Opinion
NOT FOR PUBLICATION
Submitted Without Oral Argument: February 22, 2008
Appeal from the United States Bankruptcy Court for the Northern District of California. Bk. No. 05-40818, Adv. No. 06-04113. Honorable Leslie Tchaikovsky, Bankruptcy Judge, Presiding.
Before: Markell, McManus, [ and PAPPAS Bankruptcy Judges.
Hon. Michael S. McManus, Chief Judge of the United States Bankruptcy Court for the Eastern District of California, sitting by designation.
MEMORANDUM
I. Introduction
This is an appeal in a section 523 nondischargeability proceeding by an incarcerated pro se debtor from an order granting summary judgment to the creditor/plaintiff. Creditor based her motion on the issue preclusive effect of prior criminal and civil judgments entered against the debtor for forgery, fraud, and conversion. The bankruptcy court also denied debtor's summary judgment motion, heard at the same time, as it was based upon unsubstantiated (and, it appears, untrue) allegations that the prior judgments were invalid. The bankruptcy court patiently and competently dealt with all material issues raised. We affirm.
Unless otherwise indicated, all chapter, section, and rule references are to the Bankruptcy Code, 11 U.S.C. § § 101-1532 as enacted and promulgated prior to the effective date (October 17, 2005) of the relevant provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (" BAPCPA"), Pub. L. 109-8, 119 Stat. 23 (2005), and to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.
II. Facts
A. Activity Before the Adversary Proceeding was Filed
The facts leading to this appeal began in the mid-1980s. During that time, the debtor, Astarte Davis-Rice (" Debtor") took up with (she claims married) a man of means named James M. Rice (" Rice"). They moved to the Virgin Islands. Sometime in July 1986, Rice disappeared. His daughter, appellee Kathleen Clements (" Clements") became worried, and began to investigate her father's disappearance. This investigation came to naught; Rice has never been found. Clements ultimately obtained a judicial decree that her father was dead, and became the administrator of his estate. It is in that capacity that she appears in this appeal.
Clements' investigations also led to discoveries that Debtor had forged documents which purported to transfer Rice's property to Debtor and her family, and that she had also initiated a quiet title action seeking to declare all Rice's property as her own. Ultimately, Debtor was indicted for numerous criminal offenses in the Virgin Islands. Before trial, she jumped bail. She was later discovered living under another name in Santa Barbara; this discovery came to light after she was caught embezzling from her California employer. After conviction in California for that embezzlement, she was sent back to the Virgin Islands in 1992.
There, in 1993, Debtor entered into a plea bargain which included a plea of guilty with respect to various crimes involving Rice and his property. Judgments of conviction were entered upon that plea (" Virgin Islands Criminal Convictions"), and the district court sentenced Debtor to fifteen years in prison for her crimes. She appealed the sentence given, and lost. Government of Virgin Islands v. Davis, 43 F.3d 41, 43, 31 V.I. 332 (3d Cir. 1994), cert. denied, 515 U.S. 1123, 115 S.Ct. 2280, 132 L.Ed.2d 283 (1995). She has since filed several habeas corpus petitions regarding her convictions; none have been successful. It is with respect to these convictions that Debtor is presently incarcerated.
Debtor's signed plea agreement is in the record. It shows that Debtor pled guilty to a variety of federal and territorial offenses, spread over four separate criminal indictments and informations. In particular, Debtor pled guilty to: conspiracy to defraud, forgery on real property deed, offering false evidence in a civil case, perjury, selling property obtained unlawfully, mail fraud, making false statements, and failure to appear. Government of Virgin Islands v. Davis, 43 F.3d 41, 43, 31 V.I. 332 (3d Cir. 1994), cert. denied, 515 U.S. 1123, 115 S.Ct. 2280, 132 L.Ed.2d 283 (1995).
