In re: Wileharda Kilian Mbunda, 9th Cir. BAP (2012)

7/25/2019 In re: Wileharda Kilian Mbunda, 9th Cir. BAP (2012)

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UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. NC- 11- 1653- MkHPa )

WI LEHARDA KI LI AN MBUNDA, ) Bk. No. 10- 34095 )

Debt or . ) Adv. No. 10- 03267_______________________________)

)THOMAS VAN ZANDT, Executor f or )t he Estat e of Eval i ne J eanne )Mal i s, )

)

Appel l ant , ) )v. ) OPINION

)WI LEHARDA KI LI AN MBUNDA, )

)Appel l ee. )

_______________________________)

Ar gued and Submi t t ed on Oct ober 18, 2012at San Fr anci sco, Cal i f or ni a

Fi l ed December 14, 2012______________

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Nor t her n Di st r i ct of Cal i f or ni a

Honor abl e Denni s Mont al i , Bankrupt cy J udge, Pr esi di ng

Appear ances: Appel l ant Thomas Van Zandt , Esq. argued on hi s ownbehal f as execut or f or t he est at e of Eval i ne J eanne Mal i s; andSt ephen D. Fi nest one, Esq. ar gued f or Appel l ee Wi l ehar da Ki l i an

Mbunda.

Bef or e: MARKELL, HOLLOWELL, and PAPPAS, Bankr upt cy J udges.

FILED

DEC 14 2012

SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT


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1Because some of t he key pl ayers i n t hi s appeal shar e t he

same sur name, we ref er t o themby t hei r f i r st name f or ease ofr ef er ence. No di sr espect i s i nt ended.

2Unl ess speci f i ed ot her wi se, al l chapt er and sect i onr ef er ences are t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532, andal l Rul e r ef er ences ar e t o t he Feder al Rul es of Bankrupt cyPr ocedur e, Rul es 1001- 9037. Al l Ci vi l Rul e ref er ences ar e t ot he Feder al Rul es of Ci vi l Pr ocedur e. Al l Evi dence Rul er ef er ences are to the Feder al Rul es of Evi dence.

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MARKELL, Bankr upt cy J udge:

INTRODUCTION

Appel l ant Thomas Van Zandt ( Thomas) , as execut or f or t heest at e of Eval i ne J eanne Mal i s ( Mal i s) , 1 sued debt or Wi l eharda

Ki l i an Mbunda ( Mbunda) seeki ng t o decl are that a debt Mbunda

owed t o Mal i s s pr obat e est at e was nondi schar geabl e. The

bankrupt cy cour t i ni t i al l y di smi ssed wi t hout l eave t o amend al l

but one of Thomas s cl ai ms f or r el i ef . At t r i al , t he cour t

gr ant ed Mbunda s mot i on f or a j udgment on par t i al f i ndi ngs at t he

cl ose of Thomas s case, and ent ered j udgment i n f avor of Mbunda.

We AFFI RM.

FACTS

Mbunda f i l ed her chapt er 72 bankr upt cy case i n Oct ober 2010.

I n her schedul es, Mbunda l i st ed a debt t o Mal i s i n t he amount of

$165, 000 ( Debt ) . Accordi ng t o Mbunda s schedul es, t he Debt

arose f r om busi ness l oans made by Mal i s t o Mbunda i n Sept emberand November 2005. These l oans wer e made t o Mbunda as t he sol e

pr opr i et or of an ar t and j ewel r y st or e known as t he Twi ga

Gal l er y.

Thomas f i l ed hi s nondi schar geabi l i t y compl ai nt agai nst


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3The compl ai nt r epeatedl y r ef er s t o t he Debt as a l oan, andr epeat edl y r ef er s t o t he secur i t y al l egedl y pr omi sed f or t hel oan. I n t wo pl aces, however , t he compl ai nt r ef er s t o t heunder l yi ng t r ansact i on as somet hi ng ot her t han a l oan secur ed byr eal and per sonal pr oper t y secur i t y. Fi r st , i t al l eged t hatMbunda i nduced Mal i s t o i nvest i n t he Twi ga Gal l er y. Compl ai nt( Dec. 14, 2010) at 6. Second, i t st at es t hat Mbunda t ol d Mal i s

( cont i nued. . . )

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Mbunda i n December 2010. Thomas al l eged t hat t he Debt was

nondi schar geabl e under 523( a) ( 2) ( A) , ( 4) and ( 6) . Consi st ent

wi t h Mbunda s bankrupt cy schedul es, t he compl ai nt r ef er r ed t o t he

t r ansact i ons f r om whi ch t he Debt ar ose as a $100, 000 l oan f r omMal i s t o Mbunda i n Sept ember 2005 and a second $100, 000 l oan f r om

Mal i s t o Mbunda i n November 2005. Accor di ng t o t he compl ai nt ,

Mal i s r ef i nanced her home i n or der t o l oan t he $200, 000 t o

Mbunda.

I n pert i nent part , Thomas al so al l eged t hat Mbunda made the

f ol l owi ng mi sr epr esent at i ons i n or der t o i nduce Mal i s t o l oan

Mbunda t he $200, 000:

1. Mbunda woul d use t he l oan pr oceeds t o pur chase ar t i st i c

mat er i al s f or t he ar t gal l er y, i ncl udi ng ant i que beads

and quant i t i es of gol d, i vor y and pr eci ous and semi -

pr eci ous gemst ones ( col l ect i vel y, Raw Mat er i al s) .

2. Mal i s woul d have a secur i t y i nt er est i n t he Raw

Mat er i al s and i n ot her r eal and per sonal pr oper t yMbunda owned.

3. Mal i s al so woul d have a secur i t y i nt er est i n t he Twi ga

Gal l er y ( col l ect i vel y wi t h t he Raw Mat er i al s and t he

ot her r eal and personal pr oper t y al l egedl y pr omi sed as

secur i t y, t he Col l at er al ) . 3


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3( . . . cont i nued)t hat t he Debt woul d be secur ed by an owner shi p i nt er est i n theTwi ga Gal l er y. Compl ai nt ( Dec. 14, 2010) at 8. Thomasr ef er r ed t o t hese t wo al l egat i ons when t r yi ng t o est abl i sh t hatt he l oan was r eal l y some ot her f or m of t r ansact i on, such as apar t ner shi p, i n or der t o st at e a cl ai m under 523( a) ( 4) . We

addr ess t hi s ar gument l at er i n t hi s opi ni on.4Thomas had or i gi nal l y at t empted t o st at e a cl ai m under

523( a) ( 4) f or , among ot her t hi ngs, embezzl ement and l ar ceny.These wer e among t he cl ai ms i ni t i al l y di smi ssed. Thomas has notchal l enged t he di smi ssal of hi s 523( a) ( 4) act i on al l egi ng t heseact s. As a r esul t , he has wai ved any ar gument r el at i ng t o t hoset heor i es. See Br ownf i el d v. Ci t y of Yaki ma, 612 F. 3d 1140, 1149

( cont i nued. . . )

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4. Mbunda woul d execut e t r ansact i on document at i on

memor i al i zi ng t he Debt and Mal i s s secur i t y i nt er est i n

t he Col l at er al .

