In re: Havy Nguyen, 9th Cir. BAP (2012)

7/25/2019 In re: Havy Nguyen, 9th Cir. BAP (2012)

http://slidepdf.com/reader/full/in-re-havy-nguyen-9th-cir-bap-2012 1/21

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* Thi s di sposi t i on i s not appr opr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or what ever per suasi ve val ue i t mayhave ( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue.See 9t h Ci r . BAP Rul e 8013- 1.

**Hon. Wi l l i am J . Laf f er t y I I I , Bankr upt cy J udge f or t heNor t her n Di st r i ct of Cal i f or ni a, si t t i ng by desi gnat i on.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. CC- 11- 1379- LaPaMk)

HAVY NGUYEN, ) Bk. No. 10- 25953- SC)

Debt or . ) Adv. No. 10- 1533- SC ______________________________)

)GENESI S V J , I NC. , )

)Appel l ant , )

)

v. ) MEMORANDUM

*

)HAVY NGUYEN, )

)Appel l ee. )

______________________________)

Ar gued and Submi t t ed on J anuar y 20, 2012,at Pasadena, Cal i f or ni a

Fi l ed - Febr uar y 17, 2011

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour t

f or t he Cent r al Di str i ct of Cal i f or ni aHonor abl e Scot t Cl ar kson, Bankrupt cy J udge, Pr esi di ng

Appear ances: Edward Hays of Marshack Hays LLP ar gued on behal f of Appel l ant Genesi s V J , I nc. ; Al l an Dean Epst ei nargued on behal f of Appel l ee Havy Nguyen.

Bef ore: LAFFERTY** , PAPPAS and MARKELL, Bankr upt cy J udges.

FILED

FEB 17 2012

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

Case: 11-1379 Document: 21 Filed: 02/17/2012 Page: 1 of 21



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1Unl 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 are to t he Feder al Rul es of Bankrupt cyPr ocedur e, Rul es 1001- 9037. Al l "Ci vi l Rul e" r ef er ences ar e t o

t he Feder al Rul es of Ci vi l Pr ocedur e.2 The sect i on 727 cl ai ms wer e di smi ssed upon or al mot i on of

Genesi s pr i or t o t he concl usi on of t r i al .

3Pr i or t o t he sal e, Home Desi gn was operated under t he nameShowcase Fur ni t ur e Gal l er y ( “Showcase”) . The r ecord i s uncl earas t o when t he name was changed f r om Showcase t o Home Desi gn.For ease of r ef er ence, we wi l l r ef er t o t he f ur ni t ur e st or e asHome Desi gn, i r r espect i ve of i t s name at t he r el evant t i me.

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Appel l ant Genesi s V J , I nc. ( “Genesi s”) , havi ng obt ai ned a

j udgment by def aul t agai nst t he appel l ee Havy Nguyen ( t he

“Debt or ”) f or br each of cont r act , and agai nst t he Debt or ’ s

spouse, Bi l l Ha ( “Mr . Ha”) , f or f r aud i n t he i nducement , f i l ed anadver sar y pr oceedi ng seeki ng to deny t he Debt or ’ s di schar ge under

sect i ons 727( a) ( 2) 1 and 727( a) ( 4) and t o decl ar e t he st at e cour t

j udgment nondi schar geabl e under sect i ons 523(a) ( 2) , 523(a) ( 4) ,

and 523( a) ( 6) . Fol l owi ng a t r i al , t he bankrupt cy cour t f ound

agai nst Genesi s and det er mi ned t hat t he cl ai m based on t he st at e

cour t j udgment was di schar geabl e as t o t he Debt or . 2 Genesi s

t her eaf t er f i l ed a t i mel y appeal . We af f i r m.

I. FACTS

Genesi s V J , I nc. pur chased a f ur ni t ur e st ore known as Home

Desi gn Fur ni t ur e Gal l ery ( “Home Desi gn”) 3 f r om t he Debt or . The

Debt or ’ s spouse, Mr . Ha, operated and cont r ol l ed Home Desi gn, and

negot i at ed t he sal e i n al l r espect s on behal f of t he Debt or .

Unt i l 2006, t he Debt or and Mr . Ha j oi nt l y owned Home Desi gnt hr ough a cor por at i on, VYNA, I nc. I n 2006, t he cor por at i on was

di ssol ved and al l of i t s assets wer e t r ansf er r ed t o t he Debt or as




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sol e pr opr i et or . Despi t e t hi s change i n owner shi p, Mr . Ha

cont i nued t o operate and mai ntai n compl ete cont r ol over Home

Desi gn. Ot her t han bei ng t he l egal owner , t he Debt or had at al l

t i mes no meani ngf ul i nvol vement i n t he operat i on of Home Desi gn.I n ear l y 2007, Mr . Ha deci ded t o l i st Home Desi gn f or sal e

wi t h a busi ness br oker . The adver t i sement i ndi cat ed t hat t he

busi ness ear ned annual net pr of i t s of $630, 000. I n r esponse t o

t he ad, Manorama Gupt a ( “Ms. Gupt a”) , Genesi s’ pr esi dent ,

cont acted Mr . Ha t o i nqui r e about pur chasi ng Home Desi gn. Dur i ng

t he cour se of negot i at i ons, Mr . Ha repr esent ed hi msel f as a co-

owner ( even t hough Home Desi gn was sol el y i n t he Debt or ’ s name)

and made var i ous r epr esent at i ons r egardi ng Home Desi gn, i ncl udi ng

r epr esent at i ons as t o i t s pr of i t abi l i t y and i t s asset s.

I n May 2007, i n r el i ance on Mr . Ha’ s r epr esent at i ons,

Genesi s agr eed t o pur chase al l of Home Desi gn’ s asset s, i ncl udi ng

t he showr oom l ease, al l of t he i nvent or y, busi ness goodwi l l ,

r el at i onshi ps wi t h whol esal er s, f i xt ur es, and t wo t r ucks. Mr . Haand Genesi s pr epared an Asset Pur chase Agr eement ( t he “Purchase

Agr eement ”) , whi ch pr ovi ded f or payment by Genesi s of $500, 000 —

$350, 000 up f r ont ( spl i t i nt o a $10, 000 i ni t i al deposi t and a

$340, 000 cashi er ’ s check upon cl osi ng) and an addi t i onal

$150, 0000 over t went y- f our mont hs — i n exchange f or t he assets of

Home Desi gn.

