Young Rae Cho v. Caffebene Inc.

NOTICE OF MOTION AND MOTION for Summary Judgment as to Claims of Plaintiff Young Rae Cho

C.D. Cal.September 16, 2016

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Brett Andrew Nadler (admitted pro hac vice) bnadler@ballonstoll.com Ballon Stoll Bader & Nadler, P.C. 729 Seventh Avenue – 17th Floor New York, New York 10019 Telephone: 212-575-7900 Facsimile: 212-764-5070 Mark Andrew Byrne markbyrne@byrnenixon.com Byrne and Nixon LLP 888 West Sixth Street Suite 1100 Los Angeles, CA 90017 Telephone: 213-620-8003 Facsimile: 213-620-8012 Attorneys for Defendant Caffebene Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA YOUNG RAE CHO, Plaintiff, vs. CAFFEBENE INC., Defendants. AND RELATED CASES. This Document Relates To: 2:15-cv-04611-CAS (JEMx) ) )) )) )) )) )) )) )) )) )) )) ) ) ) ) )) ) Master File No. 2:15-cv-04611-CAS (JEMx) c/w 2:15-cv-04613-CAS (JEMx) CAFFEBENE INC.’S NOTICE OF MOTION AND MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF PLAINTIFF YOUNG RAE CHO Date: September 26, 2016 (as per concurrently-filed ex parte application for Order shortening time on motion) Time: 11:00 AM Hon. Christina A. Snyder TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on September 26, 2016, at 11:00 AM, or as soon thereafter as the matter may be heard, before the Honorable Christina A. Snyder, located at 312 N. Spring Street, Los Angeles, California 90012, Defendant CAFFEBENE INC. Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 1 of 22 Page ID #:1195 2 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 (“Caffebene”) will and hereby does move for summary judgment as to all claims by Plaintiff Young Rae Cho (“Cho”). This motion will be made pursuant to Fed. R. Civ. P. 56 on the grounds that Caffebene is entitled to summary judgment, as a matter of law, because the indisputable facts show that: (1) Cho is judicially estopped from asserting his claims, which he failed to disclose in his two Chapter 7 bankruptcy cases. See In re: Young Rae Cho, 2:15-bk- 28617-BR (Bankr. C.D. Cal.); In re: Young Rae Cho, Case No. 2:16-bk-15989-TD (Bankr. C.D. Cal.); and, even if not judicially estopped, in the alternative, (2) Cho lacks standing to prosecute this action, having lost the legal right when he filed for bankruptcy protection. This motion is made following Caffebene’s counsel’s repeated attempts to confer with Cho’s counsel, pursuant to Local Rule 7-3, which took place between September 9, 2016 and September 14, 2016, as detailed more fully in the accompanying Declaration of Brett Andrew Nadler. This motion is based on this Notice of Motion and Motion, the Memorandum of Points and Authorities contained herein, and the concurrently-filed Statement of Uncontroverted Facts and Conclusions of Law, Declaration of Brett A. Nadler, and Ex Parte Application for Order Shortening Time of Motion, the record on file in this action, and any other matters the Court deems appropriate. Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 2 of 22 Page ID #:1196 3 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Dated: September 16, 2016 Respectfully submitted, BALLON STOLL BADER & NADLER, P.C. By: /s/ Brett Andrew Nadler Brett Andre Nadler (admitted pro hac vice) Attorneys for Defendant Caffebene Inc. Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 3 of 22 Page ID #:1197 i DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 TABLE OF CONTENTS TABLE OF AUTHORITIES ........................................................................................ ii MEMORANDUM OF POINTS AND AUTHORITIES .............................................. 1 INTRODUCTION......................................................................................................... 1 SUMMARY OF UNDISPUTED FACTS .................................................................... 2 ARGUMENT ................................................................................................................ 5 A. Summary Judgment Standard ........................................................................ 5 B. Cho’s Claims are Barred, As a Matter of Law, Under the Doctrine of Judicial Estoppel Because He Failed to Disclose Them in His Bankruptcy Cases ......................................................................................... 6 1. Cho’s Claims are Inconsistent with the Position He Took in His Bankruptcy Cases ................................................................................ 9 2. The Bankruptcy Court Accepted Cho’s Prior Inconsistent Positions ....... 10 3. Cho Would Derive an Unfair Advantage If Not Estopped ........................ 10 4. The Evidence Discredits Cho’s Claimed “Mistake” In Failing to Disclose His Claims to the Bankruptcy Court ........................................ 11 C. Cho Lacks Standing to Pursue the Claims Against Caffebene 14 CONCLUSION ............................................................................................................. 15 Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 4 of 22 Page ID #:1198 ii DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 TABLE OF AUTHORITIES Ah Quin v. County of Kauai DOT, 733 F.3d 267 (9th Cir. 2013) ................................................................................... 