Tolotti v. Seaboard Produce Distributors, Inc. (In re Tolotti)

Summarized by Lars Fuller , BakerHostetler
11 years 7 months ago

Citation:

Tolotti v. Seaboard Produce Distributors, Inc. (In re Tolotti), BAP No. CC-14-1019-TaPaKi (BAP 9th Cir. August 25, 2014)

Tag(s):

Ruling:

BAP affirmed bankruptcy court's application of issue preclusion to certain issues from state court default judgment to motion for summary judgment, but reversed bankruptcy court's finding that state court default judgment regarding debtor's subjective state of mind was entitled to preclusive effect. BAP concluded that debtor did not have adequate notice that entry of default judgment would include her intent and willfulness with respect to wrongful acts against property since those mental elements were not pled in complaint and were not necessary elements for judgment on claims.

Procedural context:

Debtor appealed to Bankruptcy Appellate Panel (BAP) for 9th Circuit from summary judgment entered by bankruptcy court in favor of plaintiff creditor on dischargeability claim.

Facts:

Creditor acquired title to debtor's real property at foreclosure sale, including grove of avocado trees. Debtor refused to vacate, and creditor obtained writ of possession following unlawful detailer action. Debtor filed bankruptcy under chapter 13, later converted to chapter 7. While in possession, debtor allowed property to deteriorate, failing to water or tend avocado trees, and removing various fixtures. Creditor sued to except debt from discharge, alleging debtor caused malicious injury to property by intentionally damaging the property. The parties stipulated to allow continuation of the state court action wherein creditor asserted various state law claims, including waste, damage, and destruction of property. After debtor failed to comply with state court orders, state court entered default judgment in excess of $660,000. Creditor's proposed order for default judgment contained express findings of debtor's willful intent to injure property. State court entered default judgment, including express findings of debtor's willful intent to injure property. Debtor did not oppose entry of default judgment or language of the proposed order.

Judge(s):

Taylor, Pappas, Kirscher

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