Opinion
20-11834 Adv. 20-1038
12-14-2021
In re: MATTHEW SAMPSON Debtor v. MATTHEW SAMPSON Defendant SEAN DEOKARAN MATTHEW PICKETT Plaintiffs
John R. Glankler, Esq. John A. Schuh, Esq.
This opinion is not intended for publication or citation.
Chapter 7
John R. Glankler, Esq.
John A. Schuh, Esq.
MEMORANDUM OPINION DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT ON ISSUE PRECLUSION [Docket Number 26]
Beth A. Buchanan United States Bankruptcy Judge
This matter is before this Court on Plaintiffs' Motion for Summary Judgment on Issue Preclusion [Docket Number 26]; Defendant's Response in Opposition [Docket Number 30] and Supporting Affidavit [Docket Number 31]; Plaintiffs' Reply [Docket Number 32]; and Defendant's Sur-Reply [Docket Number 33].
Plaintiffs Sean Deokaran and Matthew Pickett ("Deokaran and Pickett") filed a complaint to except from discharge a state-court judgment debt owed to them by Debtor-Defendant Matthew Sampson. Subsequently, Deokaran and Pickett filed a motion for summary judgment on a limited issue: whether the state court's award of punitive damages following a default judgment and damages hearing is entitled to preclusive effect. As provided in the analysis set forth in this opinion, the state court's award of punitive damages does not include an express adjudication of the elements of fraud and, consequently does not meet the requirement that those elements be "actually litigated" for purposes of having preclusive effect as to the elements of fraud set forth in 11 U.S.C. § 523(a)(2)(A). Accordingly, summary judgment is denied.
I. JURISDICTION
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a) and 1334, and the standing General Order of Reference in this District. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) and consent has been given by the parties for this Court to enter final orders and judgments [Docket Numbers 18 and 19].
II. BACKGROUND
A. State Court Complaint
On September 16, 2019, Plaintiffs Deokaran and Pickett filed a complaint in the Hamilton County Common Pleas Court against two defendants: Sampson Light Industry, LLC ("Sampson Light"), and the Debtor, Matthew Sampson ("Sampson"), seeking damages against the defendants for unpaid wages (the "State Court Litigation") [Docket Number 26, Ex. A (the "State Court Complaint")]. The State Court Complaint included four claims for relief: breach of contract, piercing the corporate veil, fraud and fraudulent conveyance [Id.]. Deokaran and Pickett requested contract damages, tort damages, reasonable attorney fees, costs, statutory interest, and "other relief" to which they may be entitled [Id., "Wherefore" clause]. Deokaran and Pickett also requested punitive damages on their fraudulent conveyance claim [Id., ¶ 47].
B. Service and Notice
Sampson was served with the State Court Complaint on December 3, 2019 by regular mail, but he did not file an answer in the State Court Litigation [Id., Ex. B]. On January 30, 2020, Deokaran and Pickett filed a Motion for Default Judgment against the defendants including Sampson [Id., Ex. C]. However, Sampson was not served with the Motion for Default Judgment [Id., Ex. C and Docket Number 31, Sampson Aff., ¶ 1].
The Motion for Default Judgment refers to a scheduled hearing on February 20, 2020 for Deokaran and Pickett to "present damages" [Docket Number 26, Ex. C]. Their counsel's affidavit indicates that the state court damages hearing actually occurred on March 5, 2020 [Id., Glanker Aff., ¶ 2(d)]. Sampson attests that he was not notified of the February or March hearing dates from Deokaran and Pickett's counsel nor did he receive notice from the Hamilton County, Ohio Assignment Commissioner's Office or Clerk of Courts as to court conferences and hearings held in relation to the matter [Docket Number 31, Sampson Aff., ¶¶ 2-3].
