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FILED

APR 07 2015

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NOT FOR PUBLICATION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. CC-14-1274-TaPaKi

) BAP No. CC-14-1300-TaPaKi

BOAZ SHAMAM, ) (cross-appeals)

)

Debtor. ) Bk. No. 11-19995-VK

______________________________)

) Adv. No. 11-01619-VK

BOAZ SHAMAM, )

)

Appellant/ )

Cross-Appellee, )

)

v. ) MEMORANDUM*

)

DONALD MOTZKIN, )

)

Appellee/ )

Cross-Appellant, )

)

ERIT SHAMAM; DAVID KEITH ) 

GOTTLIEB, Chapter 7 Trustee,** )

)

Appellees. )

______________________________)

Submitted Without Oral Argument***

on March 19, 2015

Filed - April 7, 2015

* This disposition is not appropriate for publication.

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value.

See 9th Cir. BAP Rule 8024-1(c)(2).

** Neither Erit Shamam nor David Keith Gottlieb have filed

briefs or otherwise appeared in these appeals.

*** After examination of the briefs and record, and after

notice to the parties, in an order entered January 9, 2015, the

Panel unanimously determined that oral argument was not needed

for this appeal. See Fed. R. Bankr. P. 8019(b); 9th Cir. BAP

Rule 8019-1.
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Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Victoria S. Kaufman, Bankruptcy Judge, Presiding

 

Appearances: Boaz Shaman, pro se, on brief; Eric P. Israel and

Michael G. D’Alba of Danning, Gill, Diamond &

Kollitz, LLP on brief for appellee/cross-appellant

Donald Motzkin.

 

Before: TAYLOR, PAPPAS, and KIRSCHER, Bankruptcy Judges.

Creditor Donald Motzkin filed an adversary proceeding

against chapter 71 debtor Boaz Shamam and his non-filing spouse,

seeking, as relevant to this appeal, to except from discharge

certain debts under § 523(a)(4) and (a)(6). Following a long

series of events in the adversary proceeding and two state court

proceedings, the bankruptcy court reinstated an entry of default

against the Debtor and granted, in part, Motzkin’s motion for

default judgment. The bankruptcy court subsequently entered an

order denying the Debtor’s motion to set aside the reinstated

default, an order granting in part and denying in part Motzkin’s

motion for default judgment, and a default judgment fully

resolving the adversary proceeding against the Debtor. The

Debtor appeals, pro se, from that order and the default judgment. 

Motzkin cross-appeals from the bankruptcy court’s partial

denial of his motion for default judgment.

We AFFIRM the bankruptcy court. 

1 Unless otherwise indicated, all chapter and section

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

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

Procedure and all “Civil Rule” references are to the Federal

Rules of Civil Procedure.

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FACTS

Pre-Bankruptcy

The Debtor and Motzkin were the sole shareholders, officers,

and directors of D&B Real Estate Corporation, a California

corporation (the “Corporation”). The Corporation was the sole

general partner of Good Land Partners, L.P., a California limited

partnership (the “Partnership”). The Debtor and Motzkin formed

the Partnership for the purpose of real estate investment. They

were, individually, limited partners in the Partnership. 

In 2006, the Debtor and Motzkin applied for and obtained an

American Express business credit card for the Corporation (the

“Corporate Card”). The account was opened under the names of the

Corporation and Motzkin, based on Motzkin’s personal financial

information. It appears that the Debtor was an authorized user

on the account and, thus, that he had his own credit card. 

American Express mailed the statements directly to the Debtor’s

personal residence. 

The Debtor apparently engaged in the unauthorized use of the

Corporate Card. He arranged for a card to be issued to his nondebtor spouse, Erit Shamam (“Mrs. Shamam”), although she was not

an officer, director, or employee of the Corporation. He and

Mrs. Shamam then made a number of non-business related charges

over the course of a three-year period.

Notwithstanding the unauthorized use, the Debtor made

regular payments on the Corporate Card for approximately three

years before defaulting. American Express then demanded payment

from Motzkin for the past due payment. Following negotiations,

Motzkin settled the account by paying American Express

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$32,958.76. During this time, Motzkin also learned that the

Debtor opened a second American Express account in the

Corporation’s name, which carried a balance of $3,131.08. 

In 2006, the Debtor also obtained a Bank of America Visa

business credit card, this time, in the name of the Partnership

(the “Partnership Card”). As with the Corporate Card, this card

was opened using Motzkin’s personal financial information and

Bank of America mailed the statements directly to the Debtor’s

personal residence. According to Motzkin, the Debtor obtained

the Partnership Card without Motzkin’s knowledge or consent. 

