Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Morabito

United States District Court, D. Nevada

September 17, 2019

In re PAUL A. MORABITO, Debtor.
v.
PAUL A. MORABITO., Defendant. JH, INC., et al., Plaintiffs, PAUL A. MORABITO, Appellant,
v.
JH, INC., et al., Appellees.

          ORDER

          MIRANDA M. DU CHIEF UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         Appellant Paul A. Morabito appeals the United States Bankruptcy Court for the District of Nevada's (“Bankruptcy Court”) January 3, 2019 orders granting Appellees'[1]motions for authorization to register judgment (resulting in the “Registration Order” (ECF No. 9 at 55-57)) and application for judgment debtor exam (resulting in the “Judgment Debtor Order” (Id. at 41-53)) (collectively, “Orders”). (ECF Nos. 1, 8 at 7.) Appellant primarily argues the Bankruptcy Court abused its discretion in entering the Registration Order because the judgment it permitted Appellees to register, the “Nondischargeability Judgment” (ECF No. 9 at 303-304), was either not a money judgment, or to the extent the Bankruptcy Court entered the Nondischargeability Judgment as a redundant federal money judgment, the Bankruptcy Court should not have.[2] (ECF No. 8 at 10.) The Court is unpersuaded by Appellant's arguments. Thus, and as further explained below, the Court affirms the Bankruptcy Court's Orders.

         II. BACKGROUND

         This is Appellant's second appeal to this Court from the same underlying bankruptcy proceedings. See In re Morabito, 596 B.R. 718 (D. Nev. 2019) (“First Appeal”) (affirming the Bankruptcy Court's decisions challenged in that appeal), currently on appeal sub nom. In re: JH, Inc., et al. v. Paul Morabito, No. 19-15322 (9th Cir. Filed Feb. 25, 2019). The Court also previously issued a written decision on Appellant's recusal motion in this appeal, in which the Court declined to recuse itself. (ECF No. 23.) The Court refers to those prior orders for the factual background of this case. (Id. at 2-5.) See also First Appeal, 596 B.R. at 721-25.

         As relevant here, the Bankruptcy Court issued the Nondischargeability Judgment in Appellees' favor in the underlying bankruptcy proceedings. Incorporating by reference the Bankruptcy Court's Memorandum Decision filed April 30, 2018 (“Memorandum Decision”), and its Amended Findings of Fact and Conclusions of Law also filed April 30, 2018 (“AFFCL”), the Nondischargeability Judgment provides that Appellees:

have satisfied their burden of proof and proven all the necessary requirements to obtain a nondischargeable judgment under 11 U.S.C. § 523(a)(2), and the $85, 000, 000.00 less the value of any payments made by Defendant, owed to the Plaintiffs by Defendant, is a nondischargable debt. The Court finds in favor of Plaintiffs on the First and Second causes of action.

(ECF No. 9 at 304.) This Nondischargeability Judgment was also the subject of the First Appeal, where the Court found the Bankruptcy Court did not abuse its discretion in finding this $85 million debt that originated in a state-court confession of judgment (the “COJ”) nondischargeable.[3] See 596 B.R. at 727-28.

         As mentioned above, the Nondischargeability Judgment incorporated by reference two concurrently-filed written decisions of the Bankruptcy Court. Both merit brief discussion because they are relevant to the Court's analysis herein. The Bankruptcy Court entered both the Memorandum Decision and the AFFCL after a bench trial on a cause of action not directly relevant to the Nondischargeability Judgment, except for the fact that Appellant testified at the trial, allowing the Bankruptcy Court to evaluate his credibility and make findings that Appellant engaged in fraudulent conduct. (ECF No. 20-10 at 13-18.) In the AFFCL, the Bankruptcy Court wrote that the evidence presented at that trial “provided additional facts establishing that [Appellant] engaged in fraud, supporting a judgment of nondischargeability[.]” (ECF No. 9 at 317.) Similarly, the Bankruptcy Court wrote in the Memorandum Decision that “[t]he evidence and testimony at the Trial reinforced the Court's fraud findings[.]” (ECF No. 20-10 at 3.) The Bankruptcy Court also found that Appellant “made intentional misrepresentations regarding material facts, intending for [Appellees] to rely upon them.” (Id. at 14.) Thus, the Bankruptcy Court itself found that Appellant committed fraud beyond the fraud indirectly captured in the COJ. (Id. at 3.)

         Appellees' efforts to collect on the Nondischargeability Judgment led to this appeal. More specifically, Appellees moved for authorization to register the Nondischargeability Judgment under 28 U.S.C. § 1963. (ECF No. 9 at 290-301.) Appellees were motivated to register the Nondischargeability Judgment in the Central District of California and the District of Arizona under section 1963 because they understood that Appellant had left Nevada, was residing in Palm Springs, and had a brother in Arizona. (Id. at 294-95.) They also alleged Appellant had assets in both California and Arizona that he moved from Nevada after judgment was entered against him in state court. (Id. at 295-96.) The Registration Order reflects that the Bankruptcy Court granted this motion. The Bankruptcy Court also granted Appellees' related request for a judgment debtor exam to assist in their collection efforts in the Judgment Debtor Order.

         Appellant raised the argument he now raises in this appeal for the first time in opposing Appellees' motions to register the Nondischargeability Judgment and related motion for a debtors exam. Because 28 U.S.C. § 1963, upon which Appellees relied in obtaining the Registration Order, only applies to “money judgments, ” Appellant opposed Appellees' motions leading to the Orders in part because the Nondischargeability Judgment is not a “money judgment.” (ECF No. 9 at 257-270.) While the Registration Order and Judgment Debtor Order do not explicitly discuss money judgments, the Bankruptcy Court placed findings on the record at a hearing he held in advance of issuing them stating that the Nondischargeability Judgment is a money judgment. (ECF No. 9 at 186-188.)

         III. LEGAL STANDARD

         A bankruptcy court's conclusions of law are reviewed de novo, “including its interpretation of the Bankruptcy Code, ” and its factual findings are reviewed for clear error. In re Rains, 428 F.3d 893, 900 (9th Cir. 2005); see also In re Salazar, 430 F.3d 992, 994 (9th Cir. 2005). In reviewing a bankruptcy court's decision, this Court ignores harmless errors. See In re Mbunda, 484 B.R. 344, 355 (B.A.P. 9th Cir. 2012). The Court may affirm the Bankruptcy Court's decision “on any ground fairly supported by the record.” In re Warren, 568 F.3d 1113, 1116 (9th Cir. 2009).

         The parties agree, and the Court finds, that this Court reviews the Bankruptcy Court's Registration Order for abuse of discretion. (ECF Nos. 8 at 10, 19 at 8.) See alsoIn re Sasson, 424 F.3d 864, 867, 874-75 (9th Cir. 2005). “A bankruptcy court abuses its discretion if it applies the wrong legal standard, misapplies the correct legal standard, or if its factual findings are illogical, implausible, or without support in inferences that may be ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.