good morning in may it please the court christopher reeve this read smith l a p appearing on behalf of the appellant's mr and mrs yang who are the debtors in the bankruptcy court from which this appeal arises i would like to reserve five minutes for my rebuttal ok there are presently two issues before this court the first issue is whether the settlement agreement at issue here was functionally given the same effect as a unenforceable pre position discharge waiver and the second issue is whether the bank of the bankruptcy court erred when it granted summary judgment on the papers where there was a genuine dispute of material facts about the intent of the parties when they signed the settlement agreement and the stipulation on the first issue  mr and mrs yang as debtors in bankruptcy were entitled to the fundamental right provided to them by the bankruptcy court to seek a fresh start in bankruptcy bankruptcy debtors get that fresh start in the bankruptcy code through f section five twenty three which gives them a discharge now there are exceptions to the discharge but the exceptions are limited and this court has found numerous times that those exceptions are to be narrowly construed fact it has the consequence of course of the just church waiver but it recites it stipulates to facts is not sort of a in the abstract i wave my right to a discharge and of course we don't allow that when it's just in the abstract that's correct your honor but it  stipulated basically track what's necessary to show nondestructive ability is there any basis for saying that should or should not be deemed to be invalid preposition waiver and or w i we believe that and we contend that under the under the court's decision and weighing and in subsequent decisions that have come out after whining and interpret it by the bankruptcy appellate panel that even if it were even if it were just a standalone stipulation assuming that that was the case which which isn't the case here that that operates as a waiver and to give effect to that with to do violence to the public policy against pretty distraught waivers and i think it's  creditor could require the debtor to stipulate that x knowing that that would make the law non dischargeable well your honor it specifically at that is correct and in wink that was the concern that was that was that was brought up by the bankruptcy was that by giving a fax to stipulations even without reference to section five twenty three let's say that a savvy creditor were to remove any reference to section five twenty three to give effect to a stipulation where the intent of the stipulation is to obtain a discharge waiver which make it commonplace in every settlement agreement savvy creditors all over the country would start to put that in their settlement agreements with the hope that if if they if the defendant were to declare bankruptcy that they could that they could get a discharge waiver without having to actually go to  trial on the issue of whether there was fraud or not and to give effect to that sort of a stipulation would undermine the entire purpose of huang and thorpe and other court cases in the ninth circuit that prohibit that sort of waiver and i think it's pretty good for down into the details of the specific cases are we supposed to get because in a way this is a hard problem i understand the reasons why we disfavor or do not allow preposition waivers yes the facts of the underlying  litigation make it pretty clear that there was fraud there was a bonafide lawsuit there was a lot of discovery it went to a long time we ended up getting a settlement for i think three three million dollars in which the there's a stipulation to the a long fraud case and there we are settled and this is true well your honor i think that's not quite right next to the second issue of whether the court should have looked and looked more closely at the at the facts and i think had they had the court dealt into the facts which frankly it did not do it  interested in judge letters question as to can we take the stipulation and its face value and judge let you suggest we can view it when it seems to be true when the facts seem to be correct  every flecked reality as opposed to just something the creditor made that enters a in order to get the settlement what you want i think that that that the stipulation itself i don't think you can take on face value because it is so vague and that is that one of the problems that was that was brought up in one place the case specifically and when they pointed out that the that the agreement danced around the issue of fraud that's clearly what happened in the settlement agreement and mr yang testified to the  bankruptcy court that he specifically rejected prior stipulations where they tried to make him agree that he had committed fraud and and by disregarding that testimony the bankruptcy court disregarded the fact that the stipulation on its face  should have been given the way that the plaintiffs were arguing that it should have been given also the stipulation even if it even if it incorporates by reference the facts of the complaint those facts don't support a finding of fraud the stipulation itself and moreover the complaint doesn't specify which parts of the loans are the damages were attributable to the fraud so you have multiple issues here where the where the where the stipulation and the complaint both neither of them provide for a non disclosure ability finding and i think that it i thinks the court lost sight of one i think major issue here in the bankruptcy court was was mrs yang and she seems to have been ignored i think in much of this process but the complaint as to mrs yang who was essentially an add on she was it the stipulation just said yang as a singular and they defined it as to both of them but the