Silao v. Anderson (In re: Pandora Hospice Care, Inc.)

Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
3 months 4 days ago

Case Type:

Business

Case Status:

Affirmed in part and Reversed in part

Citation:

24-5024 (9th Circuit, Nov 20,2025) Not Published

Tag(s):

Ruling:

The U.S. Court of Appeals for the Ninth Circuit upheld a bankruptcy court's (a) judgment that the appellant had to turn over $137,000 to the debtor's estate as prepetition checks he received were not loan repayments, (b) ruling that the appellant also had to pay prejudgment interest on the $137,000, and (c) order denying the appellant's motion for a new trial. The circuit court reversed and remanded as to the bankruptcy court's calculation of prejudgment interest, concluding the lower court erred in determining the date on which interest began to accrue.

Procedural context:

The Ninth Circuit reviewed the bankruptcy court's factual findings, including its assessment of witness credibility, using a clearly erroneous standard. It reviewed the bankruptcy court's decisions to award prejudgment interest and to deny the motion for a new trial for an abuse of discretion, It concluded the bankruptcy court abused its discretion in setting the start date for interest accrual as a date other than the one on which turnover of the funds was demanded or suit was filed. Finally, it explained that Appellant did not properly preserve an argument concerning the statutory basis for Appellee's claims in the bankruptcy court: "[Appellant]’s briefing on this front elides two distinct questions: (1) whether the bankruptcy court’s finding that [Appellant] owed the funds was clearly erroneous, and (2) whether a turnover action under 11 U.S.C. § 542(b) was appropriate in light of the parties’ dispute over whether [Appellant] owed [Debtor] the funds. [Appellant] has forfeited the latter argument by failing to press it in the bankruptcy court."

Facts:

Prepetition, Appellant Nicholas Silao, an owner of Debtor Pandora Hospice Care, Inc., received $137,000 from Debtor. After Debtor filed a chapter 7 bankruptcy petition in the U.S. Bankruptcy Court for the Central District of California, Appellee Karl T. Anderson became the case trustee. Appellee filed an adversary proceeding against Appellant, seeking turnover of the $137,000 to Debtor's estate under 11 U.S.C. § 542(b). Following a trial, the bankruptcy court concluded the funds Appellant received from Debtor were not, as Appellant contended, for repayment of a loan. In reaching this conclusion, the court heard testimony from Appellant--who the court deemed not credible--and Appellee--who the court deemed credible. The court also reviewed Debtor's original and amended tax returns and checks written by Debtor to Appellant, all of which Appellant had prepared. Appellant did not adduce documentary evidence at trial showing he "had previously transferred money to [Debtor] as he claimed" such that the $137,000 transferred to him constituted a partial repayment of a loan. After concluding Appellant had to turn over the $137,000 to Debtor, the court also held Appellant should pay prejudgment interest and set the date from which to start calculating that interest as December 31, 2016, based on Debtor's unamended 2016 tax return. Upon receipt of the final judgment, Appellant moved the bankruptcy court for a new trial under Fed. R. Civ. P. 59 (incorporated via Fed. R. Bankr. P. 9023), contending he would provide evidence of the loans he made to Debtor. The bankruptcy court denied this motion. Appellant appealed the judgment and the order denying his motion for a new trial to the U.S. District Court for the Central District of California, which affirmed in full. Appellant then took a second appeal to the Ninth Circuit.

Judge(s):

R. NELSON and VANDYKE, Circuit Judges, and COLE, District Judge

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