As has been reported in the national media, the OJ Simpson civil case has found its way to the Bankruptcy Court of the Southern District of Florida. The decision reported was In re Lorraine Brooke Associates, Inc., Case No. 07-12641 (Bankr.S.D.Fla. July 2, 2007)(Cristol, C.J. Emeritus). In this corporate chapter 7 case, the objection to the claim of Frederic Goldman came before the court. Goldman's secured claim in the amount of approximately $38 million dollars was based on the judgment against OJ Simpson obtained in the Los Angeles County Superior Court in 1997. The stock of the Debtor corporation was owned by Simpson's four adult children.
The evidence before the court was the May 8, 2006 contract between the Debtor and HarperCollins contract concerning the publication of the book titled "If I Did It", a letter by Simpson stating that he wrote the book, the trail of money which was paid by HarperCollins which showed that it ultimately reached Simpson or his benefit, and documents under which Simpson transferred to the Debtor his rights to the book and related intellectual property rights. Goldman previously obtained an assignment order and restraining order dated March 13, 2007 in the aforementioned California State Court. He further obtained an order declaring the Debtor corporation a surrogate of Simpson. Goldman argued to the bankruptcy court that the Debtor was barred from re-litigating the California State Court assignment and surrogate orders.
The court noted the fundamental principle that judicial proceedings of any state are entitled to the full faith and credit in every court within the United State. "The principles of full faith and credit require[s] that federal court 'must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered.'" In re Bursack, 65 F.3d 51, 53 (6th Cir. 1995). The court noted that the Eleventh Circuit Court of Appeals has held that the collateral estoppel law of a state must be applied to determine the preclusive effect of a prior state court judgment. In re St. Laurent, 991 F.2d 672, 676 (11th Cir. 1993). The court found that California would give apply collateral estoppel to preclude the relitigation of the issues argued and decided in the prior assignment and surrogate orders.
Apart from the application of the doctrine of collateral estoppel, the court found that the Debtor was part of a scheme or device to hinder, delay, or defraud creditor Goldman by the use of the corporate veil. The court found the Debtor to be the nominee of Simpson. The court pierced and lifted the corporate veil from the device created for the sole purpose of secreting the possible assets from creditor Goldman. The court further found a lack of separate existence between the Debtor and Simpson and that the Debtor was incorporated without any legitimate business purpose.
The objection to the Goldman claim was overruled and the Goldman secured claim was allowed in full.