complaint alleged only that mrs yang receive the benefits of the fraud so even on  face the complaint allege that mr for mr gang committed fraud after the fact and then mrs yang receive the benefits of that and on that basis they have mrs yang sinus a settlement agreement that admits to liability and somehow try to  into an argument that mrs yang committed fraud the complaint itself doesn't support that it merely says she she received the benefits of that that is not grounds for section five twenty three finding either the complaint or the settlement agreement and i think in this  and they denied him his right to trial and the fact that in bankruptcy court you're entitled to you know you're going to have the code requires that the bankruptcy court interview essentially almost like a plea bargain any debtor that wants  post petition discharge the fact that that is not extended as a protection in this case is very concerning because by rubber stamping the settlement agreement and never looking beyond it this debtor was entitle to less protections than a debtor would which is not binding the court did seem to suggest that collateral estoppel fact could be given to the facts that's not the law of the circuit and we would contend that given the opinion and why and then given subsequent opinions like wayne and  that that that should that the collateral estoppel effect shouldn't be given to a stipulation of facts where the stipulation of facts was intended as a precondition discharge of a that and california law i think the i think the manifested here i don't think it was your honor and the fact is that actually mr yang specifically denied that intent in his declaration and at the very very minimum the bankruptcy court should have had a trial on that issue and so that creates a genuine issue of material fact that was the if there is evidence of that intent that it should be disregarded but i'm sorry i missed it i didn't quite understand it say that one more time our position your honor is that under whaling and it's progeny that if there is any and if there's any evidence of intent on either side that the stipulation operate for the purpose of denying a discharge even when the actual consequence of the wording is very clear someone is free to say well i didn't intend that consequence i think that that's correct your honor and i think the bankruptcy court ought to consider that issue and they may give it very little weight and they may determine that it's not credible in which case it should given the effect do you're saying if there's evidence there is the stipulations element there was in tampa to be used in bankruptcy which it is then it's saying yes ron i think it operates in the same purpose and i don't i don't believe that this court needs to go that far to make a decision in this case because this case doesn't fall anywhere near that standard i think there's plenty of evidence of intent and we're dealing with a very vague what is what could be more clear and unambiguous your end of the complaint itself was based on multiple theories only only some of which were fraud and one of the theories was breach of contract and a breach of contract argument would have supported the entire the entire do theories and my colleagues talking facts well you're on to the point of what i'm trying to say your honor is that in the case the you had a very similar issue where there was a complaint with multiple theories multiple causes of action one of was fraud and there was a collateral stop effect given to a settlement there was a clear agreement on to the facts of that of that complaint that complaint could have supported fraud and it could have supported the other one the question here is whether when mr yang signed on to that and said i think your honor all it said is it has the ability to all of the facts and for purposes of liability the fact that he dances around the fraud brings a squarely within one year if the intent was to stipulate to fraud the stipulation should have been clear on that issue and said it said he was stipulating to fraud and that's exactly the facts again why don't we have no other side we're down to about a minute and a half we'll make sure you get a chance to say what you say thank you  in many proceedings and litigation that has been ongoing for over sixteen years the issue in this case is whether or not the bankruptcy court properly considered facts that were stipulated to between the parties in the settlement of civil civil litigation matter and in relying upon those stipulated facts made independent determination as to whether or not those facts supported not discharge ability under five twenty three eight to four and the court made that determination it did so without thinking take into consideration any purported pre partition waiver app never asserted that the appellant's waive their right to challenge the issue of not charge ability the bankruptcy court did not conclude that there was a waiver of the ability to contest not just charge ability and the bankruptcy appellate panel affirmed strictly on the basis of the consideration of stipulated facts and whether or not they supported a finding for not charging bill let me ask you about the the ability can never be a preposition waiver i think that the parties are free to stipulate the facts so it can never be a prepositional i think the court has to determine whether or not the specific stipulation is sufficient or not to be carved out from any purported prepositional years there's nothing that's expressly a preposition waiver the selman agreement just say as the d facts as opposed to saying this is this way this is not just our debility that is is can ever be a preposition an invalid preposition waiver is that your position no it's not your honor i think you have to look at the