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UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NC-11-1653-MkHPa

 )

WILEHARDA KILIAN MBUNDA, ) Bk. No. 10-34095

 )

Debtor. ) Adv. No. 10-03267

_______________________________)

 )

THOMAS VAN ZANDT, Executor for )

the Estate of Evaline Jeanne )

Malis, )

 )

Appellant, )

 )

v. ) OPINION

 )

WILEHARDA KILIAN MBUNDA, )

 )

Appellee. )

_______________________________)

Argued and Submitted on October 18, 2012

at San Francisco, California

Filed – December 14, 2012 ______________

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable Dennis Montali, Bankruptcy Judge, Presiding 

Appearances: Appellant Thomas Van Zandt, Esq. argued on his own

behalf as executor for the estate of Evaline Jeanne Malis; and

Stephen D. Finestone, Esq. argued for Appellee Wileharda Kilian

Mbunda. 

Before: MARKELL, HOLLOWELL, and PAPPAS, Bankruptcy Judges.

FILED

DEC 14 2012

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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1Because some of the key players in this appeal share the

same surname, we refer to them by their first name for ease of

reference. No disrespect is intended.

2Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all “Rule” references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037. All “Civil Rule” references are to

the Federal Rules of Civil Procedure. All “Evidence Rule”

references are to the Federal Rules of Evidence.

2

MARKELL, Bankruptcy Judge:

INTRODUCTION

Appellant Thomas Van Zandt (“Thomas”), as executor for the

estate of Evaline Jeanne Malis (“Malis”),1 sued debtor Wileharda

Kilian Mbunda (“Mbunda”) seeking to declare that a debt Mbunda

owed to Malis’s probate estate was nondischargeable. The

bankruptcy court initially dismissed without leave to amend all

but one of Thomas’s claims for relief. At trial, the court

granted Mbunda’s motion for a judgment on partial findings at the

close of Thomas’s case, and entered judgment in favor of Mbunda. 

We AFFIRM.

FACTS

Mbunda filed her chapter 72 bankruptcy case in October 2010. 

In her schedules, Mbunda listed a debt to Malis in the amount of

$165,000 (“Debt”). According to Mbunda’s schedules, the Debt

arose from business loans made by Malis to Mbunda in September

and November 2005. These loans were made to Mbunda as the sole

proprietor of an art and jewelry store known as the Twiga

Gallery. 

Thomas filed his nondischargeability complaint against
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The complaint repeatedly refers to the Debt as a loan, and

repeatedly refers to the security allegedly promised for the

loan. In two places, however, the complaint refers to the

underlying transaction as something other than a loan secured by

real and personal property security. First, it alleged that

Mbunda induced Malis “to invest” in the Twiga Gallery. Complaint

(Dec. 14, 2010) at ¶ 6. Second, it states that Mbunda told Malis

(continued...)

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Mbunda in December 2010. Thomas alleged that the Debt was

nondischargeable under § 523(a)(2)(A), (4) and (6). Consistent

with Mbunda’s bankruptcy schedules, the complaint referred to the

transactions from which the Debt arose as a $100,000 loan from

Malis to Mbunda in September 2005 and a second $100,000 loan from

Malis to Mbunda in November 2005. According to the complaint,

Malis refinanced her home in order to loan the $200,000 to

Mbunda. 

In pertinent part, Thomas also alleged that Mbunda made the

following misrepresentations in order to induce Malis to loan

Mbunda the $200,000:

1. Mbunda would use the loan proceeds to purchase artistic

materials for the art gallery, “including antique beads

and quantities of gold, ivory and precious and semiprecious gemstones” (collectively, “Raw Materials”).

2. Malis would have a security interest in the Raw

Materials and in other real and personal property

Mbunda owned.

3. Malis also would have a security interest in the Twiga

Gallery (collectively with the Raw Materials and the

other real and personal property allegedly promised as

security, the “Collateral”).3
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3(...continued)

that the Debt would be “secured by an ownership interest” in the

Twiga Gallery. Complaint (Dec. 14, 2010) at ¶ 8. Thomas

referred to these two allegations when trying to establish that

the loan was really some other form of transaction, such as a

partnership, in order to state a claim under § 523(a)(4). We

address this argument later in this opinion.

4

Thomas had originally attempted to state a claim under

§ 523(a)(4) for, among other things, embezzlement and larceny. 

These were among the claims initially dismissed. Thomas has not

challenged the dismissal of his § 523(a)(4) action alleging these

acts. As a result, he has waived any argument relating to those

theories. See Brownfield v. City of Yakima, 612 F.3d 1140, 1149

(continued...)

4

4. Mbunda would execute transaction documentation

memorializing the Debt and Malis’s security interest in

the Collateral.