See, e.g., Davis-Rice v. United States, 224 Fed.Appx. 702, 2007 WL 786782 (9th Cir. 2007); Davis-Rice v. Clark, 2007 WL 1840180 (N.D. Cal., June 26, 2007); Davis-Rice v. Clark, 2007 WL 1558570 (N.D. Cal., May 29, 2007); Davis-Rice v. Clark, 2006 WL 3797890 (N.D. Cal., Dec. 22, 2006); Davis-Rice v. Clark, 2006 WL 1646143 (N.D. Cal., June 14, 2006); Davis-Rice v. Clark, 2005 WL 3310039 (N.D. Cal., Dec. 7, 2005). There were several habeas petitions filed in the Virgin Islands, but they are not reported in Westlaw, and only can be inferred by the unreported Third Circuit decisions affirming their dismissal. E.g., Government of the Virgin Islands v. Davis, 107 F.3d 7 (3d Cir. 1997)(unpublished table decision); Government of the Virgin Islands v. Davis, 107 F.3d 6 (3d Cir. 1997)(unpublished table decision).
In affirming the sentence given, the Third Circuit summarized the acts and intentions Debtor's guilty pleas had admitted:
Both the V.I. Case and the U.S. Case involved Davis' efforts to defraud the estate of James Merrills Rice (Rice Estate) of more than one million dollars worth of real and personal property. Specifically, Davis prepared a false and fictitious last will and testament of James Rice purporting to bequeath to her the bulk of the Rice Estate; altered Rice's power of attorney, giving herself full and complete control over his property, assets and affairs; and prepared a false warranty deed for the purpose of facilitating the transfer of valuable realty owned by Rice to herself. Using the forged documents, Davis transferred title for or otherwise unlawfully appropriated or conveyed personal property belonging to Rice which was valued at more than $120,000. Davis also forged Rice's signature on a series of checks which totalled $10,985 and entered into contractual agreements concerning Rice's boat, the Fish Eagle, assigning to herself a percentage of the profits earned by the venture.
In addition to the other illegal activities Davis stood convicted of by virtue of her plea in the V.I. Case, she filed a lawsuit against a number of entities and individuals, including Rice, to quiet title to property she had fraudulently obtained. In preparation for that lawsuit, Davis forged letters, deeds and other documents to make it appear as though James Rice was alive and that he had given all of his worldly possessions to her and her sons. Davis presented the false documents at a deposition during which she also gave false testimony.
With respect to the U.S. Case, Davis prepared forged documents instructing the Guardian Savings Bank in Houston, Texas, to transfer two one hundred thousand (100, 000) dollar certificates of deposit into an account held by the Icon Corporation, which was wholly-owned by Davis and her sons.
Government of Virgin Islands v. Davis, 43 F.3d 41, 43, 31 V.I. 332 (3d Cir. 1994), cert. denied, 515 U.S. 1123, 115 S.Ct. 2280, 132 L.Ed.2d 283 (1995) (footnotes omitted).
In the meantime, on July 31, 1989, Clements sued Debtor in California state court. Those proceedings were stayed during the pendency of the Virgin Islands criminal proceedings. After entry of the Virgin Islands Criminal Convictions, the California case went to trial. As a sanction for her refusal to cooperate in pretrial discovery, the California court barred Debtor from presenting any defense, and then found against her on all liability issues. Trial was then had on the issue of damages. In November 1993, Clements received a judgment against the Debtor in the amount of $2,538,630.01 for " Fraud, Conversion and Conspiracy." (" California Civil Judgment"). Punitive damages constituted $1 million of the award.
Debtor refused to testify at her deposition, invoking the Fifth Amendment privilege against self-incrimination. By then, however, she had been convicted of the acts that were the subject of the civil lawsuit, so that there was nothing left upon which she could incriminate herself.
Clements originally sued as the conservator of the estate of her father, " a missing person." In 1991, Clements' father was declared dead, and Clements' capacity changed. The California Civil Judgment reflects that it is in favor of Clements in her capacity as " administrator of the estate of James M. Rice." Id., p. 31.
The California Court of Appeal affirmed the California Civil Judgment in 1995 in an unreported decision. Clements has since renewed the California Civil Judgment, although Debtor contends that Clements has done so in a flawed manner.
In papers filed in response to pre-hearing matters, Debtor indicates that the renewal of the California Civil Judgment in 1993 was procedurally improper in that she did not receive the required notice. We express no view on that issue, as it does not affect the appeal before us, since all Clements sought was a declaration of nondischargeability of her claim, not a liquidation or validation of it. Any defense Debtor may have on this point is best reserved for any enforcement action by Clements on the California Civil Judgment itself.