11 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................................................... 6 Arruda v. C&H Sugar Co., 2007 U.S. Dist. LEXIS 16519 (E.D. Cal. Mar. 8, 2007) ..................................... 8, 11 Ash v. OneWest Bank, FSB, No. 09-974, 2010 WL 2231972 (E.D. Cal. June 3, 2010) ......................................... 8 Banuelos v. Waste Connections, Inc., No. 12-1012, 2013 WL 398859 (E.D. Cal. Jan. 31, 2013) ........................................ 8 Barger v. Cartersville, 348 F.3d 1289 (11th Cir. 2003) ................................................................................. 7 Becker v. Wells Fargo Bank, Nat’l Assoc., No. 12-1742, 2012 WL 5187792 (E.D. Cal. Oct. 18, 2012) ............................... 8, 15 Bhan v. NME Hosps., Inc., 929 F.2d 1404 (9th Cir. 1991) ................................................................................... 6 Britto v. Bank of America, N.A., No. C 13-03508 WHA, 2013 U.S. Dist. LEXIS 146978, 2013 WL 5587400 (N.D. Cal. Oct. 10, 2013) .......................................................................................... 14 Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002) ................................................................................. 8 Cannon-Stokes v. Potter, 453 F.3d 446 (7th Cir. 2006) ..................................................................................... 7 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................................................................................................... 5 Elston v. Westport Ins. Co., 253 Fed. Appx. 697 (9th Cir. 2007) ........................................................... 7, 9, 10, 11 Estate of Spirtos v. One San Bernardino County Super. Ct., 443 F.3d 1172 (9th Cir. 2006) ................................................................................. 14 Ford Motor Co. v. Pearson, 40 F.2d 858 (9th Cir. 1930) ..................................................................................... 12 Granados v. Supervalu, Inc., No. 11-10175, 2012 WL 3562521 (C.D. Cal. Aug. 16, 2012) .................................. 8 Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) ............................................................... 2, 6, 7, 8, 9, 10 Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 5 of 22 Page ID #:1199 iii DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Hay v. First Interstate Bank of Kalispel N.A., 978 F.2d 555 (9th Cir. 1992) ................................................................................. 7, 8 Herfurth v. CitiMortgage, Inc., 2014 U.S. Dist. LEXIS 104206 (E.D. Cal. July 28, 2014) ...................................... 14 HPG Corp. v. Aurora Loan Servs., LLC, 436 B.R. 569 (E.D. Cal. 2010)................................................................................... 8 Jethroe v. Omnova Solutions, Inc., 412 F.3d 598 (5th Cir. 2005) ..................................................................................... 7 Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. General Motors Corp., 337 F.3d 314 (3d Cir. 2003) ...................................................................................... 7 Laisure-Radke v. Pharmaceutical Resources, Inc., 313 Fed. Appx. 32 (9th Cir. 2009) ............................................................................. 9 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ............................................................................................... 5, 6 New Hampshire v. Maine, 532 U.S. 742 (2001) ................................................................................................... 6 Ortiz v. Sodexho Operations, LLC, 2011 U.S. Dist. LEXIS 111208 (S.D. Cal. Sept. 27, 2011) ................................... 8, 9 Payless Wholesale Distributors, Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570 (1st Cir. 1993) ...................................................................................... 7 Risetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597 (9th Cir. 1996) ....................................................................................... 7 Rose v. Beverly Health and Rehab. Servs., Inc., 356 B.R. 18 (E.D. Cal. 2006), aff’d, 2008 U.S. App. LEXIS 20594 (9th Cir., Sept. 24, 2008) .................................................................................................... 8 Snead v. Aurora Loan Servs., LLC, No. 12-0293, 2012 WL 3756887 (E.D. Cal. Aug. 28, 2012) .................................... 8 Somekun v. Thrifty Payless, Inc., 509 F.3d 105 (2d Cir. 1998) ...................................................................................... 5 Taylor v. List, 880 F.2d 1040 (9th Cir. 1989) ................................................................................... 5 UA Local 343 v. Nor.-Cal Plumbing, Inc., 485 F.3d 1465 (9th Cir. 1994) ................................................................................... 5 United States ex rel. Gebert v. Transport Administrative Services, 260 F.3d 909 (8th Cir. 2001) ..................................................................................... 