611 B.R. 327 (Bkrtcy.E.D.Cal. 2020), 18-90339-E-7, In re Solario

Docket Nº:18-90339-E-7
Citation:611 B.R. 327
Opinion Judge:Ronald H. Sargis, Judge
Party Name:IN RE Kimberly Rose SOLARIO, Debtor. v. Kimberly Rose Solario, Defendant. Craig De Jong, Plaintiff, Adv. Proc. 18-9014 Docket Control NEU-3
Attorney:Michael R. Tener, Stockton, CA, for Plaintiff. Kimberly Rose Solario, Pro se.
Case Date:January 22, 2020
Court:United States Bankruptcy Courts, Ninth Circuit

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611 B.R. 327 (Bkrtcy.E.D.Cal. 2020)

IN RE Kimberly Rose SOLARIO, Debtor.

Craig De Jong, Plaintiff,

v.

Kimberly Rose Solario, Defendant.

Nos. 18-90339-E-7

Adv. Proc. 18-9014

Docket Control NEU-3

United States Bankruptcy Court, E.D. California

January 22, 2020

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Michael R. Tener, Stockton, CA, for Plaintiff.

Kimberly Rose Solario, Pro se.

MEMORANDUM OPINION AND DECISION

Ronald H. Sargis, Judge

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Craig De Jong ("Plaintiff") filed the instant adversary proceeding on August 17, 2018, against Kimberly Rose Solario ("Defendant-Debtor"). Plaintiff has submitted Proofs of Claim No. 2-1, No. 3-1, and No. 4-1, asserting a total obligation thereon of $460,465.47 in Defendant-Debtor’s Chapter 7 bankruptcy case (18-90339). The obligations asserted under each of the three proofs of claim are discussed below in this Decision. Each of the claims is based on the final judgment or orders of the Superior Court (the "State Court") in De Jong v. George Beach, Susan Beach, Kimberly Solario [Defendant-Debtor] et al, California Superior Court of the County of San Joaquin Case No. 39-2014-00314863 ("State Court Action"). For this Decision, the court establishes the additional following defined terms: Final Judgment in State Court Action, Exhibit 4, Dckt. 34 at 58-60... "State Court Judgment"

Final Decision in Support of State Court Judgment Exhibit 3, Id. at 17-23... "Final Decision"

Interlocutory Decision Incorporated into Final Decision Exhibit 1 to the Final Decision, Id. at 25-48... "Interlocutory Decision"

Interlocutory Judgement and Order to Pay Taxes Exhibit to Proof of Claim No. 2-1; Exhibit 8, Id. at 83-88... "Interlocutory Judgment and Order to Pay Property Taxes"

Order For Damages Pursuant to California Code of Civil Procedure § 2033.420 Exhibit to Proof of Claim No. 4-1; Exhibit 10, Id. at 130-133... "2033.420 Order"

State Court Judge Issuing Orders and Judgment In the State Court Action... "State Court Judge"

Now before the court is Plaintiff’s Motion for Summary Judgment requesting a determination that each of Plaintiff’s three claims are nondischargeable pursuant to 11 U.S.C. § § 523(a)(2), 523(a)(4), and 523(a)(6), and each of them, as claims arising from fraud, embezzlement or larceny, and willful and malicious conduct by Defendant-Debtor. Dckt. 36.

The court grants the Motion for Summary Judgment and judgment shall be entered for Plaintiff determining that the obligations set forth in Proofs of Claim 2-1, 3-1, and 4-1 are nondischargeable.

REVIEW OF MOTION FOR SUMMARY JUDGMENT

On October 10, 2019, Plaintiff filed the instant Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56 and Federal Rule of Bankruptcy Procedure 7056. Dckt. 18. Plaintiff asserts that his claims should be nondischargeable because the findings in support of the final judgment in the State Court Action are sufficient to show that some or all of the debts owed by Defendant-Debtor to Plaintiff are nondischargeable pursuant to 11 U.S.C. § § 523(a)(2), 523(a)(4), and 523(a)(6). Specifically, Plaintiff argues that the court found sufficient facts that demonstrate larceny or embezzlement, that Defendant-Debtor’s conduct was willful and malicious, and that Defendant-Debtor obtained money by false pretenses, false representations, or actual fraud.

Plaintiff requests that the court determine that the issues litigated in the State Court Action be afforded preclusive effect in this adversary proceeding. Plaintiff asserts that it is appropriate for the court to do so here because the judgment satisfies the threshold requirements for issue preclusion

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under California law and doing so does not run counter to public policy.

The State Court Action was conducted in two phases. The first was the trial on liability and actual damages. The Interlocutory Judgment and Order to Pay Taxes, and Interlocutory Decision from the first phase were issued on March 22, 2017.

The second phase was on the issue of punitive damages that were sought by Plaintiff. The State Court issued the Final Judgment and Final Decision, which incorporated the Interlocutory Decision into the Final Decision. Exhibit 3, Final Decision, p. 2:27-28; Dckt. 34.1

Both the Interlocutory Judgment and Interlocutory Decision are attached as Exhibits to the Final Decision (Exhibit 1 thereto) (beginning on page 24 of 153 of the Exhibits, Id. ) and the Interlocutory Judgment and Order (Exhibit 2 thereto) (beginning on page 59 of 153 pages of the Exhibits, Id. ).