While imprisoned, Debtor filed a conspiracy case against Clements in United States District Court for the Northern District of California. Many of the allegations in that case track the allegations presented here on appeal. After Clements' summary judgment motion in 1997, the district court ruled for Clements and against Debtor. The appeal to the Ninth Circuit from this decision was voluntarily dismissed.
This tracked a lawsuit she filed in the Virgin Islands on basically the same theories, which was resolved in Clements' favor. Davis-Rice v. Estate of Rice, 151 F.3d 1024 (3d Cir. 1998)(unpublished table decision).
In 2005, Debtor began a new round of litigation, this time involving the bankruptcy courts. On February 24, 2005, she filed the bankruptcy case in which this appeal arises. She has since received her chapter 7 discharge; Clements' action is the sole adversary proceeding pending that seeks an exception from that discharge.
Debtor initially filed the case as one under chapter 11. It was converted to one under chapter 7 on January 10, 2006.
On August 16, 2005, Debtor filed a civil action in the United States District Court for the Territory of the Virgin Islands " to vacate void judgments" and for a writ of mandamus expunging her convictions. Case. No. 1:05-cv-00118-RLF-GWC (D.V.I.) (" 2005 Action"). The 2005 Action alleges (as had Debtor's previous habeas petitions and her civil conspiracy case against Clements) that Debtor's 1993 plea bargain had been improperly obtained, and should be set aside. The docket sheet indicates that on September 26, 2005, the district court recharacterized her civil action as a motion under 28 U.S.C. § 2255; that is, a request to pursue post-conviction relief after being previously denied similar relief. Under appropriate procedures, the district court then transferred Debtor's petition to the Third Circuit Court of Appeals. That court denied relief on April 17, 2007. In re Davis-Rice, 222 Fed.Appx. 135, 2007 WL 1113355, *1 (2007). Debtor sought certiorari from this decision, and the Supreme Court denied that request on October 1, 2007. Davis-Rice v. U.S. Dist. Ct. for Dist. of Virgin Islands, 552 U.S. 879, 128 S.Ct. 194, 169 L.Ed.2d 131 (2007).
Section 2255 provides that " [a] second or successive motion must be certified as provided in section 2244 by a panel of the appropriate court of appeals . . . "
In the meantime, however, the docket in the 2005 Action indicates that the district court dismissed Debtor's complaint on October 27, 2005, and closed the case. Undeterred, on October 16, 2007, Debtor sought a default in the 2005 Action against all parties. The Virgin Islands docket reflects no action on this request as of the date of submission of this case.
B. Activity After Clements' Filing of the Adversary Proceeding
Clements filed her adversary proceeding on April 17, 2006, the last day upon which such a complaint would be timely. For reasons unexplained, the docket indicates that although the complaint was filed on April 17, the receipt for the filing fee was not issued until the next day.
Due to Debtor's incarcerated status, and some initial confusion on how to serve her, much confusion surrounded the initial proceedings; the propriety of service upon Debtor, and the entry of default against the Debtor, were in doubt. The bankruptcy court clarified the situation in a memorandum dated February 10, 2007. In that memorandum, the court noted various errors in service, and set aside the default. It then found, however, that Debtor had appeared in the proceeding, thereby waiving any service defects. The memorandum thus declared the adversary proceeding to be 'at issue, ' and set a continued status conference for case management purposes.
Five months later, in July 2007, Debtor contended that she was entitled to a jury trial on the issues raised in Clements' nondischargeability complaint. The court denied Debtor's motion as untimely in an order entered on July 25, 2007. It based its denial on Debtor's failure to request a jury trial within 10 days of her first appearance, and upon her delay of over five months in making a jury trial request after the adversary proceeding had been declared 'at issue.'
Following this ruling, and without answering the complaint, on July 2, 2007 Debtor filed a summary judgment motion based upon the 2005 Action and its effect on the California Civil Judgment. She did not, however, submit any documents to support her claim.
Clements responded on July 25 with a cross-motion for summary judgment, claiming that the doctrine of issue preclusion entitled her to judgment as a matter of law. In support of this claim, she placed in the record all of the judgments and proceedings upon which she relied. There was no objection to the authenticity of these documents.