7 Williams v. Kaiser Permanente Div. of Research, 2000 U.S. Dist. LEXIS 12746 (N.D. Cal. Aug. 22, 2000) ...................................... 15 Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 6 of 22 Page ID #:1200 iv DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 STATUTORY AUTHORITIES 11 U.S.C. § 341(a) ........................................................................................................... 3 11 U.S.C. § 541(a) ........................................................................................................... 9 11 U.S.C. § 727 ...................................................................................................... 1, 4, 10 28 U.S.C. § 1332 .............................................................................................................. 2 28 U.S.C. § 1441(b) ......................................................................................................... 2 RULES AND REGULATIONS Fed.R.Civ.P. 56(a) ............................................................................................................ 5 Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 7 of 22 Page ID #:1201 1 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Defendant Caffebene Inc. (“Caffebene”) respectfully submits this Memorandum of Points and Authorities in support of its motion for summary judgment to dismiss all claims by Plaintiff Young Rae Cho (“Cho”). The undisputed facts show: (1) over one year after filing a complaint asserting various wage and hour and other claims against Caffebene, Plaintiff Cho filed for Chapter 7 Bankruptcy protection; and, (2) Cho failed to disclose his pending lawsuit and claims against Caffebene in his bankruptcy petition, schedules and other disclosures – a violation of the Bankruptcy Code and Cho’s sworn statements in his two, separately-filed bankruptcy proceedings. Cho’s first bankruptcy petition, In re: Young Rae Cho, 2:15-bk-28617-BR (Bankr. C.D. Cal.), filed on December 7, 2015, was dismissed by the bankruptcy court on February 19, 2016, after Cho failed to appear for examination at two § 341(a) meetings of creditors. Cho then filed a second bankruptcy case on May 5, 2016. In re: Young Rae Cho, Case No. 2:16-bk-15989-TD (Bankr. C.D. Cal.). On August 15, 2016, the bankruptcy court filed an Order of Discharge granting Cho a discharge under 11 U.S.C. § 727, removing Cho’s personal liability for all debts owed before his bankruptcy case was filed, and prohibiting anyone from making any attempt to collect a discharged debt from Cho personally. The bankruptcy court, the trustee and Cho’s creditors relied on Cho’s incorrect schedules filed under penalty of perjury. At no time during the pendency of either bankruptcy action did Cho amend his bankruptcy petition, schedules or SOFA to disclose the instant lawsuit. Having represented under oath to the bankruptcy court that he had no legal claims against Caffebene, pursuant to well-settled Ninth Circuit precedent Cho should be judicially estopped from pursuing those claims here. See, e.g., Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 783 (9th Cir. 2001). Furthermore, even if that were not the case, Cho lacks standing to prosecute the claims against Caffebene, having lost the legal right when he filed for bankruptcy protection. Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 8 of 22 Page ID #:1202 2 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 SUMMARY OF UNDISPUTED FACTS Plaintiff was employed by Caffebene from on or about January 20, 2014 until July 25, 2014. (Uncontroverted Facts (“UF) 1). On October 2, 2014, Plaintiff filed and initiated this action in Los Angeles County Superior Court (the “State Court”), entitled “Young Rae Cho, an individual, Plaintiff v. Caffebene, Inc., a Foreign Corporation and DOES 1 through 10, inclusive, Defendants,” under assigned Case No. BC559467 (the “Action”). (UF 2). Cho’s complaint in the Action focuses on two theories of liability: (1) Caffebene’s alleged violations of the California Labor Code; and, (2) Caffebene’s alleged wrongful termination of Cho’s employment. (UF 3). On November 3, 2014, Caffebene filed in the State Court its Answer to Cho’s complaint, denying all substantive allegations of wrongdoing alleged therein, and interposing several affirmative defenses. (UF 4). On June 17, 2015, Caffebene filed a Notice of Removal with this Court and removed the Action from the State Court, invoking diversity jurisdiction pursuant to 28 U.S.C. §§ 1332 and 1441(b). (UF 5). Over one year after filing the Action, on December 7, 2015, Cho filed a Voluntary Petition for Individual Bankruptcy, along with the schedules and Statement of Financial Affairs for Individuals Filing for Bankruptcy (“SOFA”) attached thereto (collectively, “Cho’s First Bankruptcy Petition”), in the United States Bankruptcy Court for the Central District of California, thereby instituting proceedings under Chapter 7 of the Bankruptcy Code under the caption In re: Young Rae Cho, 2:15-bk-28617-BR (Bankr. C.D. Cal.) (the “First Bankruptcy Case”). (UF 6). The bankruptcy schedules that Cho filed with Cho’s First Bankruptcy Petition in the First Bankruptcy Case required Cho to identify all “[c]laims against third parties, whether or not [he has] filed a lawsuit or made a demand for payment”; and, all “[o]ther contingent and unliquidated claims of every nature . . ..” (UF 7). Cho did not identify or disclose the Action or his pending claims against Caffebene in his bankruptcy schedules filed in the First Bankruptcy Case. (UF 8). At the same time, Cho executed Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 9 of 22 Page ID #:1203 3 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 and filed a statement that he “examined th[e] petition, and . . . declare[s] under penalty of perjury that the information provided is true and correct.” (UF 9). Cho also executed and filed a Declaration About Individual Debtor’s Schedules declaring “[u]nder penalty of perjury, . . . that [he] read the summary and schedules filed with th[e] declaration and that they are true and correct.” (UF 10). In addition, the SOFA that Cho filed with Cho’s First Bankruptcy Petition in the First Bankruptcy Case asked whether, “[w]ithin 1 year before you filed for bankruptcy, were you a party in any lawsuit, court action or administrative proceeding,” to which question Cho responded “No.” (UF 11). Cho executed and filed a statement that he “read the answers on th[e] Statement of Financial Affairs and any attachments, and [] declare[s] under penalty of perjury that the answers are true and correct.” (UF 12). On February 8, 2016, the Chapter 7 Trustee in the First Bankruptcy Case filed a Motion and Declaration with the bankruptcy court requesting that Cho’s First Bankruptcy Case “be dismissed because Debtor [Cho] failed to appear at two or more 341(a) meetings of creditors held pursuant to 11 U.S.C. § 341(a).” (UF 13). On February 19, 2016, the bankruptcy court granted the Trustee’s motion and dismissed Cho’s First Bankruptcy Case. (UF 14). On May 5, 2016, Cho filed a second Voluntary Petition for Individual Bankruptcy, along with the schedules and SOFA attached thereto (collectively, “Cho’s Second Bankruptcy Petition”), in the United States Bankruptcy Court for the Central District of California, again instituting proceedings under Chapter 7 of the Bankruptcy Code under the caption In re: Young Rae Cho, 2:16-bk-15989-TD (Bankr. C.D. Cal.) (the “Second Bankruptcy Case”). (UF 15). The bankruptcy schedules that Cho filed with his Second Bankruptcy Petition in the Second Bankruptcy Case required Cho to identify all “[c]laims against third parties, whether or not [he has] filed a lawsuit or made a demand for payment”; and, all “[o]ther contingent and unliquidated claims of every nature . . ..” (UF 16). Cho, again, did not identify or disclose the Action or his pending Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 10 of 22 Page ID #:1204 4 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 claims against Caffebene in his bankruptcy schedules filed in the Second Bankruptcy Case. (UF 17). In Cho’s Second Bankruptcy Petition, Cho again executed and filed a statement that he “examined th[e] petition, and . . . declare[s] under penalty of perjury that the information provided is true and correct.” (UF 18). In the Second Bankruptcy Case, Cho again executed and filed a Declaration About Individual Debtor’s Schedules declaring “[u]nder penalty of perjury, . . . that [he] read the summary and schedules filed with th[e] declaration and that they are true and correct.” (UF 19). The SOFA that Cho filed with Cho’s Second Bankruptcy Petition in the Second Bankruptcy Case asked whether, “[w]ithin 1 year before you filed for bankruptcy, were you a party in any lawsuit, court action or administrative proceeding,” to which question Cho, again, responded “No.” (UF 20). In the Second Bankruptcy Case, Cho executed and filed a statement that he “read the answers on th[e] Statement of Financial Affairs and any attachments, and [] declare[s] under penalty of perjury that the answers are true and correct.” (UF 21). On May 18, 2016 – less than two weeks after Cho filed Cho’s Second Bankruptcy Petition – Cho personally attended a mediation session in connection with the Action and his claims against Caffebene. (UF 22). On August 15, 2016, the bankruptcy court presiding over the Second Bankruptcy Case entered an Order of Discharge granting Cho a discharge under 11 U.S.C. § 727, removing Cho’s personal liability for all debts owed before his bankruptcy case was filed, and prohibiting anyone from making any attempt to collect a discharged debt from Cho personally. (UF 23). To date, Cho has not amended his Petitions (including the schedules and SOFAs attached thereto) filed in the First Bankruptcy Case or the Second Bankruptcy Case to identify and disclose the Action and his claims against Caffebene. (UF 24). Cho never disclosed to this Court or Caffebene that he filed the First Bankruptcy Case and/or the Second Bankruptcy Case, and obtained a discharge from the bankruptcy court, during the pendency of this Action. (UF 25) Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 11 of 22 Page ID #:1205 5 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 On September 9, 2016, while doing research to prepare for the upcoming trial in the Action, Caffebene’s counsel first