ROBERT H. JACOBVITZ, Bankruptcy Judge.
THIS MATTER is before the Court on Plaintiff's Motion for Summary Judgment (Docket No. 30) and the Supplement to Plaintiff's Motion for Summary Judgment (Docket No. 38). Defendant Isaac S. Martinez filed a Response to Plaintiff's Motion for Summary Judgment (Docket No. 39), and Plaintiffs filed a reply (Docket No. 42). No other Defendant filed a response to Plaintiffs' Motion for Summary Judgment. Plaintiffs assert that principles of collateral estoppel and res judicata entitle them to judgment on their claims for non-dischargeability of debt under 11 U.S.C. § 523(a)(6) and 11 U.S.C. § 523(a)(13) based on the following: 1) a Default Judgment entered against Defendants Isaac S. Martinez and Cruz Delia Martinez awarding Plaintiffs a money judgment on their personal injury tort claims; and 2) a Plea Disposition Agreement, Statement of Facts, Conditional Discharge Order and Order Revoking Conditional Discharge and Imposing Deferred Sentence entered in criminal proceedings prosecuted by the State of New Mexico against Defendant Isaac C. Martinez for criminal sexual contact of a minor. For the reasons set forth below, the Court finds that Plaintiffs are not entitled to summary judgment against Defendant Isaac C. Martinez because the evidence before the Court fails to establish that either the judgment on Plaintiffs' personal injury tort claim issued by the Arizona state court or the criminal conviction satisfies the "actually litigated" requirement for collateral estoppel under Arizona and New Mexico law. The Court also finds that Plaintiffs are not entitled to a judgment of non-dischargeability against Defendants Cruz Delia Martinez or Verenice Martinez.
Defendant Isaac S. Martinez filed a voluntary petition under Chapter 7 of the Bankruptcy Code on December 1, 2009. Prior to the filing of Defendant's bankruptcy case, Plaintiffs filed a civil action against Defendant in the Superior Court of Arizona alleging, among other things, assault and battery ("Arizona State Court Action"). The Arizona State Court Action remained pending as of the date Defendant filed his bankruptcy case. On March 22, 2010, Plaintiffs filed a Complaint to Determine Dischargeability of Personal Injury Tort Claim Pursuant to 11 U.S.C. §§ 523(a)(6) and 523(a)(13) (the "Complaint"). Defendant Isaac S. Martinez filed an answer to the Complaint on April 26, 2010, generally denying all allegations in the Complaint. See Docket No. 4. Plaintiffs filed a motion to withdraw the reference of this adversary proceeding to the Bankruptcy Court so that the United States District Court for the District of New Mexico (the "District Court") could adjudicate the claim.
Approximately one year later, on June 16, 2011, Plaintiffs filed a Motion to Proceed with Adjudication of Adversary Proceeding to Determine Dischargeability of Personal Injury Tort Claim Removed to the United States Bankruptcy Court ("Motion to Proceed"), reporting that the appeal of the remand order had been dismissed and that the Plaintiffs' personal injury tort claim had been liquidated in the Arizona State Court Action. The Motion to Proceed requested the District Court to either 1) lift the stay and proceed to final adjudication of the adversary proceeding; or 2) refer the adversary proceeding back to the Bankruptcy Court. See Docket No. 18. Plaintiffs subsequently filed a Notice of Completion pursuant to D.N.M. LR 7.4(e) requesting the same relief as the Motion to Proceed. See Docket No. 19.
On July 21, 2011, the District Court entered a Memorandum Opinion and Final Judgment lifting the stay of the adversary proceeding and referring the adversary proceeding back to this Court to make the determination of dischargeability. In reaching its conclusion to refer the adversary proceeding back to this Court, the District Court noted that a default judgment liquidating Plaintiffs' claim had been entered in the Arizona State Court Action, and stated that "although the bankruptcy court `lacks subject-matter jurisdiction to adjudicate' personal injury tort claims, `it has exclusive jurisdiction to adjudicate its dischargeability once such claim is liquidated.'" Docket No. 20 — Memorandum Opinion, p. 4 (quoting In re Erickson, 330 B.R. 346, 349 (Bankr.D.Conn. 2005)).