The motions were heard on August 23, with Debtor participating by telephone. On August 31, the court entered its " Memorandum of Decision" denying Debtor's motion and granting Clements'.
Debtor appealed.
III. Jurisdiction
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. § § 157(b)(1) and (b)(2)(I). We initially remanded Debtor's appeal because it appeared the bankruptcy court had not entered a final judgment; upon remand, the bankruptcy court entered a final judgment, a new appeal from that judgment was taken, and a motions panel consolidated the two appeals. As a consequence, we have jurisdiction pursuant to 28 U.S.C. § § 158(a)(1) and (c)(1).
We do not believe that a letter sent by Debtor to the bankruptcy court and docketed after remand affects this analysis. As indicated in text, the bankruptcy court entered a memorandum disposition on August 31, 2007. Debtor filed a notice of appeal with respect to that memorandum on September 8, 2007. Later, a motions panel of this court remanded that appeal for entry of a final order on a separate document. A new separate order responsive to the BAP's remand was entered on November 5, 2007. Debtor filed a new notice of appeal dated November 14, 2007. As indicated in text, we consolidated these two appeals.
IV. Issues Presented
Debtor lists sixteen grounds for reversal. Many are duplicative; others are conclusory. They boil down, however, to five general allegations of error:
(A) Was Clements' complaint filed on time?
(B) Did the bankruptcy court correctly rule that Debtor waived her jury trial rights?
(C) Did the court properly apply issue preclusion concepts in ruling for Clements
(D) Did the court properly rule against Debtor on her motion for summary judgment because of Debtor's failure to substantiate her claims
(E) Did Debtor's filing of the 2005 Action have any effect on Clements' case?
V. Standard of Review
A grant or denial of summary judgment is reviewed de novo. Henry v. Lehman Commercial Paper, Inc. (In re First Alliance Mort. Co.), 471 F.3d 977, 995 (9th Cir. 2006); S.E.C. v. Colello, 139 F.3d 674, 675 (9th Cir. 1998). The evidence must be reviewed in the light most favorable to the non-moving party to determine if there are any genuine issues of material fact and whether the bankruptcy court correctly applied the substantive law. Fichman v. Media Center, 512 F.3d 1157, 1159 (9th Cir. 2008); Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). The bankruptcy court may be affirmed on any ground supported by the record. Id.
With respect to the other issues raised by Debtor, the interpretation of whether the complaint was timely is an issue under Rule 4007(c), and is a question of law to be reviewed de novo. Wilzig v. Lopez (In re Lopez), 192 B.R. 539, 543 (9th Cir. BAP 1996). The right to jury trial is a question of law that we also review de novo. Schieber v. Hooper (In re Hooper), 112 B.R. 1009, 1011 (9th Cir. BAP 1990).
VI. Analysis
A. Timeliness of Complaint
Debtor's initial argument, that the nondischargeability complaint was not timely filed, proceeds from a false premise. Debtor contends that " the adversary proceeding complaint cover sheet was the only part of Appellee's complaint that was filed on 4/17/06 . . . ." Appellant's Brief, page 4, ¶ 27 (emphasis in original).
This is clearly wrong. The cover sheet is item 2 on docket. Item 1 is the complaint itself. The clerk's notations on the complaint and the accompanying cover sheet indicate that both documents were filed on the same date. As Debtor admits that the cover sheet was filed before the deadline lapsed, it follows that the complaint, filed at the same time, was also timely filed.
B. Jury Trial Waiver
Debtor also contends that she is entitled to a jury trial on all issues. She is incorrect. There is no right to a jury trial when, as here, only nondischargeability of a claim, and not its validity or liquidation, is at issue. Hooper, 112 B.R. at 1011.
In addition, Fed.R.Civ.P. 38(b), made applicable by Rule 9015, requires that a " demand [for] a trial by jury of any issue triable of right by a jury" be made " not later than 10 days after the service of the last pleading directed to such issue . . . ." As specified by Fed.R.Civ.P. 38(d), " [t]he failure of a party to serve and file a demand as required by this rule constitutes a waiver by the party of trial by jury." As found by the bankruptcy court in its July 25, 2007, order, Debtor waited over five months after being notified that the adversary proceeding was 'at issue' - the latest date upon which she knew of " the last pleading directed to [the] issue [of nondischargeability]." As such, even if she had a right to trial by jury, she waived that right by delaying her request.
