Telos Ventures Grp., PLLC v. Short (In re Short)
| Decision Date | 04 March 2021 |
| Docket Number | Adversary Proceeding No. 20-02027,Bankruptcy Number: 19-29471 |
| Parties | In re: DOUGLAS R. SHORT, Debtor. TELOS VENTURES GROUP, PLLC, JOHN H. BOGART, YAN ROSS, AND RANDI WAGNER, Plaintiffs, v. DOUGLAS R. SHORT, Defendant. |
| Court | U.S. Bankruptcy Court — District of Utah |
Hon. Kevin R. Anderson
The Debtor is an attorney who litigated against Plaintiffs in the Utah state courts with an unrestrained fervor that too often trespassed beyond the boundaries of ethical advocacy. As a result, the state courts sanctioned the Debtor multiple times for bad faith, frivolous, vexatious, harassing, and abusive litigation conduct. Plaintiffs filed this adversary proceeding for a determination that the sanction awards are nondischargeable under § 523(a)(6).
Plaintiffs' motion for summary judgment argues that the state courts' prior findings of facts and conclusions of law preclusively establish that the sanctions constitute a debt arising from a willful and malicious injury. The Debtor counters that the state court findings are erroneous, not final, and not sufficiently specific for claim or issue preclusion to apply.
For the reasons set forth below, the Court finds that the state court rulings are res judicata, and, except for the last sanction award under Utah R. App. P. 33, they are sufficient to grant summary judgment against the Debtor.
The Court's jurisdiction over this adversary proceeding is properly invoked under 28 U.S.C. § 1334(b) and §§ 157(a) and (b)(2). Plaintiffs' complaint objects to the discharge of its particular claims, making this a core proceeding under 28 U.S.C. § 157(b)(2)(I). Venue is proper in this District under 28 U.S.C. § 1409, and an adequate notice of hearing on the motion was given.
The Court finds that the Debtor failed to comply with the Bankruptcy Court's local rule and Fed. R. Civ. P. 56 with respect to the requirements for opposing a motion for summary judgment. Rule 56(c), as made applicable to bankruptcy proceedings by Fed. R. Bankr. P. 7056, requires that the party asserting a fact as disputed must support that assertion by a citation to the record, by challenging the admissibility of the evidence, or by an affidavit. Fed. R. Civ. P. 56(e) provides that "[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c)" the court may "consider the factundisputed for purposes of the motion" or "grant summary judgment if the motion and supporting materials - including the facts considered undisputed - show that the movant is entitled to it."
The Bankruptcy Court's Local Rule 7056-1(d)(2)(B) requires that a memorandum in opposition to summary judgment include a section entitled "Response to Statement of Elements and Undisputed Material Facts" setting forth the following: (1) a concise response to each legal element stated by the moving party; (2) a response to each stated material fact; (3) a statement of additional material facts, if applicable; and (4) a statement of additional elements and material facts, if applicable.1
The Local Rule's organizational scheme assists the Court and the litigants in identifying the facts that are in genuine dispute, and the legal elements that have not been met. In furtherance thereof, the Rule requires the memorandum in opposition to "restate each numbered paragraph from the statement of material facts provided in support of that element in the motion." To identify disputed facts, the Rules requires the memorandum to "concisely describe and cite with particularity the evidence on which the non-moving party relies to dispute that fact (without legal argument)."2
The Debtor's memorandum in opposition ignores the above-described organizational schema. Specifically, it fails to identify by paragraph number which of the facts asserted by the Plaintiffs are disputed and why. Instead, the Debtor's response merely asserts 11 legal arguments in opposition to summary judgment. They can be summarized as: (1) the Utah state court rulings are all wrong; and (2) every paper the Debtor filed in Ross v. GFS and Short v. Bogart had legal support and was filed in good faith and with no intent to injure Plaintiffs. The Debtor supports hispoints with an affidavit that reasserts the same arguments made by the Debtor in his multiple, unsuccessful challenges and appeals of the state court rulings.
