Lopez Roofing Serv., Inc. v. Baker (In re Baker)

• Decision Date: 12 December 2013
• Docket Number: Case No. 7-09-12115,Adv. Pro. No. 09-01089
• Parties: In re: Stacy Baker, Debtor. Lopez Roofing Service, Inc., Plaintiff, v. Stacy Baker, Defendant.
• Court: U.S. Bankruptcy Court — District of New Mexico

In re: Stacy Baker, Debtor.Lopez Roofing Service, Inc., Plaintiff, v. Stacy Baker, Defendant.

Case No. 7-09-12115

Adv. Pro. No. 09-01089

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW MEXICO

Entered on docket: December 12, 2013

MEMORANDUM OPINION ON PLAINTIFF'S MOTION FOR SUMMARYJUDGMENT

On October 21, 2013, Plaintiff filed a Motion seeking summary judgment on its claims under 11 U.S.C. § 523(a)(4) and 11 U.S.C. § 727(4)(A) [sic], doc. 67 (the "Motion"). Defendant did not respond to the Motion. In the Motion, Plaintiff asks for a nondischargeability judgment against Defendant based on, inter alia, a criminal plea agreement and a civil default judgment. Having reviewed the Motion and supporting documents, the Court concludes that entry of a nondischargeable embezzlement judgment is appropriate. Because fact issues remain on the amount of the judgment, an evidentiary hearing will be scheduled to evaluate damages. All other requested relief will be denied.

I. FACTS

A. Admissibility of the Supporting Evidence To properly support a motion for summary judgment, the movant must offer evidence that could be presented at trial in

an admissible form. Argo v. Blue Cross and Blue Shield of Kansas, Inc., 452 F.3d 1193, 1199 (10^th Cir. 2006) (citing Fed.R.Civ.P. 56(e)). Such evidence may not simply be included alongside the movant's recitation of undisputed facts. Instead, the movant must cite to particular materials in the record in support each fact. See Fed.R.Civ.P. 56(c)(1)(A) and LBR 7056-1(b).¹

Here, the Court considered the Plea and Disposition Agreement (the "Plea Agreement") signed by Defendant and entered May 26, 2011, in the action captioned State of New Mexico v. Stacy Baker, CR No. 10-00141, Second Judicial District Court, State of New Mexico (the "Criminal Action") because it is admissible evidence of Defendant's admissions set forth therein. See Fed.R.Evid. 801(d)(2).² The Court also considered Defendant's answer to Plaintiff's amended complaint and took judicial notice of the docket in this adversary proceeding. See St. Louis Baptist Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10^th Cir. 1979) (holding that a court may, sua sponte, take judicial notice of its docket); In re Mailman Steam Carpet Cleaning Corp., 196 F.3d 1, 8 (1st Cir.1999) (citing Fed.R.Evid. 201 and concluding that "[t]he bankruptcy court appropriately took judicial notice of its own docket"); In re Quade, 496 B.R. 520, 524 (Bankr. N.D. Ill. 2013), aff'd, 498 B.R. 852 (N.D. Ill. 2013) (a "bankruptcy court [is authorized] ... to take judicial notice of its own docket").

The Court did not consider the remaining materials offered by Plaintiff. The affidavit of Tricia Lopez is not in the proper form, so her testimony and theaccompanying summary cannot be considered. The affidavit was not notarized, nor does it contain the language required for unsworn affidavits:

I declare under penalty of perjury that the foregoing is true and correct. Executed in (date).

28 U.S.C. § 1746. See also Link Treasure Ltd. v. Baby Trend, Inc., 809 F. Supp. 2d 1191, 1195 (C.D. Cal. 2011), appeal dismissed, 438 Fed. Appx. 896 (9^th Cir. 2011) (court held it could not consider declaration submitted in support of summary judgment that did not comply with 28 U.S.C. § 1746).

Further, the complaint, default judgment, and other filings in the state court civil action captioned Lopez Roofing Service, Inc. v. Stacy Baker, CV-D-101-2009-00254, First Judicial District Court, State of New Mexico (the "Civil Action") were not certified or otherwise authenticated. Because of this deficiency, the Court will only take judicial notice of the existence of the Civil Action, and of the fact that the state court entered a default judgment against Defendant.³ See, e.g., Berkery v. Comm'r, 192 B.R. 835, 840 (E.D. Pa. 1996), aff'd, 111 F.3d 125 (3d Cir. 1997) (bankruptcy court properly took judicial notice of the reversal of the Chapter 7 debtor's criminal conviction); In re American Biomaterials Corp., 954 F.2d 919, 922 (3d Cir. 1992) (court of appeals took judicial notice of guilty pleas of debtor's principals).

B. Findings. The following facts are not in genuine dispute:

1. Plaintiff is in the residential and commercial roofing business.

2. Defendant is a former employee of Plaintiff.

3. Plaintiff hired Defendant in 2004 to work in its Albuquerque office.

4. Defendant performed bookkeeping, accounting, and other administrative tasks for the company.

5. On or about March 1, 2008, Plaintiff closed its Albuquerque office.

6. The State of New Mexico commenced the Criminal Action against Defendant in 2010. Defendant was charged with embezzling from Plaintiff.

