Jhaveri et al v. Dubois et al

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8 UNITED STATES BANKRUPTCY COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10 SAN FERNANDO VALLEY DIVISION
Ml in re: Bk. No. SV 06-12053 MT
12 BRIAN DUBOIS and CONNIE DUBOIS, Chapter 7
I3 Debtor(s). Adv. No. SV 07-01026 MT
4p — oe MEMORANDUM OF DECISION RE:
is || INDRAS. JHAVERI and MARY JHAVERI, | MOTION FOR SUMMARY JUDGMENT
16 Plaintiff(s), Date: December 19, 2007
V. Time: 11:00 a.m.
17 Place: Courtroom 302
BRIAN DUBOIS and CONNIE DUBOIS,
18 Defendant(s)
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31 || LINTRODUCTION:
2 Plaintiffs Indra S. Jnaveri and Mary Jhaveri (“Plaintiffs”) filed a Notice of
33 || Renewed Motion and Motion for Summary Judgment on October 31, 2007, asking the
a4 | court to grant summary judgment in favor of Plaintiffs and declaring Plaintiffs’ jucgment
25 from the Los Angeles County Superior Court against Brian Dubois to be non-
2G _ dischargeable. For the reasons stated below, Plaintiffs’ motion is denied.

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i. FACTS:

Plaintiffs sued Brian Dubois (“Debtor”) and others in Los Angeles County
Superior Court for fraud and other claims, case no. BC 242306. On January 20, 2005,
the Los Angeles County Superior Court rendered a judgment for fraud and punitive
damages against Debtor totaling $2,408, 706.30, with interest continuing to accrue at
10% per annum (“Judgment”). Plaintiffs and Debtor entered into a post-judgment
settlement agreement, which Debtor later breached.

Debtor filed chapter 11 bankruptcy on November 28, 2006. The case was
converted to chapter 7 on February 28, 2007. On February 8, 2007, Plaintiffs initiated
an adversary proceeding against Debtor, adv. no. SV 07-01026. In Plaintiffs Complaint
for Non-Dischargeability of Debt, Plaintiffs seek: (1) a determination that the Judgment
is non-dischargeable within the meaning of 11 U.S.C. §§523(a)(2), 523(a)(4) and/or
523(a)(6); (2) costs of suit incurred herein; and (3) for such other and further relief as
this court may deem proper.

Plaintiffs filed their first motion for summary judgment on June 26, 2007. An
initial hearing on the matter was held on August 16, 2007. Because the state court
judgment was not yet final at the time the motion was filed but became final in the
interim, a continued hearing was held on October 24, 2007. The court denied the
motion for summary judgment without prejudice, finding that Plaintiffs failed to meet
their burden of proof on the motion for summary judgment and noting that Plaintiffs
failed to provide authority to show the effects of the breach of the settlement on the
Judgment.

Plaintiffs brought a second motion for summary judgment (renewed) on October

31, 2007 (*“MSJ"). This MSJ is the subject of this memorandum.

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1 || HL DISCUSSION:

lb

Plaintiffs’ four page motion argues that summary judgment should be granted
3 || because (1) the state court judgment is collateral estoppel as to non-dischargeability,
4 | and (2) the settlement agreement is not enforceable by Debtor.

5 Summary Judgment Standard:

6 Under F.R.C.P. Rule 56(c), incorporated by F.R.B.P. Rule 7056, summary
7 | judgment should be granted “if the pleadings, depositions, answers to interrogatories,
8 | and admissions on file, together with the affidavits, if any, show that there is no genuine |

9 | issue as to any material fact and that the moving party is entitied to a judgment as a

10 |) mater of law.” Under Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986), “a party

11 § seeking summary judgment always bears the initial responsibility of informing the [ ]

12 | court of the basis for its motion, and identifying those portions of ‘the pleadings,

13 | depositions, answers to interrogatories, and admissions on file, together with the

i4 | affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of

15 || material fact.” Under C.A.R. Transportation Brokerage Co. v. Darden Restaurants, inc.,
16 || 213 F.3d 474, 480 (9th Cir. 2000), “When the party moving for summary judgment

17 | would bear the burden of proof at trial, ‘it must come forward with evidence which would
ig |. entitle it to a directed verdict if the evidence was uncontroverted at trial.” Further,

19 | Countrywide Home Loans, Inc. v. U.S., 2007 WL 87827 at 7 (E.D. Cal. 2007), states:
20 | “When the moving party has the burden of proof at trial, that party must carry its initial
31 | burden at summary judgment by presenting evidence affirmatively showing, for all

22 | essential elements of its case, that no reasonable jury could find for the non-moving

23 | party.” Bell v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir. 1982).