Because the Debt or was t he l egal owner of Home Desi gn, t he

Pur chase Agr eement r equi r ed t he Debt or ’ s si gnatur e. On or about

May 21, 2007, Ms. Gupt a and Mr . Ha met wi t h t he Debt or at her

pl ace of empl oyment , and pr esent ed her wi t h t he Pur chase

Agr eement . Pr i or t o t hi s meet i ng, t he Debt or had never met or




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spoken t o Ms. Gupt a and had never seen or r evi ewed t he Pur chase

Agr eement . Nonet hel ess, t he Debt or , at Mr . Ha’ s r equest ,

execut ed t he Pur chase Agr eement wi t hout r evi ewi ng i t s t er ms. I n

r et ur n, Ms. Gupt a pr ovi ded Mr . Ha wi t h a check, payabl e to theDebt or , f or $10, 000 ( t he i ni t i al deposi t ) . Genesi s l at er pai d

t he remai ni ng $340, 000 vi a cashi ers check, and execut ed a

pr omi ssory note i n f avor of t he Debt or i n t he amount of $150, 000.

Shor t l y af t er t he sal e was cl osed, Genesi s di scover ed t hat

Mr . Ha’ s r epr esent at i ons r egar di ng t he pr of i t abi l i t y of Home

Desi gn and i t s asset s wer e f r audul ent . Genesi s di scover ed t hat

Mr . Ha had f al si f i ed t ax r et ur ns t o i nf l at e t he pr of i t abi l i t y of

t he busi ness and al so l ear ned that Home Desi gn di d not own much

of t he i nvent ory that t he Pur chase Agr eement pur port ed t o

t r ansf er . Mor eover , Mr . Ha never del i ver ed t he bui l di ng l ease or

t he t wo t r ucks, as r equi r ed by t he Pur chase Agr eement . Genesi s

event ual l y was f or ced t o di spose of t he asset s i t di d r ecei ve f or

a near t ot al l oss.On December 14, 2007, Genesi s f i l ed a l awsui t agai nst t he

Debt or and Mr . Ha i n t he Super i or Cour t of Cal i f or ni a, Count y of

Or ange, al l egi ng br each of cont r act , f r aud, negl i gent

mi sr epr esent at i on, unf ai r busi ness pr act i ces, i nt ent i onal

i nt er f er ence wi t h pr ospect i ve economi c r el at i ons, negl i gent

i nt er f er ence wi t h pr ospect i ve economi c r el at i ons, and f r aud i n

t he i nducement . On J une 15, 2009, t he st ate cour t conduct ed a

t r i al at whi ch nei t her def endant appear ed. I n l i ght of t he non-

appear ance, t he t r i al t ook t he f or m of a def aul t pr ove- up

hear i ng.

Af t er hear i ng test i mony and admi t t i ng document ary evi dence,




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4Despi t e t hi s st at ement , t he r ecor d, when consi der ed as awhol e, i s ambi guous as t o whether t he st at e cour t j udge i nt endedt o make a f i nal det er mi nat i on on t he i ssue of t he Debt or ’ s f r aud.I ndeed, t he bankrupt cy cour t det er mi ned t hat t he st at e cour t hadnot made such a det ermi nat i on.

5Al t hough t he t r anscr i pt of t he j udge’ s r emar ks at t r i al

i ndi cat es t hat t he st at e cour t di d not i nt end t o i mpose puni t i vedamages agai nst t he Debt or , t he f orm of j udgment ent ered by t hest at e cour t makes t he Debt or j oi nt l y l i abl e f or t he puni t i vedamages. Gi ven t he f act t hat t he st at e cour t di d not f i nd t heDebt or l i abl e on a t or t f or whi ch puni t i ve damages coul d beawarded, t he Cour t assumes t hi s was an oversi ght i n t he ent r y of t he j udgment . See Wal ker v. Si gnal Cos. , I nc. , 149 Cal . Rpt r .119, 126 (Cal . Ct . App. 1978) ( “Puni t i ve damages are notr ecover abl e i n an act i on f or br each of cont r act no mat t er howwi l l f ul , mal i ci ous, or f r audul ent t he br each”) .

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t he st at e cour t ent er ed j udgment agai nst t he Debt or f or br each of

cont r act , but st at ed t hat t her e was i nsuf f i ci ent evi dence t o f i nd

t he Debt or l i abl e f or f r aud. 4 I n addi t i on, t he st at e cour t f ound

Mr . Ha l i abl e f or f r aud i n t he i nducement based on t he t heor yt hat he act ed as an “agent ” of t he Debt or i n negot i at i ng t he sal e

of Home Desi gn. The Cour t ul t i mat el y awarded damages i n t he

amount of $423, 067. 60, f or whi ch t he Def endant s ar e j oi nt l y and

sever al l y l i abl e. The Cour t al so awar ded puni t i ve damages i n t he

amount of $150, 000 agai nst Mr . Ha. I n l i ght of t he f or egoi ng

di sposi t i on, and wi t h acqui escence of Genesi s’ counsel , t he st at e

cour t decl ar ed t he r emai ni ng causes of act i on moot . On J ul y 6,

2009, t he st ate cour t ent ered a j udgment i n t he amount of

$573, 067. 60 agai nst both Def endant s. 5

On May 25, 2010, t he Debt or f i l ed a vol unt ary pet i t i on under

chapt er 7 of t he Bankr upt cy Code. On September 7, 2010,

Pl ai nt i f f f i l ed a t i mel y compl ai nt seeki ng t o deny the Debt or ’ s

di schar ge under sect i ons 727( a) ( 2) and 727( a) ( 4) and to decl ar et he st at e cour t j udgment nondi schar geabl e under sect i ons




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523( a) ( 2) , 523( a) ( 4) , and 523( a) ( 6) .

Pr i or t o t r i al i n t he bankr upt cy cour t , t he Debt or f i l ed a

mot i on t o pr ecl ude l i t i gat i on of Genesi s’ sect i on 523( a) ( 2) ,

( a) ( 4) , and ( a) ( 6) cl ai ms based on t he Debt or ’ s asser t i onsr egar di ng t he col l at er al est oppel ef f ect of t he st at e cour t

j udgment . The bankrupt cy cour t t r eated t he Debt or ’ s mot i on as a

mot i on in limine and hear d or al ar gument pr i or t o t r i al . The

Debt or ar gued t hat t he st at e cour t f ound her l i abl e f or br each of

cont r act , and onl y br each of cont r act , and f ound t hat t her e was

i nsuf f i ci ent evi dence t o i mpose l i abi l i t y on t he f r aud cause of

act i on. As a r esul t , t he Debt or asser t ed t hat Genesi s shoul d be

pr ecl uded f r om r el i t i gat i ng t he i ssue of t he Debt or ’ s al l eged

f r aud or ot her wi l l f ul and mal i ci ous act s i n t he bankrupt cy

cour t .

