Now Updating
In re Thomas Perez

Summarizing by Bradley Pearce

In re Nathaneil Basola Sobayo

Summarizing by Lars Fuller

In re James Rodriguez

Case Type:
Consumer
Case Status:
Affirmed
Citation:
United States Bankruptcy Appellate Panel of the Ninth Circuit No. SC-17-1245-FLB (9th Circuit, Feb 01,2021) Not Published
Tag(s):
Ruling:
The Bankruptcy Appellate Panel affirmed the bankruptcy court's finding that State Farm's claim was nondischargeable under § 523(a)(6), because the evidence supported each element and the bankruptcy court's findings were detailed and thorough.
Procedural context:
State Farm filed an adversary proceeding against the Debtor asserting its debt was nondischargeable under 11 U.S.C. § 523(a)(6), because the Debtor wrongfully took the Ferrari from the woman, State Farm paid the woman for the loss under the insurance police, and State Farm was subrogated to her claims against the Debtor. The bankruptcy court held a three-day trial at which the Debtor testified. The bankruptcy court then issued an order with detailed findings of fact where the Debtor was found to not be credible. The bankruptcy court concluded that the Debtor met all the elements for the state law tort of conversion and separately held State Farm established the prongs of "willful" and "malicious" under § 523(a)(6). The bankruptcy court awarded State Farm damages in the amount of just over $42,000 for the balance after the Ferrari sold at auction plus pre- and post-judgment interest. The Debtor filed a motion for reconsideration, which the bankruptcy court denied. The Debtor appealed.
Facts:
The Debtor, a dentist, had a romantic relationship with a woman for two years. The woman and the Debtor worked together to build the Debtor's dental practice, and they bought a house together. Eventually the relationship ended amicably, and they continued to live together. The Debtor began to experience financial difficulties, and he transferred real and personal property to the woman. In 2011, a certain loan became due, and the collateral was the Debtor's beloved 1995 Ferrari 348 Spider (Ferrari). The woman, at the Debtor's request, paid off the loan, and the Debtor transferred title to the Ferrari to the woman. At the time, the Ferrari was listed at a value of $37,000. The woman insured the Ferrari with State Farm, included coverage for theft, and listed the Debtor as an additional driver. The Debtor agreed to only drive the Ferrari with the woman's permission. The Debtor's financial problems continued; he initially put his dental practice into chapter 11 bankruptcy in 2013, but then the practice closed. While the woman was out of the country, the Debtor moved out of the property and took out Ferrari leaving a note indicating the vehicle was safe. When the woman returned she demanded the immediate return of the Ferrari and the Debtor refused. The Debtor then commenced state court suit against the woman and another party for fraud and conversion, and the woman filed a stolen vehicle report and made a claim with State Farm. State Farm paid out on the claim over $56,000. State Farm eventually recovered the Ferrari, sold it at auction with a deficiency remaining of over $42,000. The Debtor then filed chapter 7 bankruptcy listing the State Farm claim at $57,000 and unsecured. The Debtor received a discharge, and the case closed.
Judge(s):
The Hons. Faris, Lafferty, and Brand

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