- Case Type:
- Case Status:
- Affirmed in part and Reversed in part
- NC-16-1277-BJuF; NC-16-1299-BJuF (cross-appeals) (9th Circuit, Dec 22,2017) Not Published
- Bankruptcy court's rulings on issue preclusion, nondischargeability under 523(a)(2)(A), and fees and interest were affirmed in part and vacated and remanded in part.
- Procedural context:
- Appeal from the U.S. Bankruptcy Court for the Northern District of California; reviewed for clear error (as to factual findings), de novo (as to legal findings), and for abuse of discretion (as to award of attorney's fees).
- The Bartenwerfers purchased property, remodeled it, and sold it to Buckley. After the sale, Buckley discovered several defects with the property. Buckley sued the Bartenwerfers in state court alleging, in part, that the Bartenwerfers had intentionally or negligently failed to disclose defects related to the house and had failed to obtain the necessary permits for construction. After a trial, the jury found in favor of Buckley on his causes of action for breach of contract, negligence, and failure to disclose and found in favor of the Bartenwerfers on negligence and intentional misrepresentation claims. The jury awarded Buckley damages but declined to award him punitive damages or damages for intentional fraud. Buckley filed a post-trial motion for attorney's fees, but the Bartenwerfers filed for bankruptcy before the state court could hear the fee matter. After the Bartenwerfers filed for chapter 7 bankruptcy, Buckley alleged that the state court judgment was nondischargeable under 523(a)(2)(A). The bankruptcy court held a trial and ruled in favor of Buckley on the nondischargeability claim. Buckley then filed a motion for attorney's fees, and the bankruptcy court awarded Buckley pre- and post-petition interest at the California rate of 10% on the nondischargeable portion of the state court judgment. Buckley timely filed a motion to alter or amend the fee order, contending that the bankruptcy court should have awarded interest on his state court attorney's fees. The bankruptcy court granted Buckley's reconsideration motion in its entirety and amended the fee order. On appeal, the BAP faced the following issues: (1) Did the bankruptcy court err by declining to apply issue preclusion to the jury's findings of fact? (No.) (2) Did the bankruptcy court err by not granting Mrs. Bartenwerfer's motion for judgment on partial findings? (Yes - the court erred by not making a finding as to Mrs. Bartenwerfer's intent.) (3) Was there sufficient evidence of Mr. Bartenwerfer's knowledge and intent to find him liable under 523(a)(2)(A)? (Yes.) (4) Did the bankruptcy court err by applying former Rule 7008(b) to deny Buckley attorney's fees for the adversary proceeding? (No.) (5) Did the bankruptcy court abuse its discretion in awarding Buckley his state court attorney's fees and, if so, did it err by awarding the amount that it did? (Yes; the court abused its discretion by not determining what portion of Buckley's state court attorney's fees were attributable to Mr. Bartenwerfer's fraud.) (6) Did the bankruptcy court abuse its discretion by awarding Buckley interest on the nondischargeable portion of the state court judgment and on his state court attorney's fees, and did it further err by awarding interest at the California judgment rate of 10%? (No.)
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