5. Mbunda would make monthly payments sufficient to cover

the increased amount of Malis’s monthly mortgage

payments resulting from Malis’s home refinancing.

Mbunda moved to dismiss Thomas’s complaint. In response,

the bankruptcy court dismissed without leave to amend Thomas’s

§ 523(a)(4) claim to the extent it did not deal with larceny, as

well as his § 523(a)(6) claim. The bankruptcy court granted

Thomas leave to amend his § 523(a)(2)(A) claim and that portion

of his § 523(a)(4) claim alleging that the Debt was a debt

arising from larceny. 

Thomas filed an amended complaint. Mbunda again filed a

motion to dismiss. The bankruptcy court granted Mbunda’s motion

in part, dismissing Thomas’s remaining § 523(a)(4) claim without

leave to amend. It then set the sole remaining claim under

§ 523(a)(2)(A) for trial.4
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4

(...continued)

n.4 (9th Cir. 2010); Golden v. Chicago Title Ins. Co. (In re

Choo), 273 B.R. 608, 613 (9th Cir. BAP 2002).

5Rule 7052 makes Civil Rule 52(c) applicable in adversary

proceedings. Civil Rule 52(c) provides in relevant part:

Judgment on Partial Findings. If a party has been fully

heard on an issue during a nonjury trial and the court

finds against the party on that issue, the court may

enter judgment against the party on a claim or defense

that, under the controlling law, can be maintained or

defeated only with a favorable finding on that issue.

6

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C.

§ 158.

5

On November 2, 2011, the trial on Thomas’s § 523(a)(2)(A)

claim commenced. After Thomas presented his case in chief,

Mbunda moved under Civil Rule 52(c)5

 for a judgment on partial

findings. The bankruptcy court granted that motion and, on

November 10, 2011, entered a final judgment in Mbunda’s favor. 

Thomas timely filed a notice of appeal on November 15, 2011.6

DISCUSSION

During the course of the adversary proceeding, the

bankruptcy court ruled against Thomas on each of his three claims

for relief. We address each claim for relief in turn.

1. Section 523(a)(2)(A).

Section 523(a)(2)(A) excepts from discharge debts incurred

under false pretenses, based on false representations, or based

on actual fraud. In particular, to establish fraud under

§ 523(a)(2)(A), the creditor must prove each of the following

five elements by a preponderance of the evidence: 

(1) the debtor made a representation; 
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(2) the debtor knew the representation was false at the

time he or she made it; 

(3) the debtor made the representation with the intent

to deceive; 

(4) the creditor justifiably relied on the

representation; and 

(5) the creditor sustained damage as a proximate result

of the misrepresentation having been made. 

Ghomeshi v. Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir.

2010). When, as here, the bankruptcy court has resolved the

matter under Civil Rule 52(c), we review the “‘court’s findings

of fact for clear error and its legal conclusions de

novo.’ . . . . The same standard applies to the district court’s

involuntary dismissal of a claim under [Civil] Rule 52(c).’” Lee

v. W. Coast Life Ins. Co., 688 F.3d 1004, 1009 (9th Cir. 2012)

(quoting Price v. U.S. Navy, 39 F.3d 1011, 1021 (9th Cir. 1994)). 

When deciding a motion under Civil Rule 52(c), as incorporated by

Rule 7052, the bankruptcy court is “‘not required to draw any

inferences in favor of the non-moving party; rather, the district

court may make findings in accordance with its own view of the

evidence.’” Id. (quoting Ritchie v. United States, 451 F.3d 1019,

1023 (9th Cir. 2006)). Accordingly, we review Thomas’s

contentions that the bankruptcy court did not correctly find an

absence of essential elements of the fraud claim under the

clearly erroneous standard. See Candland v. Ins. Co. of N. Am.

(In re Candland), 90 F.3d 1466, 1469 (9th Cir. 1996); Am. Express

Travel Related Servs. Co. v. Vee Vinhnee (In re Vee Vinhnee), 336

B.R. 437, 443 (9th Cir. BAP 2005) (citing Anastas v. Am. Sav.
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Bank (In re Anastas), 94 F.3d 1280, 1283 (9th Cir. 1996)).

Here, in support of its Civil Rule 52(c) ruling, the

bankruptcy court determined that there was no admissible evidence

from which it could find that Thomas had proved the first or

second elements of his § 523(a)(2)(A) claim: that Mbunda had made

any knowingly false representations. In particular, the court

found that Thomas presented no admissible evidence that Mbunda

had made any affirmative misrepresentations regarding: the

provision of security or collateral for the Debt; the execution

of particular documentation for the Debt; or the timing or amount

of monthly payments on the Debt.

