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1 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 8013-1.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-11-1565-DMkKi

)

JOSEPH H. PARKS and ) Bk. No. 08-13792-ES

TIFFANY M. PARKS, ) 

) Adv. No. 08-1404-ES

Debtors. )

______________________________)

)

JOSEPH H. PARKS, )

)

Appellant, )

)

v. ) MEMORANDUM1

)

ANGELUS BLOCK CO., INC., )

)

Appellee. )

______________________________)

Argued and Submitted on July 19, 2012

at Pasadena, California

Filed - August 7, 2012

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Erithe A. Smith, Bankruptcy Judge, Presiding 

Appearances: Kevin E. Monson, Esq. argued for Appellant Joseph

H. Parks; and Jon D. Cantor, Esq. of Dykema

Gossett, LLP argued for Appellee Angelus Block

Co., Inc. 

Before: DUNN, MARKELL, and KIRSCHER, Bankruptcy Judges.

FILED

AUG 07 2012

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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2 Unless otherwise indicated, all chapter, section and rule

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

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

The Federal Rules of Evidence are referred to as “FRE.”

-2-

The debtor/defendant/appellant Joseph H. Parks (“Debtor”)

appeals the bankruptcy court’s judgment under § 523(a)(2)(A),

excepting his debt to Angelus Block Co., Inc. (“Angelus”) from

his discharge.2 We AFFIRM.

Factual Background

From 2004 through 2008, the Debtor did business under the

name Pool Construction Services (“PCS”). The Debtor performed

construction services, including the construction of concrete

block walls for residential projects. As the operator of a small

business, the Debtor periodically experienced difficulties with

cash flow that he compensated for by working with customers who

would pay the costs of materials “up front” and deduct those

costs from the Debtor’s billings.

Angelus is a supplier of concrete blocks and related

materials to the construction industry. 

Beginning in late 2005, Dennis Reiger (“Reiger”) hired the

Debtor to work on various projects Reiger was developing,

including building concrete block walls for single family

residential projects in Salton City, California (the “Salton City

Project”). The Debtor’s work on the Salton City Project

encompassed building concrete block walls on more than 40

residential properties. On or about December 16, 2005, the

Debtor requested Angelus to supply concrete blocks and related

materials for the Salton City Project. From 2006 through 2008,
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the Debtor completed about 95% of his scope of work for the

Salton City Project.

Larry Lang (“Lang”) operates under the name “Lang

Construction” as a general contractor. Reiger sold Lang several

vacant lots in Salton City, California. These lots were in the

same development as the Salton City Project. Lang was looking to

hire a subcontractor to build concrete block walls on his vacant

lots, and Reiger referred the Debtor to him. 

The Debtor was contacted by Lang in the summer of 2006 with

a proposal that the Debtor build concrete block walls for Lang on

his Salton City lots. As the various lots were in the same

development as the Salton City Project, Lang specified that the

Debtor should build the same type of walls for him that he was

constructing for Reiger, so that the houses built on Lang’s lots

would blend in with the houses being constructed by Reiger. 

In addition to the walls the Debtor was building for Reiger

on the Salton City Project, the Debtor constructed concrete block

walls for Lang at five building lots: 1556 N. Marina Drive (the

first Lang lot developed), 1527 Valient, 2340 Falcon, 2344 Falcon

and 2366 Falcon. The Debtor completed a Job Information Sheet,

faxed to him by Angelus, for the Lang lot at 1556 N. Marina Drive

but did not complete Job Information Sheets for any of the other

lots on which the Debtor built concrete block walls for Lang. 

The four Lang lots, other than 1556 N. Marina Drive, hereafter

are referred to as the “Lang Lots.”

When Angelus delivered concrete blocks and other material to

the Debtor in the Salton City area, the Debtor or his employee

would meet the Angelus delivery truck and show the driver the
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lot(s) at which the blocks and material were to be delivered and

used. The Angelus employee then would unload the materials by

forklift and deposit them on the subject lot(s). According to

the Debtor, each such lot “was clearly identified by street and

lot numbers.” 

