Miller et al v. Media Services Acquisition Corp et al, No. 2:2009cv01425 - Document 104 (W.D. Wash. 2014)
Court Description: ORDER granting 102 Plaintiffs' unopposed Motion for Summary Judgment, by Judge James L. Robart.(MD) Modified on 7/2/2014-mailed copy of order to Pro Se Parties (MD).
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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 JON MILLER, et al., CASE NO. C09-1425JLR Plaintiffs, 11 ORDER GRANTING SUMMARY JUDGMENT v. 12 MEDIA SERVICES ACQUISITION CORP., et al., 13 14 Defendants. 15 I. INTRODUCTION 16 This matter comes before the court on Plaintiffs’ unopposed motion for summary 17 judgment against Defendants Adam Cohen and Jennifer Sultan. (See Mot. (Dkt. # 102).) 18 Defendants have filed no response. (See generally Dkt.) Having considered the 19 submissions of the parties, the balance of the record, and the relevant law, and deeming 20 oral argument unnecessary, the court GRANTS Plaintiffs’ motion for summary judgment. 21 // 22 ORDER- 1 1 II. 2 BACKGROUND The following facts are undisputed. Plaintiffs Jon Miller, Tyler Dary, Tim Fujita- 3 Yuhas, Ian Garrison, Tim Hinderliter, Deidra Johnson, Pedro Margate, Steven Ohmert, 4 Jeffery Payne, Stephen Speicher, and Charles Tso were formerly employed by defendant 5 Media Services Acquisition Corporation (“Media Services”). (Am. Compl. (Dkt. # 4) ¶¶ 6 3.5-3.15.) Mr. Cohen and Ms. Sultan were officers of Media Services. (Id. ¶¶ 3.2, 3.3.) 7 After Plaintiffs’ employments at Media Services were terminated, they brought this suit 8 against Media Services,1 Ms. Cohen, and Ms. Sultan for past due wages, deferred 9 compensation, and the value of their paid time off balances. (Id. ¶ 4.11.) Plaintiffs’ 10 claims against Mr. Cohen and Ms. Sultan are brought pursuant to RCW 49.52.050. (Id. 11 ¶¶ 7.2-7.5). This statute prohibits officers of a company from willfully withholding 12 wages (or other compensation) from employees and holds officers personally liable for 13 doing so. See RCW 49.52.050. 14 After Mr. Cohen and Ms. Sultan filed a bankruptcy petition, this action was 15 automatically stayed. (See Dkt. # 88.) The bankruptcy court consolidated their 16 bankruptcy proceedings and appointed a Chapter 11 Trustee. (See Disclosure Statement 17 (Dkt. # 102-3) ¶ C (In re Cohen, No. 10-16732, First Amended Disclosure Statement in 18 Connection with Trustee’s Joint Plan of Liquidation under Chapter 11 of the Bankruptcy 19 Code (April 13, 2013)).) In the bankruptcy proceeding, Plaintiffs (with the exception of 20 // 21 22 1 Defendant Media Services has since been dismissed from the suit. (See Dkt. # 103.) ORDER- 2 1 Tim Fujita-Yuhas2) filed proof of their claims against Mr. Cohen and Ms. Sultan in the 2 total amount of $391,757.98. (See Proof of Claims (Dkt. # 102-2) at 3-4.) The Proof of 3 Claims breaks down the precise amount of each Plaintiff’s individual claim for withheld 4 compensation. (See id. at 4.) The total amount of the Plaintiffs’ bankruptcy claim 5 includes unpaid wages, double damages under RCW 49.52.070, prejudgment interest, 6 and attorneys’ fees and costs. (See id.) Neither Ms. Sultan nor Mr. Cohen objected to this 7 claim in bankruptcy court. (Subit Decl. (Dkt. # 102-1) ¶ 7.) The Disclosure Statement filed by the Trustee includes Plaintiffs’ claims, which 8 9 the Disclosure Statement lists as “Class 3,” “unsecured,” and “contingent, unliquidated.” 10 (See Disclosure Statement Ex. C.) Originally, the Trustee’s First Amended Joint Plan of 11 Liquidation (“Plan”) anticipated no distributions to Class 3 claims such as Plaintiffs’ 12 claims. (See Disclosure Statement Ex. B ¶ 4.3.) The bankruptcy court entered an order 13 (“Confirmation Order”) approving the Disclosure Statement and confirming the Trustee’s 14 Plan. (Confirmation Order (Dkt. # 102-4).) The Confirmation Order, however, amended 15 the Plan to require “the amount of $60,000 to be distributed pro rata among the holders 16 of Allowed Class 3 Claims.” (Id. ¶ 9.) The Confirmation Order also directed that “to the 17 extent that any holder of an Allowed Claim is impaired under the Plan, the unpaid 18 balance of any such Allowed Claim following all Distributions under the Plan shall not 19 be discharged.” (Id. ¶ 12.) 