Jeaneen Bonnett v. Moirbia Scottsdale, LLC ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 4 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JEANEEN BONNETT, No. 20-60041
Appellant, BAP No. 19-1293
v.
MEMORANDUM*
MOIRBIA SCOTTSDALE, LLC,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Brand, Taylor, and Lafferty III, Bankruptcy Judges, Presiding
Argued and Submitted July 9, 2021
Portland, Oregon
Before: O’SCANNLAIN, PAEZ, and BENNETT, Circuit Judges.
Jeaneen Bonnett appeals the Bankruptcy Appellate Panel’s (“BAP”) decision
affirming the bankruptcy court’s grant of summary judgment for Moirbia Scottsdale,
LLC (“Moirbia”), in this 11 U.S.C. § 523 nondischargeability proceeding. We have
jurisdiction pursuant to 28 U.S.C. § 158(d), and we affirm.
Bonnett and Steve Goumas, her long-time business partner and personal
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
acquaintance, jointly developed a restaurant called Rula Bula the Tempe Irish Pub
(“Rula Bula”). Goumas, through several layers of corporate entities, partially owned
and operated Rula Bula, while Bonnett owned the intellectual property and provided
professional services to the restaurant. By 2010, Goumas had become insolvent, and
Wells Fargo obtained a stipulated judgment against him for $2 million, which
Moirbia later purchased. In 2011, Goumas sold Rula Bula for cash and a $360,000
promissory note payable to one of his corporate entities, Perfect Pint Holding
Company, LLC, (“Perfect Pint”). Goumas then conveyed his management interest
in Perfect Pint to Bonnett, allegedly in partial satisfaction of debts owed to Bonnett.
From the management interest, Bonnett received $61,054 in distributions and
$50,333 in payments on the note. Separately, Goumas also assigned checks totaling
$90,609 to Bonnett.
In 2014, Moirbia sued Goumas and Bonnett in Arizona state court, seeking to
set aside and recover Goumas’s allegedly fraudulent conveyances to Bonnett. After
a bench trial, the court made these findings of fact:
20. Goumas and Bonnett’s personal relationship had a significant impact
upon their business dealings and their intentions underlying the transfers . . . .
***
24. Madison [Bonnett’s corporate entity] and Bonnett are insiders as to the
Debtor entities.
25. When Lis Doon Varna [another restaurant developed by Goumas and
Bonnett] faced financial difficulties, . . . Goumas and Bonnett constructed a
scheme to transfer assets away from the businesses the Debtors operated to
Bonnett for the purpose of protecting those assets from creditors.
***
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57. The transfer of the Management Interest was made with the intent to
hinder, delay or defraud creditors of Goumas [and related entities].
***
94. The Bonnett defendants did not receive any of the above-described
transfers . . . (including the interest in the [promissory note] and other transfers
associated with the assignment of the Management Interest, and the
assignments of checks payable to Goumas) in good faith.
The court thus ruled for Moirbia on two counts of avoidance of a fraudulent transfer,
Ariz. Rev. Stat. (A.R.S.) § 44-1004, and entered judgment against Bonnett for
$510,325 and interest. The state appeals court upheld the judgment.
Bonnett then filed for bankruptcy. Moirbia filed an adversary complaint
seeking to except its state court judgment against Bonnett from discharge under 11
U.S.C. § 523. The bankruptcy court granted summary judgment for Moirbia.1 The
court held that the prior state court proceeding precluded Bonnett from relitigating
whether her debt was obtained by “actual fraud,” and thus the judgment was
excepted from discharge under § 523(a)(2)(A). The BAP affirmed.
We review de novo BAP decisions and apply the same standard of review that
the BAP applied to the bankruptcy court’s ruling. Boyajian v. New Falls Corp. (In
re Boyajian), 564 F.3d 1088, 1090 (9th Cir. 2009). We review de novo the
bankruptcy court’s decision to grant summary judgment. Id. The availability of
1
The bankruptcy court previously denied summary judgment on whether Bonnett’s
debt was obtained by “willful and malicious injury.” See 11 U.S.C. § 523(a)(6).
After granting summary judgment on the basis that Bonnett’s debt was obtained by
“actual fraud,” 11 U.S.C. § 523(a)(2)(A), the bankruptcy court directed entry of final
judgment against Bonnett.
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issue preclusion is a question of law that we review de novo. Dias v. Elique, 436
F.3d 1125, 1128 (9th Cir. 2006).
In bankruptcy proceedings, “[t]he preclusive effect of a state court judgment
rests upon the preclusion law of the state in which the judgment was issued.”
Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591 F.3d 1199, 1205 n.3 (9th
Cir. 2010). Under Arizona law, issue preclusion is available when an issue “was
actually litigated in a previous proceeding, there was a full and fair opportunity to
litigate the issue, resolution of the issue was essential to the decision, a valid and
final decision on the merits was entered, and there is common identity of parties.”
