Opinion
No. 09-42990, Adversary No. 09-4123.
January 26, 2010
ORDER ON MOTIONS and GRANTING SUMMARY JUDGMENT TO PLAINTIFFS
1. Service Objection :
Having considered the documents filed in response to the Procedural Order (Docket No. 40): Defendant's service objection (docket no. 44) is OVERRULED. LBR 5005-1(c)(2). 2. Request for Judicial Notice :
Absent contrary indication, all "Code," chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101- 1330 as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), Pub.L. 109-8, 119 Stat. 23. "RCW" references are to the Revised Code of Washington.
"Rule" references are to the Federal Rules of Bankruptcy Procedure, and "LBR" to the Local Bankruptcy Rules of this district. "FRE" references are to the Federal Rules of Evidence.
The request for judicial notice of the state court orders identified in the procedural order is GRANTED: Defendant's objection and amended objection (docket nos. 41 and 42) simply ignore the fact that, as noted in the Procedural Order . . . the state court orders are self-authenticating as public documents under seal and as certified copies of public records, FRE 902(1) and (4). As noted in the Procedural Order, counsel for Plaintiffs brought the original certified copies, with seals, to court, Defendant had the opportunity there and then to view them, and the copies attached to the Procedural Order . . . were made from those certified copies.
Defendant's argument that the various state court judges made oral rulings which are not reflected in those orders is misplaced: for the purposes of the request for judicial notice, the adjudicated facts of which I am taking judicial notice are the entry of those orders by the pertinent state courts. In re Bestway Products, Inc., 151 B.R. 530, 539-40 (Bankr. E.D. Cal. 1993). While those orders may or may not have implications respecting the merits of the adversary proceeding, or the summary judgment motion, those possibilities are not relevant to the taking of judicial notice. Nor is the correctness or propriety of the state courts' entries of the orders a criterion for taking judicial notice of them.
Moreover, a court's written findings control over any apparent inconsistency with an earlier oral ruling. Hong v. United States, 363 F.2d 116, 120 (9th Cir. 1966); Shellenbarger v. Brigman, 101 Wash. App. 339, 346 (2000). The case cited by Defendant for the contrary proposition, United States v. Fifield, 432 F.3d 1056, 1059 (9th Cir. 2005), involved sentencing in a criminal case. The rule that the oral pronouncement of a sentence controls over a written judgment is predicated on a criminal defendant's constitutional right to be present and speak at his own sentencing, see United States v. Bergmann, 836 F.2d 1220, 1222 (9th Cir. 1988), a circumstance not present here.
In any event, it is simply not subject to reasonable dispute that the state courts entered the orders in question: those facts are capable of accurate and ready determination, and the source of the certified copies cannot be reasonably questioned.
3. Dispositive Motions :
A. Defendant's motion for judgment on the pleadings (Docket No. 13):
Defendant moves for dismissal of the complaint, citing FRCP 12(c) and (d), on the basis that plaintiffs have failed to state sufficient facts on which relief may be granted. However, Defendant's pleadings fail to cite or address relevant authority, and the complaint, when considered together with its attachments, meets the standards set forth in Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949-50 (2009); see also Moss v. U.S. Secret Service, 572 F.3d 962, 967-69 (9th Cir. 2009).
The motion for judgment on the pleadings is DENIED.
B. Plaintiffs' motion for summary judgment (Docket No. 7):
i. 523(a)(6) Elements:
Section 523(a)(6) of the Bankruptcy Code provides that an individual debtor may not discharge a debt "for willful and malicious injury by the debtor to another entity or to the property of another entity." (emphasis added). The malicious injury requirement is separate from the willful injury requirement. Carrillo v. Su (In re Su), 290 F.3d 1140, 1146-47 (9th Cir. 2002) (conflating the two requirements is grounds for reversal); see also Jett v. Sicroff (In re Sicroff), 401 F.3d 1101, 1105 (9th Cir. 2005) ("We analyze the willful and malicious prongs of the dischargeability test separately."). A "willful" injury is a "deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury." Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998) (emphasis in original). "A `malicious' injury involves' (1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and (4) is done without just cause or excuse.'" In re Su, 290 F.3d at 1146-47 (quoting Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1209 (9th Cir. 2001)).