Following the referral of this adversary proceeding back to this Court, Plaintiffs filed a Motion for Default Judgment and a Motion for Summary Judgment. See Docket Nos. 29 and 30. Defendant Isaac Martinez filed a response to the Motion for Default Judgment simply requesting that the Court deny the Plaintiffs' Motion for Default Judgment. See Docket No. 36. Defendant Isaac Martinez also filed a Response to Plaintiffs' Motion for Summary Judgment, stating that the default judgment in the Arizona State Court Action was the result of improper service, and attaching copies of video depositions, police reports, medical reports, and audio transcripts of court proceedings that Defendant claims will demonstrate that he is innocent of all the allegations, charges, and subsequent convictions contained in the documents Plaintiffs attached in support of their Motion for Summary Judgment. See Docket No. 39. Plaintiffs filed a Motion to Strike Defendant Isaac S. Martinez's Response to Plaintiffs' Motion for Summary Judgment and Attached Exhibits B through E filed in Violation of Rule 9037(a) ("Motion to Strike"), requesting the Court to strike the exhibits attached to Defendant's response because the documents were not authenticated. The Motion to Strike also requested the Court to seal the Response and supporting documents because the documents contained personal identifying information pertaining to a minor and a minor victim of a crime. Id. The Court entered an Order Granting, in Part, and Denying, in Part Plaintiffs' Motion to Strike Defendant Isaac S. Martinez's Response to Plaintiffs' Motion for Summary Judgment and Attached Exhibits B — E Filed in Violation of Rule 9037(A) ("Order on Motion to Strike"). See Docket No. 44. The Order on Motion to Strike directed that the Response and the exhibits attached to the Response be sealed from public view, and stated that, because the attached documents were not authenticated, the Court would not consider them. Id.
Summary judgment, governed by Rule 56, Fed.R.Civ.P., will be granted when the movant demonstrates that there is no genuine dispute as to a material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a), made applicable to adversary proceedings by Rule 7056, Fed.R.Bankr.P. "[A] party seeking summary judgment always bears the initial responsibility of informing the ... court of the basis for its motion, and ... [must] demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party seeking summary judgment must set forth by number all material facts the movant contends are not subject to genuine dispute, and refer with particularity to the portions in the record upon which the movant relies. NM —LBR 7056-1(b). In considering a motion for summary judgment, the Court must "`examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment.'" Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796 (10
"[A] party opposing a properly supported motion for summary judgment may not rest on mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial" through affidavits or other supporting evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Furthermore, New Mexico Local Bankruptcy Rule 7056-1(c) provides that the party opposing summary judgment must 1) list the material facts as to which the party contends a genuine fact exists, 2) "refer with particularity to those portions of the record upon which the opposing party relies," and 3) "state the number of the movant's fact that is disputed." NM LBR 7056-1(c). Properly supported material facts set forth in the movant's motion are "deemed admitted unless specifically controverted" by the party opposing summary judgment. NM LBR 7056-1(c).
Defendant Isaac S. Martinez did not comply with NM LBR 7056-1(c) inasmuch as he failed to respond to Plaintiffs' numbered facts, and did not identify his own statement of material facts with particularized references to the record that he contends demonstrate the presence genuine issues of material fact that would preclude summary judgment. This failure is sufficient to deem admitted all of Plaintiffs' identified material facts to the extent Plaintiffs properly supported the facts with evidence, and could serve as sufficient grounds to grant the motion for summary judgment, provided the material facts demonstrate that the movant is entitled to summary judgment as a matter of law. Cf. Taylor v. Jasper (In re Jasper), 356 B.R. 787, 2007 WL 390287, at *2 (10
1. The Superior Court of Arizona, County of Maricopa entered a Default Judgment against Defendants Isaac S. Martinez and Cruz Delia Martinez in the Arizona State Court Action on May 18, 2011. See Certified copy of Default Judgment attached to Supplement to Plaintiff's [sic.] Motion for Summary Judgment ("Supplement") as Exhibit A.