During the period that Angelus was doing business with the

Debtor, it was the customary practice of Angelus to obtain

required information for the California preliminary lien notice

(“California Preliminary Lien Notices”) from its customers on a

Job Information Sheet for each location to which Angelus products

would be delivered. The required information included the

identity of the owner of the project, the project address, the

general contractor and any construction lender. Until the

required information was obtained, material would not be

delivered to the job site.

Reiger terminated the Debtor’s services in January 2007 for

reasons not specified in the record. On or about January 9,

2007, the Debtor failed to pay for some of the concrete blocks

and related material he had ordered from Angelus. At the time

Reiger terminated him, the Debtor owed Angelus approximately

$60,000. The Debtor stated that the total amount for materials

purchased from Angelus for the Lang Lots was approximately

$15,500.

On or about February 7, 2007, Angelus caused mechanic’s

liens to be recorded with respect to various properties to which

its products had been delivered at the Debtor’s request and

subsequently filed complaints to foreclose its mechanic’s liens

(“Mechanic’s Lien Litigation”). During the Mechanic’s Lien
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Litigation, Angelus allegedly learned for the first time that

concrete blocks and other materials that it understood had been

delivered to Reiger projects in the Salton City area in fact had

been delivered for walls to be constructed on the Lang Lots. 

Angelus accordingly was unable to recover for products delivered

to the Lang Lots through the Mechanic’s Lien Litigation.

The Debtor filed his chapter 7 bankruptcy petition on

July 1, 2008. Thereafter, Angelus filed a timely adversary

proceeding complaint (“Adversary Proceeding”) to except the

Debtor’s debt to Angelus from discharge under § 523(a)(2)(A),

(a)(4), and (a)(6). However, by the time of trial, Angelus only

was pursuing its claim for relief under § 523(a)(2)(A) and a

claim for attorney’s fees. 

The Adversary Proceeding was tried (the “Trial”) before the

bankruptcy court on January 24-25, 2011, with direct testimony

presented by declarations and live testimony on crossexamination. Angelus argued and presented evidence to the effect

that the Debtor knew that unless Angelus received proper

information to complete the California Preliminary Lien Notices,

it would not be able to pursue the owner of subject property(ies)

for payment in the event that payment was not received from the

Debtor. The Debtor admitted that he never informed Angelus who

the owner of the Lang Lots was when he began to construct the

concrete block walls on the Lang Lots using Angelus products. 

The Debtor also admitted that he was paid by Lang for the Angelus

products he ordered and installed on the Lang Lots, but he did

not pay Angelus for those materials. Angelus presented evidence

that it suffered damages totaling $68,490.42 resulting from
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Debtor’s failure to disclose his use of Angelus products on the

Lang Lots.

The Debtor presented a multi-prong defense to Angelus’

claims. First, the Debtor testified that his agreement with

Reiger was to the effect that when Angelus invoiced the Debtor

for products used for the Salton City Project, Reiger paid for

the products and deducted the payments to Angelus from the

Debtor’s invoices for the Salton City Project. When Lang

contacted the Debtor to perform similar work on Lang’s lots in

the Salton City area, the Debtor testified that he approached

Reiger and explained that he did not have the financial resources

to cover the costs of products to be installed on Lang’s lots. 

The Debtor further testified that he and Reiger agreed that the

amount that would be due to the Debtor from Reiger for his labor

on the Salton City Project would be sufficient to cover the cost

of products for Lang’s lots, and that Reiger would pay for the

Angelus products used on Lang’s lots, deducting the cost from the

Debtor’s invoices for the Salton City Project. 

Reiger testified that no such agreement existed. Lang

testified that he was not aware of any such agreement. Angelus

also submitted declarations from two of its employees, its Credit

Manager and its accounts receivable manager, denying that they

ever were informed of such an agreement. 

The Debtor also argued and testified that he or his employee

always directed the Angelus employee delivering products to place

them on the specific lot(s) where they were going to be

installed. Since each lot was clearly identified by street and

lot number, any failure by Angelus to obtain necessary
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information for California Preliminary Lien Notices was its own

fault and was not the result of any intentional failure to

provide information by the Debtor. 

Angelus countered with evidence that the Debtor provided

information to complete California Preliminary Lien Notices for

82 separate lots in the Salton City Project and 1556 N. Marina

Drive but did not provide such information for the four Lang

Lots. 