While the bankruptcy court acknowledged that Mbunda had 

testified that she had told Malis of her need to repay certain

debts around the time of the original transaction, the court

found that what Mbunda generally told Malis did not amount to a

representation that the loan proceeds would be used only to pay

those debts. Furthermore, the court also found that what Mbunda

generally told Malis was consistent with Mbunda’s actual use of

the proceeds. According to the court, Mbunda’s uncontradicted

testimony reflected that she used most of the proceeds to pay her

debts, including those she owed to her landlord and to certain

consignors of goods.

The bankruptcy court further found that Mbunda’s promise to

repay the Debt was not false when made. It instead found that

Mbunda intended to repay the loan at the time she borrowed the

$200,000 from Malis. In support of this finding, the court

relied on the exhibits, offered by Thomas and admitted into

evidence, reflecting that Mbunda had made payments on the Debt of
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at least $40,000, and perhaps as much as $50,000. According to

the court, these payments “completely undermined” any notion that

Mbunda did not intend to repay the Debt at the time she incurred

it. This finding was not clearly erroneous, as it is not

illogical, implausible, or without support in the record. United

States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009)(en banc). 

Perhaps because of the high standard of review, Thomas did

not argue in his opening brief that the bankruptcy court’s

findings were clearly erroneous. Instead, he argued that the

bankruptcy court committed reversible error by excluding certain

evidence. Of the evidence the bankruptcy court excluded, the

most significant is Thomas’s testimony regarding what Malis

supposedly told him about the Debt before she passed away. 

This is also a difficult argument for any appellant, as we

review a bankruptcy court’s evidentiary rulings for abuse of

discretion, and then only reverse if any error would have been

prejudicial to the appellant. See Johnson v. Neilson (In re

Slatkin), 525 F.3d 805, 811 (9th Cir. 2008) (citing Latman v.

Burdette, 366 F.3d 774, 786 (9th Cir. 2004)). “We afford broad

discretion to a district court’s evidentiary rulings. To reverse

such a ruling, we must find that the district court abused its

discretion and that the error was prejudicial. A reviewing court

should find prejudice only if it concludes that, more probably

than not, the lower court’s error tainted the verdict.” Harper

v. City of Los Angeles, 533 F.3d 1010, 1030 (9th Cir. 2008)

(citations and internal quotation marks omitted); see also S.E.C.

v. Jasper, 678 F.3d 1116, 1122 (9th Cir 2012) (stating that a

trial court’s evidentiary rulings should not be disturbed absent
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a “clear abuse of discretion” and prejudice).

Here, the record makes clear the content of Thomas’s

proposed testimony. We have the record of Thomas’s arguments

made at trial, his offers of proof, and a declaration that he

filed in support of his opposition to Mbunda’s motion in limine

to exclude such evidence. These portions of the record reflect

that, according to Thomas, Malis told him in 2009 and 2010 that

Mbunda had made the following representations regarding the Debt:

1. that “the loan was an investment”;

2. that the loan would be used to purchase “valuable art

items including antique beads, gold and silver, ivory,

and gems . . .”;

3. that the Raw Materials purchased with the loan proceeds

would be used to produce art works that would be sold

at a profit;

4. that, if Mbunda could not produce or sell such art

works, she would resell the Raw Materials purchased to

repay the loan;

5. that Mbunda would make monthly payments large enough to

pay off the Debt within five years;

6. that, as an investor, Malis would receive a percentage

of the profits from the sale of the artworks;

7. that Mbunda and Malis were partners;

8. that Mbunda had many valuable things she could sell to

repay the Debt; and

9. that Mbunda would execute documentation memorializing

all that they had agreed to.

See Plaintiff’s Decl. (Oct. 31, 2011) at pp. 2-3.
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The bankruptcy court ruled that Thomas’s proposed testimony

was inadmissible hearsay. See Evidence Rules 801, 802. Thomas

first challenges the bankruptcy court’s characterization of the

proposed testimony as hearsay: he argues that Malis’s out-ofcourt statements were not being offered to prove the truth of the

matter asserted. If correct, admission of the statements would

not violate the hearsay rule. Evidence Rule 801(c)(2)

(statements are hearsay only if “a party offers [them] in

evidence to prove the truth of the matter asserted in the

statement.”). According to Thomas, he offered the statements to

establish that Malis thought she had security, or alternatively

thought she was in a partnership with Mbunda. Once Malis’s

mental state was established, Thomas would then be able to argue

that the court could infer that representations by Mbunda – about

the collateral and the existence of something other than a loan –

had caused Malis’s state of mind. 