discovered the foregoing facts and circumstances concerning the First Bankruptcy Case and Second Bankruptcy Case, and Cho’s failure to disclose the Action and his claims against Caffebene therein. Caffebene’s counsel immediately sent Cho’s counsel an email advising of said facts, and Ninth Circuit case law establishing that judicial estoppel bars Cho from pursuing his undisclosed claims. (UF 26). On September 13, 2016 – only after receiving Caffebene’s counsel’s email – Cho filed a motion with the bankruptcy court “to reopen [the Second Bankruptcy Case] in order to amend Schedules,” which motion is returnable on October 12, 2016. (UF 27). ARGUMENT A. Summary Judgment Standard Summary judgment must be granted when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden of “informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986). This burden is “not negligible,” UA Local 343 v. Nor.-Cal Plumbing, Inc., 485 F.3d 1465, 1471 (9th Cir. 1994), and cannot be carried by “conclusory allegations unsupported by factual data,” Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989), “[c]onclusory, speculative testimony in affidavits,” Somekun v. Thrifty Payless, Inc., 509 F.3d 105, 114 (2d Cir. 1998), or the “mere scintilla of Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 12 of 22 Page ID #:1206 6 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 evidence,” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Rather, the nonmoving party “must produce specific evidence, through affidavits or admissible discovery material, to show that a dispute exists.” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991); see also Matsushita Elec. Indus. Co., 475 U.S. at 586 (holding, nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.”) B. Cho’s Claims are Barred, As a Matter of Law, Under the Doctrine of Judicial Estoppel Because He Failed to Disclose Them in His Bankruptcy Cases Cho is judicially estopped from pursuing his claims against Caffebene. Judicial estoppel is an equitable doctrine that “precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position.” Risetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir. 1996). Courts invoke judicial estoppel to promote “general consideration[s] of the orderly administration of justice and regard for the dignity of judicial proceedings, and to protect against a litigant playing fast and loose with the courts.” Hamilton, 270 F.3d at 783. The United States Supreme Court has articulated three factors that courts may consider in determining whether to apply judicial estoppel: (1) whether a party’s position is “clearly inconsistent with its earlier position;” (2) whether the first court accepted the party’s earlier position; and (3) “whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001). Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 13 of 22 Page ID #:1207 7 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 In the bankruptcy context, it is well-settled that “a party is judicially estopped from asserting a cause of action not raised in a reorganizational plan or otherwise mentioned in the debtor’s schedules or disclosure statements.” Hamilton, 270 F.3d at 783; Hay v. First Interstate Bank of Kalispel N.A., 978 F.2d 555 (9th Cir. 1992); Elston v. Westport Ins. Co., 253 Fed. Appx. 697, 699 (9th Cir. 2007). “All six appellate courts that have considered this question hold that a debtor in bankruptcy who denies owning an asset, including a chose in action or other legal claim, cannot realize on that concealed asset after the bankruptcy ends.” Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006) (citing Payless Wholesale Distributors, Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570 (1st Cir. 1993); Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. General Motors Corp., 337 F.3d 314 (3d Cir. 2003); Jethroe v. Omnova Solutions, Inc., 412 F.3d 598 (5th Cir. 2005); United States ex rel. Gebert v. Transport Administrative Services, 260 F.3d 909, 917-19 (8th Cir. 2001); Hamilton v. State Farm Fire & Casualty Co., 270 F.3d 778 (9th Cir. 2001); Barger v. Cartersville, 348 F.3d 1289, 1293-97 (11th Cir. 2003)). In Hamilton, a Chapter 7 bankruptcy case dealing with judicial estoppel, the Ninth Circuit explicitly relied on the analysis in Hay, a Chapter 11 case also dealing with judicial estoppel, without drawing any distinction between Chapter 7 and Chapter 11 bankruptcies. Hamilton, 270 F.3d at 783. District courts applying the standard set forth in Hay and Hamilton have routinely invoked judicial estoppel to preclude causes Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 14 of 22 Page ID #:1208 8 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 of action not disclosed in bankruptcy proceedings.1 “The rationale for . . . decisions invoking judicial estoppel to prevent a party who failed to disclose a claim in bankruptcy proceedings from asserting that claim after emerging from bankruptcy is that the integrity of the bankruptcy system depends on full and honest disclosure by debtors of all of their assets.” Hamilton, 270 F.3d at 782, 785. “The courts will not permit a debtor to obtain relief from the bankruptcy court by representing that no claims exist and then