Finally, the Debtor testified that he was owed approximately

$60,000 by Reiger for the Salton City Project when he was

terminated that was not paid to him. The Debtor further

testified that he had no money to obtain legal assistance to

collect from Reiger and did not pursue collection. The amount

owed to him by Reiger would have been enough to pay Angelus in

full. 

However, on cross-examination, the Debtor admitted that when

he prepared and filed his bankruptcy schedules, he did not list

any account receivable as owing from Reiger to him or PCS on his

Schedule B.

The Debtor also argued that Angelus was paid for its

products installed on the Lang Lots by Reiger. It was only after

the Mechanic’s Lien Litigation was initiated that payments for

the products installed on the Lang Lots were backed out by

Angelus as an accounting matter.

At the conclusion of the Trial, the bankruptcy court set a

briefing schedule for post-trial memoranda. Both Angelus and the

Debtor filed post-trial briefs, and Angelus filed a reply brief

to the Debtor’s post-trial brief.
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3 This issue encompasses issues 1 through 4 and 6, as stated

in Appellant’s Opening Brief at pp. 1-2. Each of said issues, as

stated by Debtor, is essentially a variation on the same theme,

as discussed infra.

-8-

On June 10, 2011, the bankruptcy court announced its

findings and conclusions orally, finding in favor of Angelus on

its claim to except its debt from the Debtor’s discharge under

§ 523(a)(2)(A). Following the announcement of the bankruptcy

court’s oral findings of fact and conclusions of law, the Debtor

requested that the bankruptcy court make additional specified

fact findings. The bankruptcy court denied the Debtor’s request

for additional fact findings by order entered on July 19, 2011. 

Judgment was entered in favor of Angelus on July 19, 2011,

determining that the Debtor’s debt to Angelus was excepted from

his discharge and that the amount of damages was $63,870.87. The

Debtor timely appealed, in light of the bankruptcy court’s order

extending the deadline to file a Notice of Appeal to October 14,

2011.

Jurisdiction

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

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

§ 158.

Issues

1. Whether the Debtor can be subject to an exception to

discharge in this case for failures to disclose information where

there was no evidence of any affirmative misrepresentation by

Debtor, and there was evidence that Angelus was paid for its

products used on the Lang Lots.3
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2. Whether the bankruptcy court erred in sustaining

evidentiary objections to portions of the Declaration of Vedrana

Spasojevic.

3. Whether the bankruptcy court erred in refusing to make

the additional findings of fact requested by the Debtor.

Standards of Review

In an appeal from an exception to discharge judgment, we

review the bankruptcy court’s fact findings under the clearly

erroneous standard and its conclusions of law de novo. Honkanen

v. Hopper (In re Honkanen), 446 B.R. 373, 382 (9th Cir. BAP

2011). However, the ultimate question of whether a particular

debt is excepted from discharge is a mixed question of law and

fact that we review de novo. Id.; Searles v. Riley (In re

Searles), 317 B.R. 368, 373 (9th Cir. BAP 2004) (Mixed questions

of law and fact are reviewed de novo when they require the

bankruptcy court “to consider legal concepts and exercise

judgment about values animating legal principles.”).

Under the clearly erroneous standard, a reviewing court may

not reverse the bankruptcy court’s findings “simply because it is

convinced that it would have decided the case differently.” 

Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 573

(1985). The bankruptcy court’s credibility determinations are

entitled to substantial deference. Rule 8013; Thiara v. Spycher

Bros. (In re Thiara), 285 B.R. 420, 427 (9th Cir. BAP 2002). 

The bankruptcy court’s evidentiary rulings are reviewed for

abuse of discretion. Am. Express Travel Related Serv. Co., Inc.

v. Vinhnee (In re Vinhnee), 336 B.R. 437, 442-43 (9th Cir. BAP

2005). Likewise, the bankruptcy court’s decision to accept or
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reject proposed findings of fact is reviewed for abuse of

discretion. Cont’l Connector Corp. v. Houston Fearless Corp.,

350 F.2d 183 (9th Cir. 1965).

We apply a two-part test to determine objectively whether

the bankruptcy court abused its discretion. United States v.

Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc). 

