Zenovic v. Crump (In re Zenovic)
- Summarized by Lars Fuller , BakerHostetler
- 9 years 3 weeks ago
- Case Type:
- Consumer
- Case Status:
- Affirmed in part and Reversed in part
- Citation:
- BAP No. SC-15-1204-FYJu (9th Circuit, Jan 31,2017) Not Published
- Tag(s):
-
- Ruling:
- In a nondischargeability action, the BAP for the 9th Circuit affirmed in part, reversed in part, and remanded to the bankruptcy court (SD Cal.). The BAP found that the BAP properly applied California's prejudgment interest rate, rather than the much lower federal rate. However, the BAP found the bankruptcy court erred in valuing certain real property for purposes of calculating the damages claim. The court should have measured the value of the property as of the closing date, or as of the date of loss, but not the trial date.
- Procedural context:
- After trial, bankruptcy court entered judgment in favor of creditor in nondischargeability action. Creditor appealed the calculation of damages.
- Facts:
- Creditors contracted with general contractor (Zenovic) for acquisition of real property and construction of eldercare facility, with purchase price paid up front, but with title to pass at closing upon completion of property. Zenovic failed to construct facility, and made a variety of misrepresentations to buyers. Upon demand from the buyers, Zenovic failed to provide an accounting of funds received, which were to be spent on construction of the facility. Buyers subsequently sued various parties in state court, including Zenovic for fraud. Zenovic filed bankruptcy under chapter 7 two weeks before trial. Following a six day trial, the bankruptcy court entered judgment in favor of creditors to include prejudgment interest at California's 7% rate, rather than the federal prejudgment interest rate. The bankruptcy court measured creditors' out of pocket losses, added prejudgment interest, then subtracted amounts the creditors' received through settlements with other parties.
- Judge(s):
- Faris, Yun, Jury
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