Hansen et al v. Taromi et al

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
1
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
SIAMAK and AFSANEH NAJAFI TAROMI, 	No. 09-11661
Debtor(s).
______________________________________/
J. T. HANSEN, et al.,
Plaintiff(s),
v. 	A.P. No. 09-1113
SIAMAK and AFSANEH NAJAFI TAROMI,
Defendant(s).
_______________________________________/
Memorandum on Motion for Summary Judgment
_________________
Before bankruptcy, plaintiffs sued Chapter 7 debtor and defendant Siamak Taromi in state
court and obtained a $7.4 million default judgment after Taromi failed to answer. The judgment is just
a few short sentences, but contains a finding that Taromi made intentional fraudulent
misrepresentations. It does not state what those misrepresentations were. Plaintiffs seek summary
judgment that their claims are nondischargeable under § 523(a)(2) of the Bankruptcy Code based on
principles of issue preclusion (collateral estoppel).
Entered on Docket
January 11, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-01113 Doc# 9 Filed: 01/10/10 Entered: 01/11/10 09:10:27 Page 1 of 2

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
2
Taromi opposes the motion on the grounds that the judgment is not final. After learning of the
judgment, he made a motion for relief from default which was denied. The denial of that relief is now
on appeal.
Under California law, a trial court judgment is not final and will not be given preclusive effect
if an appeal is pending. 40A Cal.Jur.3d, Judgments, § 171. Moreover, even if this court could apply
issue preclusion to this case it is not bound to do so. Application of issue preclusion is at heart a
matter of discretion. In re Lopez, 367 B.R. 99, 107-08 (9th Cir. BAP 2007). See also Christopher
Klein et al., Principles of Preclusion & Estoppel in Bankruptcy Cases, 79 Am. Bankr. L.J. 839, 882-83
(2005). Given the huge size of the judgment and the cursory findings of the state court, simple justice
would require this court to at least wait and see how the appeal comes out before entering a
nondischargeable judgment.
There is also an independent reason why summary judgment is not appropriate: there is no
showing that the findings were necessary to the judgment. Since no punitive damages were awarded,
the judgment could have been rendered on any claim in the complaint. Absent a demonstration that
the state action was based only on intentional fraud, plaintiffs cannot show that the findings of the
state court were necessary to its judgment.
For the foregoing reasons, plaintiffs’ motion for summary judgment will be denied. Any party
may submit an appropriate form of order.
Dated: January 10, 2010
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 09-01113 Doc# 9 Filed: 01/10/10 Entered: 01/11/10 09:10:27 Page 2 of 2