Genesi s opposed t he mot i on in limine and, f ar f r om

cont endi ng as i t has on t hi s appeal t hat col l at er al est oppel

appl i ed t o t he agency i ssue, asser t ed t hat t he st at e cour t di dnot make any f i ndi ngs r egardi ng f r aud or agency and t hat t he

bankr upt cy cour t needed t o make a determi nat i on as t o those

i ssues.

Af t er consi der i ng t he ar gument of t he par t i es, bot h wr i t t en

and or al , and r evi ewi ng t he st at e cour t t r i al r ecor d, t he

bankr upt cy cour t determi ned t hat Genesi s was not pr ecl uded f r om

l i t i gat i ng t he i ssue of f r aud because i t was not “act ual l y

l i t i gat ed” as to t he Debt or i n t he st at e cour t act i on. The

bankr upt cy cour t f ound t hat , even t hough Genesi s put on some

evi dence r egar di ng t he Debt or ’ s al l eged f r aud, t he st at e cour t

st opped shor t of maki ng a f i nal det er mi nat i on as t o t hat i ssue.




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Fur t her more, based on Genesi s’ asser t i on t hat t he bankrupt cy

cour t was r equi r ed to det er mi ne t he agency i ssue, t he bankrupt cy

cour t di d not even consi der appl yi ng col l at er al est oppel t o t he

st at e cour t ’ s “f i ndi ng” t hat t her e was an agency r el at i onshi pbetween the Debt or and Mr . Ha but , i nst ead, t ook evi dence on the

mat t er .

I mmedi at el y af t er r ul i ng on t he mot i on, t he bankrupt cy cour t

conduct ed a t r i al on t he act i on. Pr i or t o t he concl usi on of

t r i al , but af t er pr esent i ng evi dence wi t h r espect t o t he

sect i on 727 cl ai ms f or r el i ef , Genesi s moved t o di smi ss i t s

sect i on 727 cl ai ms f or r el i ef . The t r i al cont i nued on t he

sect i on 523 cl ai ms f or r el i ef and, at t he t r i al ’ s concl usi on, t he

bankrupt cy cour t r ul ed i n f avor of t he Debt or on t he r emai ni ng

cl ai ms f or r el i ef .

Per t i nent t o t hi s appeal , t he bankrupt cy cour t det er mi ned

t hat t he Debt or was not l i abl e f or any di r ect f r aud wi t h r espect

t o t he subj ect t r ansact i on and t hat t her e was i nsuf f i ci entevi dence t o i mput e any f r aud t o the Debt or based on an agency

r el at i onshi p. Mor e speci f i cal l y, t he bankr upt cy cour t f ound t hat

t he evi dence si mpl y di d not show t hat t he Debt or had anyt hi ng t o

do wi t h t he busi ness ot her t han bei ng t he nomi nal owner and

si gni ng t he Pur chase Agr eement at Mr . Ha’ s di r ect i on.

The bankrupt cy cour t enter ed j udgment on J une 30, 2011,

decl ar i ng t hat t he st at e cour t j udgment was di schar geabl e as t o

t he Debt or . Genesi s f i l ed a t i mel y not i ce of appeal on J ul y 14,

2011.

/ / /

/ / /




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II. ISSUES

1. Di d t he bankrupt cy cour t er r i n not appl yi ng i ssue

pr ecl usi on t o t he st at e cour t ’ s “f i ndi ng” t hat Mr . Ha was t he

agent of t he Debt or?2. Di d t he bankrupt cy cour t er r i n f i ndi ng t hat Mr . Ha’ s

f r aud shoul d not be i mput ed t o t he Debt or based on an agency

r el at i onshi p and t hat t he debt i s t her ef or e di schar geabl e?

III. JURISDICTION

The bankrupt cy cour t had j ur i sdi ct i on under 28 U. S. C.

§ 157( b) ( 2) ( I ) and § 1334. We have j ur i sdi ct i on under 28 U. S. C.

§ 158.

IV. STANDARDS OF REVIEW

We r evi ew t he bankrupt cy cour t ’ s det er mi nat i on regar di ng the

avai l abi l i t y of i ssue pr ecl usi on de novo as a mi xed quest i on of

l aw and f act . Cogl i ano v. Ander son ( I n r e Cogl i ano) , 355 B. R.

792, 800 ( 9t h Ci r . BAP 2006) . Once we determi ne t hat i ssue

pr ecl usi on i s avai l abl e, t he bankr upt cy cour t ’ s deci si onr egar di ng whet her or not t o appl y t he doct r i ne i s r evi ewed f or

abuse of di scret i on. See Robi v. Fi ve Pl at t er s, I nc. , 838 F. 2d

318, 321 ( 9t h Ci r . 1988) ( “As t o i ssue pr ecl usi on, once we

det er mi ne t hat [ i t ] i s avai l abl e, t he actual deci si on t o appl y i t

i s l ef t t o t he di st r i ct cour t ’ s di scret i on”) ; Lopez v. Emer gency

Ser v. Rest or at i on, I nc. ( I n r e Lopez) , 367 B. R. 99, 103 ( 9t h Ci r .

BAP 2006) ; Geor ge v. Ci t y of Morr o Bay ( I n r e Geor ge) , 318 B. R.

729, 733 ( 9t h Ci r . BAP 2004) .

