Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-3_09-ap-03182/USCOURTS-canb-3_09-ap-03182-1/pdf.json

Parties Involved:
Ottorino Pasian
Plaintiff
Sam Leonetti
Defendant

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MEMORANDUM RE SUMM. JUDG. MOTIONS -1-

UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re

OTTORINO PASIAN and

DANILA PASIAN, 

Debtors.

 

OTTORINO PASIAN,

Plaintiff, 

vs.

SAM LEONETTI, 

Defendant. ____________________________________

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Case No. 94-31563 TEC

Chapter 7

Adv. Proc. No. 09-3182 TC 

MEMORANDUM RE COUNTER MOTIONS FOR SUMMARY JUDGMENT

On May 28, 2010, the court held a hearing on Defendant’s

Motion for Summary Judgment and Plaintiff’s Counter Motion for

Summary Judgment. Dennis D. Davis appeared for Plaintiff Ottorino

Pasian (hereinafter Debtor). Iain A. Macdonald and Michele L.

McGill appeared for Defendant Sam Leonetti (hereinafter Leonetti). 

The motions concern the preclusive effect of the judgment

(Judgment) filed on March 4, 1999 in the action styled as Leonetti

Signed and Filed: June 02, 2010

________________________________________

THOMAS E. CARLSON

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

June 03, 2010

GLORIA L. FRANKLIN, CLERK 

U.S BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 09-03182 Doc# 28 Filed: 06/02/10 Entered: 06/03/10 10:30:23 Page 1 of 3 
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1 I.e., the complaint functionally alleges the elements of a

claim under section 523(a)(6) without expressly seeking relief

under section 523(a)(6). 

2

 In opposition to Debtor’s motion to reopen the bankruptcy

case, Leonetti filed a sworn declaration stating that he did not

receive notice of the bankruptcy case. Debtor neither introduced

evidence to contradict Leonetti’s declaration, nor moved under Rule

56(f) for additional time to file or obtain such evidence.

MEMORANDUM RE SUMM. JUDG. MOTIONS -2-

v. Pasian et al., San Francisco County Superior Court Case No.

990679 (the State-Court Action).

Debtor first contends that the Judgment should not be given

preclusive effect, because it involved an action to enforce a

prepetition claim after Debtor’s discharge was entered. This

argument is unpersuasive. There is an implied exception to the

discharge injunction for actions to determine whether a particular

debt should be excepted from discharge under section 523(a). The

complaint filed in the State-Court Action “incidentally pleaded”1

all of the elements of an exception-from-discharge claim under

section 523(a)(6). Because Leonetti neither received notice of

Debtor’s bankruptcy case nor had actual knowledge of the case,2 the

state court had jurisdiction to enter a judgment that included

findings sufficient to establish the non-dischargeability of the

debt in question. Fidelity Ntl. Title Ins. Co. v. Franklin (In re

Franklin), 179 B.R. 913 (Bankr. E.D. Cal. 1995).

Debtor next argues that the Judgment was obtained through

extrinsic fraud. Even if this court cannot set aside the Judgment

on such grounds, it is well recognized that a federal court should

decline to give issue-preclusion effect to the judgment of a

California state court if that judgment was obtained by extrinsic

fraud. See, e.g., Younie v. Gonya (In re Gonya), 211 B.R. 367 (9th

Cir. BAP 1997).

Case: 09-03182 Doc# 28 Filed: 06/02/10 Entered: 06/03/10 10:30:23 Page 2 of 3 
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-3-

Debtor has introduced evidence sufficient to create a triable

issue of fact regarding whether the Judgment was obtained by

extrinsic fraud. The court determines that it is appropriate to

stay the present action to allow the California state court, rather

than this court, to determine whether the Judgment was obtained by

extrinsic fraud. Such a course of action would intrude less upon

the state courts and would therefor be in keeping with principles

of federalism. The parties agree that it is preferable for the

state court to determine the issue.

**END OF MEMORANDUM**

Case: 09-03182 Doc# 28 Filed: 06/02/10 Entered: 06/03/10 10:30:23 Page 3 of 3