ORDER GRANTING OIL STATES INDUSTRIES, INC.'S
MOTION FOR SUMMARY JUDGMENT WITH BRIEF IN SUPPORT AND NOTICE
OF OPPORTUNITY FOR HEARING [DOC. 18]
Sarah
A Hall United States Bankruptcy Judge
On June
21, 2021, plaintiff Oil States Industries, Inc. ("Oil
States") filed the Oil States Industries, Inc.'s
Motion for Summary Judgment with Brief in Support and Notice
of Opportunity for Hearing [Doc. 18] (the
"Motion"). On July 7, 2021, defendant Ashwin
Nambakam ("Debtor") filed Ashwin Nambakam's
Opposition to Oil States Industries, Inc.'s Motion for
Summary Judgment and Request for Hearing [Doc. 19] (the
"Objection"). Oil States subsequently amended the
Motion by filing the Oil States Industries, Inc.'s
Amendment to Motion for Summary Judgment [Doc. 18] with
Notice of Opportunity for Hearing [Doc. 20], on July 12, 2021
(the "Amendment"; the Motion as amended by the
Amendment, the "Amended Motion"). On July 26, 2021
Debtor filed Ashwin Nambakam's Amended Opposition to Oil
States Industries, Inc.'s Motion for Summary Judgment
[Doc. 22] (the "Amended Objection").
The
Court has jurisdiction to hear this action pursuant to 28
U.S.C. § 1334(b), and venue is proper pursuant to 28
U.S.C. § 1409. Reference to the Court of this matter is
proper pursuant to 28 U.S.C. § 157(a), and this is a
core proceeding as contemplated by 28 U.S.C. §
157(b)(2)(I). Furthermore, Oil States consents to entry of
final orders and judgment by the Court in this adversary
proceeding pursuant to Federal Rule of Bankruptcy Procedure
7008. Debtor does not dispute the Court's jurisdiction
however, he "does not consent to the entry of a judgment
of nondischargeability of his debts." [Doc. 5].
Debtor's baffling position is of no consequence; the
Court unquestionably has jurisdiction to enter a final
judgment as to the dischargeability of his debts. Johnson
v. Riebesell (In re Riebesell), 586 F.3d 782
793 (10th Cir. 2009).
This
adversary proceeding concerns a debt arising from a state
court action filed in the District Court of Oklahoma County
Oklahoma, Case No. CJ-2017-3496 (the "State Court
Action" and the "State Court," respectively).
In the State Court Action, Oil States sought damages and
injunctive relief for the theft of confidential, trade-secret
information by former employees, including Debtor. Due to
repeated, egregious discovery misconduct, Oil States obtained
a default judgment against Debtor as a sanction, finding him
liable on each of Oil States' claims, including
misappropriation of trade secrets and breach of duty of
loyalty. A bench trial was conducted on remedies, and a
judgment was entered against Debtor in favor of Oil States in
the aggregate amount of $563, 686.17. Oil States now seeks to
have the debt excepted from Debtor's discharge pursuant
to 11 U.S.C. § 523(a)(4) and (6), relying on issue
preclusion to support its request for summary judgment.
For the
reasons set forth below, Oil States' Amended Motion is
granted.
UNDISPUTED
MATERIAL FACTS
"'Necessary
to the effective rebuttal of a summary judgment motion is the
non-moving party's demonstration that genuine issues of
fact remain. Non-moving parties raise genuine issues of
material fact by controverting the moving party's factual
averments with particularity.'" American Express
Bank v. Mowdy (In re Mowdy), 526 B.R. 63, 73
(Bankr. W.D. Okla. 2015) (citing Bank of Cushing v.
Vaughan (In re Vaughan), 342 B.R. 385
(10th Cir. BAP 2006)). In opposing a properly
supported motion for summary judgment, a party cannot rely on
mere allegations or general denials but must come forward
with specific and material facts, established by probative
evidence. Mowdy, 526 B.R. at 73 (citing State
Farm Fire and Cas. Co. v. Edie (In re Edie),
314 B.R. 6, 18 (Bankr. D. Utah 2004)). Debtor's burden to
controvert Oil States' facts "'requires more
than what was put forth in this case.'"
Mowdy, 526 B.R. at 73 (citing Vaughan, 342
B.R at 385). His choice to provide no affidavit or any other
evidentiary materials to support his denial of Oil
States' statement of undisputed facts, which were
properly supported by the record before the Court, failed to
create any disputed material facts. For purposes of the
Amended Motion, the Court finds no genuine dispute exists as
to the following material facts:
1. On June 20, 2017, Oil States filed the State Court Action.
Amended Motion, Exhibit 1.