The Final Judgment ( Exhibit 4, Id. ), issued on February 14, 2018, states the following relief given Plaintiff against Defendant-Debtor: A. Judgment in the amount of...$460,663.00

B. Prejudgment interest from July 28, 2014, at the rate of 7% per annum to the February 14, 2018 Entry of the Judgment.

C. A credit of ($359,000.00) as of May 30, 2017, against the judgment for the turnover of the 484 S. Manley Road, Ripon, California property (the "Ripon Property") to the Plaintiff on that date.

D. Punitive Damages against Defendant-Debtor...$ 20,000.00 [punitive damages aggregating $850,000.00 were awarded against the other four defendants in the State Court Action]

E. Costs of Suit....$ TDB by Post-Judgment Memorandum

F. Plaintiff is determined to be the sole owner of the Ripon Property.

G. All right, title, and interest to the Ripon Property are the separate property of Plaintiff and the judgment may be recorded to so reflect that true state of title to the Ripon Property.

Defendant-Debtor abandoned and dismissed her appeal of the Final Judgment on June 14, 2015. Exhibit 5, Id. at 61. The Defendant-Debtor’s appeal of the Final Judgment was dismissed by order of the District Court of Appeal. Exhibit 6, Id. pages 64-68.

REVIEW OF THE THREE PROOFS OF CLAIM, JUDGMENT, AND ORDERS UPON WHICH THE PROOFS OF CLAIM ARE BASED

Proof of Claim No. 2-1, Exhibit 8

The amount of the claim is stated to be $7,991.70. The basis for this claim is the asserted failure of the Defendant-Debtor to comply with the Interlocutory Judgment and Order of the State Court for Defendant-Debtor to pay property taxes on the Ripon Property. The Interlocutory Judgment and Order are an attachment to Proof of Claim No. 2-1 (as well as filed separately as an Exhibit and attached to the Final Decision).

The Interlocutory Decision and Order, ¶ 13; Attachment to Proof of Claim No. 2-1 filed as Exhibit 8, Id., includes the following express language ordering the turnover of the Ripon Property by Defendant-Debtor

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to Plaintiff and the payment of property taxes: A. Defendant-Debtor is ordered to deliver exclusive possession of the Ripon Property to Plaintiff within thirty days of service of the notice of entry of the Interlocutory Judgment and Order. The Interlocutory Judgment and Order are dated March 29, 2017.

B. Plaintiff may enforce the order for turnover of the Ripon Property at any time after the expiration of the thirty-day period given to Defendant-Debtor to comply with the order.

C. Until possession of the Ripon Property is turned over to Plaintiff, the Defendant-Debtor is to pay all property taxes when due, and obtain and maintain insurance on the property.

D. Upon timely delivery of possession of the Ripon Property by Defendant-Debtor to Plaintiff, there shall be a credit of $359,000.00, as of the date of the transfer to Plaintiff.

The Final Judgment states that the credit for the $359,000.00 is given as of May 30, 2017, which is stated to be the date the Ripon Property was turned over to Plaintiff. Exhibit 4, Id.

A second attachment to Proof of Claim No. 2-1 is Plaintiff’s computation of the $7,991.70 due for unpaid property taxes, which provides the following calculation of the taxes, including principal, penalty, and costs: A. 2014 Tax Year...$ 193.21

B. 2015 Tax Year...$2,816.21

C. 2016 Tax Year...$4,982.28

The Interlocutory Decision does not clearly identify that these past due taxes are being ordered paid as part of the turnover ordered by the court. The above unpaid taxes appear to be in the nature of damages that predate the judgment. The court’s order to pay the taxes appears to be prospective, stating that Defendant-Debtor shall "pay all property taxes upon the Ripon Property when due." The Order having been issued March 29, 2017, it appears that this would be for taxes after that time.

Proof of Claim No. 3-1, Exhibit 9

Proof of Claim No. 3-1 is filed in the amount of $254,486.65 for the obligation owing on the Final Judgment. This includes the pre- and post-judgment interest, compensatory damages, punitive damages, and costs as of February 14, 2018.

Proof of Claim No. 4-1, Exhibit 10

Proof of Claim No. 4-1 asserts a claim in the amount of $197,987.12 and is based on an order obtained pursuant to California Code of Civil Procedure § 2033.420 for Expenses of Making Proof in the State Court Action. The Order includes findings that Defendant-Debtor, as well as other of the State Court Action defendants failed to admit specific Requests for Admissions which Plaintiff then had to prove at trial. The $197,987.12 is the award for the expenses in Plaintiff having to prove the facts which Defendant-Debtor and the other State Court Action defendants failed to admit.

California Code of Civil Procedure § 2033.420 provides that when a party in an action fails to admit the genuineness of any document or the truth of any matter when requested to do so as provided under the California Code of Civil Procedure, then "the party requesting the admission [here the Plaintiff] may...

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