Thomas’s argument, however, confuses and conflates the

proffered testimony. The excluded testimony contained two levels

of out-of-court statements: (1) what Mbunda told Malis, and (2)

what Malis told Thomas. Had Malis been available to testify at

trial as to what Mbunda had told her, the first level statements

– what Mbunda supposedly told Malis – could have been admitted

either because they would have been the admission of a party

opponent, Evidence Rule 801(d)(2), or they could have been

testimony not about the truth of Mbunda’s statements, but about

the terms of the contract between them. 5-801 Weinstein’s Federal

Evidence § 801.11[3] (2012) (“the rule against hearsay does not

exclude relevant evidence as to what the contracting parties said
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or wrote with respect to the making or the terms of an

agreement.”); see also United States v. Montana, 199 F.3d 947,

950 (7th Cir. 1999).

But Malis was deceased. Thomas was thus blocked at the

second level in attempting to admit what Malis had told him about

what Mbunda had told Malis. As a result, Thomas attempted to

testify regarding what Malis had told him in 2009 and 2010 about

what Mbunda had told Malis about a transaction that occurred back

in 2005. 

This convoluted argument shows that Thomas was not trying to

establish Malis’s mental state. He was attempting to offer

Malis’s statements to prove the truth of what Malis allegedly had

told him about her discussions with Mbunda. As such, Thomas’s

statements were inadmissible hearsay, Evidence Rule 801, 802,

805, and their exclusion was not an abuse of discretion. In re

Slatkin, 525 F.3d at 811. 

Anticipating that he would not prevail on his hearsay

characterization argument, Thomas next argues that Malis’s

statements were excepted from the rule against hearsay by

Evidence Rule 803(3). That rule excepts from the hearsay rule

“statement[s] of memory or belief to prove the fact remembered or

believed” if those statements relate “to the validity or terms of

the declarant’s will.” Evidence Rule 803(3). According to

Thomas, Malis initially shared with him some of her memories

regarding the Debt in the midst of a discussion regarding whether

she needed a will.

But Thomas’s reading of this exception to the hearsay rule

is overbroad. The Advisory Committee Notes accompanying this
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rule make clear that this exception is limited to statements

concerning “the execution, revocation, identification, or terms

of declarant’s will.” Evidence Rule 803, Advisory Committee Note

to para. 3 (citing Annotation: Admissibility of testator’s

declarations upon issue of genuineness or due execution of

purported will, 62 A.L.R.2d 855 (1958)). Malis’s supposed

memories about her discussions with Mbunda regarding the Debt

simply are beyond the scope of this exception. As one treatise

explains:

The “exception” for wills cases is created by special

language in the state-of-mind exception creating an

exception to the limit that otherwise applies, and

“backing in” to a new hearsay exception of such breadth

seems out of proportion to the language chosen.

Pre-Rules state cases did not allow such broad use of

the exception, which reinforces the proposition that

the minimal approach taken in the language of the Fed.

R. Evid. 803(3) did not completely change practice by

opening the door broadly to statements proving behavior

by others.

Christopher B. Mueller and Laird C. Kirkpatrick, 4 FED. EVID.

§ 8:74 (3d ed. 2012). Again, the bankruptcy court’s refusal to

allow these statements into evidence was not an abuse of

discretion as it was a straightforward and correct application of

Evidence Rule 803(3). Slatkin, 525 F.3d at 811.

Thomas next argues that the bankruptcy court should have

applied Evidence Rule 807(a)’s “residual exception” to admit his

statements. Again, this is a difficult argument on appeal; a

trial court’s decision that evidence did not meet the

requirements of Evidence Rule 807 is reviewed under the abuse of

discretion standard. United States v. Shryock, 342 F.3d 948, 982

(9th Cir. 2003). Indeed the Ninth Circuit has recently noted

that: 
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Our research has disclosed only one instance where a

circuit court reversed a district court to require

admission of a statement under [Evidence Rule] 807. 

See U.S. v. Sanchez-Lima, 161 F.3d 545, 547-48 (9th

Cir. 1998). However, the hearsay statements in that

case were videotaped and under oath, and thus had

indicators of trustworthiness that Anderson’s

statements do not.

United States v. Bonds, 608 F.3d 495, 501 (9th Cir. 2010).

Thomas nevertheless contends that the bankruptcy court ruled

that the residual exception was inapplicable because Thomas’s

hearsay testimony failed to qualify for any of the specifically

listed hearsay exceptions. But that argument mischaracterizes

the import and meaning of the bankruptcy court’s ruling. A fair

reading of the entire record persuades us that the bankruptcy

court declined to apply the residual exception because it

concluded that Malis’s out-of-court statements regarding the Debt

did not satisfy the rule’s requirements. In particular, in order

to apply the residual exception, the bankruptcy court would have

needed to determine, among other things, that the offered

statements had “circumstantial guarantees of trustworthiness”

equivalent to those associated with the hearsay exceptions set

forth in Evidence Rules 803 and 804. See, e.g., United States v.

