- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 22-1143 (9th Circuit, Feb 15,2023) Not Published
- Tag(s):
-
- Ruling:
- Though describing as "harsh" certain of its evidentiary rulings against Hea Sook Kang (CR) in her adversary proceeding against chapter 7 debtor Soon Hee Kim (DR) due to the CR's demonstrable noncompliance with its trial procedures, the U.S. Bankruptcy Appellate Panel of the Ninth Circuit (BAP) discerned no bias in and affirmed the substantive decision of the U.S. Bankruptcy Court for the Central District of California (BC) rejecting the CR's attempt to exempt her debt from discharge pursuant to section 523(a)(2)(A).
- Procedural context:
- After the DR filed a chapter 7 petition, the CR filed an adversary complaint against her asserting three causes of action:(1) Fraud and Deceit, (2) Fraudulent Concealment, and (3) Non-Dischargeability pursuant to 11 U.S.C. § 523(a)(2)(A). Although this pleading referenced a memorandum of agreement settled the parties' pre-petition state court lawsuit as well as the state court complaint and judgment and said that copies of those documents were attached as exhibits, none were appended. Over a year prior to trial, the CR filed exhibit lists. While she attached a copy of the first amended complaint, the state court judgment, and the memorandum of agreement for the state court settlement to these lists, the CR never provided a copy of the second amended complaint. The parties filed a joint pretrial stipulation that included a list of trial exhibits that the parties intended to use at trial. That list included the first amended complaint filed in state court, the memorandum of agreement that settled the state court case, and the state court’s judgment. The BC approved the joint pretrial stipulation on November 18, 2021.
The adversary proceeding would "drag on" for years, with both parties failing to comply with the BC's trial procedures but also due to the CR's shuffling of attorneys (four in total), repeated alteration of her theory of the case, failure to provide the state court documents essential to her final lawyer's issue preclusion argument, and unavailability on the original trial date due to foreign travel.
Ultimately, the BC concluded that the CR had not carried her burden and thus ruled in favor of the DR.
The CR timely appealed.
- Facts:
- By the time the DR turned to bankruptcy, the parties were already in open war. In 2014, the CR hired the the DR both to provide financial services related to the former's business and to help her shield her assets from potential claims. Seemingly consistent with the CR's advice in this effort, the CR sold her home and deposited the sale proceeds ($130,000) into a bank account held by a newly-formed company, IK & H, LLC. Though ownership of this entity was contested, both the DR and CR had access to its accounts. Unfortunately, the DR used her access to withdraw its funds and deposit them anew into her own account, from which she then loaned the money to a few unidentified clients with the aim of receiving a greater return on the “investment." The DR claimed the CR knew of these efforts; the CR denied as much. Regardless, the money was not paid back, and the DR was not able to repay the funds. As a result, the CR sued the DR in California state court for return of the $130,000 plus punitive damages. Eventually, the parties settled the case via a memorandum of agreement, and the state court entered a stipulated judgment in the CR's favor in October 2017, stating that it adjudicated the claims in a second amended complaint. Subsequently, the DR filed for bankruptcy.
- Judge(s):
- Robert J. Faris; William J. Lafferty III; and Frederick P. Corbit
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