I n eval uat i ng whet her t he bankrupt cy cour t abused i t s

di scr et i on, we must f i r st det er mi ne de novo whether t he

bankrupt cy cour t i dent i f i ed t he cor r ect l egal st andar d. See




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6Al t hough t he par t i es r ef er t o t he col l at er al est oppelef f ect of t he st at e cour t ’ s r ul i ngs, t he Supr eme Cour t nowgener al l y uses t he t er m “i ssue pr ecl usi on” i nst ead of “col l at er alest oppel . ” Tayl or v. St ur gel l , 553 U. S. 880, 892 n. 5 ( 2008)( “i ssue pr ecl usi on encompasses t he doct r i nes once known as‘ col l at er al est oppel ’ and ‘ di r ect est oppel ’ ”) , ci t i ng Mi gr a v.War r en Ci t y School Di st . Bd. of Educ. , 465 U. S. 75, 77 n. 1( 1984) ; see al so Pai ne v. Gr i f f i n ( I n r e Pai ne) , 283 B. R. 33, 38( 9t h Ci r . BAP 2002) . - 9 -

Peopl e’ s Capi t al & Leasi ng Cor p. v. Bi g3D, I nc. ( I n r e Bi g3D,

I nc. ) , 438 B. R. 214, 219- 220 ( 9t h Ci r . BAP 2010) ( en banc) ( ci t i ng

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

I f t he bankr upt cy cour t i dent i f i ed t he cor r ect l egalr ul e, t hi s cour t t hen det er mi nes whet her i t s appl i cat i onof t he cor r ect l egal st andar d t o t he f act s was( 1) i l l ogi cal , ( 2) i mpl ausi bl e, or ( 3) wi t hout suppor t i ni nf er ences t hat may be dr awn f r om t he f act s i n t her ecor d. Onl y i f t he bankr upt cy cour t di d not i dent i f yt he cor r ect l egal r ul e, or i f i t s appl i cat i on of t hecor r ect l egal st andar d t o t he f act s was i l l ogi cal ,i mpl ausi bl e, or wi t hout suppor t i n i nf er ences t hat may bedr awn f r om f act s i n t he r ecor d, i s i t appr opr i at e t oconcl ude t hat t he bankrupt cy cour t abused i t s di scr et i on.

I d. ( ci t at i on omi t t ed) ( i nt er nal quot at i ons mar ks omi t t ed) .

Wi t h r espect t o the bankrupt cy cour t ’ s det er mi nat i on

r egar di ng t he agency i ssue, we revi ew t he bankrupt cy cour t ’ s

f i ndi ngs of f act f or cl ear er r or . Beaupi ed v. Chang ( I n r e

Chang) , 163 F. 3d 1138, 1140 ( 9t h Ci r . 1998) .

V. DISCUSSION

A. Genesis Waived Its Issue Preclusion Argument Regarding Agency

Genesi s ar gues t hat t he bankr upt cy cour t er r ed by notappl yi ng i ssue pr ecl usi on6 t o the st at e cour t ’ s det er mi nat i on

t hat Mr . Ha act ed as t he Debt or ’ s agent i n connect i on wi t h t he

sal e of Home Desi gn. However , Genesi s wai ved t hi s ar gument by

not pr esent i ng i t t o t he bankrupt cy cour t .

Gener al l y, appel l at e cour t s do not consi der ar gument s “t hat




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ar e not ‘ pr oper l y r ai se[ d] ’ i n t he t r i al cour t s. ” O’ Rour ke v.

Seaboar d Sur . Co. ( I n r e Feger t , I nc. ) , 887 F. 2d 955, 957 ( 9t h

Ci r . 1989) ; see al so I n r e Cyber net i c Ser v. , I nc. , 252 F. 3d 1039,

1045 n. 3 ( 9t h Ci r . 2001) ( st at i ng t hat appel l at e cour t wi l l notexpl or e r ami f i cat i ons of ar gument because i t was not r ai sed i n

t he bankr upt cy cour t and, accordi ngl y, was wai ved) ; Scovi s v.

Henr i chsen ( I n r e Scovi s) , 249 F. 3d 975, 984 ( 9t h Ci r .

2001) ( st at i ng t hat cour t wi l l not consi der i ssue r ai sed f or f i r st

t i me on appeal absent except i onal ci r cumst ances) ; Concr et e Equi p.

Co. , I nc. v. Fox ( I n r e Vi gi l Br os. Const r . , I nc. ) , 193 B. R. 513,

520 ( 9t h Ci r . BAP 1996) . An ar gument i s “pr oper l y r ai sed” i f i t

was r ai sed suf f i ci ent l y f or t he t r i al cour t t o make a r ul i ng.

I n r e Feger t , I nc. , 887 F. 2d at 957. Despi t e t he gener al r ul e,

“[ a] r evi ewi ng cour t may consi der an i ssue r ai sed f or t he f i r st

t i me on appeal i f ( 1) t her e are except i onal ci r cumst ances why the

i ssue was not r ai sed i n t he t r i al cour t , ( 2) t he new i ssue ar i ses

whi l e t he appeal i s pendi ng because of a change i n t he l aw, or( 3) t he i ssue pr esent ed i s pur el y one of l aw and t he opposi ng

par t y wi l l suf f er no pr ej udi ce as a r esul t of t he f ai l ur e t o

r ai se t he i ssue i n t he t r i al cour t . ” Franchi se Tax Bd. v.

Rober t s ( I n r e Rober t s) , 175 B. R. 339, 345 ( 9t h Ci r . BAP

1994) ( i nt er nal quot at i ons omi t t ed) ( ci t i ng Uni t ed St at es v.

Car l son, 900 F. 2d 1346, 1349 ( 9t h Ci r . 1990) ) .

Ther e i s not hi ng i n t he r ecor d showi ng t hat Genesi s made t he

argument t hat t he bankr upt cy cour t was precl uded f r om maki ng a

det er mi nat i on r egar di ng t he exi st ence of an agency rel at i onshi p

/ / /

/ / /




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7I n f act , dur i ng t he hear i ng bef or e t he bankrupt cy cour t ,Genesi s ar gued t hat t he st ate cour t had made no determinationwi t h r espect t o f r aud by the Debt or , i ncl udi ng whet her f r audshoul d be i mput ed t o her vi a Mr . Ha' s al l eged agency, and t hatt he i ssue t her ef or e needed t o be t r i ed i n t he adver sary

pr oceedi ng. See Tr anscr i pt of Bankrupt cy Cour t Tr i al , pg. 16,l ns. 20- 25 ( st at i ng “[ a] gency was not l i t i gat ed i n st at e cour t ”) . To t he ext ent such an asser t i on mi ght al so suppor t a f i ndi ng t hatGenesi s shoul d be j udi ci al l y est opped f r om asser t i ng t hat t hebankrupt cy cour t er r ed by not appl yi ng i ssue pr ecl usi on wi t hr espect t o t hi s i ssue, t he panel not es t hat t he Debt or has notr ai sed t hat ar gument on appeal , and t hat i n l i ght of t he cl earwai ver of t he pr ecl usi on ar gument i n t he bankrupt cy cour t , i t i s,i n any event , unnecessary f or t he panel t o resol ve her e an i ssueconcer ni ng j udi ci al est oppel . - 11 -

bet ween t he Debt or and Mr . Ha. 7 I n i t s cl os i ng at t r i al , Genes i s

di d ar gue t hat t he st at e cour t f ound Mr . Ha l i abl e f or f r aud i n

t he i nducement based on t he t heor y t hat he act ed as an agent f or

t he Debt or . However , Genesi s never ar gued t o t he bankr upt cycour t t hat t he st at e cour t ’ s use of agency pr i nci pl es t o i mpose

l i abi l i t y on Mr . Ha precluded t he bankrupt cy cour t f r om

det er mi ni ng t he i ssue of whet her an agency rel at i onshi p exi st ed.

