Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-3_13-ap-03221/USCOURTS-canb-3_13-ap-03221-0/pdf.json

Parties Involved:
Zenaida Barr
Plaintiff
Wanda R. Ogilvie
Defendant

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MEMORANDUM DECISION FOLLOWING 

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UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re:

WANDA R. OGILVIE,

Debtor.

ZENAIDA BARR,

Plaintiff,

v.

WANDA R. OGILVIE,

Defendant.

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Case No. 13-31179 HLB

Chapter 13

Adv. Proc. No. 13-03221 HLB

MEMORANDUM DECISION FOLLOWING TRIAL

This action came before the court on February 18, 2015 for 

trial on Plaintiff Zenaida Barr’s complaint, which she filed in 

her individual capacity and as administrator of and successor 

in interest to the estate of Regina Barr. Zenaida Barr 

contends that a debt allegedly owed to her by Defendant and 

Debtor Wanda Ogilvie should be excepted from discharge pursuant 

to 11 U.S.C. § 523(a)(2)(A), (a)(4) and/or (a)(6).1 As 

1 Unless otherwise noted, all statutory citations shall refer to Title 11 of 

the United States Code (the “Bankruptcy Code”), 11 U.S.C. § 101 et seq., and

all citations to rules of procedure shall refer to the Federal Rules of 

Bankruptcy Procedure (each a “Bankruptcy Rule”).

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Signed and Filed: February 23, 2015

________________________________________

HANNAH L. BLUMENSTIEL

U.S. Bankruptcy Judge

Entered on Docket 

February 23, 2015

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

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explained below, the Court finds that Ms. Barr has failed to 

prove all essential elements of her claims; therefore, judgment 

should be entered in favor of the Defendant on all counts.2

 

Findings of Fact

Regina Barr is Ms. Ogilvie’s half-sister and Zenaida 

Barr’s mother. In July 2004, Regina Barr received an 

inheritance totaling $152,486.04 (the “Inheritance”) from the 

probate estate of her deceased father, Earl Barr. 

Throughout her adult life, Regina Barr suffered from 

severe, and ultimately fatal, health problems. Aware that she 

might not live to see her daughter into adulthood, Regina Barr 

hoped to leave some or all of the Inheritance to Zenaida Barr. 

Regina Barr passed away in July 2009 at the age of 45, leaving 

Zenaida Barr as her only heir. 

The Court received conflicting evidence as to what steps 

Regina Barr took to fulfill her wish to provide for her 

daughter. Zenaida Barr, as well as witnesses Marvyce Barr 

(Regina Barr’s half-sister) and Desiree Zuniga (a family 

friend), testified that Regina Barr gave some or all of the 

Inheritance to Ms. Ogilvie for safekeeping. Ms. Ogilvie 

testified that when Regina Barr received her inheritance, she 

and Ms. Ogilvie went together to a bank, cashed the Inheritance 

check and used the proceeds to purchase two money orders, the 

amounts of which she could not recall, but which she believed 

2 This memorandum decision constitutes the findings of fact and conclusions of 

law required by Rule 52(a)(1) of the Federal Rules of Civil Procedure, which 

applies in this action pursuant to Bankruptcy Rule 7052. This is a core 

proceeding in which the Court may enter final judgment. 28 U.S.C. §

157(b)(2)(I).

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added up to the full amount of the Inheritance. These money 

orders were made payable to Ms. Ogilvie, who then cashed the 

money orders and gave the cash back to Regina Barr. According 

to Ms. Ogilvie, Regina Barr hoped to conceal her receipt of the 

Inheritance from government agencies through which she received 

financial assistance, as she would become ineligible for such 

assistance if the Inheritance came to light. Ms. Ogilvie 

claims that, other than as part of the foregoing transaction,

Regina Barr never gave a dime of the Inheritance to her for 

safekeeping.

On the issue of whether Regina Barr gave some or all of 

the Inheritance to Ms. Ogilvie for safekeeping, the Court finds 

the testimony of Zenaida Barr, Marvyce Barr, and Desiree Zuniga 

most credible and convincing. Each of them testified to having 

heard from Regina Barr during her lifetime that she had given 

some or all of the Inheritance to Ms. Ogilvie for safekeeping.3

 

This version of events also squares with the undisputed 

evidence that Regina Barr depended on public assistance during 

the entire period relevant to this action, as her health issues 

prevented her from working. The parties do not dispute that, 

had the government agencies providing assistance to Regina Barr 

become aware that she had received the Inheritance, they might 

have terminated her public benefits, including the health care 

upon which she depended.

