Pacific Bancorporation v. Sears (In re Sears)

MEMORANDUM DECISION

The plaintiffs Pacific Bancorporation (“PBC”) and P.B.C. Venture Capital, Inc. (“VCI”) and debtor/defendant Gerald A. Sears (“Sears”) have filed counter-motions for summary judgment on an action to *782 determine the dischargeability of a debt pursuant to 11 U.S.C. § 523 (a)(4).

Plaintiffs PBC and VCI seek summary judgment on their complaint to determine the dischargeability of a debt claiming that a prior state court judgment finding a fiduciary relationship, breach of fiduciary duty and fraud has a collateral estoppel effect in the non-dischargeability proceeding.

Defendant Sears opposes plaintiffs’ motion for summary judgment claiming that collateral estoppel does not apply because: (a) the issues presented in this adversary proceeding are completely different from the state court trial; (b) since the issues are completely different, they have never actually been decided or litigated by the state court; (c) the award of attorney’s fees is null and void because an automatic stay was in effect at the time they were awarded so there is no valid and final judgment; and (d) the different standard of proof used in state court prevents issue preclusion.…