Case Type:
Case Status:
BAP Nos. CC-18-1052-STaL, CC-18-1058-STaL (Consolidated), 2018 WL 6565685 (9th Cir. Dec. 12, 2018) (9th Circuit, Dec 12,2018) Not Published
BAP of the 9th Circuit affirmed the ruling of the bankruptcy court (C.D. Cal.) granting summary judgment to creditor on an issue of whether debtor should be barred from relitigating the fraud underlying his debt to creditor. Because issue preclusion was appropriate, the BAP affirmed the summary judgment on creditor's section 523(a)(2)(A) claim.
Procedural context:
Creditor sued debtor to recover about $727K in unexplained losses. The state court approved a stipulated judgment without a hearing and entered judgment against debtor and two companies that he owned in the amount of about $730K. Less than two years later, debtor filed a voluntary chapter 7 petition. Creditor sought to except the judgment debt from discharge under section 523(a)(2)(A). Debtor filed a motion to rescind the stipulated judgment in the state court. It denied debtor's motion to rescind. Bankruptcy court granted creditor's summary judgment motion on the basis of the state court's ruling. BAP reversed and remanded after debtor challenged the bankruptcy court's application of issue preclusion to the stipulated judgment. On remand, the bankruptcy court granted creditor's motion to annul the stay. Also, the bankruptcy court again entered summary judgment on creditor's section 523(a)(2)(A) claim. Finally, the BAP affirmed.
Creditor and debtor are former spouses. Before they divorced, creditor and debtor entered into joint venture agreements to invest money. Creditor invested over $3 million. Debtor had about $727K in unexplained losses.
Spraker, Taylor, Lafferty

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