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FILED

APR 12 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NC-15-1251-BSKu

)

SATYA DEVI JAGAR, ) Bk. No. 4:13-bk-46850-CN

)

Debtor. ) Adv. No. 4:14-ap-04037-CN

 )

)

EUGENE SCHNEIDER, )

)

Appellant, )

)

v. ) M E M O R A N D U M1

)

SATYA DEVI JAGAR, )

)

Appellee. )

______________________________)

Argued and Submitted on January 19, 2017,

at San Francisco, California

Filed - April 12, 2017

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable Charles Novack, Bankruptcy Judge, Presiding

 

Appearances: Appellant Eugene Schneider argued pro se; Raymond

R. Miller of the Mission Law Center argued for

appellee Satya Devi Jagar.

 

Before: BRAND, SPRAKER2 and KURTZ, Bankruptcy Judges.

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have, it has no precedential value. See 9th Cir. BAP Rule 8024-1.

2 Hon. Gary A. Spraker, Chief Bankruptcy Judge for the

District of Alaska, sitting by designation.
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Creditor Eugene Schneider appeals a judgment entered in favor

of chapter 73 debtor, Satya Devi Jagar, respecting Schneider’s

claims that an alleged debt for prepetition legal fees should be

excepted from discharge under § 523(a)(2)(A) and that Jagar’s

discharge should be denied under § 727(a)(4)(A) and (a)(5). We

AFFIRM.4

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Prepetition events

1. The probate action

Schneider, who is 85 and has been practicing law in

California since 1969, was Jagar’s attorney in a probate

proceeding for her late husband’s estate. Jagar does not speak or

read English; her native language is Punjabi. She also is not

well educated and has never worked outside of the home.

Jagar married her husband in India; they later moved to the

United States. Jagar’s husband passed away just before Jagar gave

birth to their daughter. Jagar’s husband had a substantial 401(k)

plan with his employer and other assets, but his sons from a prior

3 Unless specified otherwise, all chapter, code and rule

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

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The

Federal Rules of Civil Procedure are referred to as “Civil Rules.”

4 Schneider did not include any of his trial exhibits in his

excerpts of record other than Jagar’s bankruptcy petition (Exhibit

10). A few of Schneider’s exhibits were attached to Jagar’s trial

brief, which Schneider also did not include. Attached to Jagar’s

trial brief are the three retainer agreements at issue (Exhibits

1, 2 and 3) and a copy of the check to Jagar from Schneider’s

trust account for $32,784.76 (Exhibit 7). We exercise our

discretion to take judicial notice of the bankruptcy court’s

electronic docket and these missing documents. See O’Rourke v.

Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957-58

(9th Cir. 1988); Atwood v. Chase Manhattan Mortg. Co. (In re

Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

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marriage contested the validity of Jagar’s marriage to their

father, which caused years of litigation and expense for Jagar.

Schneider represented Jagar in the probate matters for five

years, beginning in 2005. They executed three agreements over the

course of the representation, all of which were written in

English. In the 2005 Representation Agreement signed by Jagar,

Jagar agreed that if she was not appointed as the personal

representative of her late husband’s estate she would pay

Schneider his hourly billing rate of $300. Jagar was never

appointed as the personal representative. Schneider testified

that he did not discuss the 2005 Representation Agreement with

Jagar and did not know if she understood its terms.

The 2007 Representation Agreement, which was initially mailed

to Jagar for her signature, indicated that the probate action and

dispute about Jagar’s status as the wife of her late husband was

unresolved and going to trial. Schneider was also trying to get

the administrator of Jagar’s late husband’s 401(k) plan to

recognize Jagar as his widow and turn over its proceeds to her. 

Jagar stood to receive approximately $600,000 from her late

husband’s estate. In closing, the 2007 Representation Agreement

discussed the terms of payment for Schneider’s services:

Last, as you know, our agreement required that I be paid

on a monthly basis. I was told you are unable to pay me

and my compensation must come out of whatever you

receive as a result of the litigation. This is a change

in our agreement. I am prepared to accept this change

in our contract and to continue representing you so long

as the agreement is changed follows [sic]:

I will be paid my hourly rate. In addition I will

receive 7 1/2% of the value of what you receive from any

sources as a result of being established as Pyara’s

widow. In this context the term ‘any sources’ refers to

the estate and any retirement plans Pyara had.

