Cal. Equity Mgmt. Grp., Inc. v. Sinclair (In re Sinclair)

• Decision Date: 29 November 2017
• Docket Number: Case No. 14-91565-E-7,Adv. Proc. No. 15-9008
• Court: U.S. Bankruptcy Court — Eastern District of California
• Parties: In re RICHARD CARROLL SINCLAIR, Debtor. CALIFORNIA EQUITY MANAGEMENT GROUP, INC. and FOX HOLLOW OF TURLOCK OWNERS' ASSOCIATION, Plaintiffs, v. RICHARD CARROLL SINCLAIR, Defendant.

In re RICHARD CARROLL SINCLAIR, Debtor.CALIFORNIA EQUITY MANAGEMENT GROUP, INC.and FOX HOLLOW OF TURLOCK OWNERS' ASSOCIATION, Plaintiffs, v. RICHARD CARROLL SINCLAIR, Defendant.

Case No. 14-91565-E-7

Adv. Proc. No. 15-9008

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF CALIFORNIA

November 29, 2017

POSTED ON WEBSITE NOT FOR PUBLICATION

Docket Control No. HAR-2

This Memorandum Decision is not appropriate for publication.

It may be cited for persuasive value on the matters addressed.

MEMORANDUM OPINION AND DECISION GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

California Equity Management Group, Inc. ("Plaintiff-CEMG"), one of the two plaintiffs in this Adversary Proceeding, seeks entry of summary judgment determining that the obligation Richard Sinclair ("Defendant-Sinclair") on the District Court judgment Plaintiff-CEMG obtained in the amount of $5,833,175.84 ("RICO Judgment") in Fox Hollow of Turlock Owners' Association et al v. Mauctrst LLC et al, United States District Court for the Eastern District of California, Case No. 1:03-cv-05439 AWI (SAB) ("RICO Action") is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A) [actual fraud] and 11 U.S.C. § 523(a)(6) [willful and malicious injury]. The decision ("RICO Decision") in the RICO Action upon which the RICO Judgment is based has been filed in support of Plaintiff CEMG's Motion for Summary Judgment or in the Alternative, for Summary Adjudication Against Defendant Richard Sinclair ("Motion for Summary Judgment") as Exhibit 11. Request for Judicial Notice, Dckt. 73. Plaintiff-CEMG asserts that the findings and determinations in the RICO Judgment and RICO Decision are given preclusive effect pursuant to the issue preclusion under the doctrine of res judicata.

Fox Hollow of Turlock Owners' Association, the other plaintiff named in the Complaint, does not seek relief pursuant to the Motion for Summary Judgment now before this court. Because there remain unadjudicated claims asserted in the Complaint, the court does not enter judgment for just Plaintiff-CEMG at this time. Fed. R. Civ. P. 54 (b) and Fed. R. Bankr. P. 7054.

Upon consideration of the Motion for Summary Judgment, Defendant-Sinclair's Opposition, evidence presented by the Parties, applicable law, the RICO Judgment and RICO Decision, other judgments and appellate decisions (specifically identified below) involving these Parties, and oral arguments presented by the Parties; this court grants the Motion for Summary Judgment.¹

PART I

REVIEW OF MOTION, SUPPORTING PLEADINGS,

PLAINTIFF-CEMG'S RESPONSE, AND

DEFENDANT-SINCLAIR'S OPPOSITION AND OPPOSITION PLEADINGS

The Motion for Summary Judgment seeks a determination that the obligations of Defendant-Sinclair arising under the RICO Judgment are nondischargeable. Plaintiff-CEMG asserts that the findings and determinations in the RICO Action are subject to the doctrine of issue preclusion, which results in such findings and determinations being binding on the parties in this Adversary Proceeding. In addition, Plaintiff-CEMG asserts that the California Superior Court Final Judgment, California District Court of Appeal Opinions, and California Bar Court Decision listed below also support the granting of summary judgment in this Adversary Proceeding:

A. California Superior Court Judgment for $1,066,503.52, plus interest, costs, and expenses ("Final State Court Judgment") in Mauctrst, LLC et al. v. Katakis et al., California Superior Court, County of Stanislaus Case No. 332233 ("State Court Action"); Exhibit 15, Dckt. 73.

B. California Superior Court Statement of Decision ("State Court Decision") of the Superior Court in Mauctrst, LLC et al. v. Katakis et al. stating the findings, conclusions and grounds upon which the Final State Court Judgment is based has been filed in support of the Motion for Summary Judgment; Exhibit 13, Id.

C. California District Court of Appeal Decision affirming Final State Court Judgment ("DCA Judgment Opinion"). Sinclair v. Katakis et al., Cal. DCA 5th Cir. No. F058822, 2013 Cal. App. Unpub. LEXIS 509 (2013); Exhibit 16, Id.

D. California District Court of Appeal Decision affirming award of attorney's fees and costs as part of Final State Court Judgment. Sinclair v. Katakis et al., DCA F060497 ("DCA Attys Fee Opinion"); Exhibit 17, Id.

E. In the matter of Richard Carroll Sinclair, Member No. 68238, Case Nos. 13-O-10657-PEM, 13-O-11618 (Cons.) ("State Bar Court Action"), with the Decision and Order of Involuntary Inactive Enrollment ("State Bar Court Decision"), Exhibit 18 Request for Judicial Notice; Exhibit 18, Id. The California Supreme Court Order for Disbarment of Defendant-Sinclair is filed as Exhibit 19, Id.

