- Category: Judge Karlin
- Published on 16 April 2012
- Written by Judge Karlin
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SIGNED this 13th day of April, 2012.
In the United States Bankruptcy Court
for the District of Kansas
In Re: )
Michael Gene Oliver and ) Case No. 05-40504
Ann Lucile Francis, )
Michael Gene Oliver and )
Ann Lucile Francis, )
v. ) Adversary No. 11-07038
CitiMortgage, Inc. and )
CitiCorp Trust Bank, FSB, )
Memorandum Opinion and Order Granting Defendants’
Motion for Partial Summary Judgment
Case 11-07038 Doc# 54 Filed 04/13/12 Page 1 of 13
Plaintiffs Michael Gene Oliver and Ann Lucile Francis (“Olivers”) filed this
adversary proceeding against Defendants CitiMortgage, Inc. and CitiCorp Trust
Bank, FSB, raising numerous claims concerning the Defendants’ handling of
payments made on the Olivers’ mortgage during the pendency of their Chapter
13 plan. Included is a claim under Kansas law for the tort of outrage; it is the
only claim upon which Defendants seek summary judgment.
The Olivers have not responded to the Defendants’ Motion for Summary
Judgment.1 Because the motion is thus uncontested, local rules allow this Court
to decide the motion without further notice pursuant to D. Kan. Rule 7.4(b). The
Court has, of course, thoroughly reviewed the motion to determine if there is
both a legal and factual basis for granting the motion, and finds that the alleged
conduct of the Defendants is not sufficient to satisfy the threshold requirements
under Kansas law to state a claim for the tort of outrage. For that reason, the
Court grants partial summary judgment to Defendants.
Because this matter is related to the Olivers’ bankruptcy proceeding, and
the parties have consented to this Court entering a final order on the merits, the
Court has jurisdiction to hear this case and enter a final order and judgment.2
1 Doc. 47. D. Kan. Rule 6.1(d) requires any response be filed within 21 days; it has nowbeen over 30 days since the motion was filed.
2 11 U.S.C. § 157(c)(2).
Case 11-07038 Doc# 54 Filed 04/13/12 Page 2 of 13
I. Findings of Fact
The following findings of fact are based on the Statement of
Uncontroverted Facts contained in Defendants’ Memorandum in Support of their
uncontested Motion for Partial Summary Judgment,3 coupled with a review of
the final Pretrial Order.4 In December, 2002, the Olivers entered into a loan
agreement with CitiCorp Trust Bank FSB, which is a part of CitiGroup, Inc., to
finance the purchase of their home in Lawrence, Kansas. The Olivers gave a
mortgage to CitiCorp Trust Bank FSB to secure the loan.
About three years later, the Olivers filed their Chapter 13 bankruptcy
petition. Their original Chapter 13 Plan included a provision that placed
numerous requirements on how Defendants should apply any payments received
from either the Olivers or the Chapter 13 Trustee. These included requirements
mandating Defendants apply any payments received from the Trustee only to
prepetition arrearages and mandating how Defendants were to apply payments
received directly from the Olivers postpetition. The provision also prohibited the
Defendants from using “suspension accounts” or from seeking any fees or costs
associated with the mortgage without prior Court approval. The Plan also
3 Doc. 48.
4 Doc. 45.
Case 11-07038 Doc# 54 Filed 04/13/12 Page 3 of 13
contained a liquidated damages clause for violation by the Defendants, as well
as other provisions not relevant to the resolution of this summary judgment
The Olivers allege that the Defendants failed to properly apply payments
in accordance with the provisions of their Chapter 13 plan. Specifically, the
Olivers allege that the Defendants used suspense accounts to hold partial
payments (until enough money was received to constitute the full payment
required under the note) rather than applying the partial payments to the
account immediately upon receipt. They contend this resulted in improper
calculations of interest due. They also contend the Defendants misapplied
payments received from the Chapter 13 Trustee and the Olivers by not correctly
crediting those payments to prepetition arrearages and postpetition payments
as they came due, respectively. The Olivers also claim that the Defendants failed
to provide complete and accurate accountings of how the payments were applied,
when requested, and that they intentionally filed pleadings with the Court
containing an incorrect payment history.
5 Defendants did not object to these plan provisions, but if they had, it is possible thatobjections might have been sustained to any provisions that effectively modified the rights ofa holder of a secured claim on Debtors’ principal residence, as prohibited by 11 U.S.C. §
1322(b)(5). Because it is not material to the issues presented here, I do not make any findingwhether an objection would have been sustained.
