FILED
NOT FOR PUBLICATION MAR 23 2018
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: ANTHONY THOMAS; et al., No. 17-60042
Debtors, BAP No. 16-1058
______________________________
ANTHONY THOMAS and WENDI MEMORANDUM*
THOMAS,
Appellants,
v.
KENMARK VENTURES, LLC,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kurtz, Jury, and Lafferty III, Bankruptcy Judges, Presiding
Submitted February 13, 2018**
San Francisco, California
Before: BEA and N.R. SMITH, Circuit Judges, and STATON,*** District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
*** The Honorable Josephine L. Staton, United States District Judge for
the Central District of California, sitting by designation.
Anthony Thomas appeals the decision of the Bankruptcy Appellate Panel
(“BAP”) affirming the bankruptcy court’s judgment of nondischargeability under
11 U.S.C. § 523(a)(2)(A). The bankruptcy court and the BAP each concluded that
Thomas’s debt to Kenmark was nondischargeable because it was incurred by fraud.
We have jurisdiction pursuant to 28 U.S.C. § 158(d), and we affirm.
I
As an initial matter, we deny Thomas’s Motion to Supplement the Record
with evidence that purports to challenge the legitimacy of the state court judgment
debt underlying this appeal. At the time of the bankruptcy trial, Thomas was aware
of all facts related to his personal liability for the judgment, but he failed to raise
these arguments. Because “exceptional circumstances are lacking, we refuse to
consider them now.” Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 984 (9th
Cir. 2011).
II
Turning to the substance of Thomas’s appeal, Thomas argues that (1) he had
no duty to disclose to Kenmark certain information regarding the Thomas Emerald;
(2) Kenmark’s reliance on Thomas’s representations was not justifiable; and (3)
there is not sufficient evidence that Thomas had the requisite intent to deceive
Kenmark.
We independently review the bankruptcy court’s rulings on appeal from the
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BAP. Citibank (South Dakota), N.A. v. Eashai (In re Eashai), 87 F.3d 1082, 1086
(9th Cir. 1996). Whether a creditor has proven an essential element of a claim is a
“factual determination reviewed for clear error.” Anastas v. American Savings
Bank (In re Anastas), 94 F.3d 1280, 1283 (9th Cir. 1996). We hold that the
bankruptcy court did not clearly err in concluding that Kenmark proved the
elements of fraud to support the nondischargeability judgment.
Kenmark’s claim of fraud was based on Thomas’s failure to disclose that the
Thomas Emerald, the collateral pledged for Kenmark’s loan to Electronic Plastics
(“EP”), had been previously valued at amounts far lower than the amount of the
loan. Therefore, Kenmark was required to prove that (1) the omitted information
was “material,” and (2) the debtor had a duty to disclose the omitted information.
See Apte v. Japra (In re Apte), 96 F.3d 1319, 1323 (9th Cir. 1996). The lower
valuations of the Thomas Emerald were “material” because a reasonable lender
would have considered them important in agreeing to the loan . See id. Further,
Thomas had a duty to disclose those lower valuations because he selectively
disclosed to Kenmark that the Thomas Emerald had, at one point, been valued at an
amount substantially greater than the amount of the loan. See Restatement
(Second) of Torts § 551(2)(b) (1976) (“[A] party to a business transaction is under
a duty to exercise reasonable care to disclose . . . matters known to him that he
knows to be necessary to prevent his partial or ambiguous statement of the facts
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from being misleading.”); In re Apte, 96 F.3d at 1324 (applying the Restatement
(Second) of Torts to determine the existence of a duty to disclose).
The element of justifiable reliance may be presumed where, as here, the
fraud claim is based on the debtor’s concealment of material facts. In re Apte, 96
F.3d at 1323. Therefore, because Thomas’s omissions relating to the value of the
Thomas Emerald were material, Kenmark’s justifiable reliance may be presumed.
Thomas’s intent to deceive can be inferred from the fact that Thomas knew
that lower valuations of the Thomas Emerald existed and selectively disclosed to
Kenmark only the higher valuation. Cowen v. Kennedy (In re Kennedy), 108 F.3d
1015, 1018 (9th Cir. 1997), as amended (Mar. 21, 1997) (“Intent to deceive can be
inferred from surrounding circumstances.”).
III
Separately, Thomas argues that the bankruptcy court erred in failing to
clarify whether the nondischargeability judgment applies to Thomas’s wife,
Wendi. We construe a judgment so as to give effect to the stated intention of the
issuing court. United States v. 60.22 Acres of Land, 638 F.2d 1176, 1178 (9th Cir.
1980). Wendi Thomas was not a subject of the bankruptcy court’s judgment. No
evidence was presented at trial that implicated Wendi Thomas in the fraud, and the
bankruptcy court made no findings of fact as to her. Therefore, we do not find any
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error in the bankruptcy court’s judgment.
AFFIRMED.
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