20 // 21 2 Plaintiff against Cohen 22 because he did notTim Fujita-Yuhas dismissed his claims action. Ms. Sultan and Mr. (Dkt. # in this case want to participate in their bankruptcy (See 6/10/11 Order 96).) ORDER- 3 The Plaintiffs’ claim was designated as an “Allowed Claim” under the Plan. The 1 2 Trustee’s Post-Confirmation Report states that “[o]n October 23, 2012, the Trustee 3 distributed the Class 3 Carve-out in the amount of $60,000 pro rata to the holders of 4 Allowed Class 3 Claims.” (Post-Confirmation Report (Dkt. # 102-5) ¶ 7.) The list of 5 Allowed Claims included in the Post Confirmation Report shows that Plaintiffs received 6 $11,624.68—or 2.96731 % of their total Allowed Claim of $391,757.98. (Post7 Confirmation Report Ex. B at 4 (“Claim 0022”). On June 3, 2014, the bankruptcy court 8 entered a Final Decree closing Mr. Cohen and Ms. Sultan’s bankruptcy case. (Final 9 Decree (Dkt. # 102-6).) Plaintiffs’ now move for summary judgment, arguing that the 10 bankruptcy court’s allowance of their claim in the bankruptcy proceedings constitutes res 11 judicata with respect to their claims in this action. (See Mot.) 12 III. 13 ANALYSIS To begin, because the bankruptcy court has entered a Final Decree closing Mr. 14 Cohen and Ms. Sultan’s bankruptcy proceeding, the court ORDERS that the stay entered 15 in this case (Dkt. # 88) is lifted. 16 A. Summary Judgment Standard 17 Federal Rule of Civil Procedure 56 permits a court to grant summary judgment 18 where the moving party demonstrates (1) the absence of a genuine issue of material fact 19 and (2) entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 20 317, 322 (1986); see also Galen v. Cnty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007). The 21 moving party bears the initial burden of production of showing an absence of a genuine 22 issue of material fact. Celotex, 477 U.S. at 323. If the moving party will bear the ORDER- 4 1 ultimate burden of persuasion at trial, it must establish a prima facie showing that it is 2 entitled to judgment as a matter of law. UA Local 343 v. Nor-Cal Plumbing, Inc., 48 3 F.3d 1465, 1471, 1473 (9th Cir. 1994). The burden then shifts to the non-moving party to 4 designate specific facts demonstrating the existence of genuine issues for trial. Celotex, 5 477 U.S. at 324. If the nonmoving party fails to carry that burden, summary judgment for 6 the moving party is proper. Nissan Fire & Marine Ins. Co., Ltd., v. Fritz Cos., Inc., 210 7 F.3d 1099, 1106 (9th Cir. 2000). 8 B. Res Judicata 9 Res judicata “provides that a final judgment on the merits of an action precludes 10 the parties from re-litigating all issues connected with the action that were or could have 11 been raised in that action.” Rein v. Providian Fin. Corp., 270 F.3d 895, 898-99 (9th Cir. 12 2001). Res judicata is appropriate where: “(1) the parties are identical or in privity; (2) 13 the judgment in the prior action was rendered by a court of competent jurisdiction; (3) 14 there was a final judgment on the merits; and (4) the same claim or cause of action was 15 involved in both suits.” Id. (citing Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 16 708, 713 (9th Cir. 2001)). 17 The Ninth Circuit has long held that “the allowance or disallowance of a claim in 18 bankruptcy is binding and conclusive on all parties or their privies, and being in the 19 nature of a final judgment, furnishes a basis for a plea of res judicata.” Siegel v. Fed. 20 Home Loan Mortgage Corp., 143 F.3d 525, 529 (9th Cir. 1998) (quoting United States v. 21 Coast Wineries, 131 F.2d 643, 648 (9th Cir. 1942)); see also Wright v. Wells Fargo Bank, 22 N.A., No. 11-00212SOM-RLP, 2012 WL 2973202, at *4-8 (D. Haw. July 19, 2012) ORDER- 5 1 (holding that bankruptcy court’s overruling of objections to a proof of claim constituted 2 res judicata); Bronson v. Green Tree Servicing, LLC, No. 2:03-CV-1611 JAM RRB, 2009 3 WL 546159, at *4-6 (E.D. Cal. Mar. 4, 2009) (holding that the bankruptcy court’s 4 previous disallowance of the plaintiff’s proof of claims constituted res judicata). 