Cunningham v. Kinikini (In re Kinikini)

• Decision Date: 20 September 2019
• Docket Number: Case No. 19-00134-TLM,Adv. No. 19-06032-TLM
• Parties: IN RE: TENESITA M. KINIKINI and MYLA LYNNETTE KINIKINI, Debtors. CRAIG CUNNINGHAM, Plaintiff, v. TENESITA M. KINIKINI, Defendant.
• Court: U.S. Bankruptcy Court — District of Idaho

IN RE: TENESITA M. KINIKINI and MYLA LYNNETTE KINIKINI, Debtors.

CRAIG CUNNINGHAM, Plaintiff, v. TENESITA M. KINIKINI, Defendant.

Case No. 19-00134-TLM

Adv. No. 19-06032-TLM

UNITED STATES BANKRUPTCY COURT DISTRICT OF IDAHO

September 20, 2019

MEMORANDUM OF DECISION

In this adversary proceeding, Craig Cunningham ("Cunningham") contends that chapter 7 debtor Tenesita Kinikini ("Kinikini") willfully and maliciously injured him by making numerous telephone calls in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"), and, therefore, Cunningham's claim should be nondischargeable under 11 U.S.C. § 523(a)(6).¹ The matter comes before the Court onCunningham's motion for summary judgment, Adv. Doc. No. 12 ("Motion").² A hearing on the Motion was held on September 9, 2019, after which the matter was taken under advisement.

BACKGROUND

On May 12, 2015, Cunningham sued Kinikini and others in the United States District Court for the Middle District of Tennessee³ for his alleged violation of the TCPA. Adv. Doc. No. 1-1 at 5. Cunningham alleged that Kinikini made multiple calls to his two cell phones in relation to and in furtherance of a scam targeting individuals with student loan debt. Id. at 6. He further alleged that these calls solicited fees for preparation of student loan consolidation and repayment documents and falsely promised student loan forgiveness. Id.

Though Kinikini did not participate in the Tennessee Case, Cunningham testified under oath at a damages hearing before a magistrate judge. Id. at 8. After the damages hearing, the magistrate judge issued a report and recommendation to the district judge. This report resolved a discrepancy in Cunningham's pleadings regarding the number of phone calls and ultimately recommended Kinikini be found jointly and severally liable for eighty-three phone calls. Id. at 2, 8, and 10. Further, the magistrate judge recommended the district court exercise its discretion to award treble damages against the defendants in that case, including Kinikini, jointly and severally in the amount of$249,000. Id. at 9-10. The district judge adopted the magistrate judge's recommendation and entered default judgment in the amount of $249,000. Id. at 2.

On February 13, 2019, Kinikini filed his voluntary chapter 7 petition. Cunningham's motion contends summary judgment declaring Cunningham's claim nondischargeable under § 523(a)(6) is appropriate based on the default judgment's preclusive effect on the issue of willful and malicious injury to Cunningham. Adv. Doc. No. 12.

DISCUSSION AND DISPOSITION

A. Summary Judgment Standard

This Court recently summarized:

Federal Rule of Civil Procedure 56, incorporated in this adversary proceeding by Federal Rule of Bankruptcy Procedure 7056 states: "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).

The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of fact, after which the opposing party must provide evidence establishing a genuine issue of material fact. Poole v. Davis (In re Davis), 2012 WL 4831494, *2 (Bankr. D. Idaho Oct. 10, 2012) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). But even if the opposing party fails to establish the existence of disputed facts, the moving party must still establish it is entitled to judgment as a matter of law. See North Slope Borough v. Rogstad (In re Rogstad), 126 F.3d 1224, 1227-28 (holding the trial court erred by resting its grant of summary judgment on the opposing party's failure to file a response).

Additionally, "'[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts' are inappropriate at the summary judgment stage." Oswalt v. Resolute Indus., Inc., 642 F.3d 856, 861 (9th Cir. 2011) (alteration in original) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). And alljustifiable inferences must be drawn in favor of the non-moving party. Id. (citing Anderson, 477 U.S. at 255).

B.K.L.N. v. Finlay (In re Finlay), 2019 WL 3294804, *2 (Bankr. D. Idaho Jul. 22, 2019) (quoting Gugino v. Clark's Crystal Springs Ranch, LLC (In re Clark), 2014 WL 2895428, *2 (Bankr. D. Idaho Jun. 25, 2014)).

In addition, this Court has noted that "causes of action . . . that contain an express element of intent, are generally unapt candidates for summary adjudication," and "when intent is at issue, summary adjudication is likely inappropriate." Boise City v. O'Brien (In re O'Brien), 2011 WL 1457304, *2-3 (Bankr. D. Idaho Apr. 15, 2011) (denying a motion for summary judgment on a claim of nondischargeablility arising under § 523(a)(2)(A)). Nonetheless, the court must "evaluate the entirety of the record that is presented." Id. at 3.

