Aceituno v. Vowell et al

Filing 105

ORDER granting in part and denying in part 92 MOTION to liquidate damages against Defendant Fidelis Marketing, Inc. and to hold Defendant Jeffrey Garcia personally liable signed by Judge John A. Mendez on 3/2/15. (Kaminski, H)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 In re: Case No.: 2:12-cv-03068 JAM EFB 12 INTELLIGENT DIRECT MARKETING, Related No.: 2:09-cv-02898 JAM GGH 13 14 15 16 Debtor, ----------------------------THOMAS ACEITUNO, Chapter 7 Trustee Plaintiff, 17 18 19 20 21 22 v. [Bky Case 07-30685-A-7] [Bky AP No. 09-2439] ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION TO LIQUIDATE AMOUNT OF SUCCESSOR LIABILITY AGAINST FIDELIS AND HOLD JEFFREY GARCIA LIABLE TODD VOWELL; RAEANNE VOWELL; BEVERLY VOWELL; STEADFAST MAILING SERVICES, INC.; SASHI CORPORATION; JEFFREY K GARCIA; AND FIDELIS MARKETING, INC., Defendants. 23 24 This matter is before the Court on Plaintiff Thomas 25 Aceituno’s (“Plaintiff” or “Trustee”) motion to liquidate damages 26 (Doc. #92) against Defendant Fidelis Marketing, Inc. (“Defendant 27 Fidelis”) and to hold Defendant Jeffrey Garcia (“Defendant 28 1 1 Garcia”) personally liable. 2 Plaintiff’s motion, and also filed a special opposition (Doc. 3 #94) disputing the Court’s jurisdiction over him. 4 Todd and Raeanne Vowell filed a “response” (Doc. #99) to 5 Plaintiff’s motion. 6 (Doc. #100) and the Vowells (Doc. #101). 1 Defendant Garcia opposes (Doc. #96) Defendants Plaintiff replied to both Defendant Garcia 7 8 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 9 The parties and the Court, having conducted a four-day bench 10 trial from June 23, 2014 through June 26, 2014, are familiar with 11 the factual and procedural history of this case. 12 trial, the Court made the following factual and legal findings, 13 relevant to Plaintiff’s present motion. 14 operating Intelligent Direct Marketing, Inc. (“IDM”) as an 15 automotive direct mailing service in 1994, and incorporated IDM 16 in 1997. 17 profitable years, IDM began operating at a loss by late 2006 and 18 2007. 19 Fidelis, a direct mail marketing company. 20 IDM granted Fidelis a right to possess IDM’s goodwill, income 21 stream, and assets. 22 difference between IDM and Fidelis was that Fidelis would not be 23 responsible for IDM’s debt. 24 facts, the Court found that “Fidelis is the successor of IDM 25 because Fidelis was created for the purpose of avoiding Todd Vowell began Fidelis F & C (Doc. #78) at 3. Fidelis F & C at 5. Following After a number of On May 1, 2007, Jeff Garcia created Fidelis F & C at 6. Fidelis F & C at 5. In fact, the only Fidelis F & C at 5. Based on these 26 27 28 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for February 11, 2015. 2 1 liability.” 2 Court noted that “[t]he Trustee also seems to suggest that Mr. 3 Garcia should be held directly liable [on behalf of Fidelis], but 4 he fails to address alter ego liability.” 5 The Court entered judgment against Fidelis, but in favor of Mr. 6 Garcia. Fidelis F & C at 26. With regard to Mr. Garcia, the Fidelis F & C at 25. Fidelis F & C at 26. 7 8 II. 9 A. 10 OPINION Judicial Notice Plaintiff requests that the Court take judicial notice of 11 the “proofs of claim” submitted in support of his motion. 12 #92. 13 page of the exhibits, these documents appear to be part of the 14 record in the underlying bankruptcy case. 15 are public records, and Defendants do not dispute their 16 authenticity. 17 judicial notice, and Plaintiff’s request is GRANTED. 18 the Court notes that it may only take judicial notice of the 19 existence of such documents, not the facts contained therein. 20 Doc. Based on Plaintiff’s representations and the header on each These court documents Accordingly, they are the proper subject of However, Similarly, Defendants Todd and Raeanne Vowell request that 21 the Court take judicial notice of the “proof of claim” submitted 22 by the Vowells in the underlying bankruptcy case. 23 This document is a public record, and Plaintiff does not dispute 24 its authenticity. 25 judicial notice, and the request is GRANTED. 26 notes that it may only take judicial notice of the existence of 27 the document, not the facts contained therein. Doc. #99-1. Accordingly, it is the proper subject of 28 3 Again, the Court 1 B. 2 3 Discussion 1. Calculation of Damages against Fidelis Plaintiff moves for “an order fixing the total amount of the 4 debts of IDM at $1,053,438.49 for purposes of giving effect to 5 the successor liability of Fidelis Marketing, Inc., for IDM’s 6 debts, as declared” in the Court’s September 18, 2014 order. 7 Mot. at 1. 