Leal-Del Carmen, 697 F.3d 964, 974 (9th Cir. 2012) (indicia of

trustworthiness included fact that witness’s statement was on

videotape, thus allowing trier of fact to assess demeanor, and

that statements were made under oath).

Here, the record supports the bankruptcy court’s finding

that Malis’s statements lack the required circumstantial

guarantees. The statements were not made under oath nor were

they recorded in any way. There was no showing that Malis was
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It seems quite possible that Malis developed her

understanding of her rights in relation to the Debt after the

Debt was incurred. The record suggests that Malis’s discussions

with Mbunda regarding Mbunda’s financial situation were ongoing

and fluid, rather than static and limited to a single point in

time.

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under any obligation or incentive to tell the truth. 

Indeed, the evidence in the record can be easily read to

show a lack of the required circumstantial guaranties. This

other evidence tended to establish that in 2009-2010, when the

statements allegedly were made, Malis not only was quite elderly

but also was unwell. Thomas’s proposed testimony further

indicated that during this period Malis was no longer able to

fully manage her own financial affairs. Additionally, the

relevant statements from Malis related to circumstances that were

already four years old at the time she spoke with Thomas. 

The lack of detail extended to crucial factual points: it is

impossible to tell from the excluded statements when Malis

thought Mbunda allegedly made the representations. Without

specifics as to time, the statements left open the possibility

that the alleged representations were made after Mbunda incurred

the Debt, calling causation into question, as well as whether

Malis actually relied upon them in making the loans.7

Accordingly, because the bankruptcy court had more than an

adequate basis to find that Malis’s statements did not have the

requisite “circumstantial guarantees of trustworthiness,” it did

not abuse its discretion when it declined to apply the residual

exception to the hearsay rule.

Thomas’s evidentiary ruling challenges do not end there. He
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also sought to offer his own testimony, and that of his son

Patrick Van Zandt (“Patrick”), that Malis did not draft the

promissory note that Thomas had agreed could be admitted in

evidence (“Note”). The relevance of this proffered testimony was

not that the Note failed to correctly state the terms of the

Debt, but that Mbunda had forged it, thus undermining her

credibility.

Thomas relied on Evidence Rule 701 to justify admission of

this testimony, which Thomas stated would have consisted of lay

opinion that Malis would never have drafted something like the

Note. The bankruptcy court expressed two concerns about this

offered testimony. First, the court was concerned that Evidence

Rule 701 would not permit such testimony. The note was

apparently typed, and there was no issue as to Mbunda’s

signature. Second, even if admissible, the court doubted

Thomas’s explanation regarding what this testimony would prove

and why this testimony was relevant.

Like the bankruptcy court, we are also perplexed as to why

Thomas stipulated to the Note’s admission into evidence without

reservation in light of the arguments regarding the Note that he

anticipated making. If the Note were not genuine, it should not

have been admitted into evidence to establish the existence of

the Debt. But setting our perplexity aside, even if we were to

assume that the bankruptcy court incorrectly ruled regarding the

admissibility of Thomas’s and Patrick’s Note-related testimony,

that ruling was, at most, harmless error. Nothing in Thomas’s

account of his and Patrick’s excluded testimony reasonably could

have altered the bankruptcy court’s dispositive finding: that
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Thomas argues that the bankruptcy court should not have

prevented him from: eliciting testimony from Mbunda regarding

certain alleged patterns in her business-related expenditures; 

eliciting testimony from Mbunda regarding how many bank accounts

she has used at various times; and requiring Mbunda to read aloud

the contents of the Note. We do not find that any of these

rulings constitute an abuse of discretion.

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there was no evidence from which the bankruptcy court could

conclude Mbunda made affirmative misrepresentations regarding the

Debt. 

Generally speaking, we ignore harmless error. See Litton

Loan Serv’g, LP v. Garvida (In re Garvida), 347 B.R. 697, 704

(9th Cir. BAP 2006) (citing 28 U.S.C. § 2111, Rule 9005, Civil

Rule 61, and Donald v. Curry (In re Donald), 328 B.R. 192, 203–04

(9th Cir. BAP 2005)). Specifically with respect to erroneous

evidentiary rulings, such rulings do not constitute reversible

error unless it is more likely than not that the rulings changed

the outcome of the lawsuit. See Harper, 533 F.3d at 1030.

