N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
In re : B R A NTLEY JUSTIN GAR

R ETT; ER IN EILEEN GAR

R ETT, De btors,

------------------------------ JAM ES DAILY; KATHAR INE DAILY, Appe lla nts,
v. B R ANTLEY JUSTIN GAR

R ETT, Appe lle e . No. 18-60056 B AP No. 16-1265
M EM O R ANDUM *

Appe a l from

the Ninth C irc uit B ankruptc y

Appe lla te Pane l Hursh, Kurtz , a

nd B rand, B a

nkruptc y Judge s, Pre siding Subm itte d Fe brua

ry 11, 2020 * * San Fran c isc o , C a lifornia 

# FIL ED
APR 6 2020 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The pa

ne l una nim ously c onc lude s this c a se is suita ble for de c ision without ora l a

rgum e nt. Se e Fe d. R . App. P. 34(a )(2).B e fore : R

AW LINSON a

n d C ALLAHAN, C irc uit Judge s, a nd B OLTON, *** Distric t Judge
. Appe lla nts Ja m e s a nd Ka tha rine Da i ly (the Da ily s) a

ppe a l the de c ision of the B ankruptc y

Appe l late Pane l a ffirm ing the ba nkruptc y c ourt’ s de nia l of the ir c la im for e x c e ption to discha

rge unde r 11 U.S.C
. § 523(a )(2)(A) for de b t inc urre d by Appe l le e B rantle y

Justin Ga rre tt (Ga rre tt). The Da ily s a lle ge d tha t the de bt wa s non-disc ha

rge a ble be c a use Ga rre tt fra udule ntly induc e d the m

to e nte r into a
c onstruc tion a g re e m e nt for the ir re s ide nc e . The ba nkruptc y c o urt did not a

b use its disc re tion by

e xc luding e vide nc e of Garre tt’ s c onduc t oc c urring a fte r the c onstruc tion a gre e m e nt wa s signe d. The Da ily s’ c ounse l c onfirm e d during theba nkruptc y he aring tha

t the Da ily s’ c la im
wa s lim ite d to fra

udule nt induc e m e nt, whic h m ay not be prove d ba se d on e ve nts subse q ue nt to c ontra c t form at ion. S e e Ty re ll v . Bank

of Am. (In re

Ty re ll) , 528 B .R . 790, 796 (B ankr. D. Ha w. 2015) (e xpla i ning tha

t “ [t] h e princ iple s on whic h the p artie s re ly

— m ista k e an d fra udule nt induc e m e nt— only a pply to c ontra c t form ation” ) (footnote re fe re nc e om itte d); se e also Duffens v . Vale nti , 161 C a l. App. 4th 434, 449 (2008) (de line a ting tha t “ [f] ra ud in theinduc e m e nt . . . oc c urs whe n the prom isor knows wha t he is signing but his c onse nt is induc e d by fra ud” )

* * * The Honora

ble Susa n R . B olton, Unite d State s Distric t Judge for the Distric t of Ariz ona , sitting by de signa tion. 2(c ita

tion a nd inte rna l quota

tion m arks om itte d); C

ote v . Al V., Inc . (In reC

ote ) , B AP No. NC –14–1025–Ta Pa Ju, 2015 WL 4550137, a t *7 (B .A.P. 9th C i r. 2015) (opining tha

t in a fra u dule nt induc e m e nt c a se , “ a finding of fra ud wa s a p p ropriate only if [the de b tor] kne w tha

t he c ould not pa

y [the c re ditor] a s re quire d unde r the C onstruc tion C ontra c t at its form at ion” ); FO– Farme r’s Outle t, Inc . v . Danie ll ( In
reDanie ll

), B AP No. EC –12–1506–Pa JuKi, 2013 W

L 5933657, a

t *6-*7 (B .A.P. 9th C ir. 2013) (c onc l uding tha t c onduc t oc c urring a fte r c o ntra c t form ation wa s not
re le va nt to fra udule nt induc e m e nt c l a im ). 1 The ba nkruptc y c o urt c orre c tly

he ld tha t the Da ily s fa ile d to de m onstra te fraudule nt induc e m e nt. M r. Da ily a c knowle dge d in his de

position tha

t the fraudule nt induc e m e nt c la im wa s lim i te d to Ga rre tt’ s re pre se ntat ions tha t he ha d worke rs’ c om

pe nsation a

nd ge ne ra l lia

bility insura nc e . Howe ve r, M r. Da ily did not disc uss lia

bility or worke rs’ c om

pe nsat ion insura

nc e with Ga

rre tt prior to
e nte ring into the c onstruc tion a gre e m e nt, a nd the ba nkruptc y c ourt wa s unpe rsua de d by

M rs. Da ily ’ s “ e va sive ” te stim ony c onc e rning c onve rsations with Garre tt a bout insura

nc e re quire m e nts. Additiona lly , the Da ily s fa ile d

to

1 The Da ily s’ re lia

nc e on Husk

y Int’l Ele c ., Inc . v . Ritz , 136 S. C t. 1581 (2016) is mispla c e d. Adm itte dly the Supre m e C ourt he ld tha t “ a fa lse re pre se ntation ha s ne v e r be e n a re quire d e le m e nt of a c tua l fra ud,” id. at 1588 (inte rna l quota

t ion m a rks om itte d). Howe ve r, this la ngua ge is of no im

port in e va luating theDa ily s’ c la i m lim ite d to fra

udule nt induc e m e nt. 3suffic i e ntly

re but Ga rre tt’ s te stim o ny

tha t he posse sse d ge ne ra l lia bility insura nc e
and wa s not re quire d to obta i n worke rs’ c om pe nsation insura

n c e at the tim e the
a gre e m e nt wa s signe d. AFFIRM E D.

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