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Upon a final distribution order being entered in the

estate all sums will become due and will be subject to a

one and one-half percent monthly service charge until

paid. . . .

Due to Jagar’s limited understanding of English, Schneider

noted in the 2007 Representation Agreement his assumption that

someone would be translating or explaining its terms to her. If

that were the case, Schneider requested that both Jagar and the

translator sign it. Jagar signed the 2007 Representation

Agreement, as did her brother as “translator,” and returned it to

Schneider. Schneider testified that he never spoke with Jagar

about the 2007 Representation Agreement or its terms either before

or after she signed it.

The 2009 Representation Agreement addressed Schneider’s

representation of Jagar in litigation he filed against the

administrator of her late husband’s 401(k) plan to compel turnover

of the funds to Jagar. The payment arrangement for Schneider’s

fees for this litigation was to be the same as that in the probate

action. Jagar signed the 2009 Representation Agreement, but

Schneider did not request in that agreement that anyone translate

it or that any translator sign it. Schneider testified that he

did not discuss the 2009 Representation Agreement with Jagar, but

assumed that her brother was translating all documents for her.

Neither Schneider nor Jagar testified as to the outcome of

the probate action or other litigation, but Schneider’s

dischargeability complaint stated that Jagar did receive her late

husband’s 401(k) funds of over $450,000 and that she was

ultimately awarded a total of approximately $600,000 from her

husband’s estate. Jagar has not disputed this assertion.

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In or around January 2010 Jagar rolled over $300,000 of her

late husband’s 401(k) plan proceeds to another Individual

Retirement Account (“IRA”). It appears that Jagar may have

received the 401(k) plan proceeds directly. The record reflects

that Schneider received payments on behalf of Jagar from the

probate estate’s administrator of $102,784.76. Schneider retained

$70,000.00 of that amount and sent the balance of $32,784.76 to

Jagar on April 10, 2010.

2. Schneider’s suit for unpaid fees

In March 2013, Schneider filed a collection action in state

court against Jagar for alleged unpaid fees. The collection

action was at the discovery stage when Jagar filed her bankruptcy

case.

B. Postpetition events

1. Jagar’s bankruptcy filing

Jagar, with the assistance of counsel (now deceased), filed a

chapter 7 bankruptcy case on December 31, 2013. Her certificate

of counseling indicated that she received prepetition credit

counseling from Abacus Credit Counseling via the internet on

December 26, 2013. Jagar listed the IRA rollover account in her

Schedule B with a value of $332,824.40, which she claimed exempt. 

She also listed a counter-claim against Schneider for “overpayment

of attorney fees paid to handle probate matter[.]” Besides her

mortgage with Wells Fargo, Schneider is Jagar’s only other

creditor. She listed Schneider in her Schedule F as holding a

“disputed” unsecured claim for “Breach of Contract” for $200,000. 

In her Schedule I, Jagar disclosed her monthly income of $1,700

from social security.

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2. Schneider’s dischargeability complaint

Schneider timely filed a complaint against Jagar objecting to

her discharge under § 727(a)(4)(A) and (a)(5) and seeking a

determination that the debt for unpaid legal fees was excepted

from discharge under § 523(a)(2)(A).

For his § 523 claim, Schneider alleged that Jagar signing and

mailing the 2007 Representation Agreement indicated she agreed to

Schneider’s proposed payment terms, which induced him to provide

legal services to her resulting in an award in excess of $600,000

from her late husband’s estate. However, during the course of

discovery in the collection action, which was three years after

the probate action had ended, Jagar had now taken the position

that she and her brother understood Schneider’s fees to be only

7.5% of the amounts collected, not an hourly rate of $300.00 plus

the 7.5% contingency. Schneider alleged that Jagar knew at the

time she signed the 2007 Representation Agreement that she did not

intend to pay him in accordance with its terms. Schneider alleged

that he had no knowledge of Jagar’s false representation that she

agreed to the contract terms. Schneider alleged that he relied on

Jagar’s false representations to his detriment resulting in

damages of “not less than $135,000.”