5. Mbunda woul d make mont hl y payment s suf f i ci ent t o covert he i ncr eased amount of Mal i s s mont hl y mort gage

payment s r esul t i ng f r om Mal i s s home r ef i nanci ng.

Mbunda moved t o di smi ss Thomas s compl ai nt . I n r esponse,

t he bankr upt cy cour t di smi ssed wi t hout l eave t o amend Thomas s

523( a) ( 4) cl ai m t o t he ext ent i t di d not deal wi t h l ar ceny, as

wel l as hi s 523( a) ( 6) cl ai m. The bankrupt cy cour t gr ant ed

Thomas l eave t o amend hi s 523(a) ( 2) ( A) cl ai m and t hat por t i on

of hi s 523( a) ( 4) cl ai m al l egi ng t hat t he Debt was a debt

ar i s i ng f r om l ar ceny.

Thomas f i l ed an amended compl ai nt . Mbunda agai n f i l ed a

mot i on t o di smi ss . The bankr upt cy cour t gr ant ed Mbunda s mot i on

i n par t , di smi ssi ng Thomas s r emai ni ng 523( a) ( 4) cl ai m wi t hout

l eave t o amend. I t t hen set t he sol e r emai ni ng cl ai m under 523( a) ( 2) ( A) f or t r i al . 4


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4( . . . cont i nued)n. 4 ( 9t h Ci r . 2010) ; Gol den v. Chi cago Ti t l e I ns. Co. ( I n r eChoo) , 273 B. R. 608, 613 ( 9t h Ci r . BAP 2002) .

5Rul e 7052 makes Ci vi l Rul e 52( c) appl i cabl e i n adver sarypr oceedi ngs. Ci vi l Rul e 52( c) pr ovi des i n r el evant par t :

Judgment on Partial Findings. I f a par t y has been f ul l y

heard on an i ssue dur i ng a nonj ur y t r i al and t he cour tf i nds agai nst t he par t y on t hat i ssue, t he cour t mayent er j udgment agai nst t he par t y on a cl ai m or def enset hat , under t he cont r ol l i ng l aw, can be mai nt ai ned ordef eat ed onl y wi t h a f avor abl e f i ndi ng on t hat i ssue.

6The bankr upt cy cour t had j ur i sdi ct i on pur suant t o 28 U. S. C. 1334 and 157( b) ( 2) ( I ) . We have j ur i sdi ct i on under 28 U. S. C. 158.

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On November 2, 2011, t he t r i al on Thomas s 523( a) ( 2) ( A)

cl ai m commenced. Af t er Thomas pr esent ed hi s case i n chi ef ,

Mbunda moved under Ci vi l Rul e 52( c) 5 f or a j udgment on par t i al

f i ndi ngs. The bankrupt cy cour t gr ant ed t hat mot i on and, onNovember 10, 2011, ent ered a f i nal j udgment i n Mbunda s f avor .

Thomas t i mel y f i l ed a not i ce of appeal on November 15, 2011. 6

DISCUSSION

Dur i ng t he cour se of t he adver sary pr oceedi ng, t he

bankr upt cy cour t r ul ed agai nst Thomas on each of hi s t hr ee cl ai ms

f or r el i ef . We addr ess each cl ai m f or r el i ef i n t ur n.

1. Section 523(a)(2)(A).

Sect i on 523( a) ( 2) ( A) except s f r om di schar ge debt s i ncur r ed

under f al se pr et enses, based on f al se r epr esent at i ons, or based

on act ual f r aud. I n par t i cul ar , t o est abl i sh f r aud under

523( a) ( 2) ( A) , t he cr edi t or must pr ove each of t he f ol l owi ng

f i ve el ement s by a pr eponderance of t he evi dence:

( 1) t he debt or made a r epr esent at i on;


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( 2) t he debt or knew t he repr esent at i on was f al se at t he

t i me he or she made i t ;

( 3) t he debt or made t he r epr esent at i on wi t h t he i nt ent

t o decei ve;( 4) t he cr edi t or j ust i f i abl y r el i ed on t he

r epr esent at i on; and

( 5) t he credi t or sust ai ned damage as a pr oxi mat e resul t

of t he mi sr epr esent at i on havi ng been made.

Ghomeshi v. Sabban ( I n r e Sabban) , 600 F. 3d 1219, 1222 ( 9t h Ci r .

2010) . When, as here, t he bankr upt cy cour t has r esol ved t he

mat t er under Ci vi l Rul e 52( c) , we r evi ew t he cour t s f i ndi ngs

of f act f or cl ear er r or and i t s l egal concl usi ons de

novo. . . . . The same st andar d appl i es t o t he di st r i ct cour t s

i nvol unt ar y di smi ssal of a cl ai m under [ Ci vi l ] Rul e 52( c) . Lee

v. W. Coast Li f e I ns. Co. , 688 F. 3d 1004, 1009 ( 9t h Ci r . 2012)

( quot i ng Pr i ce v. U. S. Navy, 39 F. 3d 1011, 1021 ( 9t h Ci r . 1994) ) .

When deci di ng a mot i on under Ci vi l Rul e 52( c) , as i ncor por at ed byRul e 7052, t he bankrupt cy cour t i s not r equi r ed t o dr aw any

i nf er ences i n f avor of t he non- movi ng par t y; r at her , t he di st r i ct

cour t may make f i ndi ngs i n accor dance wi t h i t s own vi ew of t he

evi dence. I d. ( quot i ng Ri t chi e v. Uni t ed St at es, 451 F. 3d 1019,

1023 ( 9t h Ci r . 2006) ) . Accor di ngl y, we r evi ew Thomas s

cont ent i ons t hat t he bankrupt cy cour t di d not cor r ect l y f i nd an

absence of essent i al el ement s of t he f r aud cl ai m under t he

cl ear l y err oneous st andar d. See Candl and v. I ns. Co. of N. Am.

( I n r e Candl and) , 90 F. 3d 1466, 1469 ( 9t h Ci r . 1996) ; Am. Expr ess

Tr avel Rel at ed Ser vs. Co. v. Vee Vi nhnee ( I n r e Vee Vi nhnee) , 336

B. R. 437, 443 ( 9t h Ci r . BAP 2005) ( ci t i ng Anast as v. Am. Sav.


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Bank ( I n r e Anast as) , 94 F. 3d 1280, 1283 ( 9t h Ci r . 1996) ) .

Her e, i n suppor t of i t s Ci vi l Rul e 52( c) r ul i ng, t he

bankr upt cy cour t determi ned t hat t here was no admi ss i bl e evi dence

f r om whi ch i t coul d f i nd t hat Thomas had pr oved t he f i r st orsecond el ement s of hi s 523( a) ( 2) ( A) cl ai m: t hat Mbunda had made

any knowi ngl y f al se r epr esent at i ons. I n par t i cul ar , t he cour t

f ound t hat Thomas pr esent ed no admi ss i bl e evi dence t hat Mbunda

had made any af f i r mat i ve mi sr epr esent at i ons r egar di ng: t he

pr ovi si on of secur i t y or col l at er al f or t he Debt ; t he execut i on

of par t i cul ar document at i on f or t he Debt ; or t he t i mi ng or amount

of mont hl y payment s on t he Debt .

