Court Opinion

ID: 205484
Source: CourtListenerOpinion
Date Created: 2011-02-25 01:12:07+00
Date Added: 2024-06-11T17:27:48.309450
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                           FOR THE NINTH CIRCUIT                               FEB 24 2011

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

In re: MARICRIS C. RODRIGUES-                    No. 10-60019
LABABIT; MICHAEL J. LABABIT,
                                                 BAP Nos. WW-09-1020 & WW-
              Debtors,                           09-1030

ROBERT ZAUPER,
                                                 MEMORANDUM*
              Appellant,

  v.

MARICRIS C. RODRIGUES-LABABIT;
MICHAEL J. LABABIT,

              Appellees.

                         Appeal from the Ninth Circuit
                           Bankruptcy Appellate Panel
            Pappas, Riegle, and Montali, Bankruptcy Judges, Presiding

                     Argued and Submitted February 9, 2011
                              Seattle, Washington

Before: B. FLETCHER, PAEZ, and IKUTA, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      Robert Zauper appeals the Bankruptcy Appellate Panel (BAP)’s decision

holding that his Washington default judgment against Michael Lababit and

Maricris Rodrigues-Lababit was not entitled to preclusive effect in the Lababits’

bankruptcy proceedings, affirming the bankruptcy court’s denial of emotional

distress damages, and reversing and remanding for recalculation of compensatory

damages.

      We have jurisdiction over this interlocutory bankruptcy appeal because the

question at issue is legal in nature, and a resolution favorable to Zauper would

obviate the need for further fact finding in the bankruptcy court. See 28 U.S.C.

§ 158; Bonner Mall P’ship v. U.S. Bancorp Mortg. Co. (In re Bonner Mall P’ship),

2 F.3d 899, 904 (9th Cir. 1993).

      The state court’s default judgment did not have a claim preclusive effect

because Zauper’s claims in state court (based on negligence, strict liability,

nuisance, and gross negligence) were not the same as his claims in the bankruptcy

court (based on willful and malicious conduct). The bankruptcy court was

therefore free to modify the damages award. See Hardacre v. DiNoto (In re

Dinoto), 46 B.R. 489, 491–92 (B.A.P. 9th Cir. 1984).

      Nor did the default judgment have an issue preclusive effect. We agree with

the BAP’s well-reasoned conclusion that the Washington Supreme Court would

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likely hold, consistent with the Restatement (Second) of Judgments, that under

Washington law an issue is not “actually litigated” by a default judgment, Stephens

v. Bigelow (In re Bigelow), 271 B.R. 178, 184 (B.A.P. 9th Cir. 2001). We

therefore decline to certify this issue to the Washington Supreme Court. Although

the debtors here did not bring a motion to vacate the default judgment, no

Washington case has held that we must therefore give the default judgment issue

preclusive effect. Nor is FDIC v. Daily (In re Daily), 47 F.3d 365 (9th Cir. 1995),

applicable, because here the debtors never actively participated in the proceedings

leading to a default judgment, and the court did not enter a default judgment as a

sanction for discovery abuse. See id. at 368–69.

      In considering Zauper’s claim for emotional distress damages, the

bankruptcy court referenced only the tort of intentional infliction of emotional

distress, which requires a plaintiff to prove “severe” emotional distress. See Nord

v. Shoreline Sav. Ass’n, 805 P.2d 800, 803–04 (Wash. 1991). Zauper, however,

also argued that he was entitled to emotional distress damages under a lower

standard of proof associated with claims for malicious injury to a pet, see Womack

v. von Rardon, 135 P. 3d 542, 546 (Wash. Ct. App. 2006), and conversion, see

Birchler v. Castello Land Co., 942 P.2d 968, 973 (Wash. 1997). Accordingly, we

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remand this issue to the bankruptcy court to reconsider Zauper’s emotional distress

claim under the correct standard.

      Finally, we see no reason to disturb the BAP’s decision not to publish its

decision in this case.

      The parties shall bear their own costs on appeal.

      AFFIRMED in part and VACATED and REMANDED in part.

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