8 summarizing the claims filed in the underlying IDM bankruptcy 9 case, as well as copies of the documentary proof submitted in Along with his motion, Plaintiff submits a chart 10 support of these claims. 11 not oppose this portion of Plaintiff’s motion, and does not 12 dispute Plaintiff’s calculation of IDM’s debt, for which Fidelis 13 bears successor liability. 14 Vowell submit a “response” to Plaintiff’s motion, which is 15 discussed below. See Doc. #92. Defendant Fidelis does However, Defendants Todd and Raeanne 16 Under 28 U.S.C. § 2202, the Court may grant “[f]urther 17 necessary or proper relief . . . against any adverse party whose 18 rights have been determined by [a declaratory] judgment.” 19 U.S.C. § 2202. 20 “declaratory judgment be entered against Fidelis declaring it 21 liable for IDM’s debt on Plaintiff’s successor liability claim.” 22 Order at 26. 23 fixing the debt of IDM, for purposes of giving effect to the 24 September 18, 2014 declaratory judgment imposing successor 25 liability on Fidelis, is properly before the Court. 28 On September 18, 2014, the Court ordered that Accordingly, Plaintiff’s request for an order 26 In calculating the amount of damages against Fidelis, 27 Plaintiff looks to the claims submitted against IDM in the 28 underlying bankruptcy action, but excludes two categories of 4 1 claims. 2 1, 2007, the date on which Fidelis came into existence as the 3 “new IDM.” 4 claims filed by Fidelis, Garcia, Sashi Corporation, Todd Vowell, 5 or Raeanne Vowell. 6 calculation is “conservative” because it excludes “doubtful or 7 questionable claims.” 8 the sum of all claims which do not fall into either of the above 9 categories, Plaintiff seeks damages against Fidelis in the amount First, Plaintiff excludes any claims arising after May Mot. at 4. Second, Plaintiff excludes any “insider” Mot. at 4. Plaintiff notes that this Reply to Vowells at 1; Mot. at 4. Taking 10 of $1,053,438.49. 11 are supported by documentary proof, which accompanies Plaintiff’s 12 declaration. 13 this calculation. 14 and the supporting documentation, and in the absence of any 15 opposition by Fidelis, the Court adopts Plaintiff’s calculation. 16 Accordingly, the Court finds that the total amount of IDM’s debt, 17 for which Fidelis is liable as a successor to IDM, is 18 $1,053,438.49. 19 determination as to whether or not the “insider” claims or claims 20 arising after May 1, 2007 should ultimately be paid or disallowed 21 during the Trustee’s distribution of the bankruptcy estate. 22 All of the claims included in this calculation Doc. #92. As noted above, Fidelis does not oppose In light of Plaintiff’s conservative approach As discussed below, the Court makes no Defendants Todd and Raeanne Vowell argue that Plaintiff is 23 attempting to “summarily invalidate the Vowells’ claim.” Vowell 24 Response at 2. 25 failure to include their claims in the calculation of damages 26 against Fidelis will ultimately prevent them from prevailing on 27 those claims during bankruptcy proceedings. 28 2. The Vowells express concern that Plaintiff’s Vowell Response at However, as explained in Plaintiff’s reply, this is not the 5 1 case. 2 seeks to fix the total amount of IDM’s debt for which Fidelis 3 bears successor liability. 4 ($1,053,438.49) will be added to the bankruptcy estate, for 5 eventual distribution by the Trustee. 6 estate, the Trustee will “examine proofs of claims and object to 7 the allowance of any claim that is improper.” 8 704(a)(5). 9 funds held by the Trustee, the estate will be distributed 10 according to the priorities set forth in 11 U.S.C. § 726. 11 Accordingly, the Vowells’ concern that this order will invalidate 12 their claims is misplaced: a final determination as to the 13 validity of their claims will not be made until later in the 14 bankruptcy proceedings, after the Trustee has collected the funds 15 comprising the bankruptcy estate. 16 the Vowells ask the Court to increase the amount of damages 17 imposed against Fidelis – by including their $2,286,479.57 claim 18 against IDM – this request is not properly before the Court and 19 Defendant Fidelis has had no chance to address their argument. 20 Reply to Vowells at 2. Plaintiff’s current motion merely The amount imposed by the Court Prior to distributing the 11 U.S.C. § If the monetary amount of valid claims exceeds the Moreover, to the extent that For all of these reasons, Plaintiff’s motion to fix the 21 amount of IDM’s debt, for which Fidelis bears successor 22 liability, at $1,053,438.49 is GRANTED. 23 2. 24 Personal Liability of Garcia Plaintiff also asks the Court to find that “Garcia as well 25 as Fidelis [is] liable for repayment of [IDM’s] debt.” 26 8. 