C. Issue Preclusion and Clements' Summary Judgment Motion
Clements grounded her summary judgment request on the preclusive effect of her California Civil Judgment and the Virgin Islands Criminal Convictions. Issue preclusion based upon prior state court litigation applies to nondischargeability proceedings. Grogan v. Garner, 498 U.S. 279, 284 n.11, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); Cal-Micro, Inc. v. Cantrell (In re Cantrell), 329 F.3d 1119, 1123 (9th Cir. 2003); Khaligh v. Hadaegh (In re Khaligh), 338 B.R. 817, 824 (9th Cir. BAP 2006). The preclusive effect of a prior state court judgment in a subsequent federal action is determined by the law of the state or territory in which the judgment was entered. See 28 U.S.C. § 1738; Gayden v. Nourbakhsh (In re Nourbakhsh), 67 F.3d 798, 800 (9th Cir. 1995).
As a policy matter, issue preclusion shields parties from multiple lawsuits, conserves judicial resources, and encourages reliance on adjudication by reducing the likelihood of inconsistent decisions. Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980); Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). See generally Christopher Klein, Lawrence Ponoroff & Sarah Borrey, Principles of Preclusion and Estoppel in Bankruptcy Cases, 79 Am. Bankr. L.J. 839, 852-58 (2005) (footnotes omitted).
The Virgin Islands is a " territory" within the meaning of Section 1738, and thus the judgments of the courts of that territory are to be given full faith and credit. Bergen v. Bergen, 439 F.2d 1008, 1013, 8 V.I. 336 (3d Cir. 1971).
Given the Full Faith and Credit statute, " [i]f a state court would give preclusive effect to a judgment rendered by courts of that state, then the Full Faith and Credit Statute (28 U.S.C. § 1738) imports the same consequence to an action in federal court based on the same award." In re Khaligh, 338 B.R. at 824 (citing McDonald v. City of W. Branch, 466 U.S. 284, 287, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984)); Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1245 (9th Cir. 2001).
1. Preclusive Effect of California State Court Judgment and Virgin Islands Judgments of Conviction
Under California preclusion law, collateral estoppel effect is given to a judgment that " actually and necessarily" decides the issue in question. People v. Howie, 41 Cal.App.4th 729, 736, 48 Cal.Rptr.2d 505 (Cal.Ct.App. 1995). This Panel has interpreted this standard in fraud cases to mean:
Generally,
In order for a prior judgment to be entitled to collateral estoppel effect under California law, the following five elements must be met:
(1) The issue sought to be precluded from relitigation must be identical to that decided in a former proceeding;
(2) The issue must have been actually litigated in the former proceeding;
(3) It must have been necessarily decided in the former proceeding;
(4) The decision in the former proceeding must be final and on the merits; and
(5) The party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding.
Baldwin v. Kilpatrick (In re Baldwin), 245 B.R. 131, 134 (9th Cir. BAP 2000) (citing Younie v. Gonya (In re Younie), 211 B.R. 367, 373 (9th Cir. BAP 1997) (citation omitted), aff'd, 163 F.3d 609 (9th Cir.1998) (unpublished table decision)). See also Tobin v. Sans Souci Ltd. P'ship (In re Tobin), 258 B.R. 199, 203 (9th Cir. BAP 2001).
To the extent that recourse to the original criminal judgments is appropriate, the Virgin Islands law of issue preclusion is less plentiful, but that jurisdiction appears to have adopted a standard similar to California. As stated by the Third Circuit when reviewing Virgin Islands law:
All requirements for issue preclusion would appear to be easily met, except possibly the " actually litigated" element, as Debtor was barred from presenting a defense by the California trial court's ruling on her improper assertion of the Fifth Amendment privilege. In the Ninth Circuit, however,
A party who deliberately precludes resolution of factual issues through normal adjudicative procedures may be bound, in subsequent, related proceedings involving the same parties and issues, by a prior judicial determination reached without completion of the usual process of adjudication. In such a case, the 'actual litigation' requirement may be satisfied by substantial participation in the adversary contest in which the party is afforded a reasonable opportunity to defend himself on the merits but chooses not to do so.