First, we “determine de novo whether the bankruptcy court

identified the correct legal rule to apply to the relief

requested.” Id. Second, we examine the bankruptcy court’s

factual findings under the clearly erroneous standard. Id. at

1262 & n.20. We must affirm the bankruptcy court’s fact findings

unless those findings are “(1) ‘illogical,’ (2) ‘implausible,’ or

(3) without ‘support in inferences that may be drawn from the

facts in the record.’” Id.

We may affirm on any basis supported by the record. Shanks

v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008).

Discussion

A. Generally Applicable Standards in a § 523(a)(2)(A) Case.

Section 523(a)(2)(A) provides that, “a discharge under . . .

this title does not discharge an individual debtor from any debt

– (2) for money, property, services, or an extension, renewal, or

refinancing of credit, to the extent obtained by – (A) false

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

prevail on a § 523(a)(2)(A) claim, a creditor must establish five

elements: “‘(1) misrepresentation, fraudulent omission or

deceptive conduct by the debtor; (2) knowledge of the falsity or

deceptiveness of his statement or conduct; (3) an intent to

deceive; (4) justifiable reliance by the creditor on the debtor’s
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statement or conduct; and (5) damage to the creditor proximately

caused by its reliance on the debtor’s statement or conduct.’”

Oney v. Weinberg (In re Weinberg), 410 B.R. 19, 35 (9th Cir. BAP

2009) (quoting Turtle Rock Meadows Homeowners Ass’n v. Slyman

(In re Slyman), 234 F.3d 1081, 1085 (9th Cir. 2000)). The

creditor bears the burden of proof to establish each of those

five elements by a preponderance of the evidence. In re Slyman,

234 F.3d at 1085.

The exceptions to discharge in bankruptcy are interpreted

narrowly in favor of the debtor. See, e.g., Bernard v. Sheaffer

(In re Bernard), 96 F.3d 1279, 1281 (9th Cir. 1996). The

relatively lenient burden of proof standard compared to the

consistent admonition to interpret the standards for exceptions

to discharge narrowly in the debtor’s favor creates a tension

that informs bankruptcy court decision making in § 523 cases.

B. The Impact of Nondisclosure in the Absence of Affirmative

Misrepresentations.

The Ninth Circuit has concluded that the nondisclosure of

material information in the context of a business transaction

will support an exception to discharge claim under

§ 523(a)(2)(A), analogizing such a situation to securities fraud. 

See Apte v. Japra (In re Apte), 96 F.3d 1319, 1323 (9th Cir.

1996).

In this case, Angelus alleged that the Debtor ordered

Angelus products for installation on the Lang Lots, but the

Debtor did not advise Angelus that its products in fact were

being used on the Lang Lots and left Angelus with the impression

that they were being used for lots in Reiger’s Salton City
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Project. Angelus further contended that the Debtor’s failure to

disclose his use of Angelus products on the Lang Lots resulted in

damages to Angelus based on its reliance that its products were

being directed to and for use on Reiger lots and consequent

inability to file lien notices to protect its interests with

respect to the Lang Lots. 

The bankruptcy court found that the Debtor knew that he was

giving the impression through nondisclosure that Angelus products

were being delivered for installation on Reiger lots when he knew

that the products were actually being used on the Lang Lots. The

bankruptcy court further found that leaving that false impression

was consistent with the Debtor’s strategy to have Reiger pay for

the Angelus products installed on the Lang Lots. However, the

bankruptcy court also found that there was no agreement between

Reiger and the Debtor for Reiger to pay for the Angelus products

used on the Lang Lots.

The Debtor asserts the following arguments in support of his

position that the bankruptcy court erred in its findings. We

deal with each argument in turn.

1. Debtor disclosed the installation of Angelus products

on the Lang Lots.

The Debtor argues there was no “fraud by concealment” in

that the Debtor presented uncontradicted evidence that the Debtor

(or Debtor’s employee) pointed out to the Angelus employee

delivering its products the particular lots on which its products

were to be installed, including the Lang Lots. The short answer

to Debtor’s argument is that evidence is not inconsistent with

the bankruptcy court’s finding that the Debtor knowingly failed
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to disclose that the owner of the Lang Lots was Lang, rather than

Reiger.

2. The Debtor had a duty to disclose facts material to his

transactions with Angelus.