7. In May 2011, Defendant entered into the Plea Agreement.

8. In the Plea Agreement, Defendant plead guilty to two counts of criminal embezzlement under New Mexico law, N.M.S.A. § 30-16-8.

9. As part of the Plea Agreement, Plaintiff agreed to pay restitution in the amount of $40,097.04.

10. Defendant paid an undisclosed amount under the restitution

agreement.

11. On January 26, 2009, Plaintiff commenced the Civil Action.

12. On March 12, 2009, the state court entered an Order for Default Judgment (the "Default Judgment") against Defendant in the Civil Action.

13. The conduct at issue in the Criminal Action is the same as that addressed in the Civil Action and this adversary proceeding.

II. DISCUSSION

A. Summary Judgment Standards. Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. "[A] party seeking summary judgment always bears the initial responsibility of informing thedistrict court of the basis for its motion, and ... [must] demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In determining whether summary judgment should be granted, the Court will view the record in the light most favorable to the party opposing summary judgment. Harris v. Beneficial Oklahoma, Inc. (In re Harris), 209 B.R. 990, 995 (10^th Cir. BAP 1997). To deny a motion for summary judgment, genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A mere "scintilla" of evidence will not avoid summary judgment. Vitkus v. Beatrice Co., 11 F.3d 1535, 1539 (10^th Cir. 1993). Rather, there must be sufficient evidence on which the fact finder could reasonably find for the nonmoving party. See Anderson, 477 U.S. at 251; Vitkus, 11 F.3d at 1539.

Defendant's failure to respond to the Motion does not mean that the Motion must be granted. Rather, the Court must determine whether judgment is appropriate. See, e.g., United States v. One Piece of Real Property Located at 5800 SW 74^th Avenue, Miami, Florida, 363 F.3d 1099, 1101 (11^th Cir. 2004) (court cannot base summary judgment on mere fact that the motion is unopposed, but must consider the merits of the motion); D.H. Blair & Co. Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (citing and following 5800 SW 74^th Street). In doing so, the Court must review the evidence submitted in support of the Motion and determine if Plaintiff has met its burden of proof. D.H. Blair, 462 F.3d at 110; John v. State of Louisiana (Bd. of Trustees for State Colleges and Universities), 757 F.2d 698, 708 (5^th Cir. 1985).

B. Debts for Embezzlement. Debts arising from "fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny" are excepted from the general discharge. 11 U.S.C. § 523(a)(4). For purposes of § 523(a)(4), a creditor may prove embezzlement by showing "the fraudulent appropriation of property by a person to whom such property has been entrusted or into whose hands it has lawfully come." In re Wallace, 840 F.2d 762, 765 (10^th Cir. 1988) (citation and quotation marks omitted). See also In re Kuwazaki, 438 B.R. 355 (10^th Cir. BAP 2010) (unpublished) (citing Wallace); In re Fickes, 2011 WL 4625278, at *11 (Bankr. D. Colo. 2011) (citing Wallace for the proposition that "the Tenth Circuit uses the federal common law definition of embezzlement"). New Mexico's criminal statute on embezzlement defines the crime thusly:

Embezzlement consists of a person embezzling or converting to the person's own use anything of value, with which the person has been entrusted, with fraudulent intent to deprive the owner thereof.

N.M.S.A. § 30-16-8(A). For purposes of this case, the definition of embezzlement in New Mexico is the same as the federal common law definition. Wallace, 840 F.2d at 765, citing State v. Peke, 371 P.2d 226, 231 (N.M. 1962); State v. Seefeldt, 212 P.2d 1053, 1054 (N.M. 1949); Rainbo Baking Co. v. Apodaca, 542 P.2d 1191 (N.M. App. 1975).

C. Claim Preclusion.

The Court first addresses whether summary judgment is appropriate based on claim preclusion⁴ principles. Claim preclusion bars litigation of claims that were or couldhave been advanced in an earlier proceeding. Strickland v City of Albuquerque, 130 F.3d 1408, 1411 (10th Cir. 1997) (citing State ex rel Martinez v Kerr-McGee Corp., 898 P.2d 1256, 1259 (N.M. App. 1995)).

"Federal courts give the same preclusive effect to state court judgments that those judgments would be given in the state court from which they emerged." Strickland, 130 F.3d at 1411 (citing Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466 (1982)). Under New Mexico law, claim preclusion requires four elements: "(1) the same party or parties in privity; (2) the identity of capacity or character of persons for or against whom the claim is made; (3) the same subject matter; and (4) the same cause of action in both suits." Strickland, 130 F.3d at 1411 (citing Myers v. Olson, 676 P.2d 822, 824 (N.M. 1984)).

In this adversary proceeding, claim...