2. The Default Judgment awarded Plaintiffs damages on their personal injury tort claims in the aggregate amount of $1,600,564.50. Id.
3. The Default Judgment includes a finding that Plaintiffs sustained damages as a result of the wrongful conduct of the Defendants and that Defendant Isaac S. Martinez's acts were willful and wanton. Id.
4. Defendant Isaac S. Martinez participated in the hearing that resulted in the entry of the Default Judgment. See Certified copy of Minute Entry attached to Plaintiffs' Reply to Defendant Isaac S. Martinez's Response to Plaintiff's Motion for Summary Judgment ("Reply").
5. The Minute Entry reflects that Isaac Martinez was "present on his own behalf" at the default hearing, that Isaac Martinez was sworn in, and that he testified at the hearing. Id.
6. On December 9, 2003, Defendant Isaac Martinez entered into a Plea and Disposition Agreement in a criminal action filed against him in the State District Court, County of Hidalgo, State of New Mexico (the "Criminal Action"). See Certified copy of Plea and Disposition Agreement attached to Plaintiff's Supplement as Exhibit B.
7. The Plea and Disposition Agreement states that Defendant Isaac S. Martinez agreed to plead no contest to two counts of criminal sexual contact of a minor in the third degree (child under 13), a third degree felony, contrary to §30-9-13(a), N.M.S.A., as amended. Id.
8. Defendant Isaac S. Martinez was represented by counsel at the time he entered into the Plea and Disposition Agreement. Id.
9. On January 8, 2004, a Conditional Discharge Order was entered in the Criminal Action. See Certified copy of Conditional Discharge Order attached to the Supplement as Exhibit D.
10. The Conditional Discharge Order recites that the court in the Criminal Action found that a basis in fact exists for the plea and approves the plea, but without a finding of guilt. Id.
11. The Conditional Discharge Order dismissed Counts 1 and 2: Criminal Sexual Penetration; Counts 4 and 6: Criminal Sexual Contact of a Minor; and Count 7: Attempted Criminal Sexual Contact of a Minor pursuant to the Plea and Disposition Agreement. Id.
12. On November 30, 2005, the District Court of Hidalgo County, New Mexico entered an Order Revoking Conditional Discharge and Imposing Deferred Sentence in the Criminal Action (the "Criminal Revocation Order"). See Certified copy of Order Revoking Conditional Discharge and Imposing Deferred Sentence attached to Supplement as Exhibit E.
13. Defendant Isaac Martinez appeared with counsel at the hearing which resulted in the entry of the Criminal Revocation Order. Id.
14. The Criminal Revocation Order states that the Defendant Isaac S. Martinez admitted all violations in the Petition to Revoke Probation, that the admission was "knowingly, intelligently, freely and voluntarily made and that a basis in fact exists to believe such admissions." Id.
15. The District Court of Hidalgo County, New Mexico found that Defendant Isaac S. Martinez materially and substantially violated his probation and found and adjudged Defendant Isaac S. Martinez guilty and convicted of two counts of Criminal Sexual Contact of a Minor (Child under 13), a third degree felony, contrary to § 30-9-13(A) having occurred on or about January 1, 1999 through December 31, 2002. See Criminal Revocation Order, p.2.
16. The Criminal Revocation Order ordered Defendant Isaac S. Martinez to pay Eva Hughes $10,000 for the cost of counseling for the two victims, plus interest at the rate of 8.75 percent per annum. See Criminal Revocation Order p. 3.
17. The Criminal Revocation Order also required Defendant Isaac S. Martinez to register himself as a sex offender pursuant to the Sex Offender Registration and Notification Act, § 29-11A-1, et. Seq. NMSA 1978 (as amended 2005). See Criminal Revocation Order. p. 3.
18. Defendant Isaac S. Martinez has paid the principal amount required under the Criminal Revocation Order, but has not paid the interest which has not been liquidated.
19. Defendant Verenice Martinez was married to Defendant Isaac S. Martinez as of the date Defendant Isaac S. Martinez filed his voluntary petition under Chapter 7 of the Bankruptcy Code. Defendant Verenice Martinez is Defendant Isaac S. Martinez's non-filing spouse.
