Gessin v. Taitano (In re Gessin)
- Citation:
- BAP No. 12-1330-JuKid (BAP 9th Cir. March 4, 2013)
- Tag(s):
-
- Ruling:
- The Ninth Circuit BAP affirmed a bankruptcy court summary judgment and found that the bankruptcy court properly held that a the debt was excepted from discharge pursuant to § 523 (a)(2) based on the doctrine of issue preclusion.
Because "the Nevada Supreme Court has not directly addressed the issue of whether the inadequate presentation of evidence or attorney malpractice in the first case prevents the judgment from being given preclusive effect in the second case", the BAP predicted that the Nevada Supreme Court would follow the reasoning in Laganella v. Braen (In re Braen), 900 F.2d 621 (3rd Cir. 1990) and would find that a claim of attorney incompetence will not defeat issue preclusion under the facts presented.
- Procedural context:
- Creditor obtained a state court arbitration award and jugment against debtor based on fraudulent misrepresentations, constructive fraud, and conversion. After Debtor's Chapter 13 bankruptcy petition was filed, Creditor filed an advesray proceeding seeking to have the state court judgment declared nondischargeable. Creditor successfully obtained a summary judgment finding the debt nondischargeable under § 523 (a)(2).
- Facts:
- Approximately one week after meeting Debtor through Match.com, Debtor persuaded Creditor to cash out a CD to invest in an alternative CD that Debtor represented had a higher rate of return. The money was delivered to Debtor in cash in a shoe box. Within 45 days, Debtor told Creditor that the money had been invested in the stock market contrary to Creditor's instructions and that most of the funds had been lost. Debtor later changed his story and stated that the money had not been lost and had been used to purchase a mobile home (and subsuently re-sold in return for a promissory note).
During the arbitration that led to findings that were the basis of a finding of issue precusion in the nondischargebaility action, Debtor was represented by counsel. No witnesses were presented by Debtor even though Debtor was provided a prior continuance due to the unavailability of a critical witness. No exhibits were presented by Debtor. Debtor also completely failed to prosecute a counterclaim for harassment. Debtor did testify as an adverse witness. Debtor's counsel cross-examined witnesses, objected to evidence, and filed a pre-hearing statement as well as a post-hearing affidavit and motion. Debtor's attorney did not completely fail to respond in such a way as to deprive Debtor of his day in court and the issues were therefore actually litigated as required for issue preclusion.
- Judge(s):
- Jury, Kirscher, and Dunn
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