Court Opinion

ID: 4288048
Source: CourtListenerOpinion
Date Created: 2018-06-25 20:00:28.176709+00
Date Added: 2024-06-11T14:37:24.476758
License: Public Domain

NOT FOR PUBLICATION                         FILED
                    UNITED STATES COURT OF APPEALS                        JUN 25 2018
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

In re: STEPHEN F. LOPEZ,                        No.    17-60018

             Debtor,                            BAP No. 15-1335
______________________________

STEPHEN F. LOPEZ,                               MEMORANDUM*

                Appellant,

 v.

VLADIMIR RAICEVIC, Trustee and
IMELDA RAICEVIC,

                Appellees.

                           Appeal from the Ninth Circuit
                             Bankruptcy Appellate Panel
                Jury, Faris, and Yun, Bankruptcy Judges, Presiding

                        Argued and Submitted June 4, 2018
                              Pasadena, California

Before: FERNANDEZ and CHRISTEN, Circuit Judges, and MARSHALL,**
District Judge.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Consuelo B. Marshall, United States District Judge for
the Central District of California, sitting by designation.
      Stephen Lopez appeals the decision of the United States Bankruptcy

Appellate Panel of the Ninth Circuit, which affirmed the bankruptcy court’s

determination that the Raicevics’1 fraud judgment against Lopez, obtained in

California state court, is a nondischargeable debt for money obtained by fraud. See

11 U.S.C. § 523(a)(2)(A). Lopez contends that the bankruptcy court erred in giving

the state court judgment issue preclusive effect on the elements of fraud. We affirm.

      Under California law,2 a final judgment on the merits can preclude a party

from relitigating issues actually litigated and necessarily decided by that judgment.

See Cal-Micro, Inc. v. Cantrell (In re Cantrell), 329 F.3d 1119, 1123 (9th Cir.

2003). It is undisputed that Lopez was a party to the California state court

proceedings, in which a final judgment was entered against him on the merits. It

also cannot reasonably be disputed that the elements of fraud were actually

litigated and necessarily decided by the judgment. Finally, the elements necessary

to prove fraud under California law are identical to those necessary to prove

nondischargeability under 11 U.S.C. § 523(a)(2)(A). Compare Lazar v. Superior

Court, 12 Cal. 4th 631, 638, 909 P.2d 981, 49 Cal. Rptr. 2d 377 (1996) with Am.

Express Travel Related Servs. Co. Inc. v. Hashemi (In re Hashemi), 104 F.3d 1122,

1
  Our use of the phrase “the Raicevics” in this disposition refers to Appellees
Vladimir and Imelda Raicevic collectively.
2
  We look to California law in determining the issue preclusive effect of a
California state court judgment. See 28 U.S.C. § 1738.

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1125 (9th Cir. 1996). We accordingly conclude that issue preclusion was available.

      Even where issue preclusion is available, later courts have discretion to

decide whether applying issue preclusion in a given case will further the public

policy underlying the doctrine. See Lucido v. Superior Court, 51 Cal. 3d 335, 342–

43, 795 P.2d 1223, 272 Cal. Rptr. 767 (1990). The bankruptcy court recognized its

discretion not to give preclusive effect to the state court judgment, but concluded

that applying issue preclusion would further the public policy underlying the

doctrine. In reaching this conclusion, the bankruptcy court identified the correct

legal standard and applied it in a way that was not “illogical, implausible, or

without support in inferences that may be drawn from the record.” United States v.

Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc). We accordingly find no

abuse of discretion in the bankruptcy court’s decision to apply issue preclusion in

this case.

      Lopez contends that the California state court judgment is inconsistent with

a later bankruptcy court judgment entered against the Raicevics, in which the

bankruptcy court discharged the debt of Lopez’s co-tortfeasor, Launi Travis,

finding that the elements of fraud were not met. Lopez argues that, under the “last

in time” rule, issue preclusive effect should have been given to the bankruptcy

court judgment rather than the state court judgment. We disagree.

      Assuming without deciding that the bankruptcy court judgment is the last-in-

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time judgment,3 we nonetheless conclude that the bankruptcy court was correct to

accord issue preclusive effect to the state court judgment rather than the bankruptcy

court judgment. Lopez was not a party to Launi Travis’s bankruptcy proceedings,

and the Raicevics had no opportunity in those proceedings to assert the issue

preclusive effect of the state court judgment against Lopez. Under similar

circumstances, we have held that the earlier judgment should control

notwithstanding the last-in-time rule. See Robi v. Five Platters, Inc., 838 F.2d 318,

328 (9th Cir. 1988). As in Robi, the rationales underpinning the last-in-time rule

“would be better served in [this] case by giving [preclusive] effect to the [state

court] judgment, not to the [bankruptcy] judgment[]. The [state court] judgment is

the last in time in which both [Lopez] and the [Raicevics] were parties. We can

think of no rational reason to permit [Lopez] to avoid the … preclusive effect of

the [state court] judgment by trying to draw issue preclusion from a subsequent

case in which he was not involved.” Id.

      AFFIRMED.

3
 This assumption is questionable, as the state court judgment did not become final
for purposes of issue preclusion until after the bankruptcy court judgment, due to
differences in how finality is determined under state and federal law. Compare
Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102,
1105 n.3 (9th Cir. 2010) with Hawkins v. Risley, 984 F.2d 321, 324 (9th Cir. 1993).

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