Whi l e t he bankrupt cy cour t acknowl edged that Mbunda had

t est i f i ed t hat she had t ol d Mal i s of her need t o r epay cer t ai n

debt s around t he t i me of t he or i gi nal t r ansact i on, t he cour t

f ound t hat what Mbunda general l y t ol d Mal i s di d not amount t o a

r epr esent at i on t hat t he l oan pr oceeds woul d be used onl y to pay

t hose debt s. Fur t hermore, t he cour t al so f ound t hat what Mbundagener al l y t ol d Mal i s was consi st ent wi t h Mbunda s act ual use of

t he pr oceeds. Accor di ng t o t he cour t , Mbunda s uncont r adi ct ed

t est i mony ref l ected t hat she used most of t he pr oceeds t o pay her

debt s, i ncl udi ng t hose she owed t o her l andl or d and t o cer t ai n

consi gnor s of goods.

The bankrupt cy cour t f ur t her f ound t hat Mbunda s promi se t o

r epay t he Debt was not f al se when made. I t i nst ead f ound t hat

Mbunda i ntended t o repay the l oan at t he t i me she bor r owed t he

$200, 000 f r om Mal i s. I n suppor t of t hi s f i ndi ng, t he cour t

r el i ed on t he exhi bi t s, of f er ed by Thomas and admi t t ed i nt o

evi dence, r ef l ect i ng t hat Mbunda had made payment s on the Debt of


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at l east $40, 000, and perhaps as much as $50, 000. Accordi ng t o

t he cour t , t hese payment s compl etel y undermi ned any not i on t hat

Mbunda di d not i nt end t o repay t he Debt at t he t i me she i ncur r ed

i t . Thi s f i ndi ng was not cl ear l y er r oneous, as i t i s noti l l ogi cal , i mpl ausi bl e, or wi t hout suppor t i n t he r ecor d. Uni t ed

St at es v. Hi nkson, 585 F. 3d 1247, 1262 ( 9t h Ci r . 2009) ( en banc) .

Per haps because of t he hi gh st andard of r evi ew, Thomas di d

not ar gue i n hi s openi ng br i ef t hat t he bankrupt cy cour t s

f i ndi ngs wer e cl ear l y er r oneous. I nst ead, he ar gued t hat t he

bankrupt cy cour t commi t t ed r ever si bl e er r or by excl udi ng cer t ai n

evi dence. Of t he evi dence t he bankrupt cy cour t excl uded, t he

most si gni f i cant i s Thomas s t est i mony r egar di ng what Mal i s

supposedl y t ol d hi m about t he Debt bef ore she passed away.

Thi s i s al so a di f f i cul t ar gument f or any appel l ant , as we

r evi ew a bankrupt cy cour t s evi dent i ar y r ul i ngs f or abuse of

di scr et i on, and t hen onl y rever se i f any er r or woul d have been

pr ej udi ci al t o t he appel l ant . See J ohnson v. Nei l son ( I n r eSl at ki n) , 525 F. 3d 805, 811 ( 9t h Ci r . 2008) ( ci t i ng Lat man v.

Bur det t e, 366 F. 3d 774, 786 ( 9t h Ci r . 2004) ) . We af f or d br oad

di scr et i on t o a di st r i ct cour t s evi dent i ar y r ul i ngs. To r ever se

such a r ul i ng, we must f i nd t hat t he di st r i ct cour t abused i t s

di scr et i on and t hat t he er r or was pr ej udi ci al . A r evi ewi ng cour t

shoul d f i nd pr ej udi ce onl y i f i t concl udes t hat , mor e pr obabl y

t han not , t he l ower cour t s er r or t ai nt ed t he ver di ct . Har per

v. Ci t y of Los Angel es, 533 F. 3d 1010, 1030 ( 9t h Ci r . 2008)

( ci t at i ons and i nt er nal quot at i on mar ks omi t t ed) ; see al so S. E. C.

v. J asper , 678 F. 3d 1116, 1122 ( 9t h Ci r 2012) ( st at i ng t hat a

t r i al cour t s evi dent i ar y rul i ngs shoul d not be di st ur bed absent


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a cl ear abuse of di scr et i on and pr ej udi ce) .

Here, t he recor d makes cl ear t he cont ent of Thomas s

proposed t est i mony. We have t he r ecord of Thomas s argument s

made at t r i al , hi s of f er s of pr oof , and a decl ar at i on t hat hef i l ed i n suppor t of hi s opposi t i on t o Mbunda s mot i on i n l i mi ne

t o excl ude such evi dence. These por t i ons of t he r ecor d r ef l ect

t hat , accordi ng t o Thomas, Mal i s t ol d hi m i n 2009 and 2010 t hat

Mbunda had made t he f ol l owi ng r epr esent at i ons r egardi ng t he Debt :

1. t hat t he l oan was an i nvest ment ;

2. t hat t he l oan woul d be used t o pur chase val uabl e ar t

i t ems i ncl udi ng ant i que beads, gol d and si l ver , i vor y,

and gems . . . ;

3. t hat t he Raw Mat er i al s pur chased wi t h t he l oan pr oceeds

woul d be used t o pr oduce ar t works t hat woul d be sol d

at a pr of i t ;

4. t hat , i f Mbunda coul d not pr oduce or sel l such ar t

wor ks, she woul d r esel l t he Raw Mat er i al s pur chased t or epay t he l oan;

5. t hat Mbunda woul d make mont hl y payment s l arge enough t o

pay of f t he Debt wi t hi n f i ve year s;

6. t hat , as an i nvest or , Mal i s woul d r ecei ve a per cent age

of t he pr of i t s f r om t he sal e of t he ar t wor ks;

7. t hat Mbunda and Mal i s wer e par t ner s;

8. t hat Mbunda had many val uabl e t hi ngs she coul d sel l t o

r epay t he Debt ; and

9. t hat Mbunda woul d execut e document at i on memor i al i zi ng

al l t hat t hey had agr eed t o.

See Pl ai nt i f f s Decl . ( Oct . 31, 2011) at pp. 2- 3.


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The bankrupt cy cour t r ul ed t hat Thomas s proposed t est i mony

was i nadmi ss i bl e hear say. See Evi dence Rul es 801, 802. Thomas

f i r st chal l enges t he bankr upt cy cour t s char act er i zat i on of t he

pr oposed t est i mony as hear say: he ar gues t hat Mal i s s out - of -cour t st at ement s wer e not bei ng of f er ed t o pr ove t he t r ut h of t he

mat t er asser t ed. I f cor r ect , admi ssi on of t he st at ement s woul d

not vi ol at e t he hear say r ul e. Evi dence Rul e 801( c) ( 2)

( st at ement s ar e hear say onl y i f a par t y of f er s [ t hem] i n

evi dence t o pr ove t he t r ut h of t he mat t er asser t ed i n t he

st at ement . ) . Accor di ng t o Thomas, he of f er ed t he st at ement s to

est abl i sh t hat Mal i s t hought she had secur i t y, or al t er nat i vel y

t hought she was i n a part nershi p wi t h Mbunda. Once Mal i s s

ment al st ate was est abl i shed, Thomas woul d t hen be abl e t o argue

t hat t he cour t coul d i nf er t hat r epr esent at i ons by Mbunda about

t he col l at er al and t he exi st ence of somet hi ng ot her t han a l oan

had caused Mal i s s s t at e of mi nd.