C. State Court Hearing
The March 5, 2020 hearing was held in in front of a magistrate during which evidence and testimony were presented by Deokaran and Pickett [Docket Number 26, Ex. D (March 5, 2020 Hearing Transcript ("Tr."))]. Both Deokaran and Pickett testified to being hired to work for Sampson Light, the company owned by Sampson [Id., Tr. pp. 5, 7 and 15]. Deokaran testified to missing $31,056.44 in paychecks [Id., Tr. p. 6]. At some point, Deokaran had conversations with Sampson about the missed payments saying he could not continue working without pay [Id., Tr. p. 8]. Sampson's response was to request that Deokaran continue to work, and that the money would be made up in the next month or a couple of months [Id.]. Deokaran further testified that, during the time of the missed payments, there was evidence on the ledger that Sampson used company funds for personal expenses including automotive parts, Amazon video transactions, iTunes and Starbucks [Id., Tr. pp. 10-11].
Pickett testified to missed paychecks in the total amount of $41,025.00 [Id., Tr. p. 15]. He similarly testified that after his pay became delinquent, Sampson promised him that he would not miss future paychecks and that Pickett would be reimbursed for what had been missed [Id., Tr. p. 16].
Upon conclusion of the presentation of evidence, the magistrate granted judgment for breach of contract and awarded Deokaran a total of $31,356.44 and Pickett a total of $41,201.83 on their breach of contract claims [Id., Tr. p. 24]. The magistrate also found in favor of Deokaran and Pickett on the piercing the corporate veil claim so that Sampson was personally liable for the contract damages [Id.]. However, the magistrate did not grant the plaintiffs judgment on their fraudulent conveyance claim [Id., Tr. p. 23].
Following her pronouncement, the magistrate noted that a separate hearing would be set on attorney fees but then asked Deokaran and Pickett's counsel what his clients were asking for on punitive damages [Id., Tr. pp. 24-25]. Counsel noted that his clients had "put off other work opportunities, career opportunities" so were looking to double the amount of their actual damages [Id., Tr. p. 25]. He suggested that his clients provide a little testimony and the magistrate agreed [Id.]
Deokaran testified that, while experiencing the loss of paychecks at Sampson Light, he was offered a job at Rhinestahl Corporation, a manufacturer of tooling for the aerospace industry, and a job at SA Research, a purchase service for GE Aviation [Id., Tr. pp. 25-26]. Deokaran testified that he did not take the jobs, even though they offered higher pay, because he had faith that Sampson Light would succeed based on incoming purchase orders [Id., Tr. p. 27]. Pickett testified that while he was not being paid at Sampson Light, he was offered a position as a site director at Essig Research [Id., Tr. p. 26]. The pay was higher at Essig but Pickett did not take the position because he felt that Sampson Light was a successful business and "that there was more opportunity there" [Id.].
Following presentation of this additional evidence, the magistrate orally awarded the punitive damages requested by doubling the "economic award" as to each defendant [Id., Tr. p. 27], however, at no point during the hearing did the magistrate make an express ruling on the fraud claim.
D. Magistrate's Decision
After the hearing, a Magistrate's Decision was entered [Docket Number 26, Ex. E]. The Magistrate's Decision includes a determination that Deokaran and Pickett were entitled to default judgment based on Sampson and Sampson Light's failure to file an answer. The Magistrate's Decision further states in relevant part:
On March 5th, 2020, a hearing on damages was held in this matter. Judgment was rendered in favor of Plaintiffs on their claims for breach of contract, piercing the corporate veil, and fraud. Judgment was rendered against Plaintiffs on their claim for fraudulent conveyance. Testimony was presented by the Plaintiffs Sean Deokaran and Matthew Pickett. Exhibits 3 and 4, verified by Plaintiffs' testimony, demonstrated that Plaintiff Deokaran is entitled to judgment in the amount of
$31,356.44 of economic damages, and that Plaintiff Pickett is entitled to judgment in the amount of $41,201.83 of economic damages. Plaintiffs are further entitled to punitive damages in an amount equal to their respective economic damages: Plaintiff Deokaran is entitled to judgment in the amount of $31,356.44 in non-economic, and Plaintiff Pickett is entitled to judgment in the amount of $41,201.83 of non-economic damages. Plaintiffs are also entitled to their reasonable attorney fees, to be determined at a future hearing, as well as the costs of this action, and interest at the statutory rate from the date of this judgment.
