Bonnett v. Moirbia Scottsdale, LLC (In re Bonnett)
| Decision Date | 30 July 2020 |
| Docket Number | Adv. No. 2:18-ap-00223-EPB,BAP No. AZ-19-1293-BTL |
| Parties | In re: JEANEEN BONNETT, Debtor. JEANEEN BONNETT, Appellant, v. MOIRBIA SCOTTSDALE, LLC, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
NOT FOR PUBLICATION
MEMORANDUM*Appeal from the United States Bankruptcy Court for the District of Arizona
Before: BRAND, TAYLOR, and LAFFERTY, Bankruptcy Judges.
Appellant Jeaneen Bonnett appeals a judgment determining that the debt of Moirbia Scottsdale, LLC ("Moirbia") was excepted from discharge under § 523(a)(2)(A).1 Moirbia had obtained a prior state court judgmentagainst Bonnett in a fraudulent conveyance case, wherein Bonnett was the transferee. Moirbia sought to except the debt from Bonnett's discharge under § 523(a)(2)(A) and (a)(6), and later moved for summary judgment based on issue preclusion. Finding that the elements of issue preclusion were met, the bankruptcy court granted the motion on Moirbia's § 523(a)(2)(A) claim and thereafter entered a final judgment determining that the debt was excepted from Bonnett's discharge. We AFFIRM.
Moirbia is the assignee of an approximately $2 million judgment entered against Steven Goumas and his two wholly-owned entities known as Pub Company and My Goodness ("Goumas Judgment"). Moirbia acquired the Goumas Judgment in 2012 at a sale in the bankruptcy case of one of Goumas's other entities.
Bonnett is the president and director of 100% Natural Gourmet, Inc., dba Madison Group Consultants ("Madison"). Goumas and Bonnett have been business partners since 1999, and were romantically involved from the mid-1990's until 2010. Notably, Bonnett was the backup bidder in the sale of the Goumas Judgment in 2012.
Pub Company was the manager of, but did not own a membership interest in, Perfect Pint Holding Company LLC ("Perfect Pint"). Themanagement interest entitled Pub Company to receive 50% of Perfect Pint's distributions ("Management Interest"). The other 50% of Perfect Pint's distributions went to its members, one of whom was Goumas until he sold his 4.09% interest to Bonnett's brother. As the manager and sole member of Pub Company, Goumas received funds from Perfect Pint distributed to Pub Company via the Management Interest.
Perfect Pint was the sole member of Irish Pub-Tempe LLC. In 2011, Perfect Pint sold its membership interest in Irish Pub-Tempe LLC for $720,000 to Boer Hospitality, LLC ("Boer"). Boer was owned by Bonnett's brother. Boer paid Perfect Pint $360,000 cash and gave a promissory note payable to Perfect Pint for $360,000 ("Boer Note"). In satisfaction of Pub Company's right to 50% of Perfect Pint's distributions under the Management Interest, Pub Company acquired the Boer Note.
In August 2012, Goumas and Pub Company assigned its Management Interest in Perfect Pint to Bonnett and Madison. Under the assignment, Bonnett and Madison received all of Pub Company's economic rights flowing from Perfect Pint, including the rights to receive payments under the Boer Note. The Boer Note was then valued at $358,572.00. At the time, the Management Interest constituted substantially all of Pub Company's and Goumas's assets. Thereafter, based on the Management Interest, Madison received from Perfect Pint payments on the Boer Note totaling $50,333.21 anddistributions of $61,054. Separately, Goumas assigned to Bonnett checks totaling $90,608.81 payable to him or entities he controlled.
Moirbia sued Goumas and Bonnett seeking to avoid the alleged fraudulent transfers by Goumas to Bonnett under the Arizona Uniform Fraudulent Transfer Act, Arizona Revised Statutes ("A.R.S.") § 44-1004 (actual fraudulent transfer) and § 44-1005 (constructive fraudulent transfer). Moirbia alleged that Goumas and Bonnett engaged in a series of fraudulent transfers with the intent to hinder, delay or defraud Moirbia and its attempts to collect on the Goumas Judgment. Bonnett fully participated in the four-day bench trial ("Bonnett Trial"), including presenting evidence and witnesses and cross-examining Moirbia's witnesses.
