In re: CRISTIE TOLOTTI v. Cristie Tolotti

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: CRISTIE TOLOTTI,
Debtor,
______________________________
SEABOARD PRODUCE
DISTRIBUTORS, INC.,
Appellant,
v.
CRISTIE TOLOTTI,
Appellee.
No. 14-60067
BAP No. 14-1019
MEMORANDUM*
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kirscher, Pappas, and Taylor, Bankruptcy Judges, Presiding
Argued and Submitted October 5, 2016
Pasadena, California
Before: PREGERSON, KOZINSKI** and PAEZ, Circuit Judges.
FILED
JAN 04 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** Following argument in this case, Judge Kozinski was drawn to replace
Judge Noonan.

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1. Section 523(a)(6) of the Bankruptcy Code prevents the discharge of
debts arising from a debtor’s “willful and malicious injury” to the property of
another. 11 U.S.C. § 523(a)(6). Relying on the California Superior Court’s
determination that Tolotti “acted deliberately, willfully, and intended to cause
injury to Plaintiff’s security and impede Plaintiff from obtaining physical
possession of the property,” the bankruptcy court held that Tolotti’s debt wasn’t
dischargeable. Because we are “in as good a position as the BAP to review the
decision of the bankruptcy court, we review the bankruptcy court’s decision
independently,” In re Nourbakhsh, 67 F.3d 798, 800 (9th Cir. 1995) (per curiam),
and affirm.
For collateral estoppel to apply, five factors must be met: (1) the issue
sought to be precluded “must be identical to that decided in a former proceeding”;
(2) the issue must have been “actually litigated” in the former proceeding; (3) the
issue must have been “necessarily decided” in the former proceeding; (4) the
decision in the former proceeding must be “final and on the merits”; and (5) the
party against whom preclusion is sought must be “the same as, or in privity with,”
the party to the former proceeding. Lucido v. Superior Court of Mendocino Cty.,
795 P.2d 1223, 1225 (Cal. 1990) (citations omitted).
The bankruptcy court properly applied collateral estoppel in this case. There

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is no dispute that the fourth and fifth factors—whether the parties are the same and
the prior decision was final and on the merits—are met here. The issues presented
in state court were identical to those presented to the bankruptcy court. In fact, the
parties stipulated to litigate their claims in state court “in order to avoid potentially
duplicative litigation . . . and/or inconsistent results that could arise should this
matter be litigated in bankruptcy Court.” The default judgment entered in state
court satisfies the “actually litigated” requirement. See In re Harmon, 250 F.3d
1240, 1246 (9th Cir. 2001). Assuming that Tolotti hasn’t waived the right to
challenge whether the issue was “necessarily decided,” this requirement is met so
long as the issue was not “entirely unnecessary” to the judgment. Lucido, 795 P.2d
at 1226. This prong of the collateral estoppel test is most salient when there are no
express findings. See In re Harmon, 250 F.3d at 1248 (“[T]he express finding
requirement can be waived if the court in the prior proceeding necessarily decided
the issue . . . .”). But the state court expressly found that Tolotti “acted
deliberately, willfully, and intended to cause injury to Plaintiff’s security.”
2. The bankruptcy court properly determined that “[a]pplication of the
doctrine of collateral estoppel in this case will further the public policy interest of
preserving the integrity of the judicial system, promoting judicial economy, and

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protecting litigants from harassment by vexatious litigation.” See In re Baldwin,
249 F.3d 912, 919–20 (9th Cir. 2001) (quoting Lucido, 795 P.2d at 1227).
The decision of the bankruptcy court is AFFIRMED.

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