The precise terms of the arrangement between Regina Barr 

and Ms. Ogilvie never became clear during trial, in part 

3 This testimony is excepted from the rule against hearsay by Rule 804(a)(4)of

the Federal Rules of Evidence.

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because neither party introduced any writing or other 

conclusive evidence concerning the alleged trust relationship. 

Zenaida Barr insists that Ms. Ogilvie cajoled Regina Barr into 

letting her hold the Inheritance, falsely promising to keep it 

safe and to pass it to Zenaida Barr when she came of age and/or 

needed the funds for living and educational expenses. Zenaida 

Barr urges the Court to find that Ms. Ogilvie wanted the 

Inheritance for herself and, once she possessed it, she spent a 

significant portion on clothing and gambling.

Establishing that Ms. Ogilvie came into possession of some 

or all of Regina Barr’s Inheritance begs the question of what 

happened to the funds thereafter. The Court received little 

helpful evidence on this issue: Plaintiff did not provide bank 

statements, copies of checks, credit card statements, invoices 

or any other documentary evidence that might have assisted with

tracing the funds and identifying exactly who spent how much, 

when, and for what. The Court must therefore rely on the hazy 

memories of witnesses who told the truth as best they could but 

whose recollections have faded with the passage of time.

Zenaida Barr testified that her mother spent at least 

$20,000 of the Inheritance on new furniture and a car.4

 

Additionally, unquantified sums were spent on insurance for the 

car. Zenaida Barr candidly admitted that Ms. Ogilvie provided 

her with at least $3,000 from the Inheritance for educational 

and other expenses. Still further, Regina and Zenaida Barr 

lived in an apartment building owned by Ms. Ogilvie. Their 

4 Ms. Ogilvie held title to this car, allegedly for the same reason Regina 

Barr did not want government agencies to become aware of the Inheritance.

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tenancy began shortly after Regina Barr’s receipt of the 

Inheritance and ended approximately one year after her death. 

Although a large portion of their rent was covered by a 

governmental housing subsidy, they remained responsible for 

approximately $350 per month. Zenaida Barr estimated that Ms. 

Ogilvie deducted this amount from the Inheritance no fewer than 

eight times per year. Multiplying this frequency by the seven

relevant years results in a further deduction of $19,600. 

Zenaida Barr’s trial brief concedes that Regina Barr allotted 

$2,000 of the inheritance to Ms. Ogilvie for expenses 

associated with its safekeeping. All told, Zenaida Barr’s 

testimony accounts for roughly $50,000 of the Inheritance. The 

rest, she says, Ms. Ogilvie spent on herself, although Zenaida 

Barr did not testify to having personal knowledge of the source 

of funds Ms. Ogilvie used for her personal expenses. She 

simply assumes – and insists that this Court assume – Ms. 

Ogilvie used the remaining Inheritance for that purpose.

To corroborate this, Zenaida Barr offered the testimony of 

Ms. Desiree Zuniga, a close, lifelong friend of Regina Barr’s. 

Ms. Zuniga testified that she once accompanied Regina Barr to 

Ms. Ogilvie’s house and saw Ms. Ogilvie and her daughter 

thumbing through catalogs and ordering clothing. She implied 

that the only way Ms. Ogilvie could have paid for these 

luxuries was by spending the Inheritance. 

Ms. Zuniga also testified that Regina Barr and Ms. Ogilvie 

frequently went to local casinos and gambled. She suggested

that Ms. Ogilvie’s gambling habits were excessive and that she 

gambled away a great deal of the Inheritance. Ms. Zuniga did 

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not accompany Regina Barr and Ms. Ogilvie on their trips to 

casinos, nor did she testify to any personal knowledge of the 

source of funds Ms. Ogilvie used for gambling. While the Court 

believes that Ms. Ogilvie and Regina Barr went to casinos 

together, the Court cannot accept as fact Ms. Zuniga’s 

speculation that Ms. Ogilvie gambled away the Inheritance. 

Simply put, the Court received no conclusive proof as to 

what happened to approximately $100,000 of the Inheritance, yet 

Zenaida Barr insists that the Court infer or assume that Ms. 

Ogilvie frittered it away. The Court cannot reasonably draw 

such an inference from the slim record created at trial.