Case 11-07038 Doc# 54 Filed 04/13/12 Page 4 of 13
The Olivers contend that the Defendants’ actions led to several problems
for them. First, they claim that the improper application of payments to interest
and principal caused them to file incorrect tax returns from 2005 through 2010,
because they deducted on those returns the wrong amount of interest paid on
their home loan. Second, they claim that they have been denied credit or have
been offered credit at a higher interest rate, and insurance at a higher rate, than
they would have been able to obtain had the Defendants not “defamed and
damaged” their credit (although they do not deny they were in bankruptcy, and
had accumulated substantial debt that might also have impacted their credit
rating). In the Pretrial Order, the Olivers have also indicated that they intend
to testify at trial that Ann Francis Oliver suffered multiple strokes and heart
damage which they believe were caused, at least in part, by the emotional
distress caused by Defendants’ conduct.
II. Standard for Summary Judgment
Summary judgment is appropriate if the moving party demonstrates that
there is “no genuine issue as to any material fact” and that it is “entitled to a
judgment as a matter of law.”6 In applying this standard, I view the evidence
and all reasonable inferences therefrom in the light most favorable to the
6 Fed. R. Civ. P. 56(c). Fed. R. Civ. P. 56(c) is made applicable to adversary proceedingspursuant to Fed. R. Bankr. P. 7056.
Case 11-07038 Doc# 54 Filed 04/13/12 Page 5 of 13
nonmoving party.7 An issue is “genuine” if “there is sufficient evidence on each
side so that a rational trier of fact could resolve the issue either way.”8 A fact is
“material” if, under the applicable substantive law, it is “essential to the proper
disposition of the claim.”9
The moving party bears the initial burden of demonstrating an absence of
a genuine issue of material fact and entitlement to judgment as a matter of
law.10 In attempting to meet that standard, a movant that does not bear the
ultimate burden of persuasion at trial need not negate the other party's claim;
rather, the movant need simply point out to the court a lack of evidence for the
other party on an essential element of that party’s claim.11
If the movant carries this initial burden, the nonmovant that would bear
the burden of persuasion at trial may not simply rest upon its pleadings; the
burden shifts to the nonmovant to go beyond the pleadings and “set forth specific
facts” that would be admissible in evidence in the event of trial from which a
7 Lifewise Master Funding v. Telebank, 374 F.3d 917, 927 (10th Cir. 2004).
8 Thom v. Bristol-Myers Squibb Co., 353 F.3d 848, 851 (10th Cir. 2003) (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
9 Id. (citing Anderson, 477 U.S. at 248).
10 Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).
11 Id. (citing Celotex, 477 U.S. at 325).
Case 11-07038 Doc# 54 Filed 04/13/12 Page 6 of 13
rational trier of fact could find for the nonmovant.12 To accomplish this, sufficient
evidence pertinent to the material issue “must be identified by reference to an
affidavit, a deposition transcript, or a specific exhibit incorporated therein.”13
Finally, summary judgment is not a “disfavored procedural shortcut.” It
is instead an important procedure “designed to secure the just, speedy and
inexpensive determination of every action.”14
The only claim at issue in this motion for partial summary judgment is
based on the Kansas state law tort of outrage, otherwise known as intentional
infliction of emotional distress.15 In order to prevail on a claim for outrage, the
Olivers must prove the following four elements:
(1) the conduct of the defendants must be intentional or in recklessdisregard for the plaintiffs;
(2) the conduct must be extreme and outrageous;
(3) there must be a causal connection between the defendants’ conduct andthe plaintiffs’ mental distress; and
12 Id. (citing Fed. R. Civ. P. 56(e)).
13 Diaz v. Paul J. Kennedy Law Firm, 289 F.3d 671, 675 (10th Cir. 2002).
14 Celotex, 477 U.S. at 327 (quoting Fed. R. Civ. P. 1).
15 See Valadez v. Emmis Communications, 290 Kan. 472, 476 (2010) (“In Kansas, thetort of outrage is the same as the tort of intentional infliction of emotional distress.”). Becausethis action is based upon state law, the Court will apply the substantive law of the State ofKansas. See Moore v. Subaru of Am., 891 F.2d 1445, 1448 (10th Cir. 1989); Klocek v. Gateway,
Inc., 104 F. Supp. 2d 1332, 1336 (D. Kan. 2000).
