud Overpayment Determination 035-1 became a final and non-appealable Order as of April 6, 2011 and Fraud Overpayment Determination 660-1 because a final and non-appealable Order as of May 3, 2011.
13. A true and accurate copy of each Order is attached hereto as Exhibit A and incorporated herein by reference.
14. The total amount of the Benefits that were obtained through Debtor' misrepresentation is $4,025.00.

Attached to the Complaint as Exhibit A are Orders issued by the Director of the Ohio Department of Job and Family Services (hereafter "ODJFS"). The first page of Exhibit A states that Defendant "received benefits obtained by fraudulent misrepresentation" consisting of an overpayment for the period 9/11/10 thru 1/29/11 and also 3/5/11 to 3/12/11. These resulted respectively in overpayments of $3,725.00 and $300.00. The second and third pages of Exhibit A contain a tabulation, the first column of which is entitled "Week Ending Date." It begins with the week ending 9/4/10 thru the week ending 1/29/11. The second column is entitled "Amount of Earnings." The amount corresponding to each period in the first column is then stated. The final column is entitled "Amount Overpaid." For the first date, 9/4/10, the amount is $0.00. For the date 9/11/10, the amount is $125.00. For each week thereafter, the report states that the amount overpaid is $200.00. The next two pages of Exhibit A provide the same column headings previously described, but for the weeks ending 3/5/11 and 3/12/11. For each period it is stated that the amount overpaid is $150.00. The remaining page of Exhibit A is an Affidavit by Dianna Mingus, Manager of Revenue Recovery for ODJFS. Mingus states that she is familiar with the unemployment compensation database of Ohio Job Insurance. She says that according to that database, Defendant owes a total $4,025.00 in benefit overpayments.

Plaintiff has moved for summary judgment. That is what is now before the Court.

In support of its Motion for Summary Judgment, Plaintiff offers no evidentiary material, but appears to rely upon the documents contained in Exhibit A attached to the Complaint. Defendant has filed nothing in opposition to the Motion for Summary Judgment.

Motions for summary judgment are governed by F.R.Civ.P.56 which is incorporated into bankruptcy practice by Fed.R.Bankr.P 7056. That rule provides in part that a motion for summary judgment is to be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party bears the initial burden of showing that there is no issue of material fact. Celotex Corp. v. Catrett, 447 U.S. 317, 323-324 (1986). The nonmoving party, however, bears the ultimate burden of showing that genuine issue of material facts exists.

The requirements to establish liability pursuant to § 523(a)(2)(A) are stated in In re Rembert, 141 F.3d 277 (6th Cir. 1998). The court there said:

In order to except a debt from discharge under § 523(a)(2)(A), a creditor must prove the following elements: (1) the debtor obtained money through a material misrepresentation that, at the time, the debtor knew was false or made with gross recklessness as to its truth; (2) the debtor intended to deceive the creditor; (3) the creditor justifiably relied on the false representation; and (4) its reliance was the proximate cause of loss. . . . In order to excedpt a debt from discharge, a creditor must prove each of these elements by preponderance of the evidence.
Id.
at 280-81 (citations omitted).

On the record before the Court, the Court cannot grant Plaintiff's Motion for Summary Judgment on Count I. In its memorandum in support of its Motion for Summary Judgment, Plaintiff appears to be taking the allegations of the Complaint as established facts. The Court cannot agree. If Plaintiff is looking to the documents contained in Exhibit A to its Complaint for evidence of these facts, it is foreclosed from doing so by O.R.C. § 4141.281(D)(8):

No finding of fact or law, decision, or order of the director, hearing officer, the commission, or a reviewing court under this section or section 4141.28 of the Revised Code [Determination of benefit rights and claims for benefits] shall be given collateral estoppel or res judicata effect in any separate or subsequent judicial, administrative, or arbitration proceeding, other than a proceeding arising under this chapter.

Exhibit A purports to show amounts paid to Miller in the days in question and then includes a conclusory statement of overpayment. There is no basis for the conclusion that the amount of overpayment stated is valid. Thus, there is an issue of material fact as to the amount of overpayment. Furthermore, in view of Defendant's Answer to the Complaint, and taking into consideration that she appears pro se, the Court is unable to reach a conclusion that the overpayment, whatever it might be, was received with an intention to deceive. Plaintiff's Motion for Summary Judgment on Count I is denied.

In order to except a debt from discharge under 523(a)(6), the creditor must show that "1) the debtor's conduct was willful and malicious, 2) the creditor suffered an injury to its legal rights, and 3) the creditor's loss was caused by the debtor's conduct." CMEA Title Agency, Inc. v. Little (In re Little), 335 B.R. 376 383 (Bankr. N.D. Ohio 2005).

The two prongs of the first element cited in In re Little, willful and malicious, are separate and distinct inquires. Markowitz v. Campbell, (In re Markowitz), 190 F.3d 455, 463 (6th Cir. 1999). A debtor's actions are willful if he or she intends both the conduct as well as the consequences of his or her conduct. Kawaahau v. Geiger, 523 U.S. 56, 61-63, 118 S.Ct. 974 (1988). A debtor's actions are malicious if they arise out of "conscious disregard of one's duties or without just cause or excuse." Kimco Leasing Co. v. Wilson (In re Wilson), 383 B.R. 678, 681-82 (Bankr. N.D. Ohio 2007) (quoting Wheeler v. Laudani, 783 F.2d 610, 615 (6th Cir. 1986)).

The Court finds nothing in the record before it to show that Miller's conduct was willful or malicious. Plaintiff's Motion for Summary Judgment on Count II must be denied as well.

The Court having found that there are genuine issues of material fact left unresolved in the record, Plaintiff's Motion for Summary Judgment is denied.

So Ordered. Copies to: Ohio Department of Job & Family Services
PO Box 182404
Columbus, OH 43218
Victoria Oldham
5131 Post Road
Suite 320
Dublin, OH 43017
Jennifer Ann Miller
PO Box 17151
Cincinnati, OH 45217