The Debtor argues that he had no legal duty to disclose

further information to Angelus in this case. That is contrary to

applicable Ninth Circuit law. As stated in In re Apte:

In determining the duty to disclose in the context of

fraud under 11 U.S.C. § 523(a)(2)(A), we look to the

common law concept of fraud at the time such language

was added to the statute. [Field v. Mans, 516 U.S. 59,

69-70 (1995).] The Supreme Court in Field looked to the

Restatement (Second) of Torts (1976) as “the most

widely accepted distillation of the common law of

torts” at the relevant time. Id. We do the same. 

Section 551 of that treatise provides:

(1) One who fails to disclose to another a fact that he

knows may justifiably induce the other to act or

refrain from acting in a business transaction is

subject to the same liability to the other as though he

had represented the nonexistence of the matter that he

has failed to disclose, if, but only if, he is under a

duty to the other to exercise reasonable care to

disclose the matter in question.

(2) One party to a business transaction is under a duty

to exercise reasonable care to disclose to the other

before the transaction is consummated,

. . .

(e) facts basic to the transaction, if he knows that the 

other is about to enter into it under a mistake as to

them, and that the other, because of the relationship

between them, the customs of the trade or other

objective circumstances, would reasonably expect a

disclosure of those facts.

96 F.3d at 1324 (quoting Restatement (Second) of Torts § 551

(1976) (emphasis added)). See, e.g., Barnes v. Belice

(In re Belice), 461 B.R. 564, 580 (9th Cir. BAP 2011).

Based on that standard, the bankruptcy court did not err in

determining that the Debtor owed a duty to Angelus to disclose
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facts material to the business transactions between them,

including the fact that Lang owned the Lang Lots. This is an

issue of federal law, and the Debtor’s citation to a California

law source (Witkin, Summary of California Law (10th ed. 2005)

Torts, § 796 at 1151) is inapposite.

3. There is a legal connection between Debtor’s

nondisclosures and Angelus’ damages.

The Debtor argues that the bankruptcy court erred in

determining there was proximate causation between the Debtor’s

failures to disclose and the inability to serve timely proper

California Preliminary Lien Notices because:

1) [Angelus] knew the exact address of each of the Lang

properties where the building materials were delivered

(by [Angelus]); 2) [Angelus] had the absolute and

unfettered ability to refuse delivery of the materials

until it had information sufficient to prepare and

serve preliminary lien notices; 3) upon delivery of

materials by a materialman, the materialman assumes and

bears the legal burden to seek out all information

necessary to prepare and serve preliminary notices; and

4) [Angelus] failed to serve preliminary lien notices

for the Reiger properties known to [Angelus].

Appellant’s Opening Brief at 16. Again, the Debtor’s argument is

inconsistent with controlling Ninth Circuit authority, cited by

the Debtor. See, e.g., In re Apte, 96 F.3d at 1323

(“[N]egligence in failing to discover a misrepresentation is not

a defense to fraud.”).

Under the circumstances of this case, involving

primarily a failure to disclose, positive proof of

reliance is not a prerequisite to recovery. All that

is necessary is that the facts withheld be material in

the sense that a reasonable investor might have

considered them important in the making of this

decision. This obligation to disclose and this

withholding of a material fact establish the requisite

element of causation in fact.

Id. (citing Affiliated Ute Citizens v. United States, 406 U.S.
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128, 153-54 (1972); Titan Group, Inc. v. Faggen, 513 F.2d 234,

239 (2d Cir. 1975)).

The bankruptcy court did not err in determining that there

was a causative link between Debtor’s nondisclosure of material

facts and Angelus’ damages in the context of this case. The

Debtor’s citation to California state law authorities in this

case, interpreting and applying federal law, is unavailing. 

4. Angelus ultimately was not paid for its products

delivered for installation on the Lang Lots.

The Debtor argues that Angelus’ own accounting records

showed that its invoices for products used on the Lang Lots were

paid. The bankruptcy court found that this was “technically

true,” but further found that payments by Reiger had been

improperly applied at Debtor’s direction to pay Angelus invoices

for products delivered to the Lang Lots. These findings are

consistent with the bankruptcy court’s finding that no agreement

existed between the Debtor and Reiger for Reiger to pay for

Angelus products installed on Lang’s lots. Based on the record

before us, we cannot conclude that the bankruptcy court clearly

erred in these findings.