20. Defendant Verenice Martinez was not married to Defendant Isaac S. Martinez at the time the incidents which formed the basis of the Criminal Action occurred.
21. Defendant Cruz Delia Martinez was not married to Defendant Isaac S. Martinez as of the date Defendant Isaac S. Martinez filed his voluntary petition under Chapter 7 of the Bankruptcy Code.
A judgment entered against a defendant in state court can be given preclusive effect in a subsequent adversary proceeding against the same defendant for determination of non-dischargeability of debt, provided all the elements necessary to the determination of non-dischargeability were established in the state court judgment, and provided that all requirements for collateral estoppel have been satisfied. See Grogan v. Garner, 498 U.S. 279, 284 n.11, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)(acknowledging that "[v]irtually every court of appeals has concluded that collateral estoppel is applicable in discharge exception proceedings[ ]" and clarifying "that collateral estoppel principles do indeed apply in discharge exception proceedings pursuant to § 523(a).")(citations omitted).
Here, the Default Judgment was entered in Arizona, and the criminal plea, Conditional Discharge Order, and Criminal Revocation Order were entered in New Mexico. The Court must, therefore, apply the applicable collateral estoppel requirements under Arizona and New Mexico law to determine whether Plaintiffs are entitled to a non-dischargeable judgment based on the criminal proceedings and the civil personal injury tort action.
Upon a showing of all four elements, the Court must then determine whether the non-moving party "had a full and fair opportunity to litigate the issue in the prior litigation." Id. The burden of demonstrating the lack of a full and fair opportunity to litigate the issue in the prior proceeding falls on the party opposing collateral estoppel. Hartnett v. Papa John's Pizza USA, Inc., ___ F.Supp.2
The facts not subject to genuine dispute establish that Defendant Isaac C. Martinez was a party to the prior criminal proceedings and that this cause of action to determine dischargeability of debt is different than the cause of action in the prior criminal proceedings. Defendant Isaac C. Martinez pleaded no contest to two counts of Criminal Sexual Contact of a Minor in the Third Degree (Child under 13), a third degree felony, contrary to § 30-9-13(A), N.M.S.A. 1978, as amended. See Plea and Disposition Agreement attached to the Supplement as Exhibit B. The Criminal Revocation Order included a finding, based on Defendant's voluntary and knowing admission, that he violated the conditions of his probation and adjudged Defendant guilty and convicted of the crime of criminal sexual contact of a minor. See Criminal Revocation Order attached to the Supplement as Exhibit E. Defendant Isaac S. Martinez's knowing and voluntary admissions were necessary to the determination in the Criminal Action that he violated N.M.S.A. 1978 § 30-9-13(A). What remains at issue is whether the orders entered in the Criminal Action satisfy the "actually litigated" requirement under New Mexico collateral estoppel law.
The application of collateral estoppel from a criminal proceeding to a subsequent civil proceeding has been described as "cross-over collateral estoppel." State v. Bishop, 113 N.M. 732, 734, 832 P.2d 793, 795 (Ct. App. 1992)(observing that "[t]he term `cross-over' collateral estoppel' has been used to describe the application of collateral estoppel from a civil proceeding to a criminal proceeding, or vice versa.")(citing Susan W. Brenner, "Crossing Over:" The Issue-Preclusive Effects of a Civil/Criminal Adjudication Upon a Proceeding of the Opposite Character, 7 N.Ill.U.L.Rev. 141 (1987)). Courts applying New Mexico collateral estoppel law have not specifically addressed the issue of whether a conviction resulting from a plea of no contest in a criminal proceeding should be given preclusive effect in a subsequent civil proceeding, though New Mexico law is clear that judgments entered by default are not entitled to collateral estoppel effect because those types of judgments do not satisfy the requirement for actual litigation. See Sanchez v. Lovato, (In re Lovato), 2007 WL 4371672, *1 (Bankr.D.N.M. Nov. 29, 2007)("Under New Mexico law, default judgments have no preclusive effect.")(citation omitted); Blea v. Sandoval, 107 N.M. 554, 558, 761 P.2d 432, 436 (Ct.App. 1988)("In New Mexico, we recognize that default judgments do not have collateral estoppel effect in future litigation, although they may have res judicata effect.").
