Jaurigui v. Mover (In re Swing House Rehearsal & Recording, Inc.)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 1 year 11 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- No. 23-60028 (9th Circuit, Mar 27,2024) Not Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Ninth Circuit affirmed a bankruptcy court's post-trial judgment excepting a debt from discharge. A dissenting judge would have remanded on one issue-whether the bankruptcy court properly calculated fraud damages under California law. The majority declined to consider the issue and held remand was inapt as (1) the debtor did not raise the legal issue below and a presumption exists against hearing new arguments on appeal, and (2) debtor did not present evidence to support his proposed calculation at trial.
- Procedural context:
- Debtor/Appellant raised three issues on appeal, contending the bankruptcy court (1) erred as the Creditor/Appellee lacked standing to seek to except a debt based on an assignment of the claim; (2) made erroneous factual findings; and (3) used the incorrect legal standard to calculate fraud damages under California law. The Ninth Circuit reviewed the bankruptcy court's legal conclusions de novo--though the majority declined to revisit the legal issue regarding how to calculate the fraud debt--and its factual findings for clear error.
- Facts:
- Debtor/Appellant Philip Joseph Jaurigui founded, held a majority interest in, and served as chief executive officer of Swing House Rehearsal and Recording, Inc., which provided rehearsal and recording services to musicians. Creditor/Appellee Jonathan Mover twice loaned money to Swing House; Debtor was a joint obligor on one loan and guaranteed the other. The loans were to be used to improve a new location for Swing House's operations, but the new location was not zoned for the operation of a recording studio. The recording studio never was built at the new location. After Debtor and Swing House filed bankruptcy petitions in the U.S. Bankruptcy Court for the Central District of California, Creditor filed an adversary complaint to except the debts owed to Creditor from Debtor's discharge under 11 U.S.C. § 523(a)(2)(A), (a)(2)(B), and (a)(6). Creditor contended Debtor fraudulently induced him to make the loans by (a) orally misrepresenting the new location could legally house and operate a recording studio, (b) making false written representations about Swing House's financial condition, and (c) failing to disclose certain financial information, including Swing House's lease default and related state court litigation with its prior landlord. After a five-day trial, the bankruptcy court prepared written findings of fact and conclusions of law and entered a non-dischargeable judgment in Creditor's favor for $239,288.50. Debtor timely appealed to the Bankruptcy Appellate Panel for the Ninth Circuit, which affirmed. Debtor then filed a second appeal to the Ninth Circuit.
- Judge(s):
- GRABER, GOULD, and FORREST
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