Silva v. Chadwick

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
PAULETTE CHADWICK, No. 08-10367
Debtor(s).
______________________________________/
RHONDA SILVA,
Plaintiff(s),
v. A.P. No. 08-1060
PAULETTE CHADWICK,
Defendant(s).
_______________________________________/
Memorandum on Motion for Summary Judgment
_________________
Prior to bankruptcy, plaintiff Rhonda Silva sued debtor and defendant Paulette Chawdick in state
court for violation of the Home Equity Sales Contract Act (California Civil Code § 1695 et seq.), the
Mortgage Foreclosure Consultants Act (California Civil Code § 2945 et seq.), illegal and unfair business
practices and fraud. The state court entered a default judgment against Chadwick in the amount of
$482,000.00, finding that Chadwick “defrauded plaintiff and fraudulently violated the Home Equity Sales
Contract Act.” Silva has moved for summary judgment, arguing that the doctrine of issue preclusion
Entered on Docket
January 23, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-01060 Doc# 13 Filed: 01/23/09 Entered: 01/23/09 13:22:51 Page 1 of 3

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(collateral estoppel) entitles her to a judgment in this adversary proceeding alleging that her claim is
nondischargeable for fraud pursuant to § 523(a)(2) of the Bankruptcy Code.
The flaw Silva’s argument is that the default judgment was based on both fraud, which is
nondischargeable conduct, and statutory liability under California Civil Code § 1695, which is not.
Moreover, Civil Code § 1695.7, which provides for damages for violation of the Home Equity Sales
Contract Act, does not require any finding of fraud, making the court’s default finding of fraudulent violation of
the Act unnecessary to its judgment. If a finding of a prior court was not necessary to its judgment, applying
the finding to a subsequent case is not proper. In re Cantrell, 329 F.3d 1119, 1123 (9th Cir. 2003).
Since the judgment could have been rendered for only violation of the Home Equity Sales Contract
Act, the separate finding of fraud was not necessary to the judgment. Since the Home Equity Sales Contract
Act does not require a finding of fraud before damages can be awarded, the finding of fraudulent violation of
the Act was not necessary to the judgment. Accordingly, the issue of actual fraud must be litigated in this
adversary proceeding. The motion for summary judgment will accordingly be denied. Either party may
submit an appropriate form of order.
Dated: January 23, 2009
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 08-01060 Doc# 13 Filed: 01/23/09 Entered: 01/23/09 13:22:51 Page 2 of 3

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CERTIFICATE OF MAILING
The undersigned deputy clerk of the United States Bankruptcy Court for the Northern District of
California hereby certifies that a copy of the attached document was mailed to all parties listed below
as required by the Bankruptcy Code and Rules of Bankruptcy Procedure.
Dated: Jan 23, 2009
Paulette Chadwick
714 Carolina St.
Napa, CA 94558
Case: 08-01060 Doc# 13 Filed: 01/23/09 Entered: 01/23/09 13:22:51 Page 3 of 3