The charges incurred on the Partnership Card included a

number of non-business related transactions. Motzkin asserted

that he first learned of the Partnership Card in 2009, when Bank

of America demanded payment for the past due balance. Motzkin

eventually settled the account by paying Bank of America

$23,654.39.2

In 2010, Motzkin commenced two actions in California state

court. The first case, against the Debtor and Mrs. Shamam (among

others), included causes of action for fraud, breach of fiduciary

duty, and breach of contract. The second case, against the

Debtor and the Corporation, sought a judgment removing the Debtor

as an officer and director of the Corporation and other

declaratory and injunctive relief. 

///

2 Of this amount paid, Bank of America eventually

reimbursed Motzkin for $7,169.83; this supports Motzkin’s later

request to except from discharge $16,484.56 in connection with

the Partnership Card.

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Bankruptcy and Adversary Proceeding 

The Debtor filed a chapter 7 petition on August 19, 2011. 

Mrs. Shamam was not a co-debtor. 

In November 2011, Motzkin commenced an adversary proceeding

against the Debtor and Mrs. Shamam. Motzkin sought to except

from discharge the unauthorized credit card charges incurred by

the Debtor and Mrs. Shamam, pursuant to § 523(a)(4) for

defalcation while acting in a fiduciary capacity and § 523(a)(6)

for willful and malicious injury.

In January 2012, Motzkin obtained entry of default against

the Debtor.3 The following month, the Debtor, pro se, moved to

set aside the entry of default, which Motzkin opposed. The

bankruptcy court denied the Debtor’s motion. 

Next, Motzin moved for a default judgment. The Debtor yet

again moved to set aside the entry of default, which Motzkin

opposed. 

Following a series of hearings, the bankruptcy court entered

an order conditionally granting the Debtor’s motion to set aside

the default. As provided in a prior order instructing the Debtor

to explain why it should not require payment of sanctions as a

condition to his requested relief, the bankruptcy court expressly

conditioned its vacation of the default on the Debtor’s payment

of compensatory sanctions to Motzkin in the amount of $2,930.16;

the payments were to be made in equal monthly installments of

3 We exercise our discretion to take judicial notice of

documents electronically filed in the bankruptcy case. See

Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R.

227, 233 n.9 (9th Cir. BAP 2003).

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$488.33. The order further provided that the default would not

be set aside until the Debtor made two installment payments. 

In a subsequent status report, Motzkin reported the entry of

a default judgment against the Debtor in the second state court

action. The state court judgment awarded damages to Motzkin in

the amount of $49,343.32, prejudgment interest of $14,620.78,

attorneys fees of $55,935, and costs of $511, for a total

judgment of $120,410.10. 

Instead of fully complying with the bankruptcy court’s

conditional order, the Debtor moved to dismiss the adversary

proceeding. After the bankruptcy court denied the motion, the

Debtor appealed from the denial order to this Panel. See BAP No.

CC-13-1187. The Panel dismissed his appeal as untimely. 

Although the record is not entirely clear, at some point

prior to the bankruptcy court’s denial of the motion to dismiss,

the Debtor made a second installment payment pursuant to the

conditional order. Therefore, following a status conference in

November 2012, Motzkin’s motion for default judgment was deemed

withdrawn without prejudice. 

Months passed without activity in the adversary proceeding. 

Then, in September 2013, Motzkin moved to strike the Debtor’s

answer to the adversary complaint pursuant to Civil

Rule 16(f)(1)(C) and to reinstate the entry of default against

the Debtor, based on the Debtor’s failure to complete the

sanctions installment arrangement. The Debtor did not oppose the

motion. 

Following a hearing, the bankruptcy court entered an order

granting Motzin’s motion in October 2013; it deemed the Debtor’s

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answer to the adversary complaint stricken, and it reinstated the

default against the Debtor (“Default Reinstatement Order”). 

Motion for Default Judgment

Motzkin filed a second motion seeking a default judgment

against the Debtor. Based on the state court judgment, he sought

to except from discharge $49,343.32, which constituted $16,484.56

in connection with the Partnership Card and $32,958.76 in

connection with the Corporate Card,4 in addition to the awarded

fees and costs. He also requested attorneys fees incurred in the

adversary proceeding.5

Prior to the default prove-up hearing, the bankruptcy court

issued a tentative ruling reflecting its intent to grant, in

part, Motzkin’s motion. On the § 523(a)(4) claims, it indicated

it would except from discharge the Partnership Card debt as the

Partnership was the account holder and the Debtor was a partner. 