Thomas s ar gument , however , conf uses and conf l at es t hepr of f er ed t est i mony. The excl uded t est i mony cont ai ned t wo l evel s

of out - of - cour t st at ement s: ( 1) what Mbunda t ol d Mal i s, and ( 2)

what Mal i s t ol d Thomas. Had Mal i s been avai l abl e t o t est i f y at

t r i al as t o what Mbunda had t ol d her , t he f i r st l evel st at ement s

what Mbunda supposedl y t ol d Mal i s coul d have been admi t t ed

ei t her because t hey woul d have been the admi ss i on of a part y

opponent , Evi dence Rul e 801( d) ( 2) , or t hey coul d have been

t est i mony not about t he t r ut h of Mbunda s s t atement s, but about

t he terms of t he cont r act between t hem. 5- 801 Wei nst ei n s Federal

Evi dence 801. 11[ 3] ( 2012) ( t he rul e agai nst hear say does not

excl ude r el evant evi dence as t o what t he cont r act i ng par t i es sai d


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or wr ote wi t h r espect t o t he maki ng or t he t erms of an

agr eement . ) ; see al so Uni t ed St ates v. Mont ana, 199 F. 3d 947,

950 ( 7t h Ci r . 1999) .

But Mal i s was deceased. Thomas was t hus bl ocked at t hesecond l evel i n at t empt i ng t o admi t what Mal i s had t ol d hi m about

what Mbunda had t ol d Mal i s. As a r esul t , Thomas at t empt ed t o

t est i f y r egar di ng what Mal i s had t ol d hi m i n 2009 and 2010 about

what Mbunda had t ol d Mal i s about a t r ansact i on t hat occur r ed back

i n 2005.

Thi s convol uted ar gument shows t hat Thomas was not t r yi ng t o

est abl i sh Mal i s s ment al st at e. He was at t empt i ng t o of f er

Mal i s s st at ement s t o pr ove t he t r ut h of what Mal i s al l egedl y had

t ol d hi m about her di scussi ons wi t h Mbunda. As such, Thomas s

st atement s were i nadmi ss i bl e hear say, Evi dence Rul e 801, 802,

805, and t hei r excl usi on was not an abuse of di scr et i on. I n r e

Sl at ki n, 525 F. 3d at 811.

Ant i ci pat i ng t hat he woul d not pr evai l on hi s hear saychar act er i zat i on ar gument , Thomas next ar gues t hat Mal i s s

st at ement s wer e except ed f r om t he rul e agai nst hear say by

Evi dence Rul e 803( 3) . That r ul e except s f r om t he hear say r ul e

st atement [ s] of memory or bel i ef t o pr ove t he f act r emembered or

bel i eved i f t hose st at ement s r el at e t o t he val i di t y or t er ms of

t he decl ar ant s wi l l . Evi dence Rul e 803( 3) . Accor di ng t o

Thomas, Mal i s i ni t i al l y shar ed wi t h hi m some of her memor i es

r egar di ng t he Debt i n t he mi dst of a di scussi on r egar di ng whet her

she needed a wi l l .

But Thomas s r eadi ng of t hi s except i on t o t he hear say r ul e

i s over br oad. The Advi sor y Commi t t ee Notes accompanyi ng t hi s


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r ul e make cl ear t hat t hi s except i on i s l i mi t ed t o st at ement s

concer ni ng t he execut i on, r evocat i on, i dent i f i cat i on, or t er ms

of decl ar ant s wi l l . Evi dence Rul e 803, Advi sory Commi t t ee Not e

t o par a. 3 ( ci t i ng Annot at i on: Admi ssi bi l i t y of t est at or sdecl ar at i ons upon i ssue of genui neness or due execut i on of

pur por t ed wi l l , 62 A. L. R. 2d 855 ( 1958) ) . Mal i s s supposed

memor i es about her di scuss i ons wi t h Mbunda r egardi ng t he Debt

si mpl y ar e beyond t he scope of t hi s except i on. As one t r eat i se

expl ai ns:

The except i on f or wi l l s cases i s cr eated by speci al

l anguage i n t he st at e- of - mi nd except i on cr eat i ng anexcept i on t o t he l i mi t t hat ot her wi se appl i es, andbacki ng i n t o a new hear say except i on of such br eadt hseems out of pr oport i on t o t he l anguage chosen.Pre- Rul es st at e cases di d not al l ow such br oad use oft he except i on, whi ch r ei nf or ces t he pr oposi t i on t hatt he mi ni mal appr oach t aken i n t he l anguage of t he Fed.R. Evi d. 803( 3) di d not compl et el y change pr act i ce byopeni ng t he door br oadl y t o st atement s provi ng behavi orby ot her s.

Chr i st opher B. Muel l er and Lai r d C. Ki r kpat r i ck, 4 FED. EVI D.

8: 74 ( 3d ed. 2012) . Agai n, t he bankrupt cy cour t s ref usal t oal l ow t hese st atement s i nt o evi dence was not an abuse of

di scret i on as i t was a st r ai ght f or war d and cor r ect appl i cat i on of

Evi dence Rul e 803( 3) . Sl at ki n, 525 F. 3d at 811.

Thomas next ar gues t hat t he bankrupt cy cour t shoul d have

appl i ed Evi dence Rul e 807( a) s r esi dual except i on t o admi t hi s

st at ement s. Agai n, t hi s i s a di f f i cul t ar gument on appeal ; a

t r i al cour t s deci si on t hat evi dence di d not meet t he

r equi r ement s of Evi dence Rul e 807 i s r evi ewed under t he abuse of

di scr et i on st andar d. Uni t ed St at es v. Shr yock, 342 F. 3d 948, 982

( 9t h Ci r . 2003) . I ndeed t he Ni nt h Ci r cui t has r ecent l y not ed

t hat :


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Our r esearch has di scl osed onl y one i nst ance where aci r cui t cour t r ever sed a di st r i ct cour t t o r equi r eadmi ss i on of a st atement under [ Evi dence Rul e] 807.See U. S. v. Sanchez- Li ma, 161 F. 3d 545, 547- 48 ( 9t hCi r . 1998) . However , t he hear say st at ement s i n t hatcase were vi deot aped and under oat h, and t hus had

i ndi cat or s of t r ust wor t hi ness t hat Ander son sst at ement s do not .

Uni t ed St at es v. Bonds, 608 F. 3d 495, 501 ( 9t h Ci r . 2010) .