In re Barboza, 545 F.3d 702, 706 (9th Cir. 2008).
ii. Preclusion?
This court must give the state court orders the same preclusive effect as a Washington court would. See 28 U.S.C. § 1738, the Full Faith and Credit statute, and In re Nourbakhsh, 67 F.3D 798, 801 (9th Cir. 1995).
Collateral estoppel (issue preclusion) in Washington courts requires: "(1) identical issues; (2) a final judgment on the merits; (3) the party against whom the plea is asserted must have been a party to or in privity with a party to the prior adjudication; and (4) application of the doctrine must not work an injustice on the party against whom the doctrine is to be applied." Hadley v. Maxwell, 144 Wash. 2d 306, 311, 27 P.3d 600, 602 (2001) (internal quotation omitted).
iii. Analysis:
Sanctions imposed for filing frivolous legal claims in state court may be nondischargeable under § 523(a)(6), if the requirements of issue preclusion are met. In re Zelis, 66 F.3d 205, 208 (9th Cir. 1995) (sanctions for frivolous appeal); see also Ball v. A.O. Smith Corp., 451 F.3d 66 (2d Cir. 2006) (sanctions under 28 U.S.C. § 1927).
Here, the Pierce County District Court awarded costs, attorney's fees, and sanctions pursuant to RCW 4.84.1853 and the pertinent discovery and pleading rules, and in equity. The District Court found, in relevant part:
2. Hayes' claims in this case have been advanced without reasonable cause and with a malicious motive.
3. The entire action and claims put forth by Hayes are frivolous.
. . . .
5. Hayes had multiple improper or ulterior purposes for initiating his claims and defenses in this lawsuit, and for abusing legal process in this lawsuit, including:
a) to the Defendants [sic] to respond to the legal proceedings and to appear in court,
b) to increase the Defendants['] litigation costs and cause unnecessary delay,
c) to extort time, money and resources from the Defendants,
d) to intimidated [sic] the Defendants, and
e) to annoy and harass the Defendants.
. . . .
8. Hayes has subjected Defendants to his oppressive conduct, bad faith, malicious motives, ulterior purposes, and abuse of the legal process.
Order Granting Defendants' Motion to Dismiss, pages 2-3, attached to Declaration of Allan Kanouff (docket no. 8).
The Pierce County Superior Court affirmed the District Court's findings and conclusions in its order entered 8 July 2008, and awarded additional sanctions "under the same basis as awarded by the District Court." The Washington State Court of Appeals, Division II, affirmed.
The elements of issue preclusion are met here. Both matters involve the same parties, and the identical issues: whether Hayes' conduct was willful and malicious. The state court explicitly found that Hayes acted with intent to injure defendants (i.e., by causing them to incur fees, and to annoy and harass them), and that he acted maliciously. The state court orders are final, and Hayes articulates no basis for finding that application of the doctrine would work an injustice — he just disagrees with the results.
The motion for summary judgment is GRANTED.
iv. Extent:
In Cohen v. de la Cruz, 523 U.S. 213 (1998) the Supreme Court construed "debt" in the 11 U.S.C. § 523(a)(2)(A) subsections excepting from discharge "debt . . . for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by . . . false pretenses, a false representation, or actual fraud" to mean the entire debt arising from the specified conduct. Subsection 523(a)(6) is so constructed; it follows, as Hayes's entire liability at state law is predicated on willful and malicious conduct, all of the sanctions and attorney fees are nondischargeable. In re Roussos, 251 B.R. 86, 95 (9th Cir. BAP 2000), aff'd, 33 Fed. Appx. 365, 2002 WL 726489 (9th Cir. 2002). This is true even with respect to the additional fees and costs imposed as sanctions by the Superior Court and the Court of Appeals. Although neither court's award contains findings of willful and malicious conduct, both explicitly affirmed the District Court's findings. Thus those amounts are included as part of the total debt arising from that conduct.
4. Conclusion :
Accordingly, I will enter judgment for plaintiffs, holding the sanctions awarded by the state courts nondischargeable under § 523(a)(6), which plaintiffs shall note for presentation on my 10 February 2010 calendar.