B. Local Bankruptcy Rule 7056.1

Kinikini correctly notes that Cunningham failed to provide a statement of undisputed facts in a document separate from the Motion consistent with Local Bankruptcy Rule 7056.1(b)(1)(A) which provides:

The moving party shall provide simultaneously with its motion, in a document separate from all others, a statement of asserted undisputed facts. The statement shall not be a narrative but shall set forth each fact in a separate, numbered paragraph. For each fact, the moving party shall provide a specific citation (including page, paragraph, and/or line number as appropriate) to an affidavit, deposition, or other portion of the record establishing such fact. Failure to submit such a statement in compliance with this rule constitutes grounds for denial of the motion without hearing.

(emphasis added). Though noncompliance with the rule may be fatal to the moving party's summary judgment motion, the Court retains discretion to consider the motion.

Reynard v. Green Valley Lake Holdings, LLC (In re Resler), 2019 WL 1510335, at *2 n.6 (Bankr. D. Idaho Mar. 4, 2019).

Here, while Cunningham failed to provide a separate document with a statement of undisputed facts contemporaneously with his Motion, he provided a separate statement after Kinikini filed his opposition to the Motion. Adv. Doc. No. 20. At the September 9 hearing, Kinikini acknowledged the real issue before the Court was a "matter of law," indicated the deficiencies in Cunningham's pleadings did not interfere with his ability to address the legal arguments, and did not dispute Cunningham's contention that the earlier failure to provide a separate statement of facts was not prejudicial. The Court exercises its discretion to consider the merits despite Cunningham's failure to contemporaneously provide a separate statement of undisputed facts as required by the Local Rule.

C. Issue Preclusion

Section 523(a)(6) provides that a "discharge under section 727 . . . of this title does not discharge an individual debtor from any debt . . . for willful and malicious injury by the debtor to another entity or to the property of another entity." Cunningham contends the Tennessee Case default judgment conclusively establishes both the "willful" and "malicious" elements of § 523(a)(6) because the judgment awarded treble statutory damages based on a finding of willful or knowing violation of the TCPA. Adv. Doc. No. 12-1 at 5.

Issue preclusion bars relitigation of issues actually litigated in a prior adjudication, and this doctrine applies in bankruptcy discharge proceedings. Frye v. Excelsior College (In re Frye), 2008 WL 8444822, at *4 (9th Cir. BAP 2008) (citing Grogan v. Garner,498 U.S. 279, 284 (1991)); Gamble v. Overton (In re Overton), 2009 WL 512159, at *3 (Bankr. D. Idaho Jan. 26, 2009).⁴ The preclusive effect of a prior federal court judgment is an issue of federal law. Taylor v. Sturgell, 553 U.S. 880, 891 (2008); see also W. Sys., Inc. v. Ulloa, 958 F.2d 864, 871 (9th Cir.1992)); U.S. v. Hart (In re Hart), 563 B.R. 15, 45 (Bankr. D. Idaho 2016); Overton, 2009 WL 512159, at *3.⁵

"The Supreme Court treats the Restatement (Second) of Judgments as the authoritative statement of federal issue preclusion doctrine." Frye, 2008 WL 8444822, at *4 (citing New Hampshire v. Maine, 532 U.S. 742, 748-49 (2001)). The Restatement provides:

When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.

Restatement (Second) of Judgments § 27 (Am. Law Inst. 1982). This Court derived a six-part test to determine whether a prior federal court judgment has preclusive effect:

The five threshold requirements are (1) identical issue; (2) actually litigated in the prior proceeding; (3) necessarily decided in that proceeding; (4) the former decision is final and on the merits; and (5) the party against whom preclusion is sought is either the same, or in privity with, the party in the prior proceeding. The sixth element is a mandatory additional inquiry as to whether imposition of preclusion in the particular setting would be fair and consistent with public policy.

Hart, 563 B.R. at 45 (citing Wisdom v. Gugino (In re Wisdom), 2016 WL 1039694, at *16-17 (Bankr. D. Idaho Mar. 15, 2016); Cogliano v. Anderson (In re Cogliano), 355 B.R. 792, 802-03 (9th Cir. BAP 2006); Khaligh v. Hadaegh (In re Khaligh), 338 B.R. 817, 824-25 (9th Cir. BAP 2006); Paulo v. Holder, 669 F.3d 911, 917 (9th Cir. 2011)).

After evaluating the record and the parties' arguments under this standard, this Court finds Cunningham's reliance on issue preclusion unpersuasive.

1. Actually Litigated

The Restatement provides: "In the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated." Restatement (Second) of Judgments § 27 cmt. e (Am. Law Inst. 1982). Likewise, Ninth Circuit precedent provides that a default...