Court Opinion

ID: 4113209
Source: CourtListenerOpinion
Date Created: 2017-01-04 21:01:13.622169+00
Date Added: 2024-06-11T07:45:54.674371
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            JAN 04 2017
                   UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                           FOR THE NINTH CIRCUIT

In re: CRISTIE TOLOTTI,                          No.   14-60067

          Debtor,                                BAP No. 14-1019
______________________________

SEABOARD PRODUCE                                 MEMORANDUM*
DISTRIBUTORS, INC.,

              Appellant,

 v.

CRISTIE TOLOTTI,

              Appellee.

                          Appeal from the Ninth Circuit
                           Bankruptcy Appellate Panel
            Kirscher, Pappas, and Taylor, Bankruptcy Judges, Presiding

                      Argued and Submitted October 5, 2016
                              Pasadena, California

Before:      PREGERSON, KOZINSKI** and PAEZ, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
           Following argument in this case, Judge Kozinski was drawn to replace
Judge Noonan.
                                                                                  page 2
      1.      Section 523(a)(6) of the Bankruptcy Code prevents the discharge of

debts arising from a debtor’s “willful and malicious injury” to the property of

another. 11 U.S.C. § 523(a)(6). Relying on the California Superior Court’s

determination that Tolotti “acted deliberately, willfully, and intended to cause

injury to Plaintiff’s security and impede Plaintiff from obtaining physical

possession of the property,” the bankruptcy court held that Tolotti’s debt wasn’t

dischargeable. Because we are “in as good a position as the BAP to review the

decision of the bankruptcy court, we review the bankruptcy court’s decision

independently,” In re Nourbakhsh, 67 F.3d 798, 800 (9th Cir. 1995) (per curiam),

and affirm.

      For collateral estoppel to apply, five factors must be met: (1) the issue

sought to be precluded “must be identical to that decided in a former proceeding”;

(2) the issue must have been “actually litigated” in the former proceeding; (3) the

issue must have been “necessarily decided” in the former proceeding; (4) the

decision in the former proceeding must be “final and on the merits”; and (5) the

party against whom preclusion is sought must be “the same as, or in privity with,”

the party to the former proceeding. Lucido v. Superior Court of Mendocino Cty.,

795 P.2d 1223, 1225 (Cal. 1990) (citations omitted).

      The bankruptcy court properly applied collateral estoppel in this case. There
                                                                                   page 3
is no dispute that the fourth and fifth factors—whether the parties are the same and

the prior decision was final and on the merits—are met here. The issues presented

in state court were identical to those presented to the bankruptcy court. In fact, the

parties stipulated to litigate their claims in state court “in order to avoid potentially

duplicative litigation . . . and/or inconsistent results that could arise should this

matter be litigated in bankruptcy Court.” The default judgment entered in state

court satisfies the “actually litigated” requirement. See In re Harmon, 250 F.3d

1240, 1246 (9th Cir. 2001). Assuming that Tolotti hasn’t waived the right to

challenge whether the issue was “necessarily decided,” this requirement is met so

long as the issue was not “entirely unnecessary” to the judgment. Lucido, 795 P.2d

at 1226. This prong of the collateral estoppel test is most salient when there are no

express findings. See In re Harmon, 250 F.3d at 1248 (“[T]he express finding

requirement can be waived if the court in the prior proceeding necessarily decided

the issue . . . .”). But the state court expressly found that Tolotti “acted

deliberately, willfully, and intended to cause injury to Plaintiff’s security.”

       2.     The bankruptcy court properly determined that “[a]pplication of the

doctrine of collateral estoppel in this case will further the public policy interest of

preserving the integrity of the judicial system, promoting judicial economy, and
                                                                             page 4
protecting litigants from harassment by vexatious litigation.” See In re Baldwin,

249 F.3d 912, 919–20 (9th Cir. 2001) (quoting Lucido, 795 P.2d at 1227).

      The decision of the bankruptcy court is AFFIRMED.