"`[A] guilty plea is an admission of all the elements of a formal criminal charge....'" United States v. Buonocore, 416 F.3d 1124, 1138 (10
Unlike a guilty plea, a plea of no contest, or nolo contendere, is a plea under which the accused does not expressly admit guilt but consents to be punished as if guilty. United States v. Mancinas-Flores, 588 F.3d 677, 681 (9
Given the requirement for "actual litigation" under New Mexico collateral estoppel law, the Court cannot find that the facts underlying Defendant's criminal conviction are entitled to collateral estoppel effect in this non-dischargeability proceeding. The original conviction was based on a plea of no contest under which Mr. Martinez did not admit guilt or any of the elements of the crime with which he was charged. The Conditional Discharge Order expressly stated that the plea was approved, but "without a finding of guilt." See Exhibit D. And though the Criminal Revocation Order found that Defendant Isaac S. Martinez admitted to all of the violations in the Petition to Revoke Probation, there is nothing before the Court indicating what actions constituted the violation of the probation order. Consequently, the evidence does not establish that Defendant Isaac S. Martinez's guilt in committing the crimes that formed the basis for his conviction were actually litigated as required under New Mexico law for collateral estoppel to apply to this subsequent, civil action.
The Default Judgment entered in the Arizona State Court Action awarded Plaintiffs a money judgment against Defendant Isaac S. Martinez and Cruz Delia Martinez in excess of $1,600,000.00. See Default Judgment attached to Supplement as Exhibit A. The required elements for collateral estoppel under Arizona law are:
Sunkist Growers, Inc. v. Fisher 104 F.3d 280, 284 (9
Plaintiffs point out that although the Default Judgment is titled "default," Defendant Isaac S. Martinez actually did appear in the Arizona State Court Action and appeared at the hearing that resulted in the entry of the Default Judgment. Plaintiffs also rely on Federal Deposit Ins. Corp. v. Daily (In re Daily), 47 F.3d 365 (9
Here, though the evidence Plaintiffs presented in support of summary judgment reflects that Defendant Isaac S. Martinez was present at the hearing in the Arizona State Court Action that resulted in the entry of the Default Judgment, and though the Default Judgment itself recites that Defendant Isaac S. Martinez participated in the Arizona State Court Action inasmuch as he sought to remove it to the United States District Court for the District of New Mexico, there is nothing from which this Court can discern whether the Arizona court's determination of liability or the amount of the money damages awarded to Plaintiffs in the Arizona State Court action was actually litigated.
However, even though the evidence before the Court is insufficient to establish that the Default Judgment entered in the Arizona State Court Action is entitled to collateral estoppel effect in this non-dischargeability action, the Court would give the judgment collateral estoppel effect, at least as to the non-dischargeable character of the debt, if the Plaintiffs present admissible evidence showing that the Arizona Court relied on Ariz. Rev. Stat. § 13-807 to establish liability. That statute provides that preclusive effect is to be given to a plea of no contest in a subsequent civil action filed by the victim of a crime to which the defendant has pleaded guilty.
Under this statute, a conviction, even if obtained by a plea of no contest, is entitled to preclusive effect as to the essential allegations of the offense in a subsequent Arizona civil proceeding filed by the victim of the crime against the criminal defendant. See W. Agric. Ins. Co. v. Brown, 195 Ariz. 45, 48, 985 P.2d 530, 533 (Ct. App. 1998)(stating that under A.R.S. § 13-807 "the legislature precluded defendants from denying in a civil case the essential elements of their conviction in a criminal case, with no exceptions granted."); Williams v. Baugh, 214 Ariz. 471, 473, 154 P.3d 373, 375 (Ct.App. 2007)(acknowledging that "[t]he plain language of § 13-807 precludes the criminal defendant convicted of an offense from denying the essential allegations of that offense in a civil case brought by the person injured by the criminal act[,]" but concluding further "that §13-807 does not preclude the criminal defendant who has been convicted of an offense from raising affirmative defenses under [Ariz. Rev. Stat.] § 13-413 in a subsequent civil case that do not contradict the essential allegations of the offense.")(citation omitted).