But, it also indicated its intent to discharge the Corporate Card

debt under § 523(a)(4); as the Corporation was the holder of that

account, the requisite fiduciary relationship did not exist under

California law. 

On the § 523(a)(6) claim, the bankruptcy court indicated its

intent to deem the entire state court judgment nondischargeable. 

At the default prove-up hearing, the Debtor appeared and was

permitted to argue. The bankruptcy court ultimately adopted its

4 The total stated credit card amounts reflect a nominal

difference of $100 from the $49,343.32 amount.

5 Motzin also requested an award of punitive damages. 

Contrary to the Debtor’s assertion on appeal, the bankruptcy

court did not award punitive damages.

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tentative ruling on the § 523(a)(4) issue, but changed its

tentative determination on the § 523(a)(6) issue. It determined

that the Debtor’s payments on the credit cards precluded a

finding of the requisite intent necessary for nondischargeability

under § 523(a)(6). Given its determination, the bankruptcy court

continued the default prove-up hearing for a re-calculation of

the prejudgment interest in the state court judgment, limited to

the Partnership Card, and the attorneys fees incurred in the

adversary proceeding.

Order Denying the Debtor’s Motion to Set Aside the Default

Reinstatement Order and Default Judgment 

Pursuant to the bankruptcy court’s instruction, Motzkin

filed a supplemental brief on the re-calculation, asserting

$77,948.06 as the amount of nondischargeable debt and $124,812.50

in attorneys fees incurred in the adversary proceeding. In

response, the Debtor moved to dismiss, yet again, and to vacate

Motzkin’s claims. The bankruptcy court promptly denied his

motion. 

On March 14, 2014, the Debtor moved to set aside the Default

Reinstatement Order entered in October of 2013. Attached to his

motion was a copy of a default judgment, dated October 28, 2013,

entered by the state court in the first state court action and in

the Debtor’s favor. 

At the final hearing on May 14, 2014, the bankruptcy court

heard both the Debtor’s motion to set aside the Default

Reinstatement Order and the continued default prove-up hearing.

Following a brief recitation of the history of the proceedings

and its reasoning for partially granting Motzkin’s motion for

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default judgment, the bankruptcy court denied the Debtor’s motion

to set aside the Default Reinstatement Order. 

The bankruptcy court then entered two orders: an order

denying the Debtor’s motion to set aside the Default

Reinstatement Order (“Order Denying Motion to Set Aside”) and an

order granting in part and denying in part Motzkin’s motion for

default judgment (“Order on Default Judgment”). And it entered a

default judgment against the Debtor, which provided that only

$77,948.06 of the state court judgment was nondischargeable under

§ 523(a)(4). The default judgment also awarded attorneys fees in

the amount of $124,812.50, plus post-judgment interest. 

The Debtor timely appealed from the orders and default

judgment. Motzkin cross-appealed from the Order on Default

Judgment and the default judgment. 

JURISDICTION

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.

§ 158.6

ISSUES

BAP Appeal No. CC-14-1274

Whether the bankruptcy court abused its discretion when it

denied the Debtor’s motion to set aside the Default Reinstatement

6 The adversary complaint also alleged two claims under

§ 523(a)(2) with respect to another loan and a claim against

Mrs. Shamam under § 523(a)(3). The § 523(a)(2)(A) claims were

dismissed in the default judgment on appeal and the § 523(a)(3)

claim was outside the scope of the default judgment.

Nonetheless, both the order on default judgment and the

default judgment contain an implicit Civil Rule 54 certification.

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Order.

BAP Appeal No. CC-14-1300

As to the Corporate Card debt, whether the bankruptcy court

abused its discretion when it denied Motzkin’s motion for default

judgment.

STANDARDS OF REVIEW

We review for an abuse of discretion the denial of a motion

for default judgment, Eitel v. McCool, 782 F.2d 1470, 1471-72

(9th Cir. 1986), and the denial of a motion to set aside a

default, Jeff D. v. Kempthorne, 365 F.3d 844, 850 (9th Cir.

2004). 

A bankruptcy court abuses its discretion if it applies the

wrong legal standard, misapplies the correct legal standard, or

if its factual findings are illogical, implausible, or without

support in inferences that may be drawn from the facts in the

record. See TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d

820, 832 (9th Cir. 2011) (citing United States v. Hinkson,

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

DISCUSSION

A. Motzkin’s Motion to strike the Debtor’s opening brief and

dismiss his appeal (BAP Appeal No. CC-14-1274).