Simply put, Thomas’s and Patrick’s Note-related testimony

could not have altered the outcome of the underlying adversary

proceeding even if that testimony had been admitted. The outcome

of the adversary proceeding hinged on the absence of evidence

from which the bankruptcy court, as the trier of fact, could find

that Mbunda made affirmative misrepresentations when she incurred

the Debt. The same is true for the handful of other evidentiary

items that Thomas complains the bankruptcy court should not have

excluded.8

 None of these other items of excluded evidence would

have enabled the court to find that Mbunda made the requisite

misrepresentations necessary to support Thomas’s § 523(a)(2)(A)

claim for relief. 
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2. Section 523(a)(4).

Thomas also challenges the bankruptcy court’s dismissal of

his § 523(a)(4) claim without leave to amend. Dismissals under

Civil Rule 12(b)(6) are reviewed de novo. See AlohaCare v. Haw.,

Dept. of Human Servs., 572 F.3d 740, 744 n.2 (9th Cir. 2009). 

Under that standard, “‘[d]ismissal without leave to amend is

improper, unless it is clear, upon de novo review, that the

complaint could not be saved by any amendment.’” Intri-Plex

Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048, 1056 (9th Cir.

2007) (quoting In re Daou Sys., Inc., Sec. Litig., 411 F.3d 1006,

1013 (9th Cir. 2005)).

In pertinent part, § 523(a)(4) excepts from discharge debts

incurred for “for fraud or defalcation while acting in a

fiduciary capacity.” § 523(a)(4). The term “fiduciary” is

narrowly defined for purposes of § 523(a)(4). Honkanen v. Hopper

(In re Honkanen), 446 B.R. 373, 378 (9th Cir. BAP 2011) (citing

Cal–Micro, Inc. v. Cantrell (In re Cantrell), 329 F.3d 1119, 1125

(9th Cir. 2003)). In order for there to be nondischargeability 

under § 523(a)(4), the debtor’s fiduciary capacity “must be

arising from an express or technical trust that was imposed

before, and without reference to, the wrongdoing that caused the

debt . . . .” In re Cantrell, 329 F.3d at 1125 (quoting Lewis v.

Scott (In re Lewis), 97 F.3d 1182, 1185 (9th Cir. 1996)). A

trust “ex maleficio” – that is, a trust imposed by law as a

remedy for malfeasance or wrongful actions – will not suffice. 

In re Honkanen, 446 B.R. at 379. Moreover, “[t]he broad, general

definition of fiduciary - a relationship involving confidence,

trust and good faith - is inapplicable in the dischargeability
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9In this regard, Thomas argued on appeal: 

While it appears clear from the record that the Court

below was aware that Appellant believed that there were

sufficient factual allegations that he could make that

would support the existence of a partnership and hence

a fiduciary duty in order to state a claim under

§ 523(a)(4), the Court below seems to be attempting to

protect Appellant’s interests by dissuading Appellant

from pleading a partnership . . . . 

Aplt. Opn’ng Br. (Feb. 3, 2012) at 11:19-24. As set forth below,

the record actually reveals that Thomas admitted in open court

that he had no other facts to allege regarding the existence of a

partnership. 

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context.” In re Cantrell, 329 F.3d at 1125 (quoting Ragsdale v.

Haller, 780 F.2d 794, 796 (9th Cir. 1986)). 

Despite these uncontested principles, Thomas in essence

claims that the bankruptcy court should have given him the

opportunity to amend his § 523(a)(4) claim to add allegations

regarding the existence of a partnership.9 As Thomas pointed

out, partners in California have the type of fiduciary duty with

respect to partnership assets that § 523(a)(4) covers. See

Ragsdale 780 F.2d at 796-97.

But we are convinced that any amendment to the complaint

attempting to fix the defects in the § 523(a)(4) claim would have

been futile. When amendment would be futile, the bankruptcy

court does not abuse its discretion in dismissing the complaint

without leave to amend. Dougherty v. City of Covina, 654 F.3d

892, 901 (9th Cir. 2011); Albrecht v. Lund, 845 F2d 193, 195 (9th

Cir. 1988). Amendment is futile when “‘allegation of other facts

consistent with the challenged pleading could not possibly cure

the deficiency.’” Id. (quoting Schreiber Distrib. Co. v.
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Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).

Thomas admitted at the hearing on Mbunda’s first motion to

dismiss that he had no other facts to allege regarding the

existence of a partnership:

THE COURT: You’ve simply pled the statute [§ 523(a)(4)].

You haven’t — what fact on page 3 of the complaint have

you done — established anything that might fit this

fiduciary preexisting partnership relationship?

