LBS Financial Credit Union v. Robert Manning (In re Manning)

Summarized by Joel Newell , Ballard Spahr, LLP
12 years 6 months ago

Citation:

9th Cir. BAP No. CC-13-1015-KiPaD (August 19, 2013)

Tag(s):

Ruling:

In the unpublished decision; the 9th Cir. BAP vacated the Bankruptcy Court's ruling that LBS's debt was not excepted from discharge pursuant to 11 U.S.C. Sec. 523(a)(6). The BAP remanded the matter to the Bankruptcy Court to allow LBS an opportunity to be heard on the matter. The BAP further vacated the Bankruptcy Court's order denying LBS's Motion in Limine with instructions to to the Bankruptcy Court to consider the conclusive effect of the Debtor's failure to respond to LBS's request for admission.

Procedural context:

After a trial before the Bankruptcy Court, the Bankruptcy Court rules that LBS Financial Credit Union the obligation owed by the Debtors was not excepted from discharge under 11 U.S.C. Sec. 523(a)(6). The Bankruptcy Court further denied LBS's Motion in Limine. LBS appealed both rulings.

Facts:

In 2007 Debtors obtained a loan from LBS to purchase a vehicle. A portion of the note included a provision that the Debtors would not take the vehicle out of the State of California for more than 30 days without prior written consent of LBS. ON or about 2010, the Debtors relocated to Texas (LBS was not made aware of the relocation). Sometime thereafter Debtors defaulted on the obligation to LBS. LBS filed suit in California State Court and obtained a default Judgment. Debtors move back to California and filed Chapter 7 on or about January 2012. LBS commences a adversary seeking to have its obligation excepted from discharge pursuant to 11 U.S.C. Sec. 523(a)(4) and (6). Debtors are served with the Complaint; however, Debtors do not file an Answer. The Court sets a status hearing and later entered an Order setting aside the default entered in the adversary matter. The Debtors appeared at the status hearing; however, LBS did not as a result of the prior tentative ruling by the Court excusing the appearances of the Parties. Since the transcript of this hearing was not submitted as part of the records to the BAP, the BAP was unable to determine whether the Court's decision to set aside the entry of default was by the Debtors' oral motion or by the Court sua sponte. After discovery request had been served; LBS filed a Motion in Limine based on the Debtors failure to respond to LBS's Request for Admissions. The Court denied this based on the Debtors' not being provided notice that if they do not response, then the request will be deemed admitted.

Judge(s):

Kirscher, Pappas, and Dunn

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