Because Genesi s never r ai sed t he argument , t he bankr upt cy cour t

conduct ed a t r i al i n whi ch i t was r equi r ed t o det er mi ne whet her

an agency r el at i onshi p exi st ed between the Debt or and Mr . Ha.

Onl y af t er r ecei vi ng an adver se r ul i ng f r om t he bankrupt cy cour t

does Genesi s now seek t o appl y pr ecl usi on pr i nci pl es t o t he

det er mi nat i on of t he agency i ssue.

Fur t hermor e, i t does not appear t hat any of t he except i ons

t o t he gener al r ul e appl y. The f i r st t wo except i ons ar e

unquest i onabl y not met : t her e ar e no except i onal ci r cumst ances

and t he i ssue di d not ar i se f r om a change i n t he l aw whi l e t heappeal was pendi ng. The t hi r d except i on ( i . e. , t he i ssue

i nvol ves a pur e l egal quest i on and t he opposi ng par t y wi l l not be




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8Addi t i onal l y, wi t hout a r ecor d, we ar e l ef t t o guess atwhat t he bankr upt cy woul d have deci ded had i t been pr esent ed wi t ht he i ssue. - 12 -

pr ej udi ced) i s l i kewi se i nappl i cabl e. Fi r st , t he avai l abi l i t y of

i ssue pr ecl usi on i nvol ves mi xed quest i ons of l aw and f act . See

I n r e Cogl i ano, 355 B. R. at 800. I ndeed, i n t hi s case, f act ual

quest i ons predomi nat e wi t h r espect t o the i ssue of Ha’ s agencydue t o t he mur ki ness of t he st at e cour t t r i al t r anscr i pt . As

di scussed l at er , i t i s di f f i cul t t o det er mi ne exactl y whi ch

i ssues of f act t he st at e cour t deci ded and whi ch i ssues i t

decl i ned t o deci de. Ul t i mat el y, t he r ecor d i s ambi guous at best

as t o whether t he st ate cour t made a f i ndi ng r egardi ng t he agency

i ssue.

The panel al so concl udes t hat t he Debt or i s prej udi ced by

Genesi s’ f ai l ur e t o r ai se i ssue pr ecl usi on i n t he bankr upt cy

cour t i n t he f i r st i nst ance. By f ai l i ng t o r ai se t he i ssue

bef or e t he bankrupt cy cour t , Genesi s depr i ved t he Debt or of t he

oppor t uni t y t o devel op a recor d and t o make l egal as wel l as

f act ual ar gument s agai nst t he appl i cat i on of i ssue pr ecl usi on. 8

“[ I ] f [ t he debt or ] mi ght have t r i ed [ her ] case di f f er ent l y ei t herby devel opi ng new f act s i n r esponse t o or advanci ng di st i nct

l egal ar gument s agai nst t he i ssue, i t shoul d not be per mi t t ed t o

be r ai sed f or t he f i r st t i me on appeal . ” Uni t ed St at es v.

Pat r i n, 575 F. 2d 708, 712 ( 9t h Ci r . 1978) . Genesi s has wai ved

i t s ar gument t hat t he bankrupt cy cour t was pr ecl uded f r om maki ng

a det er mi nat i on r egar di ng whet her an agency r el at i onshi p exi st ed

bet ween t he Debt or and Mr . Ha.

/ / /




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B. The Bankruptcy Court Would Not Have Abused Its Discretion in

Declining to Apply Issue Preclusion

Even i f Genesi s di d not wai ve i t s i ssue pr ecl usi on ar gument ,

t he bankrupt cy cour t woul d not have abused i t s di scr et i on bydecl i ni ng t o appl y i ssue pr ecl usi on.

I ssue pr ecl usi on appl i es i n nondi schar geabi l i t y pr oceedi ngs.

Gr ogan v. Garner , 498 U. S. 279, 284- 85 ( 1991) . I ssue pr ecl usi on

“bar s ‘ successi ve l i t i gat i on of an i ssue of f act or l aw t hat was

act ual l y l i t i gat ed and r esol ved i n a val i d cour t det er mi nat i on

essent i al t o t hat pr i or j udgment , ’ even i f t he i ssue r ecur s i n

t he cont ext of a di f f er ent cl ai m. ” Tayl or , 553 U. S. at 892

( quot i ng New Hampshi r e v. Mai ne, 532 U. S. 742, 748- 49 (2001) ) .

The pur pose of i ssue precl usi on i s t o conser ve j udi ci al r esour ces

and f ost er conf i dence i n t he out come of adj udi cat i ons by

pr ovi di ng f i nal i t y and avoi di ng i nconsi st ent r ul i ngs. See i d.

To det er mi ne t he precl usi ve ef f ect of a Cal i f or ni a st at e

cour t ’ s f i ndi ng, t he panel appl i es Cal i f or ni a pr ecl usi on l aw.28 U. S. C. § 1738 ( t he Ful l Fai t h and Cr edi t St at ut e) ; Mar r ese v.

Am. Acad. of Or t hopaedi c Sur geons, 470 U. S. 373, 380 ( 1985) .

When st at e pr ecl usi on l aw cont r ol s, t he di scr et i on t o appl y the

doct r i ne i s exer ci sed i n accor dance wi t h st at e l aw. Khal i gh v.

Hadegh ( I n r e Khal i gh) , 338 B. R. 817, 823 ( 9t h Ci r . BAP 2006) ,

af f ’ d, 506 F. 3d 956 ( 9t h Ci r . 2007) .