subsequently to assert those claims for his own benefit in a separate proceeding.” Id. Belated “efforts at honest disclosure” and “the re-opening of bankruptcy proceedings . . . after the fact does not bar the application of judicial estoppel.” Ortiz, 2011 U.S. Dist. LEXIS 111208, *15-16 (citing Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1288 (11th Cir. 2002) ("The success of our bankruptcy laws requires a debtor's full honest disclosure. Allowing [plaintiff] to back-up, re-open the bankruptcy case, and amend his bankruptcy filings, only after his omission has been challenged by an adversary, suggests that a debtor should consider disclosing potential assets only if he is caught concealing them."); accord Laisure-Radke v. Pharmaceutical Resources, Inc., 313 Fed. Appx. 32, 34 (9th Cir. 2009)). 1 See, e.g., Banuelos v. Waste Connections, Inc., No. 12-1012, 2013 WL 398859 (E.D. Cal. Jan. 31, 2013); Becker v. Wells Fargo Bank, Nat’l Assoc., No. 12-1742, 2012 WL 5187792 (E.D. Cal. Oct. 18, 2012); Snead v. Aurora Loan Servs., LLC, No. 12-0293, 2012 WL 3756887 (E.D. Cal. Aug. 28, 2012); Granados v. Supervalu, Inc., No. 11-10175, 2012 WL 3562521 (C.D. Cal. Aug. 16, 2012); Ortiz v. Sodexho Operations, LLC, 2011 U.S. Dist. LEXIS 111208, *12 (S.D. Cal. Sept. 27, 2011); HPG Corp. v. Aurora Loan Servs., LLC, 436 B.R. 569, 578 (E.D. Cal. 2010); Ash v. OneWest Bank, FSB, No. 09-974, 2010 WL 2231972, at *3 (E.D. Cal. June 3, 2010); Arruda v. C&H Sugar Co., 2007 U.S. Dist. LEXIS 16519 (E.D. Cal. Mar. 8, 2007); Rose v. Beverly Health and Rehab. Servs., Inc., 356 B.R. 18, 25 (E.D. Cal. 2006), aff’d 2008 U.S. App. LEXIS 20594 (9th Cir., Sept. 24, 2008). Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 15 of 22 Page ID #:1209 9 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1. Cho’s Claims are Inconsistent with the Position He Took in His Bankruptcy Cases The Bankruptcy Code imposes upon a bankruptcy debtor “an express affirmative duty to disclose all assets, including contingent and unliquidated claims.” Hamilton, 270 F.3d at 785; see also, 11 U.S.C. §§ 541(a) (bankruptcy “estate is comprised of . . . all legal or equitable interests of the debtor in property as of the commencement of the case . . . wherever located and by whomever held.”). A debtor’s duty to disclose potential causes of action as assets continues through the duration of the bankruptcy proceedings. Hamilton, 270 F.3d at 785. A plaintiff who fails to disclose a pending lawsuit in his bankruptcy schedules “has clearly asserted inconsistent positions.” Id. at 784; see also Elston, 253 Fed. Appx. At 699 (“[T]here is no doubt that . . . [plaintiff- debtor]'s position in this litigation is inconsistent with her earlier position, . . .”); Ortiz, 2011 U.S. Dist. LEXIS 111208 at *12 (“Plaintiff's assertion of her claims against Sodexo here is clearly inconsistent with her affirmative representation on her bankruptcy schedules that she had no such claims.”) Here, Cho filed his complaint in the instant lawsuit on October 2, 2014. Over one year later, on December 7, 2015, Cho filed his first voluntary Chapter 7 bankruptcy petition. After that first bankruptcy action was dismissed for Cho’s repeated failure to attend mandatory meetings of creditors, Cho then filed a second voluntary Chapter 7 bankruptcy petition on May 5, 2016. The indisputable documentary evidence establishes that Cho had knowledge of his claims against Caffebene, but nevertheless Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 16 of 22 Page ID #:1210 10 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 did not disclose this Action or his claims against Caffebene at any time in either of his two Chapter 7 bankruptcy cases. Cho took the position in his bankruptcy cases that he had no claims against Caffebene. There, thus, can be no dispute that Cho’s position in the instant Action is inconsistent with the position he took in his bankruptcy actions. 2. The Bankruptcy Court Accepted Cho’s Prior Inconsistent Positions For the purpose of judicial estoppel, a bankruptcy court accepts a position when it grants a discharge. Hamilton, 270 F.3d at 784 ("[A] discharge of debt by a bankruptcy court . . . is sufficient acceptance to provide a basis for judicial estoppel . . .."); Elston, 253 Fed. Appx. At 699 (“[T]here is no doubt that . . . the Bankruptcy Court adopted Elston's earlier position when it granted her a discharge . . ..”). Here, the bankruptcy court, relying on Cho’s incomplete schedules and disclosures, accepted Cho’s position and entered an Order of Discharge on August 15, 2016 granting Cho a discharge under 11 U.S.C. § 727, removing Cho’s personal liability for all debts owed before his bankruptcy case was filed, and prohibiting anyone from making any attempt to collect a discharged debt from Cho personally. 