specific to specific facts without actually saying it's a preposition whatever you're on i think it depends on what the facts are because at the end of the day what i told you what the facts are the facts are what ever is necessary to make that at n well i think again i don't know the i don't think we have enough information in that example to know what type of commercial transaction is and so forth in our case we have we have two parties who have been litigating who through an arm's length negotiation enter into a settlement agreement a very detailed settlement agreement there was a clear intent that there was to be the mission of liability and there was clear intent that there was to be admission of various facts and i think it's important understand is  see court than have to evaluate what the purpose of the agreement was whether the purpose of the agreement was to effect bankruptcy or not because here there was lots of language in the somin agreement indicating that it was extent that language constituted preposition waiver which is what the banks be court determine the pankhurst the court separate it and said as a as is that the party responsible to determine the awfully broad statement so that if i've got quite a different case when we have in front of us i've got a consumer case in which the creditor says to the consumer please deplete to the following facts i'll settle for x dody and they don't they don't know mention five lies here but i was stuck with the following five facts turns out the facts really aren't as stipulated but the consumer is going to get off the hook from instead of being stuck for i know i'm going to make the numbers up fifty thousand bucks well i'm letting you off the hook for thirty thousand if you'll stipulate to the following facts to him nothing about nothing and you just said if the if those facts constitute kno ability we're stuck that can't be right you know what i'm saying your honor is you've got to say i think in the context of this settlement agreement where we have little or no evidence of overreaching little or no evidence of us it parties on the other side we can trust this factual stipulation while you're on our certainly agree that the analysis here has to be done in a case by case basis and my point was simply that i think your answer to judge a good has to be reconsidered when my answer then is that it has to be determined of so  whether the facts that were stipulated were true or have to evaluate what the parties had mine because we know what the parties had in mind here which was to make it not just arguable because as they agree about or what exactly what are the what are the things that the bankruptcy court would be required to leave the alley way before saying that the facts have a collateral effect in the bankruptcy proceeding well i think under the cold decision the court is going to take a look and determine whether or not these  were entered into negotiated at arm's length as in the case of a settlement agreement in resolution of a civil action and determined that the sole purpose of doing so was not to provide for  partition waiver i would point out though in summary judgment if one of the parties comes in and says that's not the way it was at all with the sworn declaration why doesn't that create a genuine issue material fact that would have to be resolved big because mr mr yang's declaration simply says what he thought simply says that i don't believe i committed a fraud we're not taking the position that he stipulated to fraud the position that wasn't his and tandon entering the  that's that's a red herring the issue is what was his intent in entering into the settlement agreement he says in his declaration that he knew he signed the the documents in order to settle the case and that he knew that the documents contain a stipulation of facts what and then he goes on to say but i never believe i committed fraud well he may not believe he committed fraud and frankly the issue or determination of whether or not the facts support the fraud is a determination the bankruptcy court has to make and that's exactly what happened here we're not taking the position that he admitted to fraud were taking the position and the bankruptcy court took the position that he signed a stipulation and i would add your honor not just the settlement agreement which has language regarding the pre sition waiver but the stipulation for entry of judgment does not it has no reference to bankruptcy or not starts ability and it goes as far to say that those facts that are stipulated to that when the judgment is entered it will be entered upon those the first motion for summary judgment that was presented to the bankruptcy court that in fact that the judgment should be given precludes a perfect we took the position the collateral stoppel did apply that the bankruptcy court disagreed and it doesn't come up with any legal principle for having a binding effect of of and collateral estoppel so i sort of just counted that i mean is there any legal principle that why a stipulation in one loss it would have an effect in another lawsuit other than collateral estopp would have and any other effect would have an effect i mean there's no legal principle for having a stipulation in one lawsuit in a separate proceeding having a binding effect is a separate legal proceeding other than collateral estoppel that i'm aware of and the bankruptcy court didn't mention anything no it didn't and i'm not sure i understand the question your honor but if you're asking whether or not there's another reason why you would stipulate to facts other than to have it when i was asking whether or not we have to look at california's rules about indicating that as evidence of facts that are stipulated to can be considered no different than other evidence