As discussed above, courts give collateral estoppel or other preclusive effect to a guilty plea in subsequent civil litigation where an element of the crime to which the defendant pleaded guilty was at issue in the subsequent, civil suit, even though the criminal conviction resulting from the guilty plea required no actual litigation.
The Court concludes that the elements necessary to establish the criminal offense to which Mr. Martinez plead no contest also establish the elements under 11 U.S.C. § 523(a)(6). Debts resulting from a willful and malicious injury are not dischargeable in bankruptcy pursuant to 11 U.S.C. § 523(a)(6).
The criminal statute that Defendant Isaac S. Martinez was adjudged guilty of violating provides, in relevant part:
In State v. Osborne, 111 N.M. 654, 808 P.2d 624 (1991), the New Mexico Supreme Court clarified that this statute contains a separate "unlawfulness" element which must also be proved in addition to the element of intent. Osborne, 111 N.M. at 658, 792 P.2d at 658. ("It is beyond dispute that the statute requires the state to prove, as an essential element of the offense, that the touching was done intentionally. It strains any ordinary reading of the conjunctive phrase `unlawfully and intentionally touching' to interpret it as requiring the term "unlawfully" be given legal significance different from that of its companion term. The language of the statute itself therefore suggests that the legislature intended to make unlawfulness an element of the crime rather than lawfulness a defense.")(citation omitted). The Court, therefore, finds that the elements required under this New Mexico state criminal statute satisfy the willful and malicious requirements for non-dischargeability under 11 U.S.C. § 523(a)(6).
However, there is no evidence before this Court that the Arizona court in fact granted judgment on liability based on the preclusive effect of the criminal conviction resulting from Mr. Martinez's no contest plea. The denomination of the judgment as a Default Judgment suggests the contrary. Further, as discussed, the Default Judgment is not otherwise entitled to collateral estoppel effect. Therefore, the Court denies Plaintiffs' Motion for Summary Judgment insofar as it seeks a determination that the Default Judgment has preclusive effect in this adversary proceeding.
Under 11 U.S.C. § 523(a)(13), a debt for payment of a restitution order issued under Title 18, United States Code, is non-dischargeable through bankruptcy. 11 U.S.C. § 523(a)(13). Under this subsection, the Court "does not redetermine whether a debtor is guilty of a title 18 crime and/or whether restitution should be awarded in connection with the crime. The Court merely determines whether the order at issue has imposed an obligation that is in the nature of `restitution' and whether it was issued under the federal criminal code." State of Colorado v. Jensen (In re Jensen), 395 B.R. 472, 488 (Bankr.D.Colo. 2008). The Criminal Revocation Order that imposed on Defendant Isaac S. Martinez an obligation to pay Plaintiffs for the costs of counseling for the victims appears to be in the nature of restitution, but the order was issued by the State District Court of the County of Hidalgo pursuant to state law. "By its terms, paragraph (13) applies only to restitution orders for a criminal offense under title 18. It does not apply to restitution orders issued in state criminal prosecutions[.]" 4 Collier on Bankruptcy ¶ 523.19 (Alan N. Resnick and Henry J. Sommer, eds. 15
The Default Judgment was entered against Cruz Delia Martinez, who was Isaac Martinez's spouse at the time of the incidents. Cruz Delia Martinez has not filed an answer or otherwise responded to the Complaint. She is, therefore, in default. However, because the Arizona Default Judgment fails to meet the requirements for collateral estoppel under applicable Arizona law, the Court will not enter summary judgment against Cruz Delia Martinez.
