ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
WENDY L. HAGENAU, Bankruptcy Judge.
This matter is before the Court on Plaintiff Richard White's ("Plaintiff") Motion for Summary Judgment ("Motion") (Docket No. 9). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I), and the Court has jurisdiction over this proceeding under 28 U.S.C. §§ 157 and 1334.
Defendant Bryan Elliott ("Defendant") filed his voluntary petition under Chapter 7 of the Bankruptcy Code on May 3, 2016. Plaintiff Richard White ("Plaintiff") filed this Adversary Proceeding on August 4, 2016 against Defendant. In the complaint, Plaintiff seeks a determination that a judgment he holds against Defendant from the Superior Court of Gwinnett County is nondischargeable under 11 U.S.C. § 523(a)(2)(A) ("Complaint"). Plaintiff filed the Motion arguing that the doctrine of collateral estoppel binds the Court to the Superior Court judgment for fraud which should be sufficient to satisfy the dischargeability exception in section 523(a)(2)(A). Defendant filed a response arguing that the lack of specific factual findings in the judgment and ambiguity with respect to the fraud pled in the complaint should preclude the application of collateral estoppel (Docket No. 12).
On December 22, 2008, Plaintiff filed a complaint in the Superior Court of Gwinnett County against Level Path Investment Group, LLC, Prodigy Homes, LLC, Old Corn, LLC, Richarch Floersheim, Richard Floersheim, Inc., and Defendant (together, "Superior Court Defendants") seeking damages for claims of fraud, breach of contract and violation of Georgia's RICO statute ("Superior Court Complaint"). The Superior Court Complaint alleged that Plaintiff entered into certain contracts with the Superior Court Defendants for the purchase of a lot and the construction of a custom-built home in a development known as Stone Creek at the Reservoir. The Superior Court Complaint alleged further that the Superior Court Defendants breached these contracts by using the funds paid by Plaintiff to facilitate the construction of other projects in the development rather than using the funds for the construction of Plaintiff's house. Plaintiff also alleged that he was fraudulently induced by the Superior Court Defendants to pay funds purportedly for his house that were actually being used for separate infrastructure development. The Superior Court held a non-jury trial on April 18, 2011, and subsequently entered judgment in the amount of $423,851.04 in favor of Plaintiff against Defendant individually on all theories set forth in the Superior Court Complaint ("Superior Court Judgment"). Specifically, the Superior Court Judgment stated:
The judgment did not include findings of fact.
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law".
Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings. Fed. R. Civ. P. 56(e). Rather, the nonmoving party must present specific facts that demonstrate there is a genuine dispute over material facts.
Plaintiff argues that collateral estoppel applies to the Superior Court Judgment and that the facts decided in the Superior Court Judgment are sufficient to find the debt owed by Defendant to Plaintiff non-dischargeable under 11 U.S.C. § 523(a)(2)(A). The doctrine of collateral estoppel seeks "to prevent the re-litigation of issues previously contested and determined by a valid and final judgment in another court."
This Court must turn to Georgia law to determine the preclusive effect of the Superior Court Judgment against Defendant.
1. Identity of Parties
The record clearly shows that Plaintiff and Defendant were parties to the Superior Court litigation, so the parties are identical and the first element of collateral estoppel is satisfied.
2. Identity of Issues
To determine whether the second prong is met, the Court has to determine whether the issues decided in the underlying judgment fall within the scope of the dischargeability provision in question. Section 523(a)(2)(A) excepts from discharge "money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by...false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition..." 11 U.S.C. § 523(a)(2)(A). The traditional elements of common law fraud apply to section 523(a)(2)(A) claims.
Similarly, the tort of fraud under Georgia law requires: (1) a false representation made by the defendant; (2) which the defendant knew was false; (3) made with an intent to deceive the plaintiff; (4) justifiable and detrimental reliance by the plaintiff on such representation; and (5) damages suffered by the plaintiff as a result.
Though the Superior Court Judgment failed to include specific findings of fact, it did grant judgment in Plaintiff's favor "on all theories set forth in [the] Complaint." When the record is read as a whole, it is clear that Plaintiff raised issues of actual fraud, as opposed to constructive fraud, in the Superior Court Complaint. Specifically, Plaintiff alleged that he was induced to provide funds to the Superior Court Defendants based on representations that the funds would be used for the construction of his house, when the Superior Court Defendants knew that the funds would go toward general infrastructure development. Thus, Plaintiff alleged a fraud based in misrepresentation. These allegations, and evidence related to these allegations, were presented to the trier of fact who granted judgment in Plaintiff's favor on all theories, including the inducement theory. Therefore, the Court finds that an identity of issues exists between the Superior Court lawsuit and the present Adversary Proceeding.
3. Actually Litigated
Although "Georgia case law does not disclose any analytical framework for determining whether a matter was actually litigated" it is generally accepted that "when a question of fact is put in issue by the pleadings, is submitted to the trier of fact for its determination, and is determined, that question of fact has been `actually litigated.'"
The fourth prong "limits the doctrine's applicability to `those issues that necessarily had to be decided in order for the previous judgment to have been rendered.'"
Though the Superior Court Judgment could be supported by two or more grounds, the judgment makes clear that it is supported by all three theories included in the Superior Court Complaint. However, by granting judgment on all theories in the Superior Court Complaint, the court appears to have allowed a recovery on both fraud and breach of contract, which is impermissible under Georgia law for claims of fraudulent inducement.
Therefore, it is unclear whether the damages in the judgment are attributable to the fraud count from the Superior Court Complaint and if so, how much of the damage award is attributable to fraud. It is possible that the damages are attributable solely to the breach of contract claim. Accordingly, it appears that the Superior Court Judgment is ambiguous as to whether Plaintiff is entitled to damages based on Defendant's fraud. Because it is unclear whether any of the damages are attributable to the fraud count in the Superior Court Complaint, the Court cannot find that fraud was essential to the Superior Court Judgment. Accordingly, the fourth prong of collateral estoppel is not satisfied.
5. Full and Fair Opportunity to Litigate
The full and fair opportunity prong is "rooted in due process concerns."
Having reviewed the Motion, Defendant's response and Plaintiff's reply, along with all of the documents in the record, the Court determines that while it is clear the Superior Court rendered a judgment for fraud, it is unclear whether any damages were awarded to the Plaintiff for the fraud and if so, how much.
IT IS ORDERED.