Willian S. Tomasi v. The Savannah N. Denoce Trust (In re Tomasi)
- Citation:
- unreported
- Tag(s):
-
- Ruling:
- The 9th Circuit BAP upheld a Bankruptcy Court's determination that a prior California state court decision concerning breach of fiduciary duty was issue preclusive on whether Debtor was not entitled to discharge on a specific debt, under 11 USC 523(a)(4). The BAP specifically found that the state court had determined that an express trust existed and that Debtor had a "specific intent" to commit defalcation, as required by the new Supreme Court Bullock decision. Moreover, the BAP rejected the argument that issue preclusion was inappropriate because the state court had entered a default judgment against the Debtor, and so the underlying case was not "actually litigated." The BAP found that while there may have been some procedural confusion before the state court, concerning whether the breach of fiduciary duty claim was subject to the motion for summary judgment, nonetheless, Debtor had multiple opportunities to submit substantive briefing, and in fact did so; accordingly, the "actually litigated" requirement for issue preclusion was met.
- Procedural context:
- The Trust and Mr. Denoce brought state court action against Mr. Tomasi for various causes of action, including breach of fiduciary duty. Court granted motion for summary judgment to Trust, and Trustee Mr. Tomasi filed bankruptcy. Relief from the automatc stay was granted to Mr. Tomasi to appeal the state court judgment, and it was affirmed on appeal. The bankruptcy court then considered the trial and court of appeals decisions and found issue preclusion applied, and that the Trust had properly established a violation of 11 USC 523(a)(4) by the Debtor.
- Facts:
- Disbarred attorney Mr. Denoce entered into a business relationship with another attorney, Mr. Tomasi, and made such attorney the trustee of his daughter's trust. Disbarred attorney sought to buy car from the trustee, and trustee took the trust res as collateral for the loan, without disclosing such action to the disbarred attorney. Trustee also encumbered additional trust res to obtain loan from bank to pay off his personal credit card debt. Trustee was asked to account for his transactions, but did not.
- Judge(s):
- Kirscher, Taylor, Dunn
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