Under Cal i f or ni a l aw, t he par t y asser t i ng i ssue pr ecl usi on

has t he bur den of est abl i shi ng t he f ol l owi ng “t hr eshol d”

r equi r ement s:

Fi r st , t he i ssue sought t o be pr ecl uded f r omr el i t i gat i onmust be i dent i cal t o t hat deci ded i n a f or mer pr oceedi ng.Second, t hi s i ssue must have been act ual l y l i t i gat ed i n




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9

Even i f t hese f i ve t hr eshol d r equi r ement s ar e met ,appl i cat i on of i ssue pr ecl usi on r equi r es a “mandat or y‘ addi t i onal ’ i nqui r y i nt o whet her i mposi t i on of i ssue pr ecl usi onwoul d be f ai r and consi st ent wi t h sound publ i c pol i cy. ” Khal i gh,338 B. R. at 824- 25. Cal i f or ni a cour t s “have r ecogni zed t hatcer t ai n ci r cumst ances exi st t hat so under mi ne the conf i dence i nt he val i di t y of t he pr i or pr oceedi ng t hat t he appl i cat i on of col l at er al est oppel woul d be ‘ unf ai r ’ t o t he def endant as amat t er of l aw. ” Roos v. Red, 30 Cal . Rpt r . 3d 446, 453 ( Cal . Ct .App. 2005) .

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t he f or mer pr oceedi ng. Thi r d, i t must have beennecessar i l y deci ded i n t he f or mer pr oceedi ng. Four t h,t he deci si on i n t he f or mer pr oceedi ng must be f i nal andon t he mer i t s. Fi nal l y, t he par t y agai nst whompr ecl usi on i s sought must be t he same as, or i n pr i vi t ywi t h, t he par t y t o the f or mer pr oceedi ng.

Harmon v. Kobr i n ( I n re Harmon) , 250 F. 3d 1240, 1245 (9t h Ci r .

2001) . 9

1. Satisfaction of the Five Threshold Elements

Her e, t hr ee of t he f i ve thr eshol d r equi r ement s are

undi sput abl y sat i sf i ed: ( 1) t he par t i es i n t he st at e cour t and i n

t he nondi schar geabi l i t y act i on ar e the same, ( 2) t he st at e cour t

j udgment i s f i nal and on t he mer i t s, and ( 3) t he i ssue sought t o

be pr ecl uded f r om r e- l i t i gat i on i s i dent i cal t o t hat pur por t edl y

deci ded i n t he f or mer pr oceedi ng ( i . e. , whet her Mr . Ha act ed as

t he agent of t he Debt or i n negot i at i ng t he sal e of t he busi ness) .

The mor e di f f i cul t quest i ons ar e whet her t he i ssue of Mr . Ha’ s

st at us as t he Debt or ’ s agent was “act ual l y l i t i gat ed” and

“necessar i l y deci ded” by t he st at e cour t .a. Was Agency “Actually Litigated”?

Under Cal i f or ni a l aw, “an i ssue was actual l y l i t i gat ed i f i t

was pr oper l y r ai sed, submi t t ed f or det er mi nat i on, and det er mi ned

i n t hat pr oceedi ng. ” Her nandez v. Ci t y of Pomona, 94 Cal . Rpt r .

3d 1, 10 ( Cal . Ct . App. 2009) ( ci t i ng Peopl e v. Si ms, 186 Cal .




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Rpt r . 77 ( Cal . Ct . App. 1982) ) . I n det er mi ni ng whet her an i ssue

was act ual l y l i t i gat ed, a cour t shoul d l ook beyond t he bar e

f i ndi ngs and must scr ut i ni ze the pl eadi ngs and evi dence pr esent ed

t o det er mi ne what was act ual l y det er mi ned i n t he pr i orpr oceedi ng. Schaef er / Kar pf Pr ods. V. CNA I ns. Cos. , 76 Cal Rpt r .

2d 42, 45- 46 ( Cal . Ct . App. 1998) .

I n t hi s case, Genesi s ar gues t hat i t pr oper l y rai sed, and

submi t t ed f or det er mi nat i on, t he agency i ssue by al l egi ng i n t he

st at e cour t compl ai nt t hat Mr . Ha act ed as t he Debt or ’ s agent

wi t h r espect t o t he sal e of Home Desi gn and by pr esent i ng

evi dence at t he pr ove- up hear i ng f r om whi ch t he st at e cour t coul d

make a determi nat i on r egardi ng whether Mr . Ha act ed as t he

Debt or ’ s agent . Fur t her , t he st at e cour t made a det er mi nat i on on

t hi s i ssue when i t f ound Mr . Ha l i abl e f or f r aud i n t he

i nducement based on t he theor y t hat he act ed as t he Debt or ’ s

“agent ” i n negot i at i ng t he sal e of Home Desi gn.

However , when one l ooks at t he st at e cour t r ecord i n i t sent i r et y, t her e i s l i t t l e suppor t f or a f i ndi ng t hat t he stat e

cour t i nt ended t o make a l egal det er mi nat i on on t he i ssue. One

of t he hal l mar ks of an agency r el at i onshi p i s a pr i nci pal ’ s

cont r ol over i t s agent ’ s act i ons wi t hi n t he scope of t he agency.

See Tsur ukawa v. Ni kon Pr eci si on, I nc. ( I n r e Tsur ukawa) ,

287 B. R. 515, 521 ( 9t h Ci r . BAP 2002) ( ci t i ng Al var ez v. Fel ker

Mf g. Co. , 230 Cal . App. 2d 987, 999, 41 Cal . Rpt r . 514, 521

( 1964) ) . I n t hi s case, t he st at e cour t was not pr ovi ded wi t h any

per t i nent evi dence r egar di ng Debt or ’ s abi l i t y t o cont r ol Mr . Ha’ s

act i ons i n r el at i on t o Home Desi gn. Based on t he evi dence

pr esent ed t o t he st ate cour t , t he Debt or was t he owner of Home




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Desi gn i n name onl y and had nothi ng to do wi t h the busi ness.

Mor eover , t he st at e cour t di d not descr i be any f act ual or l egal

basi s f or i t s “f i ndi ng” of an agency r el at i onshi p, or pr esent any

sort of r easoned opi ni on on t he i ssue. The st at e cour t mer el yused t he t er m t o descri be a basi s f or f i ndi ng l i abi l i t y as t o Mr .