MR. VAN ZANDT: Well, but the partnership perhaps, if —

if there is one, was established at that time —

THE COURT: I just asked where you’ve mentioned it in 

the paper. Thats all.

MR. VAN ZANDT: Oh, I don’t — I do not mention that 

there's a partnership, because I have no information

that a partnership was formed, other than the facts of

what happened.

THE COURT: You haven’t even mentioned that a

partnership was intended.

MR. VAN ZANDT: I don’t know that one was.

Hr’g Trans. (Feb. 25, 2011) at 18:3-16.

Nor has Thomas identified on appeal any additional facts he

was prepared to allege to shore up his partnership claim. See

Dougherty, 654 F.3d at 901 (relying on a similar failure to

identify additional allegations in affirming dismissal without

leave to amend). A complaint must contain more than “a formulaic

recitation of the elements of a cause of action.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007). It must contain

“enough facts to state a claim to relief that is plausible on its

face.” Id. at 570 (emphasis added). The facts alleged must nudge

the plaintiff’s claims “across the line from conceivable to

plausible.” Id. Thomas, by his own admission, could not do that

here. Accordingly, the bankruptcy court did not err in
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dismissing the § 523(a)(4) claim without leave to amend. 

3. Section 523(a)(6).

Thomas also challenges the bankruptcy court’s dismissal of

his § 523(a)(6) claim without leave to amend. Section 523(a)(6)

excepts from discharge debts arising from willful and malicious

injury. Ormsby v. First Am. Title Co. of Nev. (In re Ormsby),

591 F.3d 1199, 1206 (9th Cir. 2010). In prosecuting its case, a 

creditor must separately plead and prove both willfulness and

maliciousness. Albarran v. New Form. Inc. (In re Barboza), 545

F.3d 702, 706 (9th Cir. 2008). When, as here, the bankruptcy

court dismissed the claim without leave to amend, the standard of

review is the same as for similar dismissals under § 523(a)(4): 

“‘[d]ismissal without leave to amend is improper, unless it is

clear, upon de novo review, that the complaint could not be saved

by any amendment.’” Intri-Plex Techs., 499 F.3d at 1056 (quoting

In re Daou Sys., 411 F.3d at 1013).

As to the individual elements of a § 523(a)(6) claim, “[a]

‘willful’ injury is a ‘deliberate or intentional injury, not

merely a deliberate or intentional act that leads to injury.’” In

re Barboza, 545 F.3d at 706 (quoting Kawaauhau v. Geiger, 523

U.S. 57, 61 (1998)) (emphasis in original). In order to

establish a willful injury, a creditor must plead and prove that

the debtor had a “subjective motive to inflict injury” or a

subjective belief that injury was “substantially certain to

result” from the debtor’s conduct. In re Ormsby, 591 F.3d at

1206 (citing Carrillo v. Su (In re Su), 290 F.3d 1140, 1142 (9th

Cir. 2002)).

As an aid to determining the debtor’s motives, cases under
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§ 523(a)(6) presume the debtor knows the natural consequences of

his or her actions. In re Ormsby, 591 F.3d at 1206; see also In

re Su, 290 F.3d at 1146 n.6 (“In addition to what a debtor may

admit to knowing, the bankruptcy court may consider

circumstantial evidence that tends to establish what the debtor

must have actually known when taking the injury-producing

action.”).

With respect to the second element, malicious injury, “‘[a]

malicious injury involves (1) a wrongful act, (2) done

intentionally, (3) which necessarily causes injury, and (4) is

done without just cause or excuse.’” Ormsby, 591 F.3d at 1207

(quoting Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1209

(9th Cir. 2001)).

Thomas argues that he meets both the malicious and wilful

elements of a 523(a)(6) claim for relief because he adequately

pled (or could have adequately pled) a claim for elder abuse

under Cal. Welfare & Insts. Code § 15610.30 (“W&I § 15610.30”). 

He contends that a well-pled claim under W&I § 15610.30 is coextensive with a willful and malicious injury under § 523(a)(6). 

In other words, according to Thomas, if he pled (or could have

pled) the elements for elder abuse under W&I § 15610.30, he

necessarily would have pled (or could have pled) the elements for

a nondischargeable debt under § 523(a)(6). 

This is simply wrong. W&I § 15610.30 in relevant part

provides that a person or entity commits financial abuse of an

elder or dependent adult when they do any of the following:

(1) Takes, secretes, appropriates, obtains, or retains

real or personal property of an elder or dependent
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10Cal. Civ. Code § 1575 provides that taking or obtaining of

an unfair advantage is an essential component of undue influence. 