For his § 727 claims, Schneider alleged that Jagar made a

false oath or account by failing to fully advise the court with

respect to her income and assets in her bankruptcy papers. He

further alleged that Jagar had failed to explain her deficiency of

assets to meet her monthly expenses.

The parties submitted trial briefs about a week before trial,

but in reviewing the docket it appears that Schneider’s brief was

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never filed. It is unknown whether the bankruptcy court reviewed

his brief, but Schneider has included a copy of it in his excerpts

of record. Schneider set forth what he contended were the

requirements for a constructive fraud claim, a claim for false

pretenses under § 523(a)(2)(A), a claim for actual fraud under

California law and a claim for negligent misrepresentation (which

has no intent element) under both federal and California law. 

Schneider argued that the debt for unpaid legal fees should be

excepted from discharge under § 523(a)(2)(A) because Jagar never

intended to pay him the hourly component of his fees. Schneider

contended that Jagar had also stated in her discovery responses to

the collection action that neither she nor her brother spoke and

communicated in English; Schneider intended to dispute this with

other evidence.

For his § 727(a)(4)(A) claim, Schneider contended that Jagar

failed to disclose several assets in her petition: (1) rental

income; (2) payments to non-attorneys in the one year preceding

her bankruptcy filing to assist her in the collection action;

(3) support she provided to persons other than herself and her

dependents; (4) substantial gifts she received in the two years

preceding her bankruptcy filing; (5) income transferred from her

daughter’s accounts to Jagar’s accounts for payment of Jagar’s

personal expenses; (6) use of her daughter’s social security

benefits to pay obligations other than for her daughter’s food,

clothing and shelter; or (7) the name(s) of those who managed or

assisted Jagar in managing her finances. Schneider did not

articulate any argument for his § 727(a)(5) claim.

///

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3. Trial on Schneider’s complaint

Schneider presented his case in chief on the first day of

what was scheduled to be a two-day trial. Witnesses included

Schneider, Jagar (through an interpreter) and Mrs. Deepo Raj.

When questioned about her discovery responses in the

collection action, Jagar testified that her brother knew “very

little” English. Trial Tr. (July 7, 2015) 22:1-3. Jagar also

testified that her brother could “read a little bit” of English. 

Id. at 59:15. As for Schneider’s payment terms, Jagar testified

that she understood her brother’s explanation of the 2007

Representation Agreement to mean that she would have to pay

Schneider 7.5% of the amount she recovered. Jagar further

testified that any recovery from the probate action was first paid

to Schneider, who then in turn paid Jagar by check in “any amount

that he felt was right, and he would give [her] just one part and

keep two parts for himself.” Id. at 27:10-16. Jagar testified

that Schneider was to receive only $45,000 under their agreement

(which is 7.5% of $600,000, the approximate total Jagar

recovered), but instead he kept $200,000 for himself.

Schneider also questioned Jagar about her prepetition credit

counseling and the related certificate filed with her petition. 

Jagar could not recall any specifics about it, but assumed that

her attorney was present when she completed the counseling. Not

satisfied with that answer, Schneider posed more questions on the

issue. Eventually, the bankruptcy court told him to “move on.”

As for the alleged undeclared rental income, Jagar testified

that in 2013 she rented a room in her home to a mother and

daughter for $600/month; they paid rent for just one month but

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stayed there another three to four months for free. Jagar said

she had to pay an attorney $1,500 to evict them. Jagar said she

did not claim the $600 as income because she suffered a loss.

When questioned about her finances and maintaining her

checking account, Jagar testified that her nine-year-old daughter

helps her. Jagar testified that her nephew sometimes helped her

financially, and that the $2,000 she paid her attorney in the

collection action just prior to her bankruptcy filing may have

come from him.