Conclusions of Law

Zenaida Barr contends in her trial brief that Ms. Ogilvie 

is indebted to her in the amount of $400,000, which represents 

$150,486.04 of the Inheritance (less the $2,000 of expenses she 

concedes to Ms. Ogilvie)5

, punitive damages, attorneys’ fees, 

and court costs. Zenaida Barr alleges that this debt should be 

declared nondischargeable under sections 523(a)(2)(A), (a)(4) 

and (a)(6) of the Bankruptcy Code.

Section 523(a)(2)(A) – money obtained by fraud or false pretenses

Section 523 excepts from discharge any debt for “money, 

property or services . . . to the extent obtained by . . . 

false pretenses, a false representation, or actual fraud.” 11 

U.S.C. § 523(a)(2)(A). In order to prevail, a creditor must 

prove all of the following by a preponderance of the evidence: 

5 Without explanation, Zenaida Barr made no allowance in her trial brief for 

the other legitimate expenses she admitted at trial were paid from the 

Inheritance.

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(1) the existence of a misrepresentation, fraudulent statement 

or omission by the debtor; (2) that the debtor knew of the 

falsity or fraudulent nature of his or her statements or 

omissions or actions at the time they were made or taken; (3) 

that the debtor intended to deceive the creditor; (4) that the 

creditor justifiably relied on the debtor’s misrepresentations, 

omissions or actions; and (5) that the creditor suffered 

damages as a result of his or her justifiable reliance. Grogan 

v. Garner, 498 U.S. 279, 290 (1991) (setting forth burden of 

proof); American Express Travel Related Services Co. v. Hashemi

(In re Hashemi), 104 F.3d 1122, 1125 (9th Cir. 1996) (setting 

forth burden of proof and elements of a claim under section 

523(a)(2)(A)); Citibank (South Dakota), N.A. v. Eashai (In re 

Eashai), 87 F.3d 1082, 1086 (9th Cir. 1996) (same).

Zenaida Barr asserts that Ms. Ogilvie convinced Regina 

Barr to give her the Inheritance by falsely promising to keep 

the money safe and to use it to pay for Zenaida Barr’s living 

and educational expenses. Instead, according to Zenaida Barr, 

Ms. Ogilvie intended to keep as much of the Inheritance as 

possible for herself and, once she got it, spent the majority

on gambling and personal luxuries. 

As previously mentioned, the Court does not doubt that 

Regina Barr gave some or all of the Inheritance to Ms. Ogilvie 

for safekeeping. But on the record before it, the Court cannot 

find that, in order to convince Regina Barr to do so, Ms. 

Ogilvie falsely promised to hold it in trust for Regina and 

Zenaida Barr’s needs. Rather, the evidence leads the Court to 

the conclusion that Regina Barr gave the Inheritance to Ms. 

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Ogilvie because she wanted to avoid the scrutiny of the 

government agencies upon whose assistance Regina Barr relied. 

This conclusion also finds support in the sums Zenaida Barr 

admits she and/or Regina Barr received from Ms. Ogilvie or that 

Ms. Ogilvie used for their benefit. While no one can account 

for the majority of the Inheritance, the Court does not find it 

reasonable on this record to infer that Ms. Ogilvie spent it on 

her personal expenses. 

In order to prevail, Zenaida Barr was required to prove 

that Ms. Ogilvie convinced Regina Barr to give her the 

Inheritance by making false promises as to its safekeeping. 

Quite simply, Zenaida Barr did not sustain her burden of proof

on this critical issue.

Section 523(a)(4) – fraud by a fiduciary; embezzlement; larceny

Section 523 excepts from discharge debts incurred as a 

result of fraud while the debtor is acting in a fiduciary 

capacity, or as a result of embezzlement or larceny. 11 U.S.C. 

§ 523(a)(4). A creditor can prevail if he or she proves by a 

preponderance of the evidence that: (1) an express trust 

existed; (2) the debt was caused by fraud or defalcation; and 

(3) the debtor acted as a fiduciary to the creditor at the time 

the debt was created. Otto v. Niles (In re Niles), 106 F.3d 

1456, 1459 (9th Cir. 1997); Lovell v. Stanifer (In re 

Stanifer), 236 B.R. 709, 713 (B.A.P. 9th Cir. 1999) (burden of 

proof).