Ha f or f r aud i n t he i nducement . St at ed di f f er ent l y, even t hough

t he st at e cour t r ef er r ed t o Mr . Ha as an “agent ” of t he Debt or ,

i t does not appear t hat t he st at e cour t made a l egal

determi nat i on t hat t he Debt or was t he pr i nci pal and Mr . Ha was

t he agent .

I t i s wel l est abl i shed t hat t he appl i cat i on of i ssue

pr ecl usi on under Cal i f or ni a l aw i nvol ves a measur e of di scr et i on.

“[ I ] ssue pr ecl usi on i s not appl i ed aut omat i cal l y or r i gi dl y, and

cour t s ar e per mi t t ed t o decl i ne t o gi ve i ssue pr ecl usi ve ef f ect

t o pr i or j udgment s i n def er ence of count er vai l i ng consi der at i ons

of f ai r ness. ” I n r e Lopez, 367 B. R. at 108 ( ci t i ng Luci do v.

Super . Ct . , 272 Cal . Rpt r . 3d 767, 795 ( Cal . 1990) ) . Gi ven t heambi gui t y of t he r ecor d and t he l ack of speci f i c f i ndi ngs of f act

by the st at e cour t t hat woul d suppor t a det er mi nat i on t hat an

agency r el at i onshi p exi st ed, i t i s f ar f r om cl ear t hat t he

bankrupt cy cour t woul d have abused i t s di scr et i on i n decl i ni ng t o

appl y i ssue pr ecl usi on t o t he agency i ssue. As a mat t er of

f ai r ness, when f aced wi t h ser i ous quest i ons about t he scope of a

r ul i ng, t he bankrupt cy cour t shoul d er r on t he si de of caut i on

and avoi d appl yi ng i ssue pr ecl usi on when a st at e cour t ’ s exact

det er mi nat i on i s ambi guous. I n t hi s case, t he st at e cour t ’ s

det er mi nat i on was si mpl y not suf f i ci ent l y f i r m t o be gi ven

pr ecl usi ve ef f ect . The bankrupt cy cour t di d not abuse i t s




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di scr et i on i n maki ng i t s own det er mi nat i on r egar di ng t he agency

i ssue.

b. Agency Was Not “Necessarily Decided”

Under Cal i f or ni a l aw, an i ssue has been “necessar i l ydeci ded” i f i t i s not “ent i r el y unnecessar y” t o t he j udgment i n

t he i ni t i al pr oceedi ngs. Zevni k v. Super i or Cour t , 70 Cal . Rpt r .

3d 817, 821 ( Cal . Ct . App. 2008) ( ci t i ng Luci do, 272 Cal . Rpt r . 3d

at 769) .

Genesi s argues t hat t he st at e cour t based i t s r ul i ng t hat

Mr . Ha coul d be hel d l i abl e f or f r aud on t he f act t hat he was

act i ng as t he Debt or ’ s agent . I n f i ndi ng Mr . Ha l i abl e f or

f r aud, t he st at e cour t st at ed as f ol l ows:

So what I have j ust convi nced mysel f i s t hat t he f r aud i nt he i nducement does not have to be by t he cont r act i ngpar t y. A t hi r d par t y, a br oker , a sal esper son, some bodyel se coul d i nduce somebody t o ent er i nt o a cont r act byf r aud. That agent woul d t hen be l i abl e.

Si nce Ha i s t he agent i n t hi s case who made thef r audul ent i nducement , he woul d be r esponsi bl e f or f r aud

i n the i nducement . Tr anscr i pt of Stat e Cour t Tr i al , pg. 25, l ns. 17- 25. Thus,

Genesi s ar gues t hat t he st at e cour t r ecor d suppor t s i t s asser t i on

t hat t he i ssue of agency was “necessar i l y deci ded. ”

I n r evi ewi ng t he st at e cour t j udge’ s musi ngs on t he i ssues

of f r aud and agency, i t appear s t hat t he cour t made t hi s f i ndi ng

pr i mar i l y because i t was t he most obvi ous vehi cl e by whi ch

l i abi l i t y coul d be i mposed upon Mr . Ha f or f r aud i n t he

i nducement . However , i t does not f ol l ow t hat t hi s quest i on was

“necessar i l y deci ded, ” because t he cour t mi ght have pr emi sed a

f i ndi ng of f r aud i n t he i nducement di r ect l y agai nst Mr . Ha based,

f or exampl e, upon hi s f al se st at ement s of co- owner shi p of t he




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10

I n t he al t er nat i ve, even i f t he st at e cour t di d make adet er mi nat i on t hat Mr . Ha was t he Debt or ’ s agent , t he st at e cour tal so made a det er mi nat i on that he act ed out si de t he scope of hi sagency. See Tr anscr i pt of St at e Cour t Tr i al , pg. 25, l ns. 2- 3( st at i ng “l yi ng woul d be out si de the scope of hi s empl oyment ”) . Thus, even i f t he agency i ssue was necessar i l y deci ded, t o bedoct r i nal l y consi st ent , t he bankrupt cy cour t woul d have al so beenpr ecl uded f r om i mput i ng Mr . Ha’ s f r aud t o t he Debt or , because t hest at e cour t al so f ound t hat Mr . Ha’ s act i ons wer e out si de t hescope of t he agency.

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busi ness. I n t hi s cont ext , i t seems t hat t he st at e cour t ’ s

f i ndi ng of agency was s i mpl y t he most conveni ent , but har dl y t he

excl usi ve, way of get t i ng t o t he r esul t t hat t he st at e cour t was

convi nced was cor r ect , i . e. , t hat Mr . Ha had commi t t ed f r aud.Ul t i mat el y, a f i ndi ng of agency was unnecessary t o t he st at e

cour t ’ s det ermi nat i on, because t he st at e cour t coul d have i mposed

l i abi l i t y f or f r aud i n t he i nducement on Mr . Ha wi t hout ever

addr essi ng t he i ssue of agency. Cf . I n r e Har mon, 250 F. 3d at

1248- 49 ( st at i ng t hat , because t he st at e cour t coul d have ent er ed

a def aul t j udgment agai nst t he def endant wi t hout f i ndi ng t hat he

had commi t t ed f r aud, t he i ssue was not necessar i l y deci ded i n t he

pr i or pr oceedi ng) . 10

Last , as pr evi ousl y di scussed, t he st at e cour t r ecor d i s

ambi guous r egardi ng whether t he st ate cour t deci ded t he agency

i ssue. Gi ven t he f act t hat i t i s uncl ear what t he st at e cour t

i nt ended t o deci de, we cannot say that t he bankr upt cy cour t woul d

have abused i t s di scret i on i n decl i ni ng t o appl y i ssue pr ecl usi ont o t he agency i ssue.