Mrs. Raj, Jagar’s sister-in-law, testified that Jagar’s

brother understood English and could read it.

After Schneider rested, counsel for Jagar moved for a

“directed verdict,” contending that Schneider had not proven his

case under § 523 or § 727. The court adjourned to consider

Jagar’s motion.

4. The tentative judgment on partial findings

The next day, the bankruptcy court read its lengthy tentative

ruling into the record, granting Jagar’s motion for judgment on

partial findings under Civil Rule 52(c).5 The court found that

Schneider had not met his burden of proof on any of his claims.

Schneider attempted to introduce documents he contended

established his damages, but the bankruptcy court declined to

admit them, ruling that such documents should have been presented

5 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.

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as part of his case in chief. The court noted that although

Schneider had testified as to the amount of damages he claimed in

his collection action complaint, Schneider had not provided any

detail as to how he arrived at that figure. For his § 523 claim,

Schneider argued that he was alleging a claim for “false

pretenses,” which he argued did not require a showing of

fraudulent intent but still satisfied § 523(a)(2)(A).

After hearing additional argument from the parties, the

bankruptcy court adjourned to review the false pretenses claim

raised by Schneider and to issue a written decision on the Civil

Rule 52(c) motion. If the court decided to deny that motion,

Jagar was to present her case on July 21, 2015.

5. The bankruptcy court’s memorandum decision and judgment

on partial findings

On July 15 and 21, 2015, respectively, the bankruptcy court

entered its memorandum decision and judgment in favor of Jagar on

all claims under Civil Rule 52(c). The court essentially adopted

its tentative ruling announced on the record. However, the court

also addressed the false pretenses claim raised by Schneider,

determining that such claim still requires a showing of fraudulent

intent in the Ninth Circuit, which Schneider had failed to prove.

This timely appeal followed.

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

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

§ 158.

III. ISSUES

1. Did the bankruptcy court err in denying Schneider’s claim

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under § 523(a)(2)(A)?

2. Did the bankruptcy court err in denying Schneider’s claims

under § 727(a)(4)(A) and (a)(5)?

IV. STANDARDS OF REVIEW

The bankruptcy court’s findings of fact under Civil Rule

52(c) are reviewed for clear error, while its conclusions of law

are reviewed de novo. Kuan v. Lund (In re Lund), 202 B.R. 127,

129 (9th Cir. BAP 1996).

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

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

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

[bankruptcy] court may make findings in accordance with its own

view of the evidence.” Ritchie v. United States, 451 F.3d 1019,

1023 (9th Cir. 2006). Accordingly, to the extent Schneider

contends the bankruptcy court incorrectly found an absence of

essential elements for his claims under § 523 and § 727, we review

those findings under the clearly erroneous standard. See Candland

v. Ins. Co. of N. Am. (In re Candland), 90 F.3d 1466, 1469 (9th

Cir. 1996).

V. DISCUSSION

Schneider raises a host of arguments on appeal. We start

with his more general concerns.

Schneider contends the bankruptcy court erred by relying on

Jagar’s testimony, while at the same time deeming her not

competent to testify. During questioning about her payment

agreement with Schneider, Jagar became emotional and her attorney

requested a brief recess. Despite the request, Jagar pressed on,

answering Schneider’s questions. As for Schneider’s claim that

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Jagar’s prepetition credit counseling certificate must have been

falsely filed because she does not read or speak English, the

bankruptcy court opined that Jagar’s limited testimony on this

issue was attributed to her limited education and her “highly

emotional state during her time on the witness stand.” Mem. Dec.

(July 15, 2015) 8:23-25. Although the court took into

consideration Jagar’s emotional state, it never deemed her

incompetent to testify. Nor does the record reflect that Jagar

was incompetent to testify.

