Noam Bouzaglou v. Jeanne Haworth ( 2020 )

FILED
NOT FOR PUBLICATION
MAR 25 2020
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: NOAM BOUZAGLOU, No. 18-60054
Debtor, BAP No. 17-1253
------------------------------
MEMORANDUM*
NOAM BOUZAGLOU,
Appellant,
v.
JEANNE HAWORTH, Successor Trustee
to McGinty Family Trust; KATHLEEN
MCGINTY,
Appellees.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Spraker, Kurtz, and Faris, Bankruptcy Judges, Presiding
Argued and Submitted February 14, 2020
Pasadena, California
Before: SCHROEDER, BERZON, and R. NELSON, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Noam Bouzaglou and his alter ego corporation were found liable for
substantial fraud damages after a state court trial. Bouzaglou appealed the
judgment. He then filed for bankruptcy, and his state court appeal was dismissed
because he no longer had standing to pursue his appeal.
Bouzaglou now appeals the BAP’s affirmance of the bankruptcy court
judgment finding the debt non-dischargeable. He contends that because he was
unable to appeal the state court judgment against him personally, that judgment
does not preclude him from retrying the fraud issues in bankruptcy court.
We affirm the BAP’s ruling that Bouzaglou is bound by the state court
judgment of fraud. There are several reasons. First, Bouzaglou chose, post-
judgment, to file for bankruptcy, thereby voluntarily relinquishing his personal
right to appeal. The bankruptcy code provides that legal interests are considered
property of a debtor’s estate, 11 U.S.C. § 541(a)(1), and we have held that a
bankruptcy trustee has the exclusive right to raise legal claims on behalf of the
estate, Estate of Spirtos v. One Bernardino Cty. Superior Court SPR 02211, 443
F.3d 1172, 1175 (9th Cir. 2006). The trustee here did not appeal. Second, while
there remained the possibility that the bankruptcy court could order the trustee to
abandon the appeal rights, the bankruptcy court denied Bouzaglou’s motion to
compel abandonment, and he neither re-filed the motion nor challenged that ruling.
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Finally, Bouzaglou’s alter ego corporation did appeal the fraud judgment against it
in state court and lost. The state appellate court explained that substantial evidence
supported the fraud judgment and the damages award against the corporation.
There is no indication that the result would have been any different if Bouzaglou
personally had appealed the parallel judgment against him.
The bankruptcy court rested its conclusion on California principles of issue
preclusion. See Lucido v. Superior Court, 795 P.2d 1223, 1225 (Cal. 1990). All of
the required elements are met here, including the identity of issues sought to be
litigated with issues already litigated in the state court proceeding. Bouzaglou’s
only remaining argument appears to be that of there being some unfairness in his
inability to appeal the fraud judgment. Since his alter ego corporation did appeal
the merits of the fraud judgment against it, which was based on the same evidence,
there is no conceivable unfairness.
AFFIRMED.
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