Thomas never t hel ess cont ends t hat t he bankr upt cy cour t r ul ed

t hat t he resi dual except i on was i nappl i cabl e because Thomas s

hear say t est i mony f ai l ed t o qual i f y f or any of t he speci f i cal l y

l i st ed hear say except i ons. But t hat ar gument mi schar act er i zes

t he i mpor t and meani ng of t he bankrupt cy cour t s r ul i ng. A f ai r

r eadi ng of t he ent i r e r ecor d per suades us t hat t he bankrupt cy

cour t decl i ned t o appl y t he r esi dual except i on because i t

concl uded t hat Mal i s s out - of - cour t st at ement s r egar di ng t he Debt

di d not sat i sf y t he r ul e s r equi r ement s. I n par t i cul ar , i n or der

t o appl y the r esi dual except i on, t he bankrupt cy cour t woul d have

needed t o det er mi ne, among ot her t hi ngs, t hat t he of f er edst at ement s had ci r cumst ant i al guar ant ees of t r ust wor t hi ness

equi val ent t o t hose associ at ed wi t h the hear say except i ons set

f or t h i n Evi dence Rul es 803 and 804. See, e. g. , Uni t ed St at es v.

Leal - Del Car men, 697 F. 3d 964, 974 ( 9t h Ci r . 2012) ( i ndi ci a of

t r ust wor t hi ness i ncl uded f act t hat wi t ness s st at ement was on

vi deot ape, t hus al l owi ng t r i er of f act t o assess demeanor , and

t hat st at ement s were made under oat h) .

Her e, t he r ecor d suppor t s t he bankrupt cy cour t s f i ndi ng

t hat Mal i s s st at ement s l ack the r equi r ed ci r cumst ant i al

guarant ees. The st at ement s were not made under oath nor were

t hey r ecorded i n any way. There was no showi ng t hat Mal i s was


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7I t seems qui t e possi bl e that Mal i s devel oped herunder st andi ng of her r i ght s i n r el at i on t o t he Debt af t er t heDebt was i ncur r ed. The r ecor d suggest s t hat Mal i s s di scussi onswi t h Mbunda regar di ng Mbunda s f i nanci al si t uat i on wer e ongoi ngand f l ui d, r at her t han st at i c and l i mi t ed t o a si ngl e poi nt i nt i me.

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under any obl i gat i on or i ncent i ve t o t el l t he t r ut h.

I ndeed, t he evi dence i n t he recor d can be easi l y read t o

show a l ack of t he r equi r ed ci r cumst ant i al guar ant i es. Thi s

ot her evi dence t ended t o est abl i sh t hat i n 2009- 2010, when t hest at ement s al l egedl y wer e made, Mal i s not onl y was qui t e el der l y

but al so was unwel l . Thomas s pr oposed t est i mony f ur t her

i ndi cat ed t hat dur i ng t hi s per i od Mal i s was no l onger abl e t o

f ul l y manage her own f i nanci al af f ai r s. Addi t i onal l y, t he

r el evant st at ement s f r om Mal i s r el at ed t o ci r cumst ances t hat wer e

al r eady f our years ol d at t he t i me she spoke wi t h Thomas.

The l ack of det ai l ext ended t o cr uci al f act ual poi nt s: i t i s

i mpossi bl e t o t el l f r om t he excl uded st at ement s when Mal i s

t hought Mbunda al l egedl y made t he r epr esent at i ons. Wi t hout

speci f i cs as t o t i me, t he st at ement s l ef t open t he possi bi l i t y

t hat t he al l eged r epr esent at i ons were made af t er Mbunda i ncur r ed

t he Debt , cal l i ng causat i on i nt o quest i on, as wel l as whet her

Mal i s act ual l y rel i ed upon t hem i n maki ng t he l oans.7

Accor di ngl y, because t he bankr upt cy cour t had more t han an

adequat e basi s t o f i nd t hat Mal i s s st at ement s di d not have t he

r equi si t e ci r cumst ant i al guar ant ees of t r ust wor t hi ness, i t di d

not abuse i t s di scr et i on when i t decl i ned t o appl y t he r esi dual

except i on t o the hear say r ul e.

Thomas s evi dent i ar y r ul i ng chal l enges do not end t her e. He


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al so sought t o of f er hi s own t est i mony, and t hat of hi s son

Pat r i ck Van Zandt ( Pat r i ck) , t hat Mal i s di d not dr af t t he

pr omi ssory note t hat Thomas had agr eed coul d be admi t t ed i n

evi dence ( Not e) . The r el evance of t hi s pr of f er ed t est i mony wasnot t hat t he Not e f ai l ed t o cor r ect l y stat e t he t er ms of t he

Debt , but t hat Mbunda had f orged i t , t hus undermi ni ng her

credi bi l i t y.

Thomas r el i ed on Evi dence Rul e 701 t o j ust i f y admi ssi on of

t hi s t est i mony, whi ch Thomas st at ed woul d have consi st ed of l ay

opi ni on t hat Mal i s woul d never have dr af t ed somet hi ng l i ke t he

Note. The bankr upt cy cour t expr essed t wo concerns about t hi s

of f er ed t est i mony. Fi r st , t he cour t was concer ned t hat Evi dence

Rul e 701 woul d not permi t such t est i mony. The not e was

apparent l y t yped, and there was no i ssue as t o Mbunda s

si gnat ur e. Second, even i f admi ssi bl e, t he cour t doubt ed

Thomas s expl anat i on r egar di ng what t hi s t est i mony woul d prove

and why t hi s t est i mony was r el evant .Li ke the bankrupt cy cour t , we ar e al so per pl exed as t o why

Thomas st i pul at ed t o t he Not e s admi ssi on i nto evi dence wi t hout

r eservat i on i n l i ght of t he ar gument s r egar di ng t he Not e t hat he

ant i ci pat ed maki ng. I f t he Not e wer e not genui ne, i t shoul d not

have been admi t t ed i nt o evi dence t o est abl i sh the exi st ence of

t he Debt . But set t i ng our per pl exi t y asi de, even i f we wer e t o

assume that t he bankrupt cy cour t i ncor r ect l y rul ed r egar di ng t he

admi ssi bi l i t y of Thomas s and Pat r i ck s Not e- r el at ed t est i mony,

t hat r ul i ng was, at most , har ml ess er r or . Not hi ng i n Thomas s

account of hi s and Pat r i ck s excl uded t est i mony r easonabl y coul d

have al t er ed t he bankr upt cy cour t s di sposi t i ve f i ndi ng: t hat


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8Thomas ar gues t hat t he bankr upt cy cour t shoul d not havepr event ed hi m f r om: el i ci t i ng t est i mony f r om Mbunda regar di ngcer t ai n al l eged pat t er ns i n her busi ness- r el at ed expendi t ur es;el i ci t i ng t est i mony f r omMbunda r egardi ng how many bank account sshe has used at var i ous t i mes; and r equi r i ng Mbunda to read al oudt he cont ent s of t he Not e. We do not f i nd t hat any of t heser ul i ngs const i t ut e an abuse of di scret i on.

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t her e was no evi dence f r om whi ch the bankrupt cy cour t coul d

concl ude Mbunda made af f i r mat i ve mi sr epr esent at i ons r egardi ng t he

Debt .

Gener al l y speaki ng, we i gnor e har ml ess er r or . See Li t t onLoan Ser v g, LP v. Gar vi da ( I n r e Gar vi da) , 347 B. R. 697, 704

( 9t h Ci r . BAP 2006) ( ci t i ng 28 U. S. C. 2111, Rul e 9005, Ci vi l

Rul e 61, and Donal d v. Cur r y ( I n r e Donal d) , 328 B. R. 192, 20304

( 9t h Ci r . BAP 2005) ) . Speci f i cal l y wi t h r espect t o er r oneous

evi dent i ar y rul i ngs, such r ul i ngs do not const i t ut e r ever si bl e

er r or unl ess i t i s mor e l i kel y t han not t hat t he r ul i ngs changed

t he out come of t he l awsui t . See Harper , 533 F. 3d at 1030.