Schneider also contends the bankruptcy court erred by

applying inconsistent standards in making its findings. First,

Schneider argues that the court excused Jagar from her obligations

under the Representation Agreements because they were written in

English, but then took a reverse position, accepting Jagar’s

explanations regarding the deficiencies in her bankruptcy

documents, which were also neither translated nor printed in her

native language. As we explain more below, the bankruptcy court

did not “excuse” Jagar from her obligations under either the

Representation Agreements or her bankruptcy documents; the court

simply found that Schneider had failed to prove his claims for

fraud under § 523(a)(2)(A) or for a false oath under

§ 727(a)(4)(A).

A. The bankruptcy court did not err in denying Schneider’s claim

under § 523(a)(2)(A).

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 a claim under

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§ 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;

(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).

2. Analysis

The bankruptcy court found that Schneider had not met his

burden of proof on the element of intent:

First, given the defendant’s lack of education and

illiteracy in English, and the insufficient evidence

regarding the strength of her brother’s command of the

English language, Schneider has not demonstrated that

Jagar fully understood the terms of the 2007 and 2009

Representation Agreements and knowingly lured Schneider

into representing her, all along not intending to fully

pay the fees due him. In addition, since the funds

apparently disbursed by Duane Leonard (the probate

estate’s administrator), were sent to the defendant,

care of Schneider, Schneider has not demonstrated by a

preponderance of the evidence how the defendant was able

to avoid Schneider’s collection efforts.

Mem. Dec. (July 15, 2015) 5:23-6:2. The court reasoned that the

same analysis applied to Schneider’s assertion that Jagar’s

conduct constituted “false pretenses” as opposed to “actual

fraud.” In either case, Schneider was required to prove that

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Jagar intended to defraud him, and he did not do so.6

Schneider contends the bankruptcy court erred by not applying

California contract law, which would not allow Jagar to be excused

from the 2007 and 2009 Representation Agreements based on her

illiteracy in English or her intentional choice of choosing an

incompetent translator. Schneider never raised this argument

before the bankruptcy court. In any event, while Schneider’s

argument might be relevant in a breach of contract action, it

matters little for a claim for fraud under § 523(a)(2)(A). In

addition, the bankruptcy court did not “excuse” Jagar from the

terms of the Representation Agreements, which she never claimed

were invalid. The court merely found that Schneider had failed to

turn a case for breach of contract into one for fraud.

Schneider also contends that Jagar’s testimony established

her wrongful intent not to pay him according to the Representation

Agreements’ terms. The bankruptcy court disagreed. With respect

to the 2007 Representation Agreement, which was the primary basis

for Schneider’s claim, Jagar testified that she believed the

agreement limited Schneider’s payment to 7.5% of her recovery,

even though she signed the agreement and sent it back to

Schneider. While her belief was inconsistent with the agreement’s

express terms, the bankruptcy court found that Schneider had not

6 The bankruptcy court cited Mandalay Resort Group v. Miller

(In re Miller), 310 B.R. 185, 201 (Bankr. C.D. Cal. 2004), for the

proposition that under Ninth Circuit law the terms “false

pretenses” and “false representation” have the same meaning in

§ 523(a)(2)(A) as the term “actual fraud.” While we believe Husky

International Electronics, Inc. v. Ritz, 136 S.Ct. 1581 (2016),

has implicitly overruled Miller, both Husky International and

Bullock v. BankChampaign, N.A., 133 S.Ct. 1754 (2013), instruct

that wrongful intent is necessary for a nondischargable claim

under § 523(a)(2)(A).

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demonstrated by a preponderance of the evidence that the agreement

was fully or accurately translated to her. Although Jagar’s

brother apparently knew some English and had translated various

documents for her, the court was not persuaded based on the

testimony that Jagar’s brother’s command of the English language

was sufficient to avoid her apparent confusion or misunderstanding

regarding the terms of Schneider’s compensation.

In addition, Schneider admitted that he knew of Jagar’s

illiteracy in English and that he never discussed with Jagar the

2007 or 2009 Representation Agreements or made sure she understood

them. Schneider simply assumed that Jagar’s brother had

accurately translated them to her. As an attorney, it would have

been better practice for Schneider to ensure that his client

understood how he was to be compensated.