24 Collateral Estoppel Issue:

25 While Plaintiffs may be able to show that collateral estoppel might bar relitigation

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of the §523 issues that are the subject of this adversary complaint, issue preclusion
involves a more involved analysis than Plaintiffs’ brief indicates. Plaintiff fails to show
how the elements of §523(a)(2)(A) and/or §523(a)(6) are satisfied if collateral estoppel
applies. Plaintiffs failed to address what issues were actually addressed in the state
court proceeding and how they apply in §523 actions. See e.g. in re Lopez, 367 B.R.
99, 104-108 (9th Cir. B.A.P. 2007): In re Munton, 352 BLR. 707, 712 (9th Cir. B.A.P.

2006). Under Celotex Corporation v. Catrett, 477 U.S. at 324, Plaintiff “bears the initial

responsibility of informing the [ ] court of the basis for its motion.” Plaintiff also “must
carry its initial burden at summary judgment by presenting evidence affirmatively
showing, for all essential elements of its case, that no reasonable jury could find for the
non-moving party.” Countrywide Home Loans, Inc. v. U.S., 2007 WL 87827 at 7.
Simply attaching the state court findings with no further analysis of how each of those
findings relates to a § 523 element is asking the court to make plaintiffs’ case for them
and not giving the debtor the opportunity to respond. Plaintiffs failed to meet their
burden to show why summary judgment should be granted and why Debtor's debt
should be deemed non-dischargeable pursuant to §523(a}(2)(A) and/or §523(a)(6).

Settlement Issue:

Plaintiffs also argue that the settlement agreement is not enforceable by Debtor.
Specifically, Plaintiffs argue that Debtor breached the settlement agreement, thereby
rendering the settlement enforceable and that there was no waiver of any breach of the
settlement agreement. At the October 24, 2007 hearing on the first motion for summary :
judgment, the court told Plaintiffs that there were outstanding issues on what effect a
breach of the settlement agreement had on the Judgment and denied the first motion

for summary judgment because Plaintiffs failed to adequately address relevant authority ,

and the issues involved. These issues raised previously by the court that Plaintiffs still

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failed to address include: (1) how does California Code of Civil Procedure §664.6 and
the state court's denial of Plaintiffs’ request to enforce the settlement agreement affect
the enforceability of the settlement agreement and Judgment?; (2) does the settlement
agreement supersede the Judgment?; (3) what effect does a breach of settlement
agreement have on the Judgment?; (4) is the state court judgment reinstated or is the
sole remedy damages arising from the breach of the settlement? !n relation to whether
or not there is a waiver of the breach of settlement agreement, plaintiff needs to
address whether there may be a material fact in dispute as to whether or not there were
actions taken by Plaintiffs that waived the breach of the settlement.

Because of this, the court cannot say whether there are any genuine issues of
material fact or whether plaintiff is entitled to judgment as a matter of law.

iV. CONCLUSION:

Based on the inadequacies of the papers filed, the court informed all parties that
no appearance was required. The court found that oral argument was unnecessary
where Plaintiffs’ moving papers failed to meet their initial burden and any additional
arguments or authorities not initially briefed by Plaintiffs would prejudice Debtor and
cause unnecessary expense.

Plaintiffs may have a third and final chance to file a motion for summary
judgment that adequately addresses the court's concerns.

DATED:
2. / 19/07

MAUREEN A. TIGHE
United States Bankruptcy Judge

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] CERTIFICATE OF SERVICE BY MAIL

he

3 | certify that a true copy of this ORDER was mailed on BE

LI 9 2007

4 | to the parties listed below:

6 |} Mark Serlin

Serlin & Whiteford, LLP
71 813 F. St., Second Floor
Sacramento, CA 95814

Michael Brewer

9 | Horbnerger & Brewer, LLP
444 S. Flower St., Suite 3010
10 || Los Angeles, CA ‘90071-2901

11 | Richard Towne

3400 Cahuenga Blvd. West
12 | Los Angeles, CA 90068

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18 || Dated: Pa Dyenen Ace

19 DEC 19 2007 - SEPUTY CLERK