Case 11-07038 Doc# 54 Filed 04/13/12 Page 7 of 13
(4) the plaintiffs’ mental distress must be extreme and severe.16
Before being allowed to proceed on this claim, the Olivers must meet two
threshold requirements: (1) that the Defendants’ conduct is so extreme and
outrageous that recovery must be permitted, and (2) that the emotional distress
suffered by them is so extreme that the law must intervene because no
reasonable person should be expected to endure the distress.17
Kansas courts have further outlined the requirements for what constitutes
extreme and outrageous conduct by noting that such conduct must go “beyond
the bounds of decency and [is] to be regarded as atrocious and utterly intolerable
in a civilized society.”18 Generally, the case must be “one in which the recitation
of the facts to an average member of the community would arouse his
resentment against the actor, and lead him to exclaim, ‘Outrageous!’”19
16 Taiwo v. Vu, 249 Kan. 585, 592 (1991).
18 Miller v. Sloan, Listrom, Eisenbarth, Sloan and Glassman, 267 Kan. 245, 257 (1999).
19 Neufeldt v. L.R. Foy Const. Co., Inc., 236 Kan. 664, 668 (1985) (quoting Dotson v.
McLaughlin, 216 Kan. 201, 210 (1975)). In addition, the Kansas appellate courts have routinelyrelied upon the Restatement (Second) of Torts, which states: “The liability clearly does notextend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.
The rough edges of our society are still in need of a good deal of filing down, and in themeantime plaintiffs must necessarily be expected and required to be hardened to a certainamount of rough language, and to occasional acts that are definitely inconsiderate and unkind.”
Restatement (Second) of Torts § 46 cmt. d (1965).
Case 11-07038 Doc# 54 Filed 04/13/12 Page 8 of 13
The Court finds the conduct complained of in this case clearly falls short
of the requirements set forth by Kansas appellate courts for the tort of outrage.
Essentially the Olivers allege that the Defendants failed to follow the special
procedures and requirements they creatively imposed upon the Defendants
through their Chapter 13 plan, as well as some requirements that were created
by the terms of the note and mortgage, and then failed to fully and accurately
disclose those failures when required to do so. While it is certainly possible that
if proven, Defendants’ actions may have violated the provisions of the Chapter
13 plan and/or federal law—as the Olivers allege in other counts, this Court
must review the facts to determine whether they state a cause of action for the
tort of outrage in Kansas.
A review of the Pretrial Order shows Plaintiffs accuse Defendants of the
following conduct: misapplication of mortgage payments, violation of the terms
of the note, security agreement and mortgage due to misapplication of payments
and improper assessment of fees, failure to provide a requested payment history,
defamation of their credit by wrongfully reporting the balance due on their note
to credit reporting agencies, providing incorrect annual interest reports, causing
them to file incorrect tax returns, failing to correct mistakes after being
questioned, intentionally hiding their mistakes with “improper” payment
histories, and filing false pleadings with the court (because of the misapplication
Case 11-07038 Doc# 54 Filed 04/13/12 Page 9 of 13
of payments, which caused all pleadings to contain the wrong numbers). Even
if the Court were to assume as true all of the Olivers’ allegations concerning the
conduct of the Defendants, such conduct cannot be described as going “beyond
the bounds of decency” nor can the conduct “be regarded as atrocious and utterly
intolerable in a civilized society.”20
A thorough review of the tort of outrage cases in Kansas shows that the
types of conduct associated with successful outrage claims typically involve
conduct as extreme as unlawfully restraining someone and falsely accusing them
of committing a crime,21 continually harassing an individual over the telephone
and threatening them and their family with physical harm and financial ruin if
a debt is not paid,22 and asking inappropriate questions about a patient’s sexual
history and making inappropriate sexual contact with a patient while
performing an independent medical exam to determine head and neck injuries
resulting from an auto accident.23 Although not all cases must fall under those
20 Id. See also Moore v. State Bank of Burden, 240 Kan. 382, 388 (1986) (grantingsummary judgment against plaintiff who brought a tort of outrage claim, finding that the
“most that can be said is that the Bank may have made an erroneous setoff of the SocialSecurity funds against a legitimate indebtedness owed to the Bank. Such action was done onlyafter consultation with counsel and without any showing of any intent to injure Mrs. Grubb,
or a reckless disregard of her”).
21 Taiwo, 249 Kan. 585.
22 Dawson v. Associates Fin. Services Co., 215 Kan. 814 (1974).
23 Smith v. Welch, 265 Kan. 868 (1998).
Case 11-07038 Doc# 54 Filed 04/13/12 Page 10 of 13
specific fact patterns, they illustrate the extreme nature of conduct that is
required to state a claim for outrage in Kansas.
In light of that type of conduct, the Court finds that the acts Defendants
are alleged to have committed, although egregious, clearly do not rise to the
required level of being “atrocious and utterly intolerable in a civilized society.”