Hullett v. Cousin, 63 P.3d 1029, 1035 (Ariz. 2003). The issue must be “identical in
all respects with that decided in the first proceeding.” S. Point Energy Ctr., LLC v.
Ariz. Dep’t of Revenue, 382 P.3d 1226, 1229 (Ariz. Ct. App. 2016) (citation
omitted).
A transferee who receives a fraudulent conveyance with the requisite
wrongful intent also commits actual fraud, and any debts traceable to the fraudulent
conveyance will be nondischargeable. Husky Int’l Elecs., Inc. v. Ritz, 136 S. Ct.
1581, 1586, 1588–89 (2016). The issue in this proceeding is whether Bonnett
received the conveyances with the intent required to commit actual fraud herself.
Bonnett argues that this issue of her fraudulent intent is not identical to any of the
issues decided in state court, and that even if it were, the state court allocated the
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burden of proof differently than it is allocated in determining nondischargeability.
She also contends that her intent was not actually litigated or essential to the state
court’s decision. We disagree.
1. There is an identity of issues. Bonnett’s wrongful intent in receiving the
fraudulent conveyance from Goumas was decided in the state court proceeding. The
state court found that Bonnett did not receive the conveyances in good faith. Thus,
the state court determined that Bonnett “knew, or should have known, that . . . the
purpose of the trade, so far as [Goumas] was concerned, was the defrauding of his
creditors.” Carey v. Soucy, 431 P.3d 1200, 1206–07 (Ariz. Ct. App. 2018) (citation
omitted). The state court also found that “Goumas and Bonnett constructed a scheme
to transfer assets,” (emphasis added), and that transfer was made with the intent to
hinder, delay, or defraud. Thus, the state court determined that Bonnett was not
merely a recipient of the transfer, but also a full and equal participant in Goumas’s
fraudulent scheme. We thus hold that the state court decided the issue of Bonnett’s
fraudulent intent in receiving the conveyances.
2. There is no shift in the burden of proof that would defeat issue preclusion.
Both parties agree that, in this proceeding, Moirbia bears the burden of proving
Bonnett had the requisite intent to commit actual fraud. But cf. Otto v. Niles (In re
Niles), 106 F.3d 1456, 1461 (9th Cir. 1997). But Bonnett argues that, in state court,
she bore the burden of proving she received the transfer in good faith (or without
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fraudulent intent). See Uniform Fraudulent Transfer Act § 8(a), cmt. (1). Thus, she
claims the burden of proof has shifted and issue preclusion is no longer available.
See Rest. 2d Judg. § 28(4). But Bonnett’s responsibility to prove the ultimate issue
of good faith does not necessarily mean she also had the burden of proof on all
evidentiary findings bearing upon good faith. Here, the state court decided that
Goumas and Bonnett jointly constructed the transfer scheme for the purpose of
determining whether Goumas had the intent to defraud his creditors. See Carey, 431
P.3d at 1206. Because Moirbia first had to carry its burden of proving Goumas’s
fraudulent intent, it had the burden to prove the finding that Goumas and Bonnett
constructed the scheme together. See Premier Fin. Servs. v. Citibank, 912 P.2d
1309, 1314–15 (Ariz. Ct. App. 1995). Thus, the burden of proof did not materially
shift to defeat issue preclusion.
3. Bonnett’s participation in the fraudulent conveyance scheme was actually
litigated. Moirbia raised the issue in its pretrial statement, and the state court decided
that Goumas and Bonnett constructed the scheme together. See Chaney Bldg. Co. v.
City of Tucson, 716 P.2d 28, 30 (Ariz. 1986) (“When an issue is properly raised by
the pleadings or otherwise, and is submitted for determination, and is determined,
the issue is actually litigated.”).
4. Finally, Bonnett’s role in constructing the fraudulent conveyance scheme
was essential to the decision. To award a judgment against Bonnett, the state court
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necessarily decided that A.R.S. § 44-1008(A), which shields a transferee who took
the conveyance in good faith and for reasonably equivalent value, did not apply.
That Bonnett constructed and participated in the scheme establishes her knowledge
of the fraudulent purpose behind the conveyances. The state court necessarily relied
on this fact to reach its ultimate conclusion that Bonnett did not receive the
conveyances in good faith, because it made no other findings relevant to Bonnett’s
good faith (or lack thereof). Thus, Bonnett’s fraudulent intent was essential to the
state court judgment.
The bankruptcy court correctly determined that the state court proceeding
precludes relitigation of whether Bonnett received the conveyances with fraudulent
intent. Moirbia has established nondischargeability under § 523(a)(2)(A). Thus, the
bankruptcy court did not err in granting summary judgment for Moirbia.
AFFIRMED.
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