Si mpl y put , Thomas s and Pat r i ck s Not e- r el at ed t est i mony

coul d not have al t er ed the out come of t he under l yi ng adver sary

pr oceedi ng even i f t hat t est i mony had been admi t t ed. The out come

of t he adver sar y pr oceedi ng hi nged on t he absence of evi dence

f r om whi ch t he bankr upt cy cour t , as t he t r i er of f act , coul d f i nd

t hat Mbunda made af f i r mat i ve mi sr epr esent at i ons when she i ncur r edt he Debt . The same i s t r ue f or t he handf ul of ot her evi dent i ar y

i t ems t hat Thomas compl ai ns t he bankr upt cy cour t shoul d not have

excl uded. 8 None of t hese other i t ems of excl uded evi dence woul d

have enabl ed t he cour t t o f i nd t hat Mbunda made the requi si t e

mi sr epr esent at i ons necessar y t o suppor t Thomas s 523( a) ( 2) ( A)

cl ai m f or r el i ef .


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2. Section 523(a)(4).

Thomas al so chal l enges t he bankrupt cy cour t s di smi ssal of

hi s 523( a) ( 4) cl ai m wi t hout l eave t o amend. Di smi ssal s under

Ci vi l Rul e 12( b) ( 6) ar e r evi ewed de novo. See Al ohaCar e v. Haw. ,Dept . of Human Ser vs. , 572 F. 3d 740, 744 n. 2 ( 9t h Ci r . 2009) .

Under t hat st andar d, [ d] i smi ssal wi t hout l eave t o amend i s

i mpr oper , unl ess i t i s cl ear , upon de novo r evi ew, t hat t he

compl ai nt coul d not be saved by any amendment . I nt r i - Pl ex

Techs. , I nc. v. Cr est Gr p. , I nc. , 499 F. 3d 1048, 1056 ( 9th Ci r .

2007) ( quot i ng I n r e Daou Sys. , I nc. , Sec. Li t i g. , 411 F. 3d 1006,

1013 ( 9t h Ci r . 2005) ) .

I n per t i nent par t , 523( a) ( 4) except s f r om di schar ge debt s

i ncur r ed f or f or f r aud or def al cat i on whi l e act i ng i n a

f i duci ar y capaci t y. 523( a) ( 4) . The t er m f i duci ar y i s

nar r owl y def i ned f or pur poses of 523( a) ( 4) . Honkanen v. Hopper

( I n r e Honkanen) , 446 B. R. 373, 378 ( 9t h Ci r . BAP 2011) ( ci t i ng

Cal Mi cro, I nc. v. Cant r el l ( I n r e Cant r el l ) , 329 F. 3d 1119, 1125( 9t h Ci r . 2003) ) . I n or der f or t her e t o be nondi schar geabi l i t y

under 523( a) ( 4) , t he debt or s f i duci ar y capaci t y must be

ar i si ng f r om an expr ess or t echni cal t r ust t hat was i mposed

bef or e, and wi t hout r ef er ence to, t he wr ongdoi ng t hat caused t he

debt . . . . I n r e Cant r el l , 329 F. 3d at 1125 ( quot i ng Lewi s v.

Scot t ( I n r e Lewi s) , 97 F. 3d 1182, 1185 ( 9t h Ci r . 1996) ) . A

t r ust ex mal ef i ci o t hat i s, a t r ust i mposed by l aw as a

r emedy f or mal f easance or wr ongf ul act i ons wi l l not suf f i ce.

I n r e Honkanen, 446 B. R. at 379. Mor eover , [ t ] he br oad, gener al

def i ni t i on of f i duci ar y - a r el at i onshi p i nvol vi ng conf i dence,

t r ust and good f ai t h - i s i nappl i cabl e i n t he di schar geabi l i t y


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9I n t hi s r egard, Thomas ar gued on appeal :

Whi l e i t appear s cl ear f r om t he r ecor d t hat t he Cour tbel ow was aware t hat Appel l ant bel i eved t hat t here weresuf f i ci ent f act ual al l egat i ons t hat he coul d make thatwoul d support t he exi st ence of a part nershi p and hence

a f i duci ar y dut y i n or der t o st at e a cl ai m under 523( a) ( 4) , t he Cour t bel ow seems t o be at t empt i ng topr ot ect Appel l ant s i nt er est s by di ssuadi ng Appel l antf r om pl eadi ng a par t ner shi p . . . .

Apl t . Opn ng Br . ( Feb. 3, 2012) at 11: 19- 24. As set f or t h bel ow,t he recor d act ual l y r eveal s t hat Thomas admi t t ed i n open cour tt hat he had no ot her f act s t o al l ege r egar di ng t he exi st ence of apar t ner shi p.

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cont ext . I n r e Cant r el l , 329 F. 3d at 1125 ( quot i ng Ragsdal e v.

Hal l er , 780 F. 2d 794, 796 ( 9t h Ci r . 1986) ) .

Despi t e t hese uncont est ed pr i nci pl es, Thomas i n essence

cl ai ms t hat t he bankrupt cy cour t shoul d have gi ven hi m t heoppor t uni t y t o amend hi s 523( a) ( 4) cl ai m t o add al l egat i ons

r egar di ng t he exi st ence of a par t ner shi p. 9 As Thomas poi nted

out , par t ner s i n Cal i f or ni a have t he t ype of f i duci ar y dut y wi t h

r espect t o par t ner shi p asset s t hat 523( a) ( 4) cover s. See

Ragsdal e 780 F. 2d at 796- 97.

But we are convi nced t hat any amendment t o t he compl ai nt

at t empt i ng t o f i x t he def ect s i n t he 523( a) ( 4) cl ai m woul d have

been f ut i l e. When amendment woul d be f ut i l e, t he bankr upt cy

cour t does not abuse i t s di scr et i on i n di smi ssi ng t he compl ai nt

wi t hout l eave t o amend. Dougher t y v. Ci t y of Covi na, 654 F. 3d

892, 901 ( 9t h Ci r . 2011) ; Al br echt v. Lund, 845 F2d 193, 195 ( 9t h

Ci r . 1988) . Amendment i s f ut i l e when al l egat i on of ot her f act s

consi st ent wi t h t he chal l enged pl eadi ng coul d not possi bl y cur et he def i ci ency. I d. ( quot i ng Schr ei ber Di st r i b. Co. v.


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Ser v- Wel l Fur ni t ur e Co. , 806 F. 2d 1393, 1401 ( 9t h Ci r . 1986) ) .

Thomas admi t t ed at t he hear i ng on Mbunda s f i r st mot i on t o

di smi ss t hat he had no ot her f act s t o al l ege r egar di ng t he

exi st ence of a par t ner shi p:THE COURT: You ve si mpl y pl ed t he st at ute [ 523(a) ( 4) ] .You haven t what f act on page 3 of t he compl ai nt haveyou done est abl i shed anyt hi ng t hat mi ght f i t t hi sf i duci ar y pr eexi st i ng par t ner shi p r el at i onshi p?