that's presented to the district court if you can to the bankruptcy court for consideration of the issue of nondestructive belittle you mr young ever done and i in the court granted where he denied he denied certain facts that are reflected in the stake or complaint not all of the facts certainly a handful of them the as you know the stake our complaint contains one hundred seventy plus paragraphs and has substantial facts that are alleged in it and i would point out that mr yang had at his disposal a complete summary of the facts that appellee was relying upon in the bankruptcy court to support a finding of fraud the most in for summary judgment detailed about six pages worth of the motion details each element of fraud and reference the specific facts in the state court complaint which supported those elements were any of those facts in the complaint facts that were denied them mr yang i don't recall the that those specific facts were denied my recollection from mr young's declaration is that he generally denied having deceived or defrauded no i understand that i'm talking about facts i don't recall that there was a specific denial with respect to these the the facts that were delineated facts in denying various things that he is alleged to have done i don't recall that he specifically denied specific facts that were referenced in the motion isn't what's important here that the the bankruptcy court actually found that under the terms of the settlement agreement the facts that mr yang was bound by support of the cause of action for fraud as opposed to a stop them from thinking about that question and or whatever but that they found your these are the facts you circulated to and it supports the cause of action for fraud your i think it's precisely what the bankruptcy court it i think that the bankruptcy court did it own independent evaluation which it's supposed to do and that's all we asked it to do was to take the stipulated facts as presented and determine whether or not we met the burden of showing not to start ability to determine whether th were true it just took them at face value i wouldn't take them as face value your honor took them as stipulated facts and the law says those that the parties are legally bound the law says both that the supreme court and this court have held that addresses the discharge ability or not just charge ability of the state court judgment the underlying debt we're going to be taking over time i can tell i want to pursue the line of questioning that judge i could has been pursuing and that is if there's no collateral estoppel here and we're not relying on collateral estoppel then i think we're going to have to find that the facts are not contested in this proceeding unless there's some other for simply saying you've got to accept what's in the stipulation just take this a little bit out of this context on just to make the example where the point i want to make a little easier to understand parties stipulate to things all the time for us is the litigation in front of them sometimes they're not that fact to be established in other settings and other litigation and songs on the merely saying that i stipulate of the facts doesn't tell me that it's got binding effect later on the way you get binding effect later on is through collateral estoppel now the ordinary will for collateral estop used for purposes of collateral estoppel but if there is no collateral estoppel here i think every fact that you regard as critical to the finding of fraud has to be a non contested fact which is why i nervous when you say i can't recall whether or not any of the facts that you listed were actually contradicted as a factual matter mr yang how do you want to respond to that long  there's evidence in the record that indicates that the parties when it comes to stipulated facts that the parties essentially negotiated and if you will without the court's benefit litigated the issues of the settlement agreement and decided that there would be an agreement or stipulation as it relates to these facts and that the parties would be bound by it there was a declaration the record from david walker a principle from f m i that indicates that that  you know it was f m i's intention that the parties and that mr yang in particular would be bound by the facts that are being stipulated to i don't think there's anything in the record that indicates that appellant was not agreeable or was not agreed agreeing to be bound by the state related facts again all that's in the record as it relates to the appellant is that he didn't believe he had committed a fraud and i don't i think as i said i don't think that's the issue that we need to focus on we need to simply focus on did you commit was it in your intent to be bound by the facts that your stipulating into and i think the record is clear that that the parties intend to be bou there's a declaration in the record from a michael stoller who was counsel for at the my who was the attorney who negotiated the settlement agreement and stipulation for entry of judgment on behalf of f m i and mr stoller states in his declaration that this was extensively negotiated and that the provisions in the stipulation for entry of judgment and settlement agreement that concern the stipulation of facts was negotiated and discussed at length with mr eubanks counsel and that mr stoller had advised mr eubanks counsel that absent such a stipulation there would be no settlement so i think on the face of the record it is undisputed that the parties intended that they would be bound by this provision to be bound by the stipulated fact that they would be bound by it and i'm just looking at the stipulation they would be bound by it in a bankruptcy proceeding with respect to five twenty three but that's precisely what the bankruptcy