Finally, and what Schneider never sufficiently explained, is

how Jagar failed to pay him what was owed when all disbursements

from the probate action apparently went through him first. 

Indeed, the record shows that Schneider received payments totaling

$102,784.76 from the probate estate’s administrator by checks

dated March 28, 2010. From those funds he retained $70,000.00 and

sent $32,784.76 to Jagar. Why did he not just keep the amount of

funds necessary to satisfy his outstanding bill before paying

anything over to Jagar? The 2007 Representation Agreement

contemplates that arrangement: “I was told you are unable to pay

me and my compensation must come out of whatever you receive as a

result of the litigation. This is a change in our agreement. I

am prepared to accept this change in our contract . . . .” Jagar

testified that Schneider did in fact keep what he believed he was

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owed. The fact that all probate disbursements were funneled

through Schneider was another basis for the bankruptcy court to

find Jagar’s lack of intent to defraud.

The bankruptcy court considered Schneider’s evidence and

found that he had not met his burden to establish Jagar’s

fraudulent intent. On this record, we cannot say that the court’s

choice between the two permissible views of evidence was clearly

erroneous. See United States v. Yellow Cab Co., 338 U.S. 338, 342

(1949) (a trial court’s choice between two permissible views of

the evidence is not clearly erroneous where the evidence would

support a conclusion either way).

Alternatively, the bankruptcy court found that even if

Schneider had demonstrated the requisite intent, he failed to

prove the amount of his damages. When asked at trial how much he

had been paid to date from the probate action, Schneider stated he

did not have that number before him, but he could provide it the

following day. Schneider did apparently bring some documents with

him the next day that he said established his damages, but the

bankruptcy court declined to consider them because Schneider had

already rested his case. Schneider also testified that he sent

Jagar billing statements every month, but he never submitted them

as evidence. Schneider also summarily stated in his

dischargeability complaint that his damages were “not less than

$135,000,” but that is not admissible evidence.

The only evidence of damages, which the bankruptcy court

noted, was Schneider’s complaint from the collection action which

alleged he was owed “$108,010.06 for services rendered, and an

additional $91,989.94 on account of fraud committed by defendants”

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(Jagar and her brother) and his testimony as to the contents of

that document. The bankruptcy court opined that without any

calculation by Schneider, it had little idea how he reached these

numbers. As a result, the court could not find that these

represented his damages.

Schneider contends that his collection action complaint and

his testimony as to the amount of damages alleged in that

complaint should have been sufficient evidence of his damages. In

essence, Schneider contends that what he stated as his amount of

damages in the collection action complaint is a factual allegation

that must be presumed to be true. This assertion is contrary to

Civil Rule 8, which is applicable to adversary proceedings by Rule

7008. An allegation as to the amount of damages is never presumed

true, even if not expressly denied by the defendant in a

responsive pleading. See Civil Rule 8(b)(6). Here, Jagar’s

answer expressly denied Schneider’s claimed damages. The fact

that Schneider testified that the collection action complaint said

what it said did not make his allegation as to damages more true.

In addition, as the plaintiff claiming nondischargeability of

an unliquidated debt, it was Schneider’s burden to prove with

specificity the amount of his damages. The record reflects that

Jagar received approximately $600,000 from her late husband’s

estate. Seven-and-a-half percent of $600,000 is $45,000, which is

the amount Jagar testified Schneider should have received. The

record reflects that Schneider received at least $70,000 for his

services, which suggests that he received not only the agreed

7.5%, but also at least some of his hourly fees. Therefore, it is

unclear exactly what amount Jagar did not allegedly pay Schneider

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for his services or, more importantly, how much of the alleged

debt was the proximate result of Jagar’s fraud and thus

nondischargable.

Based on the lack of any concrete evidence of Schneider’s

actual damages, the bankruptcy court’s finding that he failed to

prove the amount of his damages was not clearly erroneous. In any

event, because the court properly determined that Schneider did

not prove a causal relationship between Jagar’s alleged false

representations and his alleged damages, whether Schneider proved

the amount of his damages is of no consequence.