After the Bonnett Trial, the state court determined that Bonnett was liable to Moirbia for actual fraudulent transfers under A.R.S. § 44-1004(A)(1). It entered the following relevant findings of fact and conclusions of law:
Findings of Fact:
Conclusions of Law:
1. Pursuant to A.R.S. section 44-1004(A)(1) and based on consideration of, inter alia, the factors set forth in A.R.S. section 44-1004(B),2 Bonnett and Madison were the recipients of transfers made by Goumas, Pub Company or My Goodness, after the [Goumas] Judgment was entered, and the transfers were made with actual intent to hinder, delay, or defraud any creditor of Goumas, Pub Company or My Goodness and specifically Moirbia.
The state court entered a final judgment against Bonnett and Madison for $655,460.90 ("Bonnett Judgment"). Bonnett and Madison appealed the Bonnett Judgment to the Arizona Court of Appeals, which affirmed.
Bonnett filed a chapter 11 bankruptcy case on February 2, 2018. Bonnett did not object to Moirbia's motion to convert the case to chapter 7, and her case was converted on May 14, 2019.
Moirbia filed a complaint against Bonnett seeking to except the Bonnett Judgment from discharge under § 523(a)(2)(A) and (a)(6). Thereafter, Moirbia moved for summary judgment based on issue preclusion ("MSJ"). Moirbia argued that the issue of Bonnett's intent to defraud Moirbia was actually litigated in the Bonnett Trial, as demonstrated by the parties' Joint Pre-Trial Statement and the state court's findings and conclusions. Specifically, argued Moirbia, the state court found that Bonnett was the knowing recipient of the fraudulent transfers and that she actively participated in the fraudulent scheme with Goumas to hinder, delay or defraud Moirbia. Further, argued Moirbia, resolution of Bonnett's actual intent was essential to the Bonnett Judgment and the state court's determination that she was liable to Moirbia for damages resulting from the fraudulent transfer scheme under A.R.S. § 44-1004(A)(1). Moirbia argued it was undisputed that (a) Bonnett had a full and fair opportunity and motive to, and did, litigate the fraud issue in the Bonnett Trial, (b) the state court entered a valid and final decision on the merits against her, and (c) the parties in both cases were the same.
Bonnett opposed the MSJ and filed a cross-motion for summary judgment. Primarily, she argued that the state court found only that she"received" an actual fraudulent transfer from Goumas; it did not find that she had any "actual intent" to defraud Moirbia as transferee. Thus, argued Bonnett, her actual intent was neither actually litigated nor essential to the Bonnett Judgment.
After a hearing, the bankruptcy court granted the MSJ on Moirbia's § 523(a)(2)(A) claim on the basis of issue preclusion, finding that the five elements were met.3 The court determined that in order to avoid the transfers at issue, Moirbia had to not only prove that Goumas had fraudulently transferred assets to Bonnett under A.R.S. § 44-1004(A)(1), which it did, but that Bonnett did not, in turn, receive the transfers in good faith per A.R.S. § 44-1008(A). The court further reasoned that, in resolving the question of her intent, the state court concluded that Bonnett lacked good faith because the evidence established that she in fact participated in the scheme to defraud Moirbia. Thus, in the bankruptcy court's view, the issue of Bonnett's actual fraudulent intent for purposes of § 523(a)(2)(A) was actually litigated and was essential to the Bonnett Judgment finding her liable to Moirbia.
Thereafter, the bankruptcy court entered a judgment determining that the Bonnett Judgment was excepted from discharge under § 523(a)(2)(A). Bonnett timely appealed.
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.4
Did the bankruptcy court err in granting summary judgment under § 523(a)(2)(A) based on issue preclusion?
We review de novo a bankruptcy court's decision to grant summary judgment and except a debt from discharge under § 523. Zuckerman v. Crigler (In re Zuckerman), 613 B.R. 707, 713 (9th Cir. BAP 2020).
We also review de novo a bankruptcy court's determination that issue preclusion was available. Id. If issue preclusion is available, we then review the application for an abuse of discretion. Id. Under that standard, we reverse where the bankruptcy court applied the wrong legal standard, or misapplied the correct legal standard, or its factual findings are illogical, implausible, or without support in inferences...
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