MR. VAN ZANDT: Wel l , but t he part nershi p perhaps, i f i f t her e i s one, was est abl i shed at t hat t i me

THE COURT: I j ust asked wher e you ve ment i oned i t i nt he paper . That s al l .

MR. VAN ZANDT: Oh, I don t I do not ment i on t hatt her e' s a par t ner shi p, because I have no i nf or mat i ont hat a par t ner shi p was f or med, ot her t han t he f act s ofwhat happened.

THE COURT: You haven t even ment i oned t hat apar t ner shi p was i nt ended.

MR. VAN ZANDT: I don t know t hat one was.

Hr g Tr ans. ( Feb. 25, 2011) at 18: 3- 16.

Nor has Thomas i dent i f i ed on appeal any addi t i onal f act s hewas pr epared t o al l ege t o shor e up hi s par t ner shi p cl ai m. See

Dougher t y, 654 F. 3d at 901 ( r el yi ng on a si mi l ar f ai l ur e t o

i dent i f y addi t i onal al l egat i ons i n af f i r mi ng di smi ssal wi t hout

l eave t o amend) . A compl ai nt must cont ai n more t han a f ormul ai c

r eci t at i on of t he el ement s of a cause of act i on. Bel l At l .

Cor p. v. Twombl y, 550 U. S. 544, 555 ( 2007) . I t must cont ai n

enough f acts t o st at e a cl ai m t o r el i ef t hat i s pl ausi bl e on i t s

f ace. I d. at 570 ( emphasi s added) . The f act s al l eged must nudge

t he pl ai nt i f f s cl ai ms across t he l i ne f r om concei vabl e t o

pl ausi bl e. I d. Thomas, by hi s own admi ssi on, coul d not do t hat

her e. Accor di ngl y, t he bankrupt cy cour t di d not er r i n


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di smi ssi ng t he 523( a) ( 4) cl ai m wi t hout l eave t o amend.

3. Section 523(a)(6).

Thomas al so chal l enges t he bankrupt cy cour t s di smi ssal of

hi s 523( a) ( 6) cl ai m wi t hout l eave t o amend. Sect i on 523( a) ( 6)except s f r om di schar ge debt s ar i si ng f r om wi l l f ul and mal i ci ous

i nj ur y. Or msby v. Fi r st Am. Ti t l e Co. of Nev. ( I n r e Or msby) ,

591 F. 3d 1199, 1206 ( 9t h Ci r . 2010) . I n pr osecut i ng i t s case, a

cr edi t or must separ at el y pl ead and pr ove bot h wi l l f ul ness and

mal i ci ousness. Al bar r an v. New For m. I nc. ( I n r e Bar boza) , 545

F. 3d 702, 706 ( 9t h Ci r . 2008) . When, as her e, t he bankrupt cy

cour t di smi ssed t he cl ai m wi t hout l eave t o amend, t he st andar d of

r evi ew i s t he same as f or si mi l ar di smi ssal s under 523( a) ( 4) :

[ d] i smi ssal wi t hout l eave t o amend i s i mpr oper , unl ess i t i s

cl ear , upon de novo r evi ew, t hat t he compl ai nt coul d not be saved

by any amendment . I nt r i - Pl ex Techs. , 499 F. 3d at 1056 ( quot i ng

I n r e Daou Sys. , 411 F. 3d at 1013) .

As t o t he i ndi vi dual el ement s of a 523( a) ( 6) cl ai m, [ a] wi l l f ul i nj ury i s a del i berat e or i nt ent i onal i nj ury, not

mer el y a del i ber at e or i nt ent i onal act t hat l eads t o i nj ur y. I n

r e Barboza, 545 F. 3d at 706 ( quot i ng Kawaauhau v. Gei ger , 523

U. S. 57, 61 ( 1998) ) ( emphasi s i n or i gi nal ) . I n or der t o

est abl i sh a wi l l f ul i nj ur y, a credi t or must pl ead and pr ove t hat

t he debt or had a subj ect i ve mot i ve t o i nf l i ct i nj ur y or a

subj ect i ve bel i ef t hat i nj ur y was subst ant i al l y cer t ai n t o

r esul t f r om t he debt or s conduct . I n r e Or msby, 591 F. 3d at

1206 ( ci t i ng Car r i l l o v. Su ( I n r e Su) , 290 F. 3d 1140, 1142 ( 9t h

Ci r . 2002) ) .

As an ai d t o det er mi ni ng t he debt or s mot i ves, cases under


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523( a) ( 6) pr esume the debt or knows t he natur al consequences of

hi s or her act i ons. I n r e Or msby, 591 F. 3d at 1206; see al so I n

r e Su, 290 F. 3d at 1146 n. 6 ( I n addi t i on t o what a debt or may

admi t t o knowi ng, t he bankr uptcy cour t may consi derci r cumst ant i al evi dence t hat t ends t o est abl i sh what t he debt or

must have act ual l y known when t aki ng t he i nj ur y- pr oduci ng

act i on. ) .

Wi t h r espect t o t he second el ement , mal i ci ous i nj ur y, [ a]

mal i ci ous i nj ur y i nvol ves ( 1) a wr ongf ul act , ( 2) done

i nt ent i onal l y, ( 3) whi ch necessar i l y causes i nj ur y, and ( 4) i s

done wi t hout j ust cause or excuse. Or msby, 591 F. 3d at 1207

( quot i ng Pet r al i a v. J er ci ch ( I n r e J er ci ch) , 238 F. 3d 1202, 1209

( 9t h Ci r . 2001) ) .

Thomas ar gues t hat he meet s bot h t he mal i ci ous and wi l f ul

el ement s of a 523( a) ( 6) cl ai m f or r el i ef because he adequat el y

pl ed ( or coul d have adequat el y pl ed) a cl ai m f or el der abuse

under Cal . Wel f are & I nst s. Code 15610. 30 ( W&I 15610. 30) .He cont ends t hat a wel l - pl ed cl ai m under W&I 15610. 30 i s co-

ext ensi ve wi t h a wi l l f ul and mal i ci ous i nj ur y under 523( a) ( 6) .

I n ot her wor ds, accor di ng t o Thomas, i f he pl ed ( or coul d have

pl ed) t he el ement s f or el der abuse under W&I 15610. 30, he

necessar i l y woul d have pl ed ( or coul d have pl ed) t he el ement s f or

a nondi schar geabl e debt under 523( a) ( 6) .