FDIC v. Daily (In re Daily), 47 F.3d 365, 368 (9th Cir. 1995) (court gives issue preclusive effect to judgment entered as a result of sanctions awarded under Rule 37). See also Muegler v. Bening, 413 F.3d 980, 985 (9th Cir. 2005) (same, but sanctions imposed by Missouri state court). Here, Debtor participated in the California proceedings, and it was her own refusal to testify that lead to the sanctions.
2. Fraud
The California Civil Judgment recites that it is for fraud. As the Bankruptcy Appellate Panel stated in Tobin:
The elements of § 523(a)(2)(A) " mirror the elements of common law fraud" and match those for actual fraud under California law, which requires that the plaintiff show: (1) misrepresentation; (2) knowledge of the falsity of the representation; (3) intent to induce reliance; (4) justifiable reliance; and (5) damages.
258 B.R. at 203 (citing Younie v. Gonya, 211 B.R. at 373-74).
All of these elements were, or could easily have been, established by recourse to the allegations of the California complaint as supplemented and established by the findings of the Virgin Islands Criminal Convictions. As the bankruptcy court found, Debtor engaged in a series of misrepresentations as to the ownership and control of Rice's assets. These misrepresentations include numerous forgeries and lies, all designed to consolidate in her and her sons the property that rightfully belonged to Rice's estate. Her criminal conviction establishes that she made these misrepresentations with criminal intent, and made them with the intent to induce others to take actions such that Rice's assets would vest in her. Finally, the California court took evidence on the extent of the damages. All elements of common law fraud, and fraud under § 523(a)(2), were met.
3. Conversion
Clements' California Civil Judgment also found Debtor had committed conversion. Debts arising from conversion may be nondischargeable under Section 523(a)(6). That section declares nondischargeable any debt " for willful and malicious injury by the debtor to another entity or to the property of another entity."
The Ninth Circuit requires separate findings on the issues of " willful" and " malicious" . The " willful" injury requirement of § 523(a)(6) is met " when it is shown either that the debtor had a subjective motive to inflict injury or that the debtor believed that injury was substantially certain to occur as a result of his conduct." Carrillo v. Su (In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002) (quoting Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1208 (9th Cir. 2001)).
A " malicious injury" involves " (1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and (4) is done without just cause or excuse." Id . at 1146-47 (quoting Petralia v. Jercich, 238 F.3d at 1209). See, e.g., Diamond v. Kolcum (In re Diamond), 285 F.3d 822, 829 (9th Cir. 2002) (holding that a state court jury finding that the debtors " intentionally caused injury" to the creditor " without just cause" was entitled to preclusive effect for purposes of § 523(a)(6)); Murray v. Bammer (In re Bammer), 131 F.3d 788, 791 (9th Cir. 1997) (en banc) (stating that malice under § 523(a)(6) " does not require a showing of biblical malice, i.e., personal hatred, spite or ill-will").
A simple California judgment of conversion, however, is insufficient to establish nondischargeability under Section 523(a)(6). As stated in Peklar v. Ikerd (In re Peklar ):
A judgment for conversion under California substantive law decides only that the defendant has engaged in the " wrongful exercise or dominion" over the personal property of the plaintiff. It does not necessarily decide that the defendant has caused " willful and malicious injury" within the meaning of § 523(a)(6). A judgment for conversion under California law therefore does not, without more, establish that a debt arising out of that judgment is non-dischargeable under § 523(a)(6).
260 F.3d 1035, 1039 (9th Cir. 2001).
Here, however, Virgin Island Criminal Convictions supply the necessary findings of a " willful and malicious" state of mind. Her forgeries and fraudulent activity were wrongful as shown by these convictions. The convictions also establish that the acts were done intentionally and without just cause or excuse. Finally, the California Civil Judgment establishes the element of damage. Essentially, every dollar Debtor stole or swindled from the Rice estate (of which Clements is the administrator) was a dollar of damage to that estate. As such, summary judgment on the conversion claim was also appropriate.
4. Larceny and § 523(a)(4)
Clements' complaint also sought the debt to be declared nondischargeable under Section 524(a)(4). That paragraph excepts from discharge any debt " for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny."
