NORTHERN DISTRICT OF CALIFORNIA
MARIA IRENE DOMINGUEZ, No. 00-10916
SHARON L. RODEN,
v. A.P. No. 00-1119
MARIA IRENE DOMINGUEZ,
Memorandum of Decision
In 1989, plaintiff Sharon Roden filed a complaint against debtor and defendant Maria
Dominguez in state court to recover an unpaid loan. The complaint contained six counts, including one
alleging conversion and one alleging deceit. In 1990, the parties entered into a stipulated judgment in
settlement of the litigation. Because Roden was concerned that Dominguez might file a bankruptcy
petition, she insisted that the stipulated judgment recite that it was "on all counts."
Ten years later, Dominguez did file a Chapter 7 petition. Roden filed this adversary proceeding
seeking a determination that her claim is nondischargeable. She has moved the court for summary
judgment, alleging that Dominguez is collaterally estopped from defending the action because of the
1990 stipulated judgment.
The court doubts that principles of collateral estoppel justify Roden's motion. One of the
necessary elements for application of the doctrine is that the prior determination was necessary
prior judgment. The stipulated judgment was for a sum certain only, plus interest. It could have been
based only on the simple contract claims. Just because the judgment stated that it was on "all counts"
did not make a finding of deceit or conversion necessary to the judgment. There were no punitive
damages or other relief which could be based only on the deceit or conversion claims. Since a finding of
deceit or conversion was not necessary to support the judgment, Dominguez is not precluded from
refuting them now.
However, state collateral estoppel is not at all relevant to this matter. Section 727(a)(10) of the
Bankruptcy Code makes any agreement purporting to waive a discharge unenforceable if entered into
before bankruptcy. The fact that the agreement is made pursuant to a stipulated judgment does not alter
this rule. In re Cole
, 226 B.R. 647 (9th
Roden seems to argue that since her stipulated judgment did not expressly refer to a bankruptcy
discharge, it is governed strictly by state collateral estoppel law and is not subject to § 727(a)(10). The
court finds no merit to this position. As a court of equity, this court is concerned with the substance of
a transaction, not its form. Pepper v. Litton
, 308 U.S. 295, 305 (1939). Roden may not avoid the
effect of § 727(a)(10) by clever wording and a reliance on state collateral estoppel law when the effect
is exactly the same as if she had expressly contracted for a pre-bankruptcy waiver of discharge.
For the foregoing reasons, Roden's motion for summary judgment will be denied. Counsel for
Dominguez shall submit an appropriate form of order.
Dated: January 14, 2001 ___________________________