1 NOT FOR PUBLICATION 2 UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF CALIFORNIA

3 4 In re: ) 5 ) WILLIE J. WATSON, Sr., ) Case No. 23-22374-C-13 6 ) ______________________________D_e_b_t_o_r_._______________) 7 ) JESSICA L. WILLIAMS and EMMA ) Adv No. 23-02078-C 8 LAVERNE WILLIAMS, ) ) 9 Plaintiffs, ) v. ) 10 ) WILLIE J. WATSON, Sr., ) 11 ) Defendant. ) 12 ) ________________________________ 13

MEMORANDUM OF DECISION

14 15 CHRISTOPHER M. KLEIN, Bankruptcy Judge: 16 Plaintiff Creditors, Jessica Williams and Emma LaVerne 17 Williams (Plaintiffs) filed this motion for an order precluding 18 the debtor from relitigating the issues of fraud, conversion, 19 misrepresentation, and financial abuse on a theory of issue 20 preclusion and entering Judgment on the Pleadings under Federal 21 Rule of Civil Procedure 12(c). For the reasons stated herein, 22 California issue preclusion is available to be applied and as a 23 matter of judicial discretion will be imposed, thereby warranting 24 judgment on the pleadings pursuant to Rule 12(c). 25 26 Procedural History 27 Plaintiffs contend that the issues warranting were actually 28 and necessarily decided in the final default judgment filed 1 October 16, 2019, in the civil action Jessica Williams, et al. v. 2 Willie J. Watson, et al., Superior Court of California, County of 3 Alameda, Case No. RG17869515. The action initially was against 4 Willie Watson, Jr., and Doe defendants and then was amended to 5 add the current debtor Willie Watson, Sr., as a named defendant. 6 The Plaintiffs were awarded a total of $727,829.83 against 7 the defendants, including debtor Willie Watson, Sr., which award 8 consisted of $554,700.00 damages, $85,636.56 prejudgment 9 interest, $82,793.94 attorneys' fees, and $4,699.33 costs. 10 The counts in the Amended Complaint included, among others, 11 fraud, intentional misrepresentation, and financial elder abuse. 12 Issue was joined in the state court litigation, and 13 extensive proceedings ensued between the parties before the 14 Superior Court eventually struck the answers, entered default, 15 and, later, awarded default judgment. 16 The request for entry of default judgment presented to the 17 Superior Court in support of a request for entry of default 18 judgment was replete with factual evidence addressed to the 19 underlying merits. After the default judgment was entered, on two 20 occasions the Superior Court, in reasoned decisions, declined to 21 grant the defendants relief from the judgment. 22 The debtor, Willie Watson, Sr., filed his chapter 13 23 bankruptcy case on July 18, 2023. This adversary proceeding 24 alleging nondischargeability that would be excepted from a 25 chapter 13 discharge pursuant to 11 U.S.C. §§ 523(a)(2) and 26 1328(a) ensued. 27 28 1 Jurisdiction 2 Jurisdiction is founded on 28 U.S.C. § 1334(b). This is a 3 || core proceeding that a Bankruptcy Judge may hear and determine. U.S.C. § 157 (b) (2) (1). 5 6 Issue Preclusion 7 The question whether issue preclusion is available to be 8 || applied is a mixed question of law and fact that is reviewed 9l/either for clear error or de novo, depending on an appellate 10 || court's assessment whether issues of fact or of law predominate. li] U.S. Bank Nat’l Ass’n v. Village at Lakeridge, 138 S.Ct. 960 (2018); Robi v. Five Platters, Inc., 838 F.2d 318, 321 (9th Cir. 1988). 14 Once it is determined that issue preclusion is available to 15 ||} be applied as a matter of law, then the determination whether to 16] apply it under the facts is in the discretion for the trial 17 | judge, whose decision in that respect will be reviewed for abuse 18] of discretion. Robi, 838 F.2d at 321. 19 The Full Faith and Credit Act (28 U.S.C. § 1738) requires 20 that California rules of issue preclusion apply to the preclusive effect of the judgment of California state courts. Khaligh v. 22 || Hadoegh (In re Khaligh), 338 B.R. 817, 824 (9th Cir. BAP 2006). 23 California issue preclusion doctrine is governed by the decision of the California Supreme Court in Lucido v. Superior 25] Court, 51 Cal.3d 335, 341-43 (1990). 26 In Lucido, the California Supreme Court identified six 27} elements reguired for issue preclusion with respect to a judgment 28 |} of a California court:

1 First, the judgment must be on the identical issue; 2 Second, the issue must have been actually litigated; 3 Third, the issue must have been necessarily decided; 4 Fourth, the judgment must be final and on the merits; 5 Fifth, the judgment must be against the same party or a 6 party in privity; 7 Sixth, imposition of issue preclusion must be fair and 8 consistent with sound public policy. 9 51 Cal. 3d at 341-43. 10 The party urging preclusion has the burden of persuasion and 11 the correlative risk of nonpersuasion. Lucido, 51 Cal. 3d at 342; 12 Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1246 (9th Cir. 13 2001). 14 The first five elements in Lucido comport with the 15 Restatement (Second) of Judgments. Restatement (Second) of 16 Judgments § 27 (1982). The sixth element relating to fairness and 17 sound public policy re-emphasizes the proposition that the trial 18 court retains discretion whether to impose issue preclusion. 19 20 Effect of Default Judgment 21 The fact that a judgment was entered by default does not 22 necessarily flunk the requirement that the subject issue have 23 been "actually litigated" for purposes of issue preclusion. 24 The controlling question turns on the quality of the 25 determination made by the trial court in the course of rendering 26 a default judgment. Williams v. Williams (In re Williams' 27 Estate), 36 Cal.2d 289, 297 (1950); Harmon, 250 F.3d at 1246-49. 28 Some default judgments in California may be characterized as 1 "drive-by" conclusory affairs in which the trial court does not 2 make considered decisions and hence might not satisfy the 3 "actually litigated" requirement because, among other defects, 4 there are not "express findings" or other indication the issue 5 was "necessarily decided." 6 Other California default judgments contain either express 7 findings or other indicia that the issue was necessarily decided 8 in the course of entering a default judgment. Harmon, 250 F.3d at 9 1246-49. 10 In this instance, scrutiny of the approximately 300-page 11 default judgment record persuades this court that the default 12 judgment against the debtor passes muster under the standards of 13 Lucido and of Williams' Estate. 14 Not only was the initial judgment carefully considered by 15 the Alameda County Superior Court, that court revisited the 16 judgment on two occasions in the course of considering whether to 17 grant relief from the judgment. Although the debtor here now 18 protests that he had no idea that the action was pending against 19 him and that he is an innocent bystander who was denied due 20 process of law, the state court record belies that proposition. 21 22 Conclusion 23 All of the policy considerations underlying the preclusion 24 of the relitgation of issues actually litigated and necessarily 25 decided in prior litigation counsel in favor of exercising this 26 court's discretion to impose issue preclusion. 27 Accordingly, issue preclusion is imposed and the Rule 12(c) 28 motion for judgment on the pleadings is GRANTED. 1 Judgment will be entered in favor of Plaintiffs. 2 Dated: April 19, 2024 3 | \ \ 4 \\) 5 United States Bankruptcy Judge . }

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