The Debtor's failure to cite with particularity the facts he disputes and the evidence supporting his dispute, coupled with the "shot gun" approach of the Debtor's arguments, has made it more difficult for the Court to ascertain if there are any genuinely disputed facts in the Debtor's favor. However, because the Court finds that all of the facts necessary to rule on Plaintiffs' motion for summary judgment are established in the prior, final state court rulings, and given the guidance of Rule 56(e), the Court will proceed to rule on Plaintiffs' motion for summary judgment.
At the hearing on Plaintiff's summary judgment motion on December 8, 2020, the Debtor made an oral request under Rule 56(d) to conduct additional discovery. In his response to the motion for summary judgment, the Debtor argued that he needed to conduct to discovery to determine if Plaintiffs suffered any actual financial injury; meaning, were Plaintiffs liable to pay, or did they actually pay, their attorneys the costs and fees that were the basis for the sanction awards?3
Generally, Rule 56(d) permits party opposing summary judgment to demonstrate, by affidavit or declaration, the need for additional discovery. The affidavit is required to "ensure that the nonmoving party is invoking the protections of Rule [56(d)] in good faith and to afford the trial court the showing necessary to assess the merit of a party's opposition."4 The Debtor did not file a specific Rule 56(d) affidavit in the form required by the Tenth Circuit. But in his declaration inopposition to summary judgment, the Debtor alleges that he was never allowed to conduct discovery on the following: (1) whether Plaintiffs ever paid or were obligated to pay for the costs and fees awarded; and (2) whether Plaintiffs have in fact suffered any financial injury as a result of the Debtor's litigation conduct.5 In the Tenth Circuit, a party must establish that the requested additional discovery will result in relevant facts:
A party may not invoke Fed. R. Civ. P. 56[(d)] by merely asserting that discovery is incomplete or that specific facts necessary to oppose summary judgment are unavailable. Rather, the party must demonstrate precisely how additional discovery will lead to a genuine issue of material fact.6
As explained below, the state court rulings create in Plaintiffs an allowed bankruptcy claim against the Debtor for the sanction amounts, and this claim is sufficient under § 523(a)(6) to establish a debt for an injury. Thus, whether Plaintiffs actually paid the costs and fees to their attorneys is irrelevant to this cause of action as it has no bearing on the allowability of their claim against the Debtor for the amounts set forth in the sanction orders and judgments. Therefore, the Debtor's oral motion for leave to conduct additional discovery under Rule 56(d) is denied because such discovery will not produce facts that are relevant to this § 523(a)(6) cause of action.
Starting in 2012, the Utah District Court and the Utah Court of Appeals (collectively the "State Courts") sanctioned the Debtor multiple times for his abusive litigation conduct. There is a long, contentious history among Plaintiffs and the Debtor that has resulted in a plethora of decisions, rulings, orders, judgments and appeals. Plaintiffs attached 25 exhibits to their motion for summary judgment consisting of the relevant state court rulings (the exhibits are collectivelyreferred to as the "State Court Rulings").7 The State Court Rulings contain extensive findings of fact and conclusions of law against the Debtor. While the Debtor disputes the correctness of the findings, he does not dispute that the exhibits are true copies of the State Court Rulings.8 Therefore, the Court takes judicial notice9 of the State Court Rulings attached to Plaintiffs' motion for summary judgment as exhibits 1-25.10
1. In 2007, Yan Ross and Randi Wagner (collectively "Ross") filed a complaint captioned Ross et al. v. Global Fraud Solutions, LLC., Case No. 07-0915820 ("Ross v. GFS"), filed in the Third Judicial District Court for the State of Utah (the "State Court").11
2. In 2008, the State Court entered a judgment in favor of Ross, who then sought a writ of execution against property of GFS. The motion listed Michael Barnett ("Barnett"), the principal of GFS, as a person who may assert an interest in the assets of GFS.12
3. Barnett then intervened in Ross v. GFS asserting that he was the owner of a bank account against which Ross sought to execute.13
4. In September 2008, the State Court found that Barnett lacked credibility and that the bank account was an asset of GFS.14 This ruling became the focal point of contention among Plaintiffs and the Debtor.
5. In January 2009, the Debtor entered his appearance as counsel for Barnett and began challenging the prior rulings of the State Court.15
6. In March 2010, Ross sought Rule 11 sanctions against the Debtor based on his continuing efforts to overturn the September 2008 ...
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