For purposes of § 523(a)(4), the Ninth Circuit has 

narrowly construed “fiduciary capacity” to apply only to 

relationships involving express or technical trust 

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relationships, and not trusts that are imposed by law as a 

remedy. Cal-Micro, Inc. v. Cantrell (In re Cantrell), 329 F.3d 

1119, 1125 (9th Cir. 2003). The determination relies upon 

whether the requisite trust relationship exists under state 

law. Id. 

Neither party briefed the issue of whether and how the 

arrangement between Regina Barr and Ms. Ogilvie created an 

express trust under California law. But generally, an express 

trust is created when two parties agree to impose a trust 

relationship. Schlecht v. Thornton (In re Thornton), 544 F.2d 

1005, 1007 (9th Cir. 1976). The general characteristics of an 

express trust are: (a) sufficient words to create a trust; (b) 

a definite subject; and (c) a certain object or res. Id.

In this case, the existence of an express trust is 

defeated by the testimony of Marvyce Barr, who testified that, 

in explaining that she had given some or all of the Inheritance 

to Ms. Ogilvie for safekeeping, Regina Barr did not specify 

that she wanted to establish a trust. Rather, Marvyce Barr 

testified that Regina Barr only said she wanted Zenaida Barr 

cared for. In the absence of an express trust, Zenaida Barr 

cannot prevail on her claim under section 523(a)(4).

Even assuming an express trust existed, however, Zenaida 

Barr also has failed to prove that fraud or a “defalcation” 

occurred. For purposes of section 523(a)(4), a “defalcation” 

requires “the misappropriation of trust funds or money held in 

any fiduciary capacity; [or the] failure to properly account 

for such funds.” Stephens v. Bigelow (In re Bigelow), 271 B.R. 

178, 186 (B.A.P. 9th Cir. 2001). Defalcation contemplates a 

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culpable state of mind involving knowledge of, or gross 

recklessness in respect to, the improper nature of the relevant 

behavior. Bullock v. BankChampaign, N.A., _U.S._, 133 S.Ct. 

1754, 1759 (2013).

As indicated above, the Court has concluded that Ms. 

Ogilvie did not falsely promise to hold the Inheritance for 

safekeeping. But beyond that, the Court finds that the 

evidence it received also did not prove Ms. Ogilvie 

misappropriated the money she held. In fact, the only 

conclusive evidence the Court received indicates that at least 

one third of the Inheritance was spent on Regina and/or Zenaida 

Barr’s living expenses. The Court received no probative, 

credible evidence as to what happened to the remainder of the 

Inheritance and the Court declines Zenaida Barr’s invitation to 

infer that Ms. Ogilvie wasted it.

Given that Plaintiff has failed to prove the existence of 

an express trust or that fraud or defalcation by a fiduciary 

occurred, she cannot prevail on her claim under section 

523(a)(4).

Section 523(a)(6) – willful and malicious injury

Section 523 excepts from discharge debts incurred as a 

result of willful and malicious injury by the debtor to another 

entity or to another entity’s property. 11 U.S.C. § 523(a)(6). 

In order to prevail, a creditor must prove by a preponderance 

of the evidence the existence of a “deliberate or intentional 

injury, not merely a deliberate or intentional act that leads 

to injury.” Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998); 

Peklar v. Ikerd (In re Peklar), 260 F.3d 1035, 1038 (9th Cir. 

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2001) (same); Molina v. Seror (In re Molina), 228 B.R. 248, 251 

(B.A.P. 9th Cir. 1998) (setting forth burden of proof).

Here again, the Court received no evidence that suggested, 

let alone proved, that Ms. Ogilvie willfully or maliciously 

inflicted injury upon Regina or Zenaida Barr by falsely 

promising to hold the Inheritance or by wasting it. As 

previously explained, the record reflects no false promise and 

is silent as to what happened to most of the Inheritance, other 

than establishing that at least one third of it went toward 

Regina and/or Zenaida Barr’s living expenses. Without a 

willful and malicious act that caused injury to Zenaida Barr, 

she cannot prevail on her claim under section 523(a)(6).

Conclusion

Plaintiff Zenaida Barr has not succeeded in proving all 

required elements of her claims under sections 523(a)(2)(A), 

(a)(4) or (a)(6) of the Bankruptcy Code. Accordingly, the 

Court shall enter judgment in favor of the Defendant on all 

counts.

**END OF ORDER**

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Court Service List

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