[Id.] No objections to the Magistrate's Decision were filed and the Common Pleas Court Judge signed the Entry Adopting Magistrate's Decision on May 6, 2020 (collectively the Magistrate's Decision and Entry Adopting Magistrate's Decision are referred to as "State Court Judgment") [Docket Number 26, Exs. E and F].Therefore, Plaintiffs are hereby GRANTED judgment in the amount of $72,558.27 of economic damages, and $72,558.27 of non-economic, punitive damages.
III. LEGAL ANALYSIS
A. Summary Judgment Standard
This Court addresses Deokaran and Pickett's motion for summary judgment under the standard set forth in Rule 56(a) of the Federal Rules of Civil Procedure (the "Civil Rules") made applicable to this proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure. Civil Rule 56(a) provides that summary judgment is to be granted by this Court "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A "genuine" dispute exists only where "evidence is such that a reasonable [finder of fact] could return a [judgment] for the nonmoving party." Id.; Gallagher v. C.H. Robinson Worldwide, Inc., 567 F.3d 263, 270 (6th Cir. 2009).
To prevail, the moving party, if bearing the burden of persuasion at trial, must show an absence of a genuine issue of material fact on all elements of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986). Thereafter, "the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citations omitted). All inferences drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Id. at 587-88; Anthony v. BTR Auto. Sealing Sys., Inc., 339 F.3d 506, 511 (6th Cir. 2003). Nonetheless, mere conclusory allegations or unsupported opinions of the nonmovant are insufficient to defeat a motion for summary judgment. Matsushita, 475 U.S. at 586-88; See also Blaney v. Cengage Learning, Inc., 2011 U.S. Dist. LEXIS 43780, at *19-20, 2011 WL 1532032, at *7 (S.D. Ohio Apr. 22, 2011).
B. Issue Preclusion
Deokaran and Pickett argue that the punitive damages portion of the State Court Judgment preclusively establishes the elements necessary to except this portion of the judgment debt from discharge pursuant to 11 U.S.C. § 523(a)(2)(A). Under 28 U.S.C. § 1738, federal courts are directed to give the same "full faith and credit" to a state court judgment as would be given that judgment under the law of the state in which it is rendered. Bay Area Factors v. Calvert (In re Calvert), 105 F.3d 315, 317 (6th Cir. 1997); Sill v. Sweeney (In re Sweeney), 276 B.R. 186, 189 (B.A.P. 6th Cir. 2002). Consequently, in order for a judgment rendered in an Ohio state court to have preclusive effect in a bankruptcy adversary proceeding, it must be entitled to such effect under Ohio's preclusionary principles.
Ohio recognizes the dual preclusionary doctrines of claim preclusion (also referred to as res judicata) and issue preclusion (also referred to as collateral estoppel). Of these doctrines, it is issue preclusion that applies to determine whether specific facts or issues determined in a prior state court judgment bar relitigation of those same facts or issues in a separate bankruptcy dischargeability proceeding. Grogan v. Garner, 498 U.S. 279, 284 n. 11, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). Plaintiffs Deokaran and Pickett, as the parties seeking to invoke issue preclusion, carry the burden to establish its applicability. Yust v. Henkel (In re Henkel), 490 B.R. 759, 770 (Bankr. S.D. Ohio 2013).
Issue preclusion "prevents re-litigation by the same parties or their privies of issues that were necessarily litigated and ruled upon in a prior action." Hinze v. Robinson (In re Robinson), 242 B.R. 380, 384 (Bankr.N.D.Ohio 1999). Under Ohio law, a party seeking to invoke issue preclusion must establish the following four elements:
Sweeney, 276 B.R. at 189; Henkel, 490 B.R. at 771.1) A final judgment on the merits in the previous case after a full and fair opportunity to litigate the issue; 2) The issue must have been actually and directly litigated in the prior suit and must have been necessary to the final judgment; 3) The issue in the present suit must have been identical to the issue in the prior suit; 4) The party against whom estoppel is sought was a party or in privity with the party to the prior action.