court in the bap said well we're not paying attention to that because we're just looking at facts well again it does and it was tried to said we're all looking at that because that would then be a preposition waiver so if we disregard that how do we get to collateral estoppel because so far the only evidence you've pointed me to that tells me that they intended to be bound only or litigation is the evidence that points we tend to be bound to this in later litigation in the bankruptcy court under five twenty three which is precisely what the back court says when i look on that well you're out of the evidence that i referred to in the declarations doesn't doesn't specifically talk about being bound for a bankruptcy proceeding it simply says that the stipulation of facts a negotiated and important to go she determined that the parties intend to be bound by it and that there would have been a settlement without it and i remind you that the but the to stipulate that name itself says we intend to be bound by this not in some general proposition really intend to be bound by this in the bankruptcy court under five twenty three the settlement agreement says that never under the stipulation for entry of judgment does not yes but it has makes no reference to bankruptcy it makes no ability it says i see so you so your view of the settlement agreement really is off to one side if the judge can i'm saying your honor that based on the record you could the court could have disregarded the settlement agreement so whether you choose to  to carve out the pre partition language in the settlement paragraph twelve or whether you choose to disregard the entirety of paragraph twelve you are left with a clean and concise stipulation the stipulation for entry of judgment and your honor but i maintain that i maintain that if the parties intent was to be bound by those facts and where and where do you look to find to find documentation of that intent the declarations that i referred to your honor the declaration of f m my principal who says that was his intent when he entered the settlement agreement you're not looking to the actual record nation in the settlement well i'm looking at all i'm looking the entire record and looking at the entire record the yes it's neither of these documents go so far as to say that the stipulated facts can be used for any purpose anywhere anyhow but the intent that we're looking to the intent of the parties the record the only evidence the record is that the parties intend to be bound by the stipulation of facts there was no limit on how they would be possible your honor thank you i wanted to make three three points on the issue of collateral estoppel that that is precisely the point here mr yang disputed in his declaration that he intended that this have that effect that's in the record r seven twenty one he said when i signed the stipulation my understanding that i was agreeing that a company i owned had borrowed that money and i was definitely not agreeing that i committed any sort of fraud in fact i refused to sign previous versions and included in missions of fraud i was only after the general statement that i had met facts supporting liability there's nothing in there about his intent that it be bound to be found in future proceedings but the settlement agreements are very clear that it doesn't have the settlement agreement  only makes it clear in so far as it's a pre discharge waiver he intended they asked to be signed on to it as a preposition discharge waiver so to the extent that that would have been in forcible than perhaps but that's not enforceable  i would also point out that the idea that you can disaggregate the stipulation in the settlement agreement is also not supported by the record the stipulation on its face attaches the settlement agreement to it as an exhibit incorporates those terms the two were clearly signed as a single document one was intended to get the judgment the other one was intended to settle the case but they both serve the same purpose which is to have a preposition waiver and on the issue of going beyond the collateral stoppel issue if you don't have collateral stoppel all you have is a stipulation that is evidence when i was submitted mr yang contested every single fact of that stipulation and of the complaint every single fact yet so your honor at the record  or twenty paragraphs that he disputed that he committed fraud he didn't conceal information from sam that he didn't request or threaten employees or staff to do anything inappropriate that he didn't have to falsify the documents is a large he literally marches through all of the allegations in the complaint and disputes them and says i didn't do this and he ends the declaration saying the only reason i signed the settlement agreement was to buy peace i didn't think that i was going to be admitting to fraud i didn't i didn't do it and he didn't say in a general sense i didn't commit fraud in a very specific sense backed by fact he said the things that were not true in the complaint that he didn't do and that's evidence that this court never considered at the summary at the summary judgment those are genuine disputes material fact both estimate  twenty three facts and then just the final point i would make isn't just not let's not lose sight of mrs yang none of these allegations are against her she was not subject to any of this there was never any findings in the bankruptcy court as to her intent on the settlement agreement or  to the fact that she had any involvement in this and in fact the complaint in the state court all it said was on information and belief she received the benefits that's not fraud it just isn't if the court actually applied the section five twenty three standards to mrs yang it couldn't possibly have found that there