For that reason, the uncontested facts do not support the claim of outrage.
Obviously the Court does not condone Defendants’ alleged conduct, if it is
true they did what the Olivers accuse them of doing. But the Kansas Courts
have made it abundantly clear that before a claim for outrage may proceed, the
plaintiff must demonstrate extreme conduct on the part of a defendant. Deciding
what conduct is sufficiently outrageous to support a claim is not an exact science,
and the line as to what conduct satisfies this standard is admittedly blurred.
That said, the Court finds the conduct alleged in this case is clearly insufficient
to reach even the blurred edges of that line. The Kansas Courts have repeatedly
rejected claims that involved conduct much more egregious than is alleged
24 See Lovitt v. Board of County Com’rs of Shawnee County, 43 Kan. App. 2d 4, 14 (2009)
(finding that 911 operator’s accusation that a child was lying about an auto accident andrefusing to send assistance were insufficient to support a claim for outrage); Ferguson v.
Kellstadt, 2008 WL 307488 (Kan. App. 2008) (finding that nurse practitioner’s actions in
informing a patient that the patient had advanced throat cancer without conducting any testsother than a visual inspection was insufficient to support a claim for outrage even though the“cancerous lesions” the nurse observed turned out to be food stuck to the patient’s throat);
Moore v. State Bank of Burden, 240 Kan. 382 (1986) (finding allegations that bank improperly
Case 11-07038 Doc# 54 Filed 04/13/12 Page 11 of 13
Because the Olivers have not met even the first threshold requirement for
a claim of outrage, the Court need not address whether the second threshold
requirement—that the Olivers experienced extreme emotional distress—has
The Court finds that the conduct of which the Olivers accuse the
Defendants is insufficient to support a claim under the Kansas law for the tort
of outrage, and thus grants summary judgment to the Defendants on Count VI,
setoff Social Security funds against a legitimate indebtedness were insufficient to support aclaim for outrage); Burgess v. Perdue, 239 Kan. 473 (1986) (finding that physician’s statementto deceased individual’s mother that the State Neurological Institute “had her son’s brain ina jar” after the mother had specifically declined to consent to an autopsy on her son’s brain wasinsufficient to support a claim for outrage); Neufeldt v. L.R. Foy Const. Co., Inc., 236 Kan. 664
(1985) (finding that defendant’s criminal act of telephoning plaintiff’s business to falsely advisea sheriff had an arrest warrant ready to serve due to an insufficient funds check, and that asheriff was looking for the plaintiff to arrest him was insufficient to state a claim for tort ofoutrage); Hoard v. Shawnee Mission Medical Center, 233 Kan. 267 (1983) (finding plaintiffs didnot state a claim for intentional infliction of emotional distress against hospital who informedthem that their daughter was dead when she was actually at a different hospital); and
Bradshaw v. Swagerty, 1 Kan.App.2d 213 (Kan. App. 1977) (finding defendant’s use of epithets,
calling plaintiff, a young black man, a “nigger,” a “bastard,” and a “knot-headed boy,” did notstate a claim for the tort of outrage).
25 See Hanrahan v. Horn, 232 Kan. 531, 537 (1983) (finding it is unnecessary to addressthe second threshold requirement concerning the severity of the emotional distress if the firstrequirement concerning the nature of the conduct is not met). So although much of Defendants’motion centers around the fact that Plaintiffs endorsed no expert witness to support a causallink between the conduct alleged and the damages claimed, the Court need not consider thatissue because Plaintiffs have failed to even meet the first threshold requirement of severity.
See Lovitt v. Board of County Com’rs of Shawnee County, 43 Kan. App.2d at 14 (holding thatplaintiff’s own “propter hoc observations [regarding cause of son’s damages] do not establishcausation” and the conditions claimed by plaintiff are not conditions that would be apparentto the average lay person, and thus an expert witness would be necessary to establishcausation”).
Case 11-07038 Doc# 54 Filed 04/13/12 Page 12 of 13
which is contained in the Olivers’ seventh theory of recovery in the Pretrial
IT IS, THEREFORE, ORDERED that Defendants’ Motion for Partial
Summary Judgment is granted. Judgment will be entered in favor of the
Defendants as to Olivers’ seventh theory of recovery. The Olivers’ remaining
claims will be tried on the Court’s stacked docket, May 10-11, 2012.
# # #
26 Doc. 45, ¶ 7.7.
Case 11-07038 Doc# 54 Filed 04/13/12 Page 13 of 13
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