With respect to the four requirements to invoke issue preclusion, neither party disputes the fourth element: that Sampson was a party to the prior state court action. In this case, the challenge in determining whether the remaining requirements for issue preclusion are met arises from the fact that the State Court Judgment was granted by default following Sampson's failure to file an answer. Under Ohio law, "'a default judgment obviates the plaintiff's burden to prove the elements of the claim alleged'" and consequently, certain requirements to invoke issue preclusion are often lacking. Sweeney, 276 B.R. at 193 (quoting Hinze, 242 B.R. at 386). Nonetheless, Deokaran and Pickett argue that the punitive damages award in this instance was not a true default judgment because it was granted after the presentation of evidence at a hearing. With that in mind, this Court begins with an analysis of whether there is an "identity of issues" between the elements of the state court claim which Deokaran and Pickett argue should be granted preclusive effect and the elements of the claim to except the judgment debt from discharge in this adversary proceeding. Following that analysis, this Court moves on to the more challenging requirement of issue preclusion with respect to a default judgment: determining whether the state court claim was "actually and directly litigated."
1. Identity of Issues
In order for issue preclusion to apply, the facts or issues determined in the state court on which preclusive effect is to be afforded must be identical to those necessary to determine the debt excepted from discharge. Chandler v. Alexakis (In re Alexakis), 2012 Bankr. LEXIS 4164, at *14, 2012 WL 10716047, at *5 (Bankr. S. D. Ohio Sept. 6, 2012).
Deokaran and Pickett argue that Ohio common law fraud is the issue that was tried and determined in the state court that has elements that are identical to those necessary to except a debt from discharge under 11 U.S.C. § 523(a)(2)(A). This provision of the Bankruptcy Code excepts from discharge a debt:
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by-
11 U.S.C. § 523(a)(2)(A). Pursuant to this provision, a plaintiff-creditor must prove:(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition[.]
(1) the debtor obtained money, property or services through a material misrepresentation that, at the time, the debtor knew was false or made with gross recklessness as to its truth;
(2) the debtor intended to deceive the creditor;
(3) the creditor justifiably relied on the false representation; and
See Rembert v. AT&T Universal Card Services, Inc. (In re Rembert), 141 F.3d 277, 280-81 (6th Cir.1998).(4) its reliance was the proximate cause of loss.
In comparison, to establish common law fraud under Ohio law, a plaintiff must prove, by a preponderance of the evidence:
Henkel, 490 B.R. at 773 (citing Passa v. City of Columbus, 748 F.Supp.2d 804, 814 (S.D. Ohio 2010)).(a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.
This Court has determined in prior cases that the elements to prevail on an Ohio common law fraud claim are substantially similar to those required to except a debt from discharge under § 523(a)(2)(A), albeit with the added requirement under § 523(a)(2)(A) that the fraud must be of the type to induce the plaintiff-creditor to part with money, services, or property. Alexakis, 2012 Bankr. LEXIS 4164, at *16, 2012 WL 10716047, at *5 (noting that a fraudulent misrepresentation made subsequent to the creation of the debt does not meet the elements of § 523(a)(2)(A) because it does not cause the creditor to part with money, property or services). See also Schmidt v. Panos (In re Panos), 573 B.R. 723, 732 (Bankr. S.D. Ohio 2017); Henkel, 490 B.R. at 773; Miller v. Grimsley (In re Grimsley), 449 B.R. 602, 619-20 (Bankr. S.D. Ohio 2011).
Accordingly, this Court concludes that there is an identity of issues between the elements of § 523(a)(2)(A) and those necessary to establish Ohio common law fraud.
2. Actually and Directly Litigated
Deokaran and Pickett must next demonstrate that those elements of common law fraud were "actually and directly litigated" and "necessary" to the State Court Judgment's punitive damages award. Sweeney, 276 B.R. at 192. Put another way, to have preclusive effect in this adversary proceeding, they must prove that the elements of common law fraud were "'admitted or actually tried and decided'" and thereafter a final judgment rendered on the merits. Id. at 192 (citing Cashelmara Villas Ltd. P'ship v. DiBenedetto, 623 N.E.2d 213, 215 (Ohio Ct. App. 1993) and Monahan v. Eagle Picher Indus., Inc., 486 N.E.2d 1165, 1168 (Ohio Ct. App. 1984)).