There is no issue of a fiduciary relationship between Clements and the Debtor, nor is there any issue regarding embezzlement. Clements' claim must thus stand on whether there was " larceny." While Debtor was not convicted of the crime of larceny, that is not dispositive. As noted by Collier on Bankruptcy:
Larceny is the fraudulent and wrongful taking and carrying away of the property of another with intent to convert the property to the taker's use without the consent of the owner. As distinguished from embezzlement, the original taking of the property must be unlawful. For purposes of section 523(a)(4), a bankruptcy court is not bound by the state law definition of larceny but, rather, may follow federal common law, which defines larceny as a " felonious taking of another's personal property with intent to convert it or deprive the owner of same."
4 Collier on Bankruptcy ¶ 523.10[2] (15th rev. ed., Henry Sommer and Alan Resnick, eds. 2007) (citing Clarendon Nat'l Ins. Co. v. Barrett (In re Barrett), 156 B.R. 529 (Bankr. N.D. Tex. 1993)). As a result, " [l]arceny is proven for § 523(a)(4) purposes if the debtor has wrongfully and with fraudulent intent taken property from its owner." Kaye v. Rose (In re Rose), 934 F.2d 901, 903 (7th Cir. 1991). See also Dynamic Food Serv. Equip., Inc. v. Stern (In re Stern), 231 B.R. 25, 26 (S.D.N.Y. 1999).
Here, Debtor's criminal convictions for appropriating the Rice estate's property supply the necessary elements. The convictions establish that Debtor took the property wrongfully and with fraudulent intent; and the California conservatorship proceedings establish that the Rice estate was the rightful owner. As a consequence, the bankruptcy court's entering of summary judgment excepting the California Civil Judgment from Debtor's discharge was appropriate.
D. Debtor's Unsubstantiated Summary Judgment Motion
Debtor also moved for summary judgment, and the bankruptcy court denied that motion. Central to Debtor's argument is her claim that the Virgin Islands Criminal Convictions are void pursuant to the 2005 Action. She claims that the 2005 Action resulted in a nihil dicit judgment; that is, a judgment obtained by failure to answer. But as the bankruptcy court noted, " [t]here is nothing attached [to Debtor's motion or response] that is identifiable as a 2005 Virgin island [sic] nihil dicit judgment. Similarly, there is no evidence of a default judgment against [Clements]."
Translated, nihil dicit means " he says nothing, " and a nihil dicit judgment would appear to be nothing more than a judgment by default following a defendant's failure to answer a complaint. Black's Law Dictionary 1071 (8th ed. 2004).
Our review of the record confirms the bankruptcy court's findings. Without any competent evidence of her claim of a void judgment, the bankruptcy court thus properly denied Debtor's motion for summary judgment.
E. Effect of 2005 Action on Clements
Debtor contends that the 2005 Action wipes her slate clean. The 2005 Action is an attempt, under Fed.R.Civ.P. 60(b)(4), to have the Virgin Islands Criminal Convictions avoided. Were those to be avoided, however, the California Civil Judgment would still be in place, and would bar relitigation of Debtor's actions and intents.
Debtor has also challenged the validity of the California Civil Judgment. In response to pre-hearing motions, Debtor submitted documents that indicate that in January 2007 she filed a motion to set aside the California Civil Judgment on similar grounds as stated in the 2005 Action. She filed this motion in the case in which the California Civil Judgment was obtained. See Clements v. Davis-Rice, Case No. MSC 89-02907, Contra Costa County Superior Court (Jan. 18, 2007) (" Motion To/for Relief from Judgment Due to Fraud Filed by Astarte Davis").
Debtor, however, has an incorrect view of the 2005 Action. She apparently believes that simply filing a civil action voids the criminal convictions so long as it is not timely answered. This belief is reflected in her pleadings, which are replete with exhortations that failure to respond means that she automatically prevails. She apparently believes these statements.