This court focuses first on the RICO Judgment, the District Court findings of fact and conclusions of law in the RICO Decision, and whether the RICO Judgment has sufficiently determined the bankruptcy fraud and willful and malicious grounds for nondischargeability. After that, this court will then consider whether the Final State Court Judgment, the two District Court of Appeal Decisions, and the State Bar Court Decision add to the determination of whether the RICO Judgment is nondischargeable.

Plaintiff-CEMG also directs this court to its Memorandum Opinion and Decision granting a motion for summary judgment for Plaintiff-CEMG determining that the State Court Judgment is nondischargeable pursuant to 11 U.S.C. § 523(a)(6). Katakis, California Equity Management Group, Inc., and Fox Hollow of Turlock Owners' Association v. Sinclair (In re Sinclair), Bankr. E.D. Cal. Adv. Proc. No. 15-9009, 2017 Bankr. LEXIS 1210 (2017) [Exhibit 21, Dckt. 73]. This court addressed, in detail, in that Memorandum Opinion and Decision many of the same opposition grounds that Defendant-Sinclair now repeats in the Opposition to the current Motion for Summary Judgment. Judgment was entered in Adversary Proceeding No. 15-9009 on July 14, 2017, with no appeal taken therefrom.

Additionally, this court has addressed in several other rulings for which there are now final orders in the Defendant-Sinclair's Chapter 7 Bankruptcy Case ( Bankr. E.D. Cal. 14-91565, referenced in this Decision as "2014 Sinclair Bankruptcy Case") the litigation conduct and strategy of Defendant-Sinclair in his battles with Plaintiff-CEMG, Andrew Katakis, and others concerning the Fox Hollow Property:

A. Bankruptcy Court Memorandum Opinion and Decision granting the motion of the Chapter 7 Trustee in Defendant-Sinclair's current bankruptcy case to settle claims and counterclaims of the estate with Katakis Plaintiffs. 2014 Sinclair Bankruptcy Case; Dckt. 535.

B. Bankruptcy Court Memorandum Opinion and Decision sustaining the Chapter 7 Trustee's objection to Defendant-Sinclair's claim of a personal injury exemption in the "malicious prosecution suit" (term as used by Defendant-Sinclair on Schedules B and C filed under penalty of perjury) against Katakis Plaintiffs. In re Sinclair, 563 B.R. 554 (2016); 2014 Sinclair Bankruptcy Case, Dckt. 558.

C. Bankruptcy Court Memorandum Opinion and Decision denying Motion for Reconsideration of Order granting Motion to Approve Settlement and Compromise between the Chapter 7 Trustee in the 2014 Sinclair Bankruptcy Case and Andrew Katakis, Capital Equity Management Group, Inc., formerly known as California Equity Management Group, Inc.; and New Century Townhomes of Turlock Owners Associations, formerly known as Fox Hollow of Turlock Owners' Association. In re Sinclair, 2017 Bankr. LEXIS 1491 (2017); 2014 Sinclair Bankruptcy Case, Dckt. 639.

D. Bankruptcy Court Civil Minutes determining that Defendant-Sinclair was not disabled and that he was actively litigating in the 2014 Sinclair Bankruptcy Case. The court findings in the Civil Minutes recount the conduct of Defendant-Sinclair which was inconsistent with the professed disability. 2014 Sinclair Bankruptcy Case, Dckt. 337.

Evidence Presented in Support of Motion for Summary Judgment

In support of the Motion for Summary Judgment now before the court, Plaintiff-CEMG presented the following evidence:

A. Declaration of Greg Durbin. Dckt. 75.

B. Docket for the RICO Action. Exhibit A, Dckt. 76.

C. Proof of Claim 26, as amended on May 3, 2017, filed by Plaintiff-CEMG in the 2014 Sinclair Bankruptcy Case. Exhibit B, Dckt. 76.

D. Request for Judicial Notice, Exhibits 1-21. Dckt. 73

1. Consolidated Amended and Supplemental Complaint for Declaratory and Injunctive Relief and for Damages - Demand for Jury Trial, filed on July 21, 2010 in the RICO Action as Docket 410 therein.

2. Order Granting Plaintiffs' Motion to Compel, Order Imposing Monetary Sanctions, filed in the RICO Action on June 3, 2011, as Docket 613 therein.

3. Reporter's Transcript of Proceedings in the RICO Action on August 8, 2011, filed in the RICO Action on August 16, 2011, as Docket 731 therein.

4. Orders re: Motion for Reconsideration of Order to Compel; Motion to Dismiss; Motion to File Cross-Complaint; and Motion for Reconsideration of Denial of Disqualification of Plaintiff's Counsel filed in the RICO Action on September 8, 2011, as Docket 763 therein.

5. Order (Docs. 540, 550, 742, 745, 756, 784, 759 [sic 785], and 799), filed in the RICO Action on September 28, 2012, as Docket 860 therein.

6. Order re (1) Pending Motion for Order Altering or Amending Order Dismissing Claims Against Mauctrst, LLC and Application for Reconsideration (RICO Action Docket#s 897, 900); and (2) Entry of Default against Mauctrst, LLC, filed in the RICO Action on March 18, 2014, as Docket 1013 therein.

7. Order (Docs. 901, 905, 911, 921, 932, 943, 973, 997, and 1002), filed in the RICO Action on March 31, 2014, as Docket 1014 therein.

8. Findings and Recommendations recommending Denying Richard Sinclair's Motion to Amend the Scheduling Order and Stanley Flake's Motion to Amend the Scheduling Order and Granting Plaintiff's Motion for Sanctions, dated August 29, 2014, and filed as Docket 1060 on August 29, 2014, in the RICO Action.

9. Order Adopting Findings and Recommendations dated

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