5. The bankruptcy court did not clearly err in discounting

the Debtor’s evidence that he honestly believed that

Angelus products installed on the Lang Lots would be

paid for by Reiger.

The Debtor argues from his testimony that he honestly

believed that there was an agreement between himself and Reiger

that Reiger would pay for any Angelus products installed on

Lang’s lots, there was no fraud, and the bankruptcy court erred

in finding that the Debtor’s failures to disclose were
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fraudulent.

The Debtor testified that he had an agreement with Reiger

that Reiger would pay for the Angelus products used on Lang’s

lots, and Reiger would deduct any such payments from the amounts

owed to the Debtor for labor on the Salton City Project. Reiger

testified there was no such agreement; Lang testified that he was

not aware of any such agreement; and two Angelus employees, its

Credit Manager and its accounts receivable manager, testified

that they never were informed of such an agreement. 

In light of that conflicting evidence, the bankruptcy court

“ultimately found [the Debtor’s] testimony on this point

unpersuasive,” i.e., not credible.

As noted above, the bankruptcy court’s credibility

determinations, at the trial level, are entitled to substantial

deference. “Where there are two permissible views of the

evidence, the fact finder’s choice between them cannot be clearly

erroneous.” Anderson v. City of Bessemer City, N.C., 470 U.S. at

574. We cannot conclude that the bankruptcy court clearly erred

in discounting the Debtor’s “honest belief” in the face of

contrary testimony from Reiger, Lang and Angelus’ employees.

C. Evidentiary Issues Concerning the Declaration of Vedrana

Spasojevic.

The Debtor argues that the bankruptcy court erred in

sustaining Angelus’ objections to admission of certain portions

of the Declaration of Vedrana Spasojevic, an employee of Reiger, 

as not based on her personal knowledge or as inadmissible

hearsay.

As noted above, we review the bankruptcy court’s evidentiary
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rulings for abuse of discretion. Latman v. Burdette, 366 F.3d

774, 786 (9th Cir. 2004). “To reverse on the basis of an

erroneous evidentiary ruling, we must conclude not only that the

bankruptcy court abused its discretion, but also that the error

was prejudicial.” Johnson v. Neilson (In re Slatkin), 525 F.3d

805, 811 (9th Cir. 2008) (emphasis added).

The bankruptcy court struck the following statements from

Ms. Spasojevic’s declaration:

Paragraph 5, beginning at line three (“First

Statement”): “it appeared to me that [Debtor] was

passing to ERA the amounts owed to Angelus for block

being used by [Debtor] at his other projects.” [lack of

personal knowledge]

Paragraph 5, beginning at line six (“Second

Statement”): “I would then receive instructions from

Roberto to go ahead and pay the amount requested by

Angelus.” [hearsay]

Paragraph 6, beginning at line three (“Third

Statement”): “but he would instruct me to pay it if

there is still money left over of the amounts owed to

[Debtor] or, at later times, he would tell me not to

pay it, but after speaking with [Debtor] he would tell

me to go ahead and pay it.” [hearsay]

FRE 602, Lack of Person Knowledge, provides in relevant

part: “A witness may not testify to a matter unless evidence is

introduced sufficient to support a finding that the witness has

personal knowledge of the matter.” FRE 801 defines “hearsay,”

and FRE 802, Hearsay Rule, provides in relevant part: “Hearsay is

not admissible except as provided by these rules . . . .”

The Debtor argues that the foundation for the First

Statement was appropriately laid earlier in Ms. Spasojevic’s

declaration when she stated that among her job duties were “the

review, payment, and paperwork for the materials used” at the

Salton City Project. In light of her performance of those
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duties, the Debtor argues that Ms. Spasojevic had sufficient

personal knowledge to recognize when the Debtor was requesting

payment for materials used beyond the materials required for the

Salton City Project.

Angelus counters that there is no statement in

Ms. Spasojevic’s declaration indicating that she knew what

quantities of concrete blocks and other materials were used on

individual lots. She further does not state what knowledge she

had, if any, regarding other projects on which the Debtor may

have been working.