B. The bankruptcy court did not err in denying Schneider’s

claims under § 727(a)(4)(A) and (a)(5).

Objections to discharge are liberally construed in favor of

the debtor and against the objector. Khalil v. Developers Sur. &

Indem. Co. (In re Khalil), 379 B.R. 163, 172 (9th Cir. BAP 2007),

aff’d, 578 F.3d 1167 (9th Cir. 2009). For that reason, the

objector bears the burden to prove by a preponderance of the

evidence that the debtor’s discharge should be denied. Id.

1. Section 727(a)(4)(A) and (a)(5)

Section 727(a)(4)(A) provides that the debtor’s discharge may

be denied where: (1) the debtor made a false oath in connection

with the bankruptcy case; (2) the oath related to a material fact;

(3) the oath was made knowingly; and (4) the oath was made

fraudulently. Retz v. Sampson (In re Retz), 606 F.3d 1189, 1197

(9th Cir. 2010).

A false statement or an omission in the debtor’s bankruptcy

schedules or statement of financial affairs can constitute a

“false oath.” Id. at 1196. A fact is “material” if it bears a

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relationship to the debtor’s business transactions or estate, or

concerns the discovery of assets, business dealings, or the

existence and disposition of the debtor’s property. In re Khalil,

379 B.R. at 173. Nevertheless, a false statement or omission that

has no impact on a bankruptcy case is not material and does not

provide grounds for denial of a discharge under § 727(a)(4)(A). 

Id. at 172. An act is done “knowingly” when the debtor acts

“deliberately or consciously.” Id. at 173. Finally, a false

statement or omission is made “fraudulently” when the (1) debtor

makes a representation or omission, (2) that at the time the

debtor knew was false, and (3) that the debtor made them with the

intention and purpose of deceiving creditors. Id.

A debtor’s discharge may also be denied if the debtor fails

“to explain satisfactorily, . . . any loss of assets or deficiency

of assets to meet the debtor’s liabilities.” § 727(a)(5). To

establish a prima facie case under § 727(a)(5), the objector to

discharge must demonstrate that: (1) the debtor at one time, not

too remote from the bankruptcy petition date, owned identifiable

assets; (2) on the date the bankruptcy petition was filed or order

of relief granted the debtor no longer owned the assets; and

(3) the bankruptcy papers do not reflect an adequate explanation

for the disposition of the assets. In re Retz, 606 F.3d at 1205. 

Once the objector makes a prima facie case, the burden shifts to

the debtor to offer credible evidence regarding the disposition of

the missing assets. Id. The sufficiency of the debtor’s

explanation, if any, is a question of fact. See id.

2. Analysis

Schneider’s complaint failed to provide any specific examples

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of Jagar’s false oaths in connection with her bankruptcy papers. 

His trial brief provided some, but that brief was never filed and

it is not clear if the bankruptcy court reviewed it. Nonetheless,

the court inferred from the testimony at trial what false oaths

Schneider was alleging: (1) Jagar failed to disclose the $600

rental income; (2) Jagar’s Statement of Financial Affairs

mistakenly stated that her late husband’s probate case closed in

2007 as opposed to 2010; (3) Jagar did not list any gasoline or

travel expenses in her original Schedule J, but later amended to

include this $200 monthly expense; (4) Jagar did not list her

daughter’s social security income in her original Schedule I or

Statement of Financial Affairs; (5) Jagar did not list her ADT,

AT&T or Comcast bills on her Schedule F; and (6) Jagar did not

take her prepetition credit counseling course.

Overall, the bankruptcy court found that Schneider failed to

prove either that these alleged errors or omissions were material

or that they were made fraudulently with an intent to deceive

creditors; therefore, he had not established a claim under

§ 727(a)(4)(A).