Sampson argues that the State Court Judgment, including the punitive damages award, does not meet the "actually litigated" requirement because the judgment was rendered by default. As noted previously, a default judgment "obviates the plaintiff's burden to prove the elements of the claim alleged" and consequently, issues determined in a default judgment generally do not meet the "actually litigated" requirement of issue preclusion. Sweeney, 276 B.R. at 193 (quoting Hinze, 242 B.R. at 386).
In Sweeney, the Sixth Circuit Bankruptcy Appellate Panel ("BAP") considered the limited circumstances that would permit a default judgment issued by an Ohio state court to be given issue preclusive effect. Id. at 193. Specifically, the default judgment must be the subject of an "express adjudication" requiring: 1) the state court decide the merits of the claim or issue based on evidence submitted beyond the pleadings; and 2) the state court demonstrate that the claim or issue was determined on the merits, generally by making findings of fact and conclusions of law. Id. at 194. If these requirements of an "express adjudication" are met, then the state court's findings and conclusions will have preclusive effect. Id.
In Sweeney, the BAP was faced with circumstances similar to those in the case at hand: determining whether a default judgment granted in an Ohio state court after a hearing on damages meets the "actually litigated" requirement of issue preclusion. Like this case, the state court judgment in Sweeney was granted after the defendant-debtor failed to file an answer. Id. at 188. At the hearing on the default judgment, the plaintiffs provided evidence of their damages, consisting of deficiencies in the construction of the home the defendant-debtor built them, but also evidence that the defendant-debtor misled them about whether the home would eventually find itself in a sub-division. Id. at 188-189. At the close of the hearing, the court awarded damages including $100,000 in punitive damages flowing from count two, a fraud count against the defendant-debtor. Id. at 189. However, the court did not make an actual finding of fraud and simply stated that judgment should be rendered in favor of the plaintiffs and listed the damages count by count of the complaint without reciting any findings of fact or conclusions of law. Id.
In determining whether this constituted an "express adjudication," the BAP noted that although some evidence may have been submitted at the damages hearing that could have supported fraud, the state court made no findings of fact or conclusions of law on that issue. Id. at 194. Nor was there any characterization of the defendant-debtor's conduct. Id. The state court merely stated from the bench that judgment should be rendered in favor of the plaintiffs and set forth a calculation of damages without reference to the facts or drawing any conclusions. Id. In other words, the state court "did not specifically find the Debtor guilty of fraud or any element of fraud" and "[w]hen all is said and done, the [state] court's pro forma recitation may have meant nothing more than that the [state] court was satisfied from the evidence that the damages it was awarding were appropriate in amount, assuming that the Debtor was liable due to the default nature of the hearing." Id.
Much like Sweeney, following Sampson's failure to file an answer, Deokaran and Pickett filing a motion for default judgment that included a scheduled hearing date for them to "present damages." [Docket Number 26, Ex. C]. From the transcript of the hearing, it is clear that most of the evidence presented related to Deokaran and Pickett's damages in the form of lost wages and job opportunities although they did testify to statements made by Sampson that he would make up their missed paychecks in the future. Upon conclusion of the presentation of evidence, the magistrate orally awarded Deokaran and Pickett compensatory damages on their breach of contract claim and found Sampson personally liable for the damages by piercing the corporate veil [Id., Ex. D, Tr., p. 24]. The magistrate did not find Sampson liable for fraud in her oral pronouncement [Id.].
Following the hearing, the magistrate entered a written judgment noting that the defendants, Sampson and Sampson Light, failed to file an answer and "are hereby found to be in default, and Plaintiffs are entitled to judgment on their Complaint." [Id., Ex. E]. The written judgment notes the hearing on damages held on March 5, 2020 and that judgment "was rendered in favor of Plaintiffs on their claims for breach of contract, piercing the corporate veil, and fraud" [Id.].
While the written judgment, unlike the oral pronouncement, includes fraud, the judgment includes no express findings of fact or conclusions of law on that issue nor any characterization of Sampson's conduct. This lack of findings leaves this Court with no way to determine whether the elements of fraud were actually determined by the magistrate from evidence presented at the hearing or whether, instead, Sampson's liability for fraud was based solely on his default in answering the complaint. Accordingly, the State Court Judgment does not suffice as an "express adjudication" of Ohio common law fraud.
