Oil States Indus. v. Nambakam (In re Nambakam)

Decision Date25 August 2021
Docket Number19-13549-SAH,Adv. 19-01108-SAH
CourtU.S. Bankruptcy Court — Western District of Oklahoma

Chapter 7


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.


"'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).

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