Motzkin moved to strike the Debtor’s opening brief and

excerpts of record and for dismissal of his appeal (BAP

No. CC-14-1274). He argues that the Debtor included in his

excerpts of record various documents not presented to the

bankruptcy court, that the record is not continuously paginated,

and that the table of contents to the appendix fails to provide

page numbers, in contravention of BAP Rule 8018(b)-1(b). 

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Motzkin further argues that the Debtor’s opening brief fails

to comply with Rule 8014, as it lacks a table of cases, a table

of authorities, basis of appellate jurisdiction, standards of

appellate review, statement of the case, summary of the argument,

and statement of facts with appropriate record citation. And, he

argues that the Debtor failed to provide a certification of

interested parties or related cases in accordance with BAP Rule

8015(a)-1(b)-(c). Thus, Motzkin requests that we strike the

Debtor’s opening brief and dismiss his appeal.

The Debtor opposes; the opposition, however, is not helpful,

as he asserts only that he does not owe Motzkin money and

attaches the default judgment entered in his favor in the first

state court action. 

On October 20, 2014, a motions panel issued an order taking

Motzkin’s motion under advisement for determination by the merits

panel. Having considered the motion, opposition, and documents

at issue, we grant the motion in part and deny it in part.

To the extent that documents in the Debtor’s excerpts of

record were not presented to the bankruptcy court, they are

deemed stricken from the record on appeal. See Oyama v. Sheehan

(In re Sheehan), 253 F.3d 507, 512 n.5 (9th Cir. 2001) (“Evidence

that was not before the lower court will not generally be

considered on appeal.”). 

We deny Motzkin’s request to strike the Debtor’s opening

brief on appeal and to dismiss his appeal. It is true that the

Debtor’s brief falls woefully short of compliance with either the

Federal Rules of Bankruptcy Procedure or BAP rules and that the

Panel is not required to search the record unaided for error. 

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See Dela Rosa v. Scottsdale Mem. Health Sys, Inc., 136 F.3d 1241,

1244 (9th Cir. 1998). That said, we possess a sufficient record

for review. Motzkin supplemented the record with four volumes of

excerpts in connection with his cross-appeal. And, as stated, we

exercise our discretion to take judicial notice of documents

filed in the adversary proceeding and underlying bankruptcy case.

B. The Debtor’s appeal, BAP Appeal No. CC-14-1274.

The Debtor, in effect, appeals from the Order Denying Motion

to Set Aside and the default judgment. On this record, we

conclude that the bankruptcy court did not abuse its discretion

in denying the Debtor’s motion and rejecting his arguments as to

the default judgment. 

1. Civil Rule 557 default and judgment by default.

To obtain a default judgment of nondischargeability of a

debt, a two-step process is required: (1) an entry of default

(typically by the clerk of court); and (2) a judgment by default. 

Cashco Fin. Serv., Inc. v. McGee (In re McGee), 359 B.R. 764, 770

(9th Cir. BAP 2006). The bankruptcy court has ample discretion

in determining whether to enter a default judgment under Civil

Rule 55. All Points Capital Corp. v. Meyer (In re Meyer),

373 B.R. 84, 88 (9th Cir. BAP 2007) (“[D]efault judgment is a

matter of discretion in which the court is entitled to consider,

among other things, the merits of the substantive claim, the

sufficiency of the complaint, the possibility of a dispute

regarding material facts, whether the default was due to

7 Civil Rule 55 is incorporated in adversary proceedings by

Rule 7055.

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excusable neglect, and the ‘strong policy’ favoring decisions on

the merits.”). But, the bankruptcy court is cautioned against

entry of a default judgment if the plaintiff is not entitled to

the relief requested; indeed, the bankruptcy court “may even

enter judgment in favor of the defaulted defendant.” Id. at 89.

2. The bankruptcy court did not abuse its discretion in 

denying the Debtor’s motion to set aside the Default 

Reinstatement Order.

The bankruptcy court may set aside the entry of default upon

a showing of good cause. Fed. R. Civ. P. 55(c). To determine

whether good cause exists, the bankruptcy court must consider

whether: (1) the defendant engaged in culpable conduct that led

to the default; (2) the defendant lacked a meritorious defense;

or (3) reopening the default judgment would prejudice the

plaintiff. United States v. Signed Pers. Check No. 730 of Yubran

S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (internal citation

and quotation marks omitted). These factors are “disjunctive,

such that a finding that any one of these factors is true is

sufficient reason for the [] court to refuse to set aside the

default.” Id. 

Here, the bankruptcy court applied the correct legal

standard. It found that the Debtor engaged in culpable conduct

when he failed to oppose Motzkin’s motion to reinstate the

default, failed to complete the sanctions installment

arrangement, and emailed Motzkin stating his intent to run up the

attorneys fees in the adversary proceeding. The bankruptcy court

stated that it considered the Debtor’s defense in the first state

court action default judgment, but that its decision to enter

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default judgment was not based on that particular state court

litigation. And, it found that reopening the default would

prejudice Motzkin, who had taken substantial action based on the

default. 

The bankruptcy court’s findings were not clearly erroneous. 

The Debtor previously obtained a vacation of the default,

contingent on payment of a compensatory sanction. He failed to

complete the required sanction payments despite the ability to

pay them in monthly installments of $488.33. He provided no

sufficient explanation for his noncompliance. The default was

reinstated only because the Debtor failed to comply with the

bankruptcy court’s order. 

Moreover, as the bankruptcy court observed, Motzkin sought

default judgment in the adversary proceeding based on the state

court judgment entered in the second state court action. That

the state court entered default judgment against Motzkin in the

first state court action based on different causes of action had

no bearing on the judgment obtained in the second state court

action. There was no evidence that Debtor had a meritorious

defense.

Finally, the record shows that the Debtor did not oppose

Motzkin’s motion to reinstate default. Instead, as was his wont,

he moved to dismiss the adversary proceeding. 

Motzkin, on the other hand, had already obtained partial

default judgment at the prove-up hearing in January 2014. The

only issue remaining when the Debtor moved to set aside default,

for the third time, was the award of attorneys fees incurred in

the adversary proceeding. 

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On this record, the bankruptcy court did not abuse its

discretion in denying the Debtor’s motion to set aside the

Default Reinstatement Order. 

3. The Debtor’s remaining arguments as to the default 

judgment do not apply here or lack merit.

The Debtor advances a number of arguments with respect to

the default judgment. He argues that the bankruptcy court erred

by entering the default judgment based on excusable neglect,

mistake, and his pro se status. He argues that good cause exists

to set aside the default judgment, including defenses to

Motzkin’s claims. And he argues that the default judgment led to

unfair, unjust, and inequitable consequences, and that it is his

fundamental right as a debtor and defendant to due process,

notice, and the opportunity for justice. These arguments are

either inapplicable here or lack merit.

The record reflects that the Debtor never moved to set aside

the default judgment.8 Indeed, there was no opportunity to do

so; the bankruptcy court entered the default judgment on May 22,

2014, and the Debtor appealed from the judgment five days later. 

Thus, we do not review whether good cause existed to set aside

the default judgment (as opposed to the entry of default,

discussed in section B(2), supra) pursuant to Civil Rule 60(b).

8 The record also reflects that although the bankruptcy

court granted in part Motzkin’s motion for default judgment at

the prove-up hearing, the Debtor did not move for reconsideration

of that determination. Instead, once again, he moved to dismiss

the adversary proceeding. The bankruptcy court issued an order

denying that motion; the adversary proceeding docket incorrectly

links that order to another, premature motion to set aside

default judgment.

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The record further reflects that the Debtor was an active

participant in the adversary proceeding. He lacked neither

notice nor the opportunity to respond with respect to any of the

motions or hearings in the adversary proceeding. Instead, the

Debtor was an active, albeit noncompliant, litigant at almost

every stage of the litigation. Thus, his arguments as to due

process fail.

We also reject the Debtor’s attempt to use his pro se status

as both a shield and a sword. Civil Rule 55 sets forth the

procedures for default and default judgment. Pro se litigants

are not excused from complying with procedural rules. “Pro se

litigants must follow the same rules of procedure that govern

other litigants.” King v. Atiyeh, 814 F.2d 565, 567 (9th Cir.

1987), overruled on other grounds, Lacey v. Maricopa Cnty.,

693 F.3d 896 (9th Cir. 2012). Thus, that the Debtor appeared pro

se in the adversary proceeding does not justify his multiple

failures, compounded, to defend in the litigation.

The Debtor instead lays blame on Motzkin for incurring

additional attorneys fees and on the bankruptcy court for its

alleged prejudice against him, as evidenced by its remarks that

the Debtor contributed to the length of the case. Neither

assertion has merit. A litigant bears the rights and

responsibilities of prosecution and defense in a lawsuit; that

the Debtor could not or would not obtain counsel did not preclude

Motzkin from doing so and defending against the Debtor’s numerous

motions to dismiss or to set aside bankruptcy court orders. 

Moreover, the record shows that the bankruptcy court gave

the Debtor ample opportunity to appear and be heard. Its comment

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that the Debtor contributed to the length of the adversary

proceeding was not prejudicial; it was accurate. That the Debtor

subjectively believes that the default judgment is unfair,

unjust, and inequitable is not a cognizable basis for reversal on

appeal. 

C. Motzin’s cross-appeal, BAP Appeal No. CC-14-1300. 

On cross-appeal, Motzkin focuses solely on the Corporate

Card; he argues that the bankruptcy court abused its discretion

in denying default judgment of that debt under either

§§ 523(a)(4) or (a)(6). On this record, we disagree. 

1. Procedural posture

The default judgment provided that only $77,948.06 of the

state court judgment was excepted from discharge.9 In doing so,

it appears that the bankruptcy court granted judgment in the

Debtor’s favor on the § 523(a)(4) and (a)(6) claims relating to

the Corporate Card debt.

“Following denial of a motion for entry of a default

judgment, a plaintiff would ordinarily be afforded the

opportunity to conduct discovery and proceed to trial in an

effort to prove its case.” Wells Fargo Bank v. Beltran

(In re Beltran), 182 B.R. 820, 826 (9th Cir. BAP 1995). This is

particularly true where “a plaintiff was unprepared at the

default prove up hearing to present any evidence (e.g., because

it assumed its allegations would be deemed admitted without the

9 Curiously, neither the judgment nor the order state the

basis of nondischargeability. The motion for default judgment,

however, was brought only as to the § 523(a)(4) and (a)(6)

claims.

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need for presentation of any evidence at the hearing), or where a

plaintiff requested additional time to conduct discovery and/or

requested a trial on the merits.” Id. 

The record here shows that, with respect to the Corporate

Card debt, Motzkin did not request additional time to conduct

discovery or a trial on the merits of the § 523(a)(4) and (a)(6)

claims. Nor does the record show that he was unprepared to

present evidence at the prove-up hearing or that additional

evidence existed that supported his claims. Motzkin did not

raise any such issue in the months following the prove-up

hearing, while the bankruptcy court considered attorneys fees

issues. Finally, Motzkin does not raise procedural issues on

appeal.

We conclude that it was not improper for the bankruptcy

court to enter a default judgment that, in effect, discharged the

Corporate Card debt without further proceedings. 

2. The bankruptcy court did not err in denying an

exception from discharge of the Corporate Card debt

under § 523(a)(4).

Section § 523(a)(4) excepts from discharge debts for

defalcation while acting in a fiduciary capacity. Whether a

debtor is a fiduciary for the purposes of § 523(a)(4) is a

question of federal law. Lewis v. Scott (In re Lewis), 97 F.3d

1182, 1185 (9th Cir. 1996). The definition is construed

narrowly, requiring that the fiduciary relationship arise from an

express or a technical trust that was imposed prior to the

wrongdoing that caused the debt. Ragsdale v. Haller, 780 F.2d

794, 796 (9th Cir. 1986) (“The broad, general definition of

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fiduciary—a relationship involving confidence, trust and good

faith—is inapplicable in the dischargeability context.”); see

also Otto v. Niles (In re Niles), 106 F.3d 1456, 1459 (9th Cir.

1997). But, state law informs whether the requisite trust

relationship exists. See In re Lewis, 97 F.3d at 1185; Mele v.

Mele (In re Mele), 501 B.R. 357, 365 (9th Cir. BAP 2013).

Motzkin argues that the bankruptcy court erred in failing to

consider the various partnership relationships that existed;

namely, between the Corporation (as general partner of the

Partnership) and the Debtor and Motzkin (as limited partners in

the Partnership), and between the Debtor and Motzkin in relation

to the Partnership. He argues that based on In re Frain,

230 F.3d 1014 (7th Cir. 2000), shareholders of a corporation may

owe one another fiduciary duties. 

Motzkin is incorrect. California law expressly imposes

trustee duties on partners in a partnership and members in a

member-managed limited liability company. See Cal. Corp. Code

§§ 16404, 17704.09. The same is simply not true of directors,

officers, or shareholders to a corporation or to fellow

directors, officers, and shareholders. 

In fact, under California law, “although officers and

directors are imbued with the fiduciary duties of an agent and

certain duties of a trustee, they are not trustees with respect

to corporate assets.” Cal-Micro, Inc. v. Cantrell

(In re Cantrell), 329 F.3d 1119, 1126 (9th Cir. 2003). Thus,

even though an officer or director may exercise some control over

corporate assets, they are not a fiduciary within the meaning of

§ 523(a)(4). Id. at 1127; see also Swimmer v. Moeller

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(In re Moeller), 466 B.R. 525, 529 (Bankr. S.D. Cal. 2012) (“[A]

corporate principal is not a trustee of an express or statutory

trust and, thus, is not a fiduciary to the corporation and its

shareholders for the purposes of the section 523(a)(4) discharge

exception.”).

Here, the bankruptcy court determined that because the

Debtor was an officer and director of the Corporation and the

Corporation was the account holder of the Corporate Card, the

Debtor was not a fiduciary within the meaning of § 523(a)(4). 

Under California law, this determination was not erroneous. In

his capacity as an officer and director, the Debtor did not hold

the Corporation’s assets in trust for the Corporation or Motzkin. 

Thus, he was not a fiduciary as required by § 523(a)(4). 

That partnership relationships existed in the periphery of

the Corporation does not change the calculus. The Debtor and

Motzkin were limited partners in the Partnership. Under

California law, limited partners do not owe a fiduciary duty to

other partners or the limited partnership.10 Cal. Corp. Code

§ 15903.05(a). With the Partnership Card, the Debtor appears to

10 The § 523(a)(4) judgment – including the determination

of the requisite fiduciary status within the meaning of that

nondischargeability section – is not before us on appeal. Even

if it were, however, the Debtor’s conduct here is supportive of

the necessary fiduciary relationship. 

An exception to Cal. Corp. Code § 15903.05 exists implicitly

where the limited partner participates in control of the

business. See Cal. Corp Code § 15903.03. Causing the

Partnership to obtain credit appears to violate the restricted

duties of a limited partner; it is also consistent with an

implicit determination that the Debtor took on general

partnership status by exercising control.

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have acted outside his role as a limited partner, having

exercised control and assumed the corresponding duties of a

general partner. But there is no argument or evidence that ties

his actions as a corporate officer in connection with the

Corporate Card to any imputed general partnership status.

Based on the foregoing, the bankruptcy court appropriately

exercised its discretion and denied Motzkin’s motion for default

judgment as to the Corporate Card debt under § 523(a)(4). 

3. The bankruptcy court did not err in denying an

exception from discharge of the Corporate Card debt

under § 523(a)(6). 

Section 523(a)(6) excepts from discharge debts arising from

a debtor’s “willful and malicious” injury to another person or to

the property of another. Barboza v. New Form, Inc.

(In re Barboza), 545 F.3d 702, 706 (9th Cir. 2008). The

“willful” and “malicious” are conjunctive requirements, subject

to separate analysis. Id.; Carrillo v. Su (In re Su), 290 F.3d

1140, 1146-47 (9th Cir. 2002).

a. Willfulness under § 523(a)(6).

Section “523(a)(6) renders debt nondischargeable when there

is either a subjective intent to harm, or a subjective belief

that harm is substantially certain.” Id. at 1144; see also

Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1208 (9th

Cir. 2001). The injury must be deliberate or intentional, “not

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

Kawaauhau v. Geiger, 523 U.S. 57, 61-62 (1998) (emphasis in

original); see also In re Barboza, 545 F.3d at 706 (“A willful

injury is a deliberate or intentional injury, not merely a

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deliberate or intentional act that leads to injury.”) (citation

and quotation marks omitted). Thus, “debts arising from

recklessly or negligently inflicted injuries do not fall within

the compass of § 523(a)(6).” Geiger, 523 U.S. at 64.

Motzkin argues that the bankruptcy court erred when it

determined that the Debtor lacked the requisite intent to injure

based on the history of payments made on the Corporate Card. 

Among other things, he contends that the bankruptcy court

improperly applied the standard for credit card issuers under

§ 523(a)(2)(A), rather than the Jercich standard required under

§ 523(a)(6). As a result, Motzkin argues that it erroneously

focused on the Debtor’s intent at the time that he incurred the

charges, rather than at the time that the Debtor stopped making

payments on the account. 

Motzkin is correct that the state of mind analysis is

determined at the time of injury. He is incorrect, however, that

here the relevant injury occurred when the Debtor stopped making

payments on the Corporate Card. Section 523(a)(6) relates to

intentional torts. See Geiger, 523 U.S. at 61. Here, as the

bankruptcy court attempted to point out, the Debtor’s

unauthorized use of the Corporate Card gave rise to the tort, not

his cessation of payments. We reject the notion that failure to

pay a credit card is in and of itself an intentional tort. 

Therefore, the bankruptcy court did not err in determining that

its examination of the Debtor’s state of mind was at the time

that he used the Corporate Card without authorization, not when

he defaulted on the payments on the account.

The bankruptcy court determined that the Debtor lacked the

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requisite intent to injure Motzkin, as evidenced by the Debtor’s

consistent history of payments on the Corporate Card from 2006 to

2009: 

I don’t think that there’s proof that when [the Debtor]

used the [Corporate Card] that was under [the

Corporation], and when he made his payments monthly,

that he deliberately or intentionally injured [Motzkin]

and that [the Debtor] intended the consequences of his

act and that he acted with a subjective motive to

inflict injury or with a belief that injury was

substantially certain to result from the conduct.

Hr’g Tr. (Jan. 8, 2014) at 86:10-17. It found the undisputed

fact that the Debtor made payments on the Corporate Card over a

three-year period of time was inconsistent with the notion that

the Debtor subjectively intended to injure Motzkin when he

incurred the non-business charges or that he subjectively

believed that injury was substantially certain to occur. The

bankruptcy court’s finding was not illogical, implausible, or

without support from the record. 

Motzkin further argues that the bankruptcy court erred in

ruling that he could not use circumstantial evidence to prove the

Debtor’s intent. Again, we disagree.

Entry of default against a defendant does not automatically

entitle a plaintiff to a default judgment; this is so even though

the entry of default serves to deem the allegations pled as

admitted. Valley Oak Credit Union v. Villegas (In re Villegas),

132 B.R. 742, 746 (9th Cir. BAP 1991). The bankruptcy court may

require proof of the facts necessary to a claim or to determine

liability. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915,

917 (9th Cir. 1987) (Civil Rule 55 provides the bankruptcy court

with “considerable leeway as to what it may require as a

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prerequisite to the entry of a default judgment.”); Fed. R. Civ.

P. 55(b)(2) (“The court may conduct hearings . . . when, to enter

or effectuate judgment, it needs to . . . determine the amount

of damages; [] establish the truth of any allegation by evidence;

or [] investigate any other matter.”) (emphasis added). The

bankruptcy court, thus, has “the discretion to require proof of

the facts necessary to determine a valid claim for relief against

the defaulting parties.” Kring v. CitiBank, N.A. (In re Kring),

208 B.R. 73, 75 (Bankr. S.D. Cal. 1997).

Here, at the default prove-up hearing, the bankruptcy court

stated to Motzkin: “You haven’t demonstrated what the debtor

thought. You’re using circumstantial evidence.” Hr’g Tr.

(Jan. 8, 2014) at 85:2-4. But, the bankruptcy court did not rule

that Motzkin could not use circumstantial evidence. Its comment

instead reflects that, in accordance with Civil Rule 55(b)(2), it

required additional proof on the issue of the Debtor’s intent,

beyond Motzkin’s declaration detailing the scope of authorized

use of the Corporate Card. The bankruptcy court was well within

its discretion to do so. See TeleVideo Sys., Inc., 826 F.2d at

917. There was no error in this regard. 

Finally, Motzkin argues that the bankruptcy court erred by

permitting the Debtor, as a defaulting party, to dispute his

liability at the prove-up hearing. He contends that by

permitting the Debtor to argue the issue of intent at the

hearing, the bankruptcy court “allowed a record that exceeded

what is permitted by law” and that it erroneously “credited” the

Debtor’s version of events. The record belies Motzkin’s

contention. 

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At the default prove-up hearing, the bankruptcy court

permitted the Debtor to appear and be heard in opposition. But,

the Debtor was not sworn in and, thus, did not testify on any

issue, let alone on the issue of intent. In any event, there is

no evidence that the bankruptcy court “credited” the Debtor’s

version of events. To the extent it determined that the Debtor

lacked the requisite intent for § 523(a)(6), the record is clear

that it did so based on the documentary evidence before it, not

on the Debtor’s statements at the default prove-up hearing.

In sum, the bankruptcy court appropriately exercised its

discretion and denied Motzkin’s motion for default judgment as to

the Corporate Card debt under § 523(a)(6).

CONCLUSION

Based on the foregoing, we AFFIRM the bankruptcy court.

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