Plaintiffs have not alleged that Verenice Martinez was Isaac Martinez's spouse at the time that the debt arose. Indeed, Plaintiffs concede that she was not Isaac Martinez's spouse at the time the incidents occurred, and she was not a named defendant in the Default Judgment. See Motion for Summary Judgment, p. 9 and Exhibit A. Rather, Plaintiffs contend that because Verenice Martinez was Isaac Martinez's wife as of the time Isaac Martinez filed his bankruptcy petition, she is not entitled to the benefit of the community discharge under 11 U.S.C. § 524(a)(3) as to the non-dischargeable debt of Isaac Martinez.
This argument overlooks one of the required elements for determining whether the community discharge is applicable to an "innocent" spouse. Section 524(a)(3) provides:
When considering whether the community discharge under 11 U.S.C. § 524(a)(3) applies, the court must first determine whether the debt is a community debt under state law; then, the court determines the scope of the discharge. Arcadia Farms, Ltd. v. Rollinson (In re Rollinson), 322 B.R. 879, 881 (Bankr.D.Ariz. 2005)("Once a debt has been determined to be a community debt pursuant to state law, the second issue is the scope of the discharge.").
Based on the foregoing, the Court concludes that Plaintiffs are not entitled to summary judgment on their non-dischargeability claim against Defendant Isaac C. Martinez under 11 U.S.C. § 523(a)(6). Nor are Plaintiffs entitled to a judgment of non-dischargeability against Defendant Isaac C. Martinez under 11 U.S.C. § 523(a)(13). The evidence fails to establish that either the Arizona Default Judgment or the orders adjudging Defendant Isaac C. Martinez guilty of a third degree felony in the Criminal Action satisfy the "actually litigated" requirement for collateral estoppel under applicable Arizona and New Mexico law.
The Court will enter separate orders consistent with this Memorandum Opinion.
28 U.S.C. § 157(b)(5).
But cf. Charles Alan Wright, Arthur R. Miller and Edward H. Cooper, Federal Practice and Procedure § 4474.1 p. 450 (2002)("Wright and Miller"). Wright & Miller cautions that because there is no actual litigation in a guilty plea, issue preclusion should not be applied to a plea of guilty, and suggests that courts should apply judicial estoppel or other evidentiary use of the guilty plea in subsequent civil litigation because it "offers the advantage of avowed flexibility, permitting contentions inconsistent with the plea proceedings if the defendant can offer a persuasive explanation for changing positions."; Geoffrey C. Hazard, Jr., Revisiting the Second Restatement of Judgments: Issue Preclusion and Related Problems, 66 Cornell L.Rev. 564, 578 (1981)(stating that "[t]he clearest case for such an estoppel is where a defendant pleads guilty to a substantial criminal charge and then seeks in civil litigation concerning the same transaction to assert that he did not commit the criminal act.").
Under the Bankruptcy Code, the community property interest of the non-filing spouse become property of the bankruptcy estate. See 11 U.S.C. § 541 (property of the bankruptcy estate includes "[a]ll interests of the debtor and the debtor's spouse in community property as of the commencement of the case . . ."); Swink v. Sunwest Bank (In re Fingado), 113 B.R. 37, 39 (Bankr.D.N.M. 1990), subsequently aff'd by 995 F.2d 175 (10
Under New Mexico community property law, community property is liable for the community debts of both spouses. See First New Mexico Bank v. Bruton (In re Bruton), 2011 WL 6148702, at *7 (Bankr.D.N.M. Dec. 12, 2011)("under New Mexico law, there is a presumption that the debts incurred by either spouse during marriage constitute community debts, and the at community debts may be satisfied from the community property interests of both spouses.")(citations omitted). However, "a debt which arises from a tort committed by a spouse before marriage" constitutes a separate debt. N.M.S.A. 1978 § 40-3-9(5)(2006 Repl. Pamp.). And while a spouse's separate debt may be collected from that spouse's interest in community property, a creditor may not collect the separate debt of one spouse from the community property interest of the other spouse. See N.M.S.A. 1978 § 40-3-10 (Repl. Pamp. 2006)("The separate debt of a spouse shall be satisfied first from the debtor spouse's separate property . . . . Should such property be insufficient, then the debt shall be satisfied from the debtor spouse's one-half interest in the community property . . . . Neither spouse's interest in community property or separate property shall be liable for the separate debt of the other spouse.").