Nonetheless, Deokaran and Pickett argue that the magistrate's award of punitive damages must mean that the magistrate concluded that an actual fraud was committed citing Miller v. Grimsley (In re Grimsley), 449 B.R. 602 (Bankr. S.D. Ohio 2011). In Grimsley, the bankruptcy court was faced with whether it may infer a finding of fraud from a jury's award of punitive damages and attorney fees following a trial even though the written judgment made no specific finding of fraud. 449 B.R. at 604-05. Based on Ohio law and the instructions propounded to the jury, the bankruptcy court concluded that the jury could have awarded punitive damages only if the jury had found that the debtor had committed fraud. Id., at 611-18. However, in Grimsley, the debtor was an active participant in the state court litigation and trial so it was clear that any claim on which liability was established was actually litigated based on evidence presented at the trial rather than established by default. Id. at 609 (noting his participation in the state court jury trial). This is in contrast to the facts of this case. Sampson did not file an answer in the State Court Litigation nor did he receive notice of or participate in the damages hearing. Accordingly, without express findings and conclusions, it is unclear whether the magistrate awarded punitive damages based on evidence of fraud presented at the hearing or, instead, based solely on Sampson's default in answering a complaint that contained a claim for fraud.
This Court notes that Deokaran and Pickett did not include a request for punitive damages in connection with their fraud claim in the State Court Complaint [Docket Number 26, Ex. A]. Instead, their only request for punitive damages was in their fraudulent conveyance claim [Id.], a claim on which judgment was decided against them [Id., Ex. E].
Unlike the circumstances presented in Grimsley, Sweeney did involve the preclusive effect to be given to an award of punitive damages in connection with a default judgment. In Sweeney, the Sixth Circuit Bankruptcy Appellate Panel considered whether such an award could allow a bankruptcy court to infer that fraud or other misconduct justifying punitive damages was "actually litigated." 276 B.R. at 194-95. The BAP concluded that a bankruptcy court could not make such an inference absent specific findings or conclusions about the debtor's conduct in the judgment, noting:
Sweeney, 276 B.R. at 195.. . . one could reason that the court's award of punitive damages on the fraud count must mean that it actually decided that a fraud was committed. But that same reasoning would find preclusion to be the result of every default judgment, and so in every automobile accident case we would reason backwards from an award of damages to the conclusion that the court must have decided that the defendant was negligent. Even if a review of the record showed that evidence had been presented from which the court could have found negligence, there would be no assurance that it did, for we can never know whether the court awarded damages based on the evidence presented or merely on the defendant's default, as it was entitled to. It would always be free to ignore the evidence, or find it insufficient, and rely on the default instead. Only findings, or something like them, will show whether the court actually decided the question, and we think that the Plaintiffs have not carried their burden of showing such findings in this case.
The facts of Sweeney are on all fours with the circumstances presented in this case. The State Court Judgment includes no findings or conclusions regarding Sampson's conduct. The lack of findings leaves this Court with no way to determine whether Sampson's liability for punitive damages, like his liability for fraud, was determined based on evidence of misconduct presented at the damages hearing or based merely on Sampson's default in answering the State Court Complaint.
This Court concludes that the State Court Judgment's award of punitive damages, does not meet the "actually litigated" requirement to invoke issue preclusion. Accordingly, it is not entitled to preclusive effect on the elements of fraud pursuant to 11 U.S.C. § 523(a)(2)(A) in this adversary proceeding.
The parties dispute another requirement to invoke issue preclusion: whether or not Sampson had a "full and fair opportunity to litigate" the issues in the State Court Litigation. While Sampson concedes that he was served with the State Court Complaint, he received no notice of Deokaran and Pickett's motion for default judgment or notice of the damages hearing. Ultimately, this Court need not reach this issue because it has already determined that the State Court Judgment does not meet the "actually litigated" requirement necessary to invoke issue preclusion.
IV. CONCLUSION
For the reasons stated herein, the Plaintiffs' Motion for Summary Judgment on Issue Preclusion [Docket Number 26] is DENIED.
SO ORDERED.