27 prevent Garcia from using Fidelis to shield himself from 28 liability.” Mot. at Plaintiff argues that the “alter ego doctrine applies to Mot. at 6. Defendant Garcia responds that the Court 6 1 lacks jurisdiction over him because it has already entered 2 judgment in his favor, and that Plaintiff’s alter ego argument is 3 foreclosed by the doctrine of res judicata. 4 at 1; Garcia Opp. at 1. 5 Garcia’s alter ego liability . . . was not pled or litigated.” 6 Reply to Garcia at 2. 7 Garcia Special Opp. Plaintiff replies that “[t]he issue of In its September 18, 2014 order, the Court specifically held 8 that “all the claims not discussed in either the Trustee’s 9 proposed findings of fact and and conclusions of law or the 10 Trustee’s supplemental post-trial brief are abandoned.” 11 F & C at 9. 12 successor liability for IDM’s debts, the Court noted that “[t]he 13 Trustee also seems to suggest that Mr. Garcia should be held 14 directly liable . . . but he fails to address alter ego 15 liability.” 16 that “judgment be entered in favor of . . . Jeffrey Garcia” 17 without limiting or qualifying this aspect of the order in any 18 way. 19 Fidelis Immediately after finding that Fidelis bears Fidelis F & C at 25. The Court went on to order Fidelis F & C at 26. The plain implication of this language is that Mr. Garcia is 20 not personally liable, under an alter ego theory of liability, 21 for the successor liability of Fidelis on behalf of IDM’s debts. 22 Plaintiff had an opportunity to present evidence at trial to 23 support this argument in his proposed findings of fact and 24 conclusions of law, and failed to adequately do so. 25 Plaintiff concedes that the portion of his proposed findings 26 which relates to successor liability “does not request alter ego 27 liability against Garcia.” 28 Court’s specific finding that arguments not made at the time of Reply at 3. 7 In fact, In light of (1) the 1 the trial would be deemed abandoned and (2) the Court’s specific 2 finding that Plaintiff failed to address alter ego liability on 3 behalf of Mr. Garcia, Plaintiff’s alter ego argument presently 4 before the Court is barred by the doctrine of res judicata. 5 Greenspan v. LADT, LLC, 191 Cal.App.4th 486, 514 (2010) (noting 6 that “[r]es judicata prohibits the relitigation of claims and 7 issues which have already been adjudicated in an earlier 8 proceeding”). 9 request for reconsideration of the Court’s prior finding as to See Plaintiff’s present motion amounts to an untimely 10 Mr. Garcia. 11 Court to revisit its entry of judgment in favor of Mr. Garcia, 12 and the Court declines to give Plaintiff a second bite at the 13 apple. 14 Plaintiff has presented no compelling reason for the Plaintiff’s reliance on Greenspan is misplaced. Reply to 15 Garcia at 4. In Greenspan, the California appellate court 16 discussed the doctrine of res judicata with regard to an issue 17 that had not been considered in the original proceeding. 18 Greenspan, 191 Cal.App.4th at 507 (noting that the party seeking 19 to invoke the doctrine of res judicata “was not a party to that 20 claim [decided in the earlier proceeding] and did not prevail on 21 it”). 22 to amend the judgment was precluded from doing so by its failure 23 to raise the issue in the earlier proceeding. 24 Cal.App.4th at 514. 25 liability was expressly reached and rejected by the Court in its 26 September 18, 2014 order. 27 Plaintiff’s argument, as it “precludes a party to an action from 28 relitigating in a second proceeding matters litigated and See Thus, the issue in Greenspan was whether the party seeking Greenspan, 191 Here, the issue of Mr. Garcia's alter ego Accordingly, res judicata is a bar to 8 1 determined in a prior proceeding.” 2 514. 3 Greenspan, 191 Cal.App.4th at To the extent that Plaintiff’s motion seeks a finding that 4 Garcia is personally liable for the repayment of Fidelis’ and 5 IDM’s debt, his motion is DENIED. 6 Garcia personally liable for the debts of Fidelis and IDM, it 7 need not consider Defendant Garcia’s argument that the entry of 8 judgment in his favor divests the Court of jurisdiction over him. 9 Garcia Special Opp. at 1. As the Court does not find Mr. 10 11 12 III. ORDER For the reasons set forth above, the Court GRANTS 13 Plaintiff’s motion to the extent it seeks to fix the amount of 14 damages against Defendant Fidelis at $1,053,438.49, and DENIES 15 Plaintiff’s motion to the extent it seeks to hold Defendant 16 Garcia personally liable for the debts of Fidelis and IDM: 17 18 IT IS SO ORDERED. Dated: March 2, 2015 19 20 21 22 23 24 25 26 27 28 9

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