As set forth in full, Cal. Civ. Code § 1575 states as follows:

Undue influence, what. Undue influence consists: 

1. In the use, by one in whom a confidence is reposed

by another, or who holds a real or apparent authority

over him, of such confidence or authority for the

purpose of obtaining an unfair advantage over him;

2. In taking an unfair advantage of another’s weakness

of mind; or,

3. In taking a grossly oppressive and unfair advantage

of another’s necessities or distress.

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adult for a wrongful use or with intent to defraud, or

both.

(2) Assists in taking, secreting, appropriating,

obtaining, or retaining real or personal property of an

elder or dependent adult for a wrongful use or with

intent to defraud, or both.

(3) Takes, secretes, appropriates, obtains, or retains,

or assists in taking, secreting, appropriating,

obtaining, or retaining, real or personal property of

an elder or dependent adult by undue influence, as

defined in Section 1575 of the Civil Code.10

Under the plain language of W&I § 15610.30, a claim for

elder abuse must include: (1) a wrongful use; (2) an undue

influence/unfair advantage; or (3) an intent to defraud. The

first two types of conduct covered – wrongful use and undue

influence/unfair advantage – do not require any motive to injure

or any belief that injury will occur. See Cal. Civ. Code § 1575; 

Stebley v. Litton Loan Serv., LLP, 134 Cal. Rptr. 3d 604, 608

(Cal. App. 2011). 

But a creditor such as Thomas must plead and prove a

“subjective motive to inflict injury” or a subjective belief that
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injury was “substantially certain to result” from the debtor’s

conduct in order to succeed on a § 523(a)(6) claim. In re

Ormsby, 591 F.3d at 1206 (citing In re Su, 290 F.3d at 1142). 

Thus, even were it true that Thomas could have pled a W&I 

§ 15610.30 claim based upon Mbunda’s wrongful use or upon some

undue influence/unfair advantage Mbunda employed against Malis,

Thomas could not have stated a § 523(a)(6) claim because neither

of these types of conduct would have been sufficient to establish

the requisite willfulness. As a consequence, even if Thomas

could establish a claim under those parts of W&I § 15610.30, it

would not necessarily be nondischargeable under § 523(a)(6).

By process of elimination, that only leaves us with the

possibility that Thomas could have pled a W&I § 15610.30 claim

based on an intent to defraud. Thomas, however, was allowed to

proceed to trial on his fraud theories in connection with his

§ 523(a)(2)(A) claim for relief. And he lost; the bankruptcy

court correctly found (as we held above) that Thomas lacked any

factual or evidentiary basis to support his fraud theories. At

no time either on appeal or before the bankruptcy court has

Thomas suggested that he had any facts or evidence in support of

his fraud theories other than what he already stated in his

complaint and at trial. These circumstances inexorably lead us

to two alternate conclusions: (1) allowing Thomas to amend his

§ 523(a)(6) claim would have been futile; or (2) not allowing

Thomas to amend his § 523(a)(6) claim was harmless error. Under
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11The bankruptcy court dismissed Thomas’s § 523(a)(6) claim

on different grounds, but we may affirm on any basis reasonably

found in the record. Caviata Attached Homes, LLC v. U.S. Bank,

N.A., 481 B.R. 34, 44 (9th Cir. BAP 2012).

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either conclusion, Thomas can not prevail.11

4. Due Process

Finally, Thomas argues that the bankruptcy court deprived

him of due process in the course of the trial on his

§ 523(a)(2)(A) claim. We review due process issues de novo. 

Price v. Lehtinen (In re Lehtinen), 564 F.3d 1052, 1058 (9th Cir.

2009).

Thomas’s due process argument is twofold. First, according

to Thomas, the cumulative effect of all of the bankruptcy court’s

adverse evidentiary rulings at trial was to deprive him of a

meaningful opportunity to be heard. Second, Thomas complains

that the court rushed through the scheduled one-day trial simply

for the purpose of completing the trial as scheduled, which also

deprived him of a meaningful opportunity to be heard.

An appellant, however, must show prejudice to support a due

process claim. See Rosson v. Fitzgerald (In re Rosson), 545 F.3d

764, 776 (9th Cir. 2008). Here, Thomas has not shown any. To

the contrary, the merits analysis set forth above demonstrates

that Thomas lost not because of any due process violations; he

lost because he was unable to offer admissible evidence to

establish his claim. There was no cumulative effect of adverse

rulings because, as we set forth above, there were no incorrect

evidentiary rulings. And no amount of additional time could fix

that problem. In short, the absence of any prejudice shows no
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abuse of discretion, and thus is fatal to Thomas’s due process

claim.

CONCLUSION

For all of the reasons set forth above, we AFFIRM the

bankruptcy court’s judgment in favor Mbunda on Thomas’s

nondischargeability complaint.