- Case Type:
- Case Status:
- CC-16-1293-LKuF (9th Circuit, Apr 24,2017) Not Published
- Bankruptcy court did not err in applying issue preclusion to Labor Commissioner's findings or in finding that debt owed to debtor's former employee pursuant to resulting judgment was nondischargeable under § 523(a)(6).
- Procedural context:
- Appeal from the bankruptcy court for the Central District of California; reviewed de novo.
- Debtor, a licensed general contractor in California, asked creditor to work for him. Debtor paid creditor in cash, did not pay or withhold employee-related taxes, and did not obtain workers' compensation insurance. A home that debtor and creditor were working on was damaged after a storm blew off plastic sheeting that creditor had used to cover a damaged roof. Debtor subsequently withheld funds owed to creditor because creditor's work had resulted in the property damage. Creditor subsequently filed a claim with the California Labor Commissioner. After a hearing at which both parties attended, the Labor Commissioner issued a decision in favor of creditor and awarded creditor damages. The Commissioner's order advised the parties of their right to appeal the decision. After debtor failed to appeal or send payment, a judgment was entered against him. Debtor filed a chapter 7 bankruptcy, and creditor commenced an adversary proceeding seeking a declaration of nondischargeability for the amount he was owed under § 523(a)(6). At trial, the bankruptcy court gave issue preclusive effect to the Labor Commissioner's findings and found in favor of creditor. Debtor timely appealed.
- Lafferty, Kurtz, Faris
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