/ / /

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11Genesi s has not appeal ed t he bankrupt cy cour t ’ s f i ndi ngconcer ni ng t he absence of di r ect f r aud by t he Debt or . Thus, t heonl y i ssue bef or e t he panel i s whet her t he bankrupt cy cour tshoul d have i mput ed Mr . Ha’ s f r aud to t he Debt or based on agencypr i nci pl es.

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C. The Bankruptcy Court Did Not Err in Finding That Fraud Should

Not Be Imputed to the Debtor Based on Agency Principles

I n or der t o est abl i sh t hat a debt i s nondi schar geabl e under

sect i on 523( a) ( 2) ( A) , a cr edi t or must est abl i sh f i ve el ement s bya pr eponderance of t he evi dence:

( 1) mi sr epr esent at i on, f r audul ent omi ssi on or decept i veconduct by the debt or ; ( 2) knowl edge of t he f al si t y ordecept i veness of hi s s t at ement or conduct ; ( 3) an i nt entt o decei ve; ( 4) j ust i f i abl e r el i ance by t he credi t or ont he debt or ’ s s t atement or conduct ; and ( 5) damage to t hecr edi t or pr oxi mat el y caused by i t s r el i ance on t hedebt or ’ s s t at ement or conduct .

Tur t l e Rock Meadows Homeowner s Ass’ n v. Sl yman ( I n r e Sl yman) ,

234 F. 3d 1081, 1085 ( 9t h Ci r . 2000) ; Ghomeshi v. Sabban ( I n r e

Sabban) , 384 B. R. 1, 5 ( 9t h Ci r . BAP 2008) .

Genesi s ar gues t hat t he Debt or i s l i abl e f or t he f r aud

because Mr . Ha was act i ng as t he Debt or ’ s agent when he commi t t ed

f r aud agai nst Genesi s, and f r aud commi t t ed by an agent act i ng on

behal f of a pr i nci pal i s i mput ed t o t he pr i nci pal . I n ot her

wor ds, Genesi s argues t hat i t does not have t o pr ove t hat t heDebt or commi t t ed any di r ect f r aud, i t need onl y show t hat Mr . Ha

commi t t ed f r aud whi l e act i ng as agent f or t he Debt or . 11

1. Mr. Ha Was Not the Debtor’s Agent

As not ed pr evi ousl y, “[ a] pr i mar y char act er i st i c of an

agency r el at i onshi p i s t he pr i nci pal ’ s r i ght t o cont r ol t he

agent ’ s conduct r egar di ng mat t er s ent r ust ed t o i t . ” I n r e

Tsur ukawa, 287 B. R. at 521 ( ci t i ng Al var ez v. Fel ker Mf g. Co. ,




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41 Cal . Rpt r . 514, 521 ( Cal . Ct . App. 1964) ) . Genesi s ar gues

t hat , even i f t he Debt or di d not pr act i ce any cont r ol over t he

busi ness or Mr . Ha, she had t he abi l i t y t o cont r ol Mr . Ha by

vi r t ue of bei ng t he owner of t he busi ness. Genesi s ar gues thatt he panel has pr evi ousl y r ecogni zed t hat “[ o] wner shi p st at us i s,

by def i ni t i on, a posi t i on of cont r ol . ” See Tsur ukawa, 287 B. R. at

522. Thus, by vi r t ue of her posi t i on, t he Debt or was i n a

posi t i on t o cont r ol Mr . Ha, and t her ef or e an agency r el at i onshi p

exi st ed.

Not wi t hst andi ng t he f or egoi ng, t he f act s of t hi s case ar e

di st i ngui shabl e f r om t he f act s i n Tsur ukawa, and compel a

di f f erent resul t .

As an i ni t i al mat t er , “owner shi p” cannot by i t sel f cr eat e an

agency r el at i onshi p; t here must be somethi ng more t han bare l egal

t i t l e t o assets. I n Tsur ukawa, we ci t ed wi t h appr oval t he

bankr upt cy cour t ’ s anal ysi s t hat “i t i s not appr opr i at e t o f i nd

an agency rel at i onshi p i n ever y i nst ance i n whi ch a spouse t akesbar e l egal t i t l e t o busi ness pr oper t y hel d f or t he benef i t of t he

coupl e . . . . ” I d. ( quot i ng Bankrupt cy Cour t ’ s Memor andum of

Deci si on ( J an. 14, 2002) at 5- 6 ( f oot not e omi t t ed) ) . Cour t s

shoul d be caref ul when assessi ng whether a t r ue agency

r el at i onshi p exi st s bet ween mar r i ed coupl es. I d. at 522- 523.

The f act s i n Tsur ukawa ar e di st i ngui shabl e f r om t he f act s i n t hi s

case because t he spouse i n Tsurukawa pl ayed a subst ant i al r ol e i n

hel pi ng her husband car r y out hi s f r audul ent i nt ent . I n t hi s

case, unl i ke Tsur ukawa, t he Debt or had no i nvol vement i n t he

busi ness, ot her t han hol di ng bar e l egal t i t l e t o assets, and had

no i nvol vement i n t he sal e of busi ness, ot her t han si gni ng t he




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Pur chase Agr eement . Moreover , t here are no f act s t hat suggest

t he Debt or ’ s st at us as owner ( or her act i ons wi t h r espect t o t he

sal e of Home Desi gn) enabl ed Mr . Ha t o commi t f r aud. I ndeed, t he

evi dence i ndi cat ed t hat t he Debt or had no cont r ol over Mr . Hawi t h r espect t o Home Desi gn.

We cannot f i nd any er r or i n t he bankrupt cy cour t ’ s

det er mi nat i on t hat no agency rel at i onshi p exi st ed between t he

Debt or and Mr . Ha.

VI. CONCLUSION

For t he f or egoi ng r easons, we af f i r m t he bankrupt cy cour t ’ s

determi nat i on t hat t he debt owed by the Debt or t o Genesi s i s

di schar geabl e i n bankrupt cy.


Documents

In re: Havy Nguyen, 9th Cir. BAP (2012)