Frankly, the question as to whether the First Statement was

properly excluded under FRE 602 is close. However, the relevance

of the First Statement in the circumstances of this case is

limited. The First Statement does not support the Debtor’s

defense that he had an agreement with Reiger for Reiger to pay

for Angelus products installed on the Lang Lots. It does provide

further support for the proposition that some Reiger payments

were applied at Debtor’s direction to pay Angelus invoices for

products delivered to the Lang Lots. But, in that sense, it is

cumulative of other evidence, including Paragraph 7 in

Ms. Spasojevic’s declaration, from which the bankruptcy court

found as much.

Accordingly, even if the bankruptcy court erred in excluding

the First Statement, the exclusion ultimately did not prejudice

the Debtor and was no more than harmless error.

As to the Second and Third Statements, the Debtor argues

that they reflected instructions Ms. Spasojevic was given and

were introduced not to prove the truth of the facts asserted, but
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rather to prove that Ms. Spasojevic was told the instructions. 

The Debtor further argues that the Second and Third Statements

were introduced to show Ms. Spasojevic’s state of mind when she

was paying invoices presented by the Debtor. Finally, the Debtor

argues that the Second and Third Statements provide evidence

inconsistent with Reiger’s testimony that he never knowingly

authorized payment for Angelus products used on the Lang Lots.

Considering each of the subject statements, the Second

Statement describes communications not with Reiger but with a

third person employed by Reiger, i.e., double hearsay. It does

not fit within any of the specific exceptions to hearsay

exclusion set forth in FRE 803. It further does not satisfy the

foundation requirements of the residual hearsay exception in

FRE 807 because it does not tend to establish material facts and

is not particularly probative. It is Reiger’s state of mind that

is relevant, not Ms. Spasojevic’s.

The Third Statement does relate to communications between

Ms. Spasojevic and Reiger, but it also does not fall within any

of the specific exceptions to hearsay exclusion in FRE 803. 

Again, Ms. Spasojevic’s state of mind, as opposed to Reiger’s,

simply is not relevant.

On the other hand, the Third Statement does tend to

establish that, on occasion, when questions arose in

Ms. Spasojevic’s mind as to the appropriateness of making

payments to the Debtor when he requested advances or when she

noticed discrepancies in his billings, Reiger would authorize

some payments, at times, only after speaking with the Debtor. 

However, such evidence is not probative with respect to the
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Debtor’s claimed defense that Reiger had an express agreement

with the Debtor to pay for Angelus products used on Lang’s lots

and deduct such payments from the Debtor’s labor billings. It

likewise is not particularly probative as inconsistent with

Reiger’s statement that he never knowingly paid for Angelus

products installed on the Lang Lots. 

We ultimately conclude that the bankruptcy court did not

abuse its discretion in excluding the Second and Third Statements

as inadmissible hearsay.

D. Proposed Additional Fact Findings.

The Debtor argues that the bankruptcy court’s oral findings

and conclusions were inadequate to provide a “clear

understanding” of the basis for its decision in this case, and

the bankruptcy court further erred in refusing to consider the

additional findings of fact proposed by the Debtor.

As to the first point, it is clear to us from review of the

transcript of the bankruptcy court’s oral findings and

conclusions that the bankruptcy court cited and clearly

understood the applicable legal standards. It also is clear to

us that in applying the applicable legal standards based on the

evidence before it, the bankruptcy court found that the Debtor

knowingly failed to disclose information material to some of his

business transactions with Angelus, with the intent to leave a

false impression on which Angelus justifiably relied, proximately

causing damages to Angelus. The Debtor has not appealed the

amount of damages found by the bankruptcy court. Accordingly, we

conclude that the bankruptcy court’s oral findings and

conclusions were adequate to provide an explanation for its
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decision, and were supported by evidence in the Trial record. 

The Debtor’s argument lacks merit.

As to the second point, as correctly pointed out by the

Debtor, a trial court does have a “duty to carefully consider,

weigh and determine the accuracy of . . . proposed findings, and

whether they are supported by the evidence in the record . . . .” 

Cont’l Connector Corp. v. Houston Fearless Corp., 350 F.2d at

187.

After the bankruptcy court had announced its oