N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
In re : PAUL A. M OR

AB ITO, De btor,

______________________________ JH, INC .; B ERR

Y -HINC KLEY INDUSTR IES,

Pla i ntiffs-Appe lle e s,
v. PAUL A. M OR

AB ITO, De fe nda n t-Appe l la

nt. No. 19-15322

D.C . No. 3:18-c v-00221-M M D
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ne v a da M iranda M . Du, C hie f Distric t

Judge , Pre siding Subm itte d

M ay 12, 2020 ** San Fran c isc o , C a lifornia B e fore : THOM AS, C hie f Judge , a nd FR IEDLAND a

nd B ENNETT, C irc uit Judge s . 

# FIL ED
MAY14 2020 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public a t ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2).The distric t c ourt a ffirm e d a ba nkruptc y c ourt judgm e nt finding a de bt owe d by Pa ul M ora bito to M ary a

nna He rbst a

nd re late d e ntitie s (c olle c tive ly , “ He rbst” ) non-disc ha

rge a ble on the ba sis of fra

ud. M o ra bito a ppe a le d. W e have jurisdic tion unde r 28 U.S.C . §§ 158(d)(1) a nd 1291, a

nd we a ffirm
. 1. The ba

nkruptc y c o urt did not a

b u se its disc re tion in disre ga rding M ora b ito’ s de c la

ra tion unde r the sha

m a ffidavit doc trine . In se ttling litiga tion
re ga rding whe the r M o ra

b i to de fraude d He rbst in c onne c tion with a busine ss transa c tion, M ora

bito ve rifie d

tha t the c onte nts of the pa

rtie s’ stipula

t e d C onfe ssion of Judgme nt (the “ C OJ” ), inc luding fa c tua l re c ita tions de ta i ling M ora b ito’ s fra ud, we re “ true and a c c ura te .” He subsc ribe d and swore to tha

t
ve rific a tion be fore a

nota ry . Ye ars late r, whe n opposing Herbst’ s sum m ary judgm e nt m otion in the

non-disc ha

rge a bility proc e e ding be low, M ora

bito file d a de c la ra tion tha t “ c le ar[ly ] an d una

m biguous[ly ] ” c ontra dic te d the C OJ’ s c onte nts. Se e Ye age r v . Bow lin , 693 F.3d 1076, 1080 (9th C i r. 2012) (inte rna l c ita t ion
om i tte d). Give n the c ontra dic t ion, the ba nkruptc y c ourt a c t e d within its disc re tion in a p ply ing the sha

m a ffidav it doc trine
. S

e e N e lson v . C ity of Dav is , 571 F.3d 924, 928 (9th C i r. 2009) (“ The ra tiona le unde rly ing the sha m a ffidavit rule is tha

t a pa rty ought not be

a llowe d t o m anufa c ture a bogus dispute

with h imse lf to de fe a t
sum m ary judgm e nt.” ).
22. The ba nkruptc y c o urt prope rly a

pplie d Ne va da

issue pre c lusion la

w in
c onc luding tha

t the C OJ’ s fra

ud re c ita tions ba rre d M ora b ito from re litiga ting whe the r he de fraude d He rbst. S e e Fiv e Star C

apital C orp. v . Ruby , 194 P.3d 709, 713 (Ne v. 2008) (listing ne c e ssa ry fa c t ors for a

pplic a tion of issue

pre c lusion). The C OJ is a va lid fina l judgm e nt for issuepre c lusion purpose s. The C OJ inc orporate s the s am e fa c tua l findings c onc e rning M ora bito’ s fra u d tha t the Ne va da

sta te c ourt
m a de a fte r a

be nc h tria l d

uring whic h the pa

rtie s “ a c tua lly

and ne c e ssa

rily litiga te d ” whe the r M ora

bito de fraude d He rbst. Se e id . The litiga te d que stion is ide n tic a l to the fa c t issue pre se n te d to the ba nkruptc y c o urt in thenondisc ha rge a bility proc e e ding be low. Fina lly , it is undispute d tha t M o ra bito wa s a pa rty to the sta t e c ourt litiga

tion. The C OJ doe s not fa l l within the public polic y

prohibition on wa

ive rs of ba nkruptc y prote c tion. Although de

b tors m a y not “ c ontra c t a

way the right to a disc ha rge in ba nkruptc y ,” the y

ordina rily m ay stipula

te to the fa c tua l ba sis for a n
e xc e ption to discha

rge . Se e Hay hoev . C

o le(In reC

ole ) , 226 B .R . 647, 651, 655 (B .A.P. 9th C ir. 1998) (inte rna l c ita tion omitte d). 3. The ba

nkruptc y c o urt prope rly c onc lude d tha t the fourth c a

use of
a c tion wa s not m

utua lly e xc lusive with theba

nkruptc y c ourt’ s de te rm ination, in

3gran ting sum m ary judgm e nt on He rbst’ s first a nd se c ond c a

u se s of a c tion, tha

t the C OJ e sta b lishe d M ora bito’ s fra ud a s a m a tte r of fa c t. 4. The ba

nkruptc y c o urt did not e rr in c onc luding tha t the $85 m illion C OJ is not a

n une nforc e a

ble pe na lty
. Unde r Ne va da la w, “ liquida

t e d da m a ge provisions a

re prim a fa c i e va lid,” Haromy

v . Saw y e r , 654 P.2d 1022, 1023 (Ne v . 1982). M ora

bito be ars the burde n of e sta blishing tha

t the provision is a

pe na lty , se e M ason v . Fak

himi , 865 P.2d 333, 335 (Nev. 1993), a nd he c o nc e de s tha

t liquida te d da m a ge s c la use s a re a ppropria te whe n “ c o ntra c tua l da

m a ge s are
unc e rta in or im

m e a sura b le ,” K han v . Bak

hsh , 306 P.3d 411, 414 (Nev . 2013). That
wa s the c a se he re , a s the se ttle m e nt a gre e m e nt inc lude d se v e ra l non-m o ne ta ry obliga tions. B e c a

use a sta te c ourt de te rm ine d, a fte r a full tria l, tha

t He rbst wa s
e ntitle d to a

pproxim a te ly

$141 m illion in da

m a g e s , $85 m illion of whic h we re
c om pe nsatory , we c annot c o n c lude tha t the $85 m illion C OJ is “ disproportiona te to the a c tua l dam a ge s susta ine d ” by He rbst a s a

re sult of M ora

bito’ s bre a c h of the
se ttle m e nt tha

t re pla c e d the sta

te c ourt’ s judgm e nt. Mason , 865 P.2d a t 335. 5. W e de c line M ora

b ito’ s invita

tion to c onside r m a te ria ls outside the
re c o rd on a

ppe a l
. Se e Fe d. R . App. P. 10(a ), (e ). Ac c ordingly , we G RANT He rbst’ s m otion to strike

Exhibits 45 a

n d 46 of M ora

bito’ s Exc e rpts of R e c ord a s

4we ll a s Se c tion (IV)(F)(9) of M ora bito’ s ope ning brie f. And we DE NY M ora b ito’ s m otion to supple

m e nt the re c ord. AFFIRM E D.

5