3. Cho Would Derive an Unfair Advantage If Not Estopped Once Cho filed his First Bankruptcy Petition and commenced the First Bankruptcy Case, he enjoyed the benefit of an automatic stay that prevented any creditor from pursuing his money and property. See Hamilton, 270 F.3d at 784 (“The debtor, once he institutes the bankruptcy process, disrupts the flow of commerce and obtains a stay and the benefits derived by listing all his assets.”) A plaintiff-debtor also “derive[s] Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 17 of 22 Page ID #:1211 11 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 an unfair advantage if allowed the Chapter 7 discharge of her debts and whatever judgment or settlement would come from” prosecuting an action on her previously undisclosed claims. Elston, 253 Fed. Appx. At 699; Arruda v. C&H Sugar Co., 2007 U.S. Dist. LEXIS 16519, *12 (E.D. Cal. Mar. 8, 2007) (“If Plaintiff is permitted to maintain this action, he will have unfairly received the debt relief benefit from the bankruptcy court at the expense of the creditors.”) 4. The Evidence Discredits Cho’s Claimed “Mistake” In Failing to Disclose His Claims to the Bankruptcy Court In the Ninth Circuit, the existence of inadvertence or mistake is evaluated differently depending on whether the debtor has reopened bankruptcy proceedings and corrected the bankruptcy schedules to reflect the previously omitted lawsuit. Ah Quin v. County of Kauai DOT, 733 F.3d 267, 272-277 (9th Cir. 2013). When a plaintiff- debtor has reopened bankruptcy proceedings, the narrow interpretation and the presumption of deceit do not apply. Id. at 276. Instead, the court must inquire "whether the plaintiff's bankruptcy filing was, in fact, inadvertent or mistaken, as those terms are commonly understood." Id. "The relevant inquiry is not limited to the plaintiff's knowledge of the pending claim and the universal motive to conceal a potential asset — though those are certainly factors." Id. "The relevant inquiry is, more broadly, the plaintiff's subjective intent when filling out and signing the bankruptcy schedules." Id. at 276-77. Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 18 of 22 Page ID #:1212 12 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Even if Cho’s motion to reopen the Second Bankruptcy Case is granted and he amends his schedules and SOFA, and no presumption of bad faith applied, the evidence at bar indicates that Cho’s failure to disclose his claims could not be attributed to mere mistake. Namely, in his declaration filed with the bankruptcy court to reopen the Second Bankruptcy Case, Cho claims that when his bankruptcy attorney asked “if [he, Cho] was a party in any lawsuit, court action or administrative proceeding,” Cho “replied negatively” because he “had mistakenly misunderstood the question [and] thought the question was whether or not [Cho] was sued by any of the creditors.” At the outset, Cho cannot avoid the consequences of his actions simply by claiming that he relied on his bankruptcy attorney, and did not carefully read the schedules and SOFA before submitting them. Critically, Cho repeatedly executed, “under penalty of perjury,” multiple statements and declarations attesting that he had “examined” and “read” the schedules and other disclosures, and they were “true and correct.” “It is a fundamental rule that a person in possession of all his faculties, who signs an instrument for the purpose of giving effect thereto, cannot evade the consequences of the document by merely neglecting to read it.” Ford Motor Co. v. Pearson, 40 F.2d 858, 867 (9th Cir. 1930). Moreover, Cho’s “mistake” lacks all plausibility and credibility when viewed in conjunction with the indisputable documentary evidence. Namely, “Schedule A/B: Property” attached to Cho’s First Bankruptcy Petition and Second Bankruptcy Petition asks, in pertinent part: Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 19 of 22 Page ID #:1213 13 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Do you own or have any legal or equitable interest in any of the following? Claims against third parties, whether or not you have filed a lawsuit or made a demand for payment. Examples: Accidents, employment disputes, insurance claims, or rights to sue. See, e.g., Second Bankruptcy Petition, Schedule A/B, Part 4, ¶33. Cho answered “No” to this question, and executed a Declaration About an Individual Debtor’s Schedules declaring “[u]nder penalty of perjury” that he “read the summary and schedules filed with this declaration and they are true and correct.” Similarly, the SOFA that Cho filed with the bankruptcy court asks: Within 1 year before you filed for bankruptcy, were you a party in any lawsuit, court action or administrative proceeding? List all such matters, including personal injury cases, small claims actions, divorces, collection suits, paternity actions, support or custody modifications, and contract disputes. See, e.g., Second Bankruptcy Petition, SOFA, Part 4, ¶9. Cho also answered “No” to this question, and executed a statement that he “read the answers on the [SOFA], and [] declare[s] under penalty of perjury that the answers are true and correct.” Second Bankruptcy Petition, SOFA, Part 12. Taken together, Cho’s explanation for failing to disclose his claims against Caffebene is that he “mistakenly misunderstood the[se] questions,” which ask him to list “employment disputes,” “personal injury cases,” “divorces,” “paternity actions,” and “support or custody modifications,” as asking “whether or not he was sued by any of his creditors.” The foregoing, coupled with