2. In the State Court Action, Oil States alleged Debtor and
others conspired to steal, and stole, vast amounts of
confidential, trade-secret information from their employer,
Oil States Piper Valve ("Piper"), a division of Oil
States, to form a competing valve company, Legacy Valve
Systems, LLC ("Legacy"). Such information included
customer lists, confidential product cost information, valve
drawings, and other technical documents detailing Piper's
manufacturing process and quality control measures (the
"Trade Secrets"). Amended Motion, Exhibit 2.
3. In the State Court Action, Debtor was always represented
by counsel. Amended Motion, Exhibits 1, 3, 4, 5, 6, and 7.
4. On November 19, 2018, Oil States filed a Motion for
Sanctions for Defendants' Spoliation of Evidence in the
State Court Action (the "Sanctions Motion"). In the
Sanctions Motion, Oil States submitted indisputable evidence
that, while employed by Oil States, Debtor deliberately stole
Oil States' Trade Secrets and tried to cover up such
conduct by destroying evidence in violation of his duty to
preserve evidence. Oil States also presented evidence Debtor
destroyed evidence in violation of court orders and knew his
conduct was wrongful. Amended Motion, Exhibit 8, at 3-7.
5. On February 19, 2019, the State Court conducted a hearing
on the Sanctions Motion, and counsel for Debtor appeared at
the hearing. During the hearing, the State Court specifically
found:
Defendants' failure to comply with the Court's
discovery orders, failure to comply with the Court's
Temporary Injunction, spoliation of evidence, and perjury
were all done willfully, maliciously, and in bad faith.
Defendants' conduct suggests an intentional attempt to
deprive Oil States of documents necessary to prove its
damages and to interfere with the judicial system.
Amended Motion, Exhibit 13, p. 6, ¶ 26. The State Court
further held, "Defendants flagrantly disobeyed multiple
Court orders, hid their financial information and
communications, and wasted Oil States' and the
Court's time and resources." Amended Motion, Exhibit
13, p. 6, ¶ 28.
6. Following the hearing, the State Court entered a Journal
Entry ("Sanctions Order") finding, among other
things: (a) Debtor's duty to preserve evidence arose no
later than May 1, 2017; (b) Debtor committed spoliation by
destroying evidence after the duty to preserve arose; and (c)
Debtor violated court orders by destroying evidence. As a
sanction for his conduct, the State Court awarded Oil States
attorney fees and costs of $47, 563.13 (the "Sanctions
Award"). Amended Motion, Exhibit 9.
7. As the State Court Action progressed, Debtor and his
co-defendants continually failed to produce necessary
discovery despite warnings from the State Court their
continued failure to produce would result in judgment against
them. Their obstinance continued, and the State Court
ultimately granted default judgment as a sanction for their
conduct, finding Debtor and his co-defendants liable on each
of Oil States' claims, including misappropriation of
Trade Secrets under Okla. Stat. tit. 78, § 86(4) and
breach of the duty of loyalty. Amended Motion, Exhibits 11,
12, and 13 (Journal Entry of Judgment (the "Default
Judgment")).
8. On March 16, 2020, the State Court conducted a bench trial
to determine the remedies to be awarded to Oil States per the
Default Judgment. To determine the appropriate remedies, the
State Court heard and considered evidence of Debtor's
conduct. Debtor was represented by counsel at the trial on
damages. Amended Motion, Exhibits 1, 13 and 14 (Findings of
Fact and Conclusions of Law (the "Findings and
Conclusions")).
9. On November 9, 2020, the State Court entered its Findings
and Conclusions, followed by the Final Journal Entry of
Judgment entered February 24, 2021 (the "Final
Judgment"), in the State Court Action. Amended Motion,
Exhibits 14 and 15. In both the Findings and Conclusions and
the Final Judgment, the State Court found Debtor deliberately
and intentionally caused injury to Oil States, [1] and each
defendant in the State Court Action, including Debtor, was
motivated by hatred, spite and ill-will.[2] Amended Motion,
Exhibit 14, pp. 14, ¶ 29, 21, ¶ 51, and 28, ¶
10, and Exhibit 15, p. 2. The State Court entered the Final
Judgment against Debtor on Oil States' claims in the
total amount of $563, 335.17, comprised of actual damages of
$182, 085.67, punitive damages of $333, 686.37 (collectively,
the "Judgment Debt") and the $47, 563.13 Sanctions
Award. The Judgment Debt and Sanctions Award are several from
judgments awarded against other defendants. See
Amended Motion, Exhibit 15, p. 3.
10. On March 26, 2021, Oil States served a copy of the Final
Judgment on counsel for each defendant, triggering the
thirty-day period for an appeal under Okla. Stat. tit. 12,
§ 990A(A). None of the defendants, including Debtor,
perfected an appeal. See Amended Motion, Exhibits 1
and 16.
11. The Appendix filed with the Motion constitutes the entire
judgment roll from the State Court Action. See Burris v.
Burris (In re Burris), 591 B.R. 779, 793-94
(Bank. W.D. Okla. 2019) (entire judgment roll required to
support finding of issue preclusion).