They are, of course, incorrect. The docket of the 2005 Action indicates that on September 26, 2005, the district court ordered that Debtor's " independent action" was improperly characterized as such, and further ordered that:
[P]etitioner's Motion to Vacate Void Judgments Pursuant to Title 28 Rule 60(b)(4) Independent Action is recharacterized as a motion under 28 USC § 2255, and further ordered that petitioner's motion is transferred to the court of appeals for the third circuit for authorization to file a successive motion under 28 USC 2255 and 2244; . . . and further ordered that petitioner's motion for writ of mandamus is DENIED; and further ordered that petitioner's request for entry of default titled Notice of Default and Entry of Default is DENIED.
Docket Entry #11, Davis-Rice v. United States, Case No. 1: 05-cv-00118-RLF-GWC (D.V.I. Sept. 26, 2005).
Further, on October 27, the district court amended docket entry 11 " to include the order entered on September 26, 2005 and that this matter is DISMISSED and that this file is CLOSE [sic]" Docket Entry #8, Davis-Rice v. United States, Case No. 1:05-cv-00118-RLF-GWC (D.V.I. Oct. 27, 2005). It is from this order that Debtor appealed to the Third Circuit, and from the Third Circuit's adverse ruling sought certiorari. In re Davis-Rice, 222 Fed.Appx. 135, 2007 WL 1113355 (2007), cert. denied sub. nom., Davis-Rice v. U.S. Dist. Ct. for Dist. of Virgin Islands, 552 U.S. 879, 128 S.Ct. 194, 169 L.Ed.2d 131 (Oct. 1, 2007).
As a result, Debtor's contentions that her 2005 Action has removed the foundations of Clements' case against her are simply wrong. The California Civil Judgment and the Virgin Islands Criminal Convictions still stand, and each independently bars relitigation of the central and dispositive issues in Clements' adversary proceeding under established principles of issue preclusion.
VII. Conclusion
Debtor presented nothing in the bankruptcy court that would preclude summary judgment based upon the issue preclusive effects of the California Civil Judgment and the Virgin Islands Criminal Convictions. Her appeal adds nothing new, and thus we AFFIRM the bankruptcy court.
The district court consolidated sentencing in all four matters, and made its findings as to sentencing in its Memorandum of April 2, 1993, a copy of which is also in the record. When this memorandum refers to the Virgin Islands Criminal Convictions, that reference includes reference to the sentencing memorandum.
In between, however, Debtor filed, on October 9, 2007, a motion to reconsider the August 31 memorandum. The bankruptcy court denied that motion on October 22, 2007. Debtor then sent a letter dated November 6 (but not docketed until November 13) to counsel for Clements (with a copy to the bankruptcy court) complaining about the form of order that had been submitted with respect to the denial of the motion to reconsider. Neither party nor the court construed the November 6 letter as a motion to reconsider the November 5 judgment, and we think that conclusion to be sound.
Issue preclusion bars relitigation of an issue of fact or law that: (1) was actually decided by a court in an earlier action, (2) in which the issue was necessary to the judgment in such action, and (3) there was a valid and final judgment. Issue preclusion entails a determination of identity of issues, which may include consideration of factual identity, applicable legal standards, and burden of proof imposed on the parties in the respective cases.
Klein, Ponoroff & Borrey, supra at 853. See also R.T.C. v. Keating, 186 F.3d 1110, 1114 (9th Cir. 1999); Roussos v. Michaelides (In re Roussos), 251 B.R. 86, 92 (9th Cir. BAP 2000).
Traditionally, four factors must be present before the application of collateral estoppel is appropriate: (1) the previous determination was necessary to the decision; (2) the identical issue was previously litigated; (3) the issue was actually decided in a decision that was final, valid, and on the merits; and (4) the party being precluded from relitigating the issue was adequately represented in the previous action.
Hawksbill Sea Turtle v. Fed. Emerg. Mgmt. Agency, 126 F.3d 461, 475, 37 V.I. 526 (3d Cir. 1997). Moreover, it also appears that the Virgin Islands looks to the RESTATEMENT to fill any gaps left by this test. Government of Virgin Islands v. Lansdale, 172 F.Supp.2d 636 (D. V.I. 2001).
On June 26, 2007, however, not only was Debtor's motion denied, she was declared to be a vexatious litigant, and was ordered to not file anything more in the state court action without prior court approval.
The denial of Debtor's motion is currently on appeal. Clements v. Davis-Rice, Case No. A 118606 (Cal.Ct.App., 1st Dist., appeal filed July 27, 2007).