the undisputed fact that Cho had knowledge of Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 20 of 22 Page ID #:1214 14 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 the pending claims and a universal motive to conceal a potential asset, shows that Cho’s failure to disclose his claims to the bankruptcy court was not, in fact, inadvertent or mistaken. Accordingly, Cho’s belated attempt to reopen the bankruptcy and correct his misrepresentations are insufficient to avoid the consequences of his actions and the application of judicial estoppel to his action. C. Cho Lacks Standing to Pursue the Claims Against Caffebene Even if, arguendo, Cho was not judicially estopped from pursuing his unscheduled claims against Caffebene, as a matter of law, Cho lacks standing to litigate the instant Action. “When an individual declares bankruptcy, ‘any legal or equitable interests he or she had in a particular property belongs to the bankruptcy estate, as represented by the bankruptcy trustee.’" Herfurth v. CitiMortgage, Inc., 2014 U.S. Dist. LEXIS 104206, *9 (E.D. Cal. July 28, 2014) (quoting Vertkin v. Wells Fargo Home Mortgage, 2010 U.S. Dist. LEXIS 94105, 2010 WL 3619798 at *2 (N.D. Cal. Sept. 9, 2010)). Legal claims accruing before the filing of the bankruptcy petition are the property of the bankruptcy estate and, unless abandoned by the bankruptcy trustee, may be asserted only by the estate as the real party in interest. See Estate of Spirtos v. One San Bernardino County Super. Ct., 443 F.3d 1172, 1176 (9th Cir. 2006) ("[T]he bankruptcy code endows the bankruptcy trustee with the exclusive right to sue on behalf of the estate"); see also, Britto v. Bank of America, N.A., No. C 13-03508 WHA, 2013 U.S. Dist. LEXIS 146978, 2013 WL 5587400, at *2 (N.D. Cal. Oct. 10, 2013) ("Property is not abandoned by the trustee by operation of law unless the debtor formally schedules Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 21 of 22 Page ID #:1215 15 DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AS TO CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 the property before the close of the case."); Williams v. Kaiser Permanente Div. of Research, 2000 U.S. Dist. LEXIS 12746, *8 (N.D. Cal. Aug. 22, 2000) (“[A] cause of action that was never scheduled cannot be abandoned [by a trustee], and thus a debtor cannot regain standing.”) Accordingly, as a matter of law and indisputable fact, Cho lacks standing to prosecute the legal claims against Caffebene asserted in the Action. CONCLUSION For the foregoing reasons, Caffebene respectfully requests that the Court grant its motion for summary judgment and dismiss Cho’s complaint, with prejudice, and grant Caffebene such other and further relief as the Court deems just and proper. Dated: New York, New York September 16, 2016 Respectfully submitted, BALLON STOLL BADER & NADLER, P.C. By: /s/ Brett Andrew Nadler Brett Andrew Nadler (admitted pro hac vice) Attorneys for Defendant Caffebene Inc. Case 2:15-cv-04611-CAS-JEM Document 53 Filed 09/16/16 Page 22 of 22 Page ID #:1216 [PROPOSED] ORDER GRANTING CAFFEBENE INC.’S MOTION FOR SUMMARY JUDGMENT AS TO THE CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA YOUNG RAE CHO, Plaintiff, vs. CAFFEBENE INC., Defendants. AND RELATED CASES. This Document Relates To: 2:15-cv-04611-CAS (JEMx) ) )) )) )) )) )) )) )) )) )) )) ) ) ) ) )) ) Master File No. 2:15-cv-04611-CAS (JEMx) c/w 2:15-cv-04613-CAS (JEMx) [PROPOSED] JUDGMENT GRANTING CAFFEBENE INC.’S MOTION FOR SUMMARY JUDGMENT AS TO THE CLAIMS OF YOUNG RAE CHO Date: September 26, 2016 (as per concurrently-filed ex parte application for Order shortening time on motion) Time: 11:00 AM Hon. Christina A. Snyder / / / / / / / / / / / / / / / / / / Case 2:15-cv-04611-CAS-JEM Document 53-1 Filed 09/16/16 Page 1 of 2 Page ID #:1217 2 [PROPOSED] ORDER GRANTING CAFFEBENE INC.’S MOTION FOR SUMMARY JUDGMENT AS TO THE CLAIMS OF YOUNG RAE CHO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 On September 26, 2016, at 11:00 AM, in Courtroom 5 of the above-entitled Court, Defendant Caffebene Inc.’s Motion for Summary Judgment as to the Claims of Young Rae Cho can on for hearing before this Court. The parties appeared through their counsel of record. After considering all of the papers filed herein, the authorities submitted by counsel, and counsel’s oral argument, and for good cause appearing, the Court hereby grants Defendant Caffebene Inc.’s Motion for Summary Judgment as to all of Plaintiff Young Rae Cho’s causes of action. IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT: 1. Judgment is entered in favor of Defendant Caffebene Inc. on all of Plaintiff Young Rae Cho’s claims for relief. 2. Plaintiff Young Rae Cho shall take nothing on his claims against Defendant Caffebene Inc., and these claims are hereby dismissed with prejudice. 3. Defendant Caffebene Inc. is the prevailing party and shall recover its costs of suit pursuant to Rule 54 of the Federal Rules of Civil Procedure and Local Rule 54. SO ORDERED. Dated: ________________ ___________________________ Honorable Christina A. Snyder, United States District Judge Case 2:15-cv-04611-CAS-JEM Document 53-1 Filed 09/16/16 Page 2 of 2 Page ID #:1218