Schneider raises two arguments here. First, he contends the

bankruptcy court gave too much credence to Jagar’s prepetition

credit counseling certificate (also written in English), and that

the court erred by precluding his examination of Jagar on this

issue. A review of the record shows that Schneider took ample

time to question Jagar about the certificate. Jagar repeatedly

stated that she could not recall any specifics about the

counseling session, but stated that she may have completed it with

her bankruptcy attorney at her office. After extensive

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questioning about the certificate, which was leading nowhere, the

bankruptcy court finally asked Schneider to “move on” to the next

topic. The court ultimately decided to accept Jagar’s filed

certificate as proof that she had completed the prepetition credit

counseling, as opposed to Schneider’s unsupported argument that

she had not. We do not perceive this finding to be clearly

erroneous.

Second, Schneider contends the bankruptcy court erred by

overlooking inconsistencies (or even fabrications) regarding

Jagar’s testimony about her rental income. Jagar testified that

she received $600 in rental income in 2013 by renting a room in

her home. She also testified that she spent $1,500 for an

attorney to evict the non-paying tenant. Jagar explained that she

had not reported the $600 rental income in her bankruptcy papers

because the venture resulted in a $900 loss. Although we do not

have Jagar’s bank statements in the record, Schneider contends the

$1,500 payment is not reflected in them. When asked about where

the money might have come from, Jagar testified that perhaps her

nephew gave her the $1,500, which explained the lack of a bank

entry.

Schneider contends that if Jagar received $1,500 from her

nephew, then she did not lose the $600 because she did not pay the

$1,500 out of her money. Thus, apparently, the income existed and

should have been reported.7 The bankruptcy court noted that Jagar

7 Schneider contends another inconsistency is that a posttrial review of the state court record reflects no eviction case

in which Jagar was a party. Schneider has asked the Panel to take

judicial notice of this fact. Generally, we do not consider facts

(continued...)

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should have reported the $600 as income, regardless of the alleged

eviction cost. Ultimately, the court found that Schneider had

failed to prove that the “small omission” of the $600 rental

income was made with the intent to deceive creditors to satisfy

§ 727(a)(4)(A). On this record, we conclude that the court’s

finding as to the rental income was not clearly erroneous.

As for Schneider’s § 727(a)(5) claim, which was also not

pleaded with any specificity, the bankruptcy court found that no

witness had testified as to what assets were at issue and/or

unaccounted for. The only evidence before the court were

documents indicating that Jagar received funds from Schneider’s

trust account relating to the probate action. The court found

that Jagar had accounted for a majority of the funds she received

from her late husband’s 401(k), which were rolled over into an IRA

and listed by Jagar as exempt. The only other evidence of an

asset Jagar had prior to the petition date was presented in the

form of two checks, one dated March 28, 2010, made payable to

Schneider by the probate estate’s administrator for $102,784.76,

and the other dated April 4, 2010, reflecting the $32,784.76

Schneider paid to Jagar out of those funds, which she deposited on

May 1, 2010. Jagar testified that Schneider kept the $70,000.00

difference.

Jagar’s bankruptcy case was filed on December 31, 2013, more

7(...continued)

presented for the first time on appeal. In addition, Schneider

has not provided any grounds for the Panel to take judicial notice

of a state court website. Accordingly, Schneider’s request is

DENIED. However, our consideration of the website’s contents

would not change the outcome of this appeal.

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than three years after she received the funds from Schneider. 

Given that Jagar has two children, owns a home, and her only other

income is social security, the bankruptcy court found that her

receipt of these funds was too remote from the petition date to

support a claim under § 727(a)(5). Schneider does not raise any

specific argument with respect to the court’s findings on this

claim. Therefore, he has waived any such argument. Smith v.

Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“[O]n appeal,

arguments not raised by a party in its opening brief are deemed

waived.”). In any event, we do not perceive the court’s findings

here to be illogical, implausible or without support in the

record.

VI. CONCLUSION

The bankruptcy court did not err when it granted Jagar’s

motion under Civil Rule 52(c) and denied Schneider’s claims. 

Accordingly, we AFFIRM.

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