5 Moreover, even absent a separate formal order of allowance by the bankruptcy court, a 6 proof of claims that is “deemed allowed” under 11 U.S.C. § 502(a) due to a lack of 7 objection constitutes a final judgment for purposes of res judicata. Id. at 529-30 (granting 8 summary judgment due to res judicata by bankruptcy proceedings). “Of course, if the 9 court formally actually allows the claim, there can be little doubt about the ultimate res 10 judicata effect of that allowance.” Id.; see also EDP Med. Computer Sys., Inc. v. United 11 States, 480 F.3d 621, 625 (2d Cir. 2007) (agreeing that a bankruptcy court’s allowance of 12 an uncontested proof of claim is a final judgment for res judicata purposes). 13 C. Plaintiffs’ Claims 14 Plaintiffs’ claims in this action meet all four of the criterion for res judicata. The 15 claims in this case and the claims advanced in the bankruptcy proceeding involve 16 identical parties. (Compare Proof of Claims and Disclosure Statement Ex. C with Am. 17 Compl.) There is no dispute that the bankruptcy court is a court of competent 18 jurisdiction. See Rein, 270 F.3d at 899. The same cause of action—a claim for 19 wrongfully withheld compensation under RCW 49.52—is at issue in both proceedings. 20 (Compare Proof of Claims and Disclosure Statement Ex. C with Am. Compl.) 21 Finally, the bankruptcy court rendered a final judgment on the merits. Neither Ms. 22 Cohen nor Mr. Sultan objected to the Proof of Claims. (Subit Decl. ¶ 7.) The bankruptcy ORDER- 6 1 court’s Confirmation Order directed that a sum of $60,000.00 would be distributed 2 among the Allowed Class 3 Claims. (See Confirmation Order ¶ 9.) The Post3 Confirmation Report by the trustee shows that the Plaintiffs’ claim for $391,757.98 was 4 determined to be an Allowed Class 3 Claim. (See Post-Confirmation Report Ex. B at 4.) 5 On June 3, 2014, the bankruptcy court entered a Final Decree closing Mr. Cohen and Ms. 6 Sultan’s bankruptcy proceeding. (Final Decree (Dkt. # 102-6).) Accordingly, under 7 Siegel, “there can be little doubt about the ultimate res judicata effect” of the bankruptcy 8 court’s allowance of Plaintiffs’ claim. See 143 F.3d at 529; see also Wright, 2012 WL 9 2973202, at *4-8; Bronson, 2009 WL 546159, at *4-6. 10 The Post-Confirmation Report further shows that Plaintiffs received only 11 $11,624.68—or 2.96731%—toward their total Allowed Claim. (Post-Confirmation 12 Report Ex. B at 4 (“Claim 0022”). The remainder of their Allowed Claim was not 13 discharged. (Confirmation Order ¶ 13 (“[T]o the extent that any holder of an Allowed 14 Claim is impaired under the Plan, the unpaid balance of any such Allowed Claim 15 following all Distributions under the Plan shall not be discharged.”) Therefore, 16 Defendants remain liable to Plaintiffs for the outstanding $380,133.30 in unpaid wages, 17 other compensation, and attorneys’ fees. The Proof of Claims that Plaintiffs filed in the 18 bankruptcy proceedings specifies the amount of each Plaintiff’s individual claim, and the 19 court incorporates that schedule of distribution by reference in this order. (See Proof of 20 Claims at 4.) Because the facts are not in dispute, and because res judicata applies to 21 Plaintiffs’ claims as a matter of law, summary judgment in Plaintiffs’ favor is 22 appropriate. See Celotex, 477 U.S. at 322. ORDER- 7 1 2 IV. CONCLUSION For the following reasons, the court GRANTS Plaintiffs’ motion for summary 3 judgment (Dkt. # 102). Defendants Adam Cohen and Jennifer Sultan are jointly and 4 severally liable to Plaintiffs for $380,133.30 as set forth in Plaintiffs’ Proof of Claims 5 (Dkt. # 102-2). 6 Dated this 2nd day of July, 2014. 7 A 8 9 JAMES L. ROBART United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 ORDER- 8
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