Thi s i s si mpl y wr ong. W&I 15610. 30 i n r el evant par t

pr ovi des t hat a per son or ent i t y commi t s f i nanci al abuse of an

el der or dependent adul t when t hey do any of t he f ol l owi ng:

( 1) Takes, secret es, appr opr i at es, obt ai ns, or r et ai nsr eal or per sonal pr oper t y of an el der or dependent


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10Cal . Ci v. Code 1575 pr ovi des t hat t aki ng or obt ai ni ng ofan unf ai r advant age i s an essent i al component of undue i nf l uence.As set f or t h i n f ul l , Cal . Ci v. Code 1575 st at es as f ol l ows:

Undue influence, what. Undue i nf l uence consi st s:

1. I n t he use, by one i n whom a conf i dence i s r eposedby anot her , or who hol ds a r eal or appar ent aut hor i t y

over hi m, of such conf i dence or aut hor i t y f or t hepur pose of obt ai ni ng an unf ai r advant age over hi m;

2. I n t aki ng an unf ai r advant age of anot her s weaknessof mi nd; or ,

3. I n t aki ng a gr ossl y oppr essi ve and unf ai r advant ageof anot her s necessi t i es or di st r ess.

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adul t f or a wr ongf ul use or wi t h i nt ent t o def r aud, orbot h.

( 2) Assi st s i n t aki ng, secret i ng, appr opr i at i ng,obt ai ni ng, or r et ai ni ng r eal or per sonal pr oper t y of anel der or dependent adul t f or a wr ongf ul use or wi t h

i nt ent t o def r aud, or bot h.( 3) Takes, secret es, appr opr i at es, obt ai ns, or r et ai ns,or assi st s i n t aki ng, secret i ng, appr opr i at i ng,obt ai ni ng, or r et ai ni ng, r eal or per sonal pr oper t y ofan el der or dependent adul t by undue i nf l uence, asdef i ned i n Sect i on 1575 of t he Ci vi l Code. 10

Under t he pl ai n l anguage of W&I 15610. 30, a cl ai m f or

el der abuse must i ncl ude: ( 1) a wr ongf ul use; ( 2) an undue

i nf l uence/ unf ai r advant age; or ( 3) an i nt ent t o def r aud. The

f i r st t wo t ypes of conduct covered wr ongf ul use and undue

i nf l uence/ unf ai r advant age do not r equi r e any mot i ve t o i nj ur e

or any bel i ef t hat i nj ur y wi l l occur . See Cal . Ci v. Code 1575;

St ebl ey v. Li t t on Loan Ser v. , LLP, 134 Cal . Rpt r . 3d 604, 608

( Cal . App. 2011) .

But a cr edi t or such as Thomas must pl ead and prove a

subj ecti ve mot i ve t o i nf l i ct i nj ur y or a subj ecti ve bel i ef t hat


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i nj ur y was subst ant i al l y cer t ai n t o r esul t f r om t he debt or s

conduct i n or der t o succeed on a 523( a) ( 6) cl ai m. I n r e

Or msby, 591 F. 3d at 1206 ( ci t i ng I n r e Su, 290 F. 3d at 1142) .

Thus, even wer e i t t r ue t hat Thomas coul d have pl ed a W&I 15610. 30 cl ai m based upon Mbunda s wr ongf ul use or upon some

undue i nf l uence/ unf ai r advant age Mbunda empl oyed agai nst Mal i s,

Thomas coul d not have st at ed a 523(a) ( 6) cl ai m because nei t her

of t hese types of conduct woul d have been suf f i ci ent t o est abl i sh

t he r equi si t e wi l l f ul ness. As a consequence, even i f Thomas

coul d est abl i sh a cl ai m under t hose par t s of W&I 15610. 30, i t

woul d not necessar i l y be nondi schar geabl e under 523( a) ( 6) .

By pr ocess of el i mi nat i on, t hat onl y l eaves us wi t h t he

possi bi l i t y t hat Thomas coul d have pl ed a W&I 15610. 30 cl ai m

based on an i nt ent t o def r aud. Thomas, however , was al l owed t o

pr oceed t o t r i al on hi s f r aud t heor i es i n connect i on wi t h hi s

523( a) ( 2) ( A) cl ai m f or r el i ef . And he l ost ; t he bankr upt cy

cour t cor r ect l y f ound ( as we hel d above) t hat Thomas l acked anyf act ual or evi dent i ar y basi s to suppor t hi s f r aud t heor i es. At

no t i me ei t her on appeal or bef or e t he bankrupt cy cour t has

Thomas suggest ed t hat he had any f act s or evi dence i n suppor t of

hi s f r aud t heor i es ot her t han what he al r eady st at ed i n hi s

compl ai nt and at t r i al . These ci r cumst ances i nexor abl y l ead us

t o t wo al t er nat e concl usi ons: ( 1) al l owi ng Thomas t o amend hi s

523( a) ( 6) cl ai m woul d have been f ut i l e; or ( 2) not al l owi ng

Thomas t o amend hi s 523(a) ( 6) cl ai m was har ml ess er r or . Under


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11The bankr upt cy cour t di smi ssed Thomas s 523(a) ( 6) cl ai mon di f f er ent gr ounds, but we may af f i r m on any basi s r easonabl yf ound i n t he r ecor d. Cavi ata At t ached Homes, LLC v. U. S. Bank,N. A. , 481 B. R. 34, 44 ( 9t h Ci r . BAP 2012) .

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ei t her concl usi on, Thomas can not pr evai l . 11

4. Due Process

Fi nal l y, Thomas argues t hat t he bankrupt cy cour t depr i ved

hi m of due pr ocess i n t he cour se of t he t r i al on hi s 523( a) ( 2) ( A) cl ai m. We r evi ew due pr ocess i ssues de novo.

Pr i ce v. Leht i nen ( I n r e Leht i nen) , 564 F. 3d 1052, 1058 ( 9t h Ci r .

2009) .

Thomas s due process ar gument i s t wof ol d. Fi r st , accor di ng

t o Thomas, t he cumul at i ve ef f ect of al l of t he bankrupt cy cour t s

adver se evi dent i ar y r ul i ngs at t r i al was t o depr i ve hi m of a

meani ngf ul oppor t uni t y t o be hear d. Second, Thomas compl ai ns

t hat t he cour t r ushed t hr ough t he schedul ed one- day t r i al si mpl y

f or t he pur pose of compl et i ng t he t r i al as schedul ed, whi ch al so

depr i ved hi m of a meani ngf ul oppor t uni t y t o be hear d.

An appel l ant , however , must show pr ej udi ce t o support a due

pr ocess cl ai m. See Rosson v. Fi t zger al d ( I n r e Rosson) , 545 F. 3d

764, 776 ( 9t h Ci r . 2008) . Here, Thomas has not shown any. Tot he cont r ar y, t he mer i t s anal ysi s set f or t h above demonst r at es

t hat Thomas l ost not because of any due pr ocess vi ol at i ons; he

l ost because he was unabl e t o of f er admi ssi bl e evi dence t o

est abl i sh hi s cl ai m. Ther e was no cumul at i ve ef f ect of adver se

r ul i ngs because, as we set f or t h above, t her e wer e no i ncor r ect

evi dent i ar y r ul i ngs. And no amount of addi t i onal t i me coul d f i x

t hat pr obl em. I n shor t , t he absence of any pr ej udi ce shows no


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abuse of di scr et i on, and t hus i s f at al t o Thomas s due pr ocess

cl ai m.

CONCLUSION

For al l of t he r easons set f or t h above, we AFFI RM t hebankr upt cy court s j udgment i n f avor Mbunda on Thomas s

nondi schar geabi l i t y compl ai nt .

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In re: Wileharda Kilian Mbunda, 9th Cir. BAP (2012)

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