Bouzaglou v. Haworth

Case Type:
Case Status:
CC-17-1253-SKuF (9th Circuit, Aug 13,2018) Not Published
Ninth Circuit Bankruptcy Appellate Panel affirmed order from bankruptcy court finding debt non dischargeable under § 523(a)(2)(A) and (a)(4). Bankruptcy court did not err when it granted creditors’ motion for summary judgment based on the preclusive effect of the state court judgment, which found the Debtor had committed fraud.
Procedural context:
Appeal to the Ninth Circuit BAP from order of bankruptcy court finding debt non dischargeable under § 523(a)(2)(A) and (a)(4).
McGinty family built a home in Santa Monica, California, in the 1940s. Mother passed away in 2009. Sister had autism and was never able to support herself. Brother suffered from bipolar disorder, schizophrenia, and depression. He attempted suicide and died a few months later from a stroke in 2012. Debtor worked as a salesman and contracted with Brother to remodel the house. Debtor helped Brother obtain a $400,000 home loan. Many of the work orders were duplicative. The fourth work order was signed the day the Brother attempted suicide. After Brother was released from the hospital, Debtor induced Brother to sign a quitclaim deed transferring the property to the Debtor. McGinty family obtained a fraud judgment against the Debtor in state court. Debtor filed for bankruptcy. McGinty family commenced an adversary proceeding seeking a determination that the debt owed to them was non dischargeable under § 523(a)(2)(A) and (a)(4). They argued they were entitled to summary judgment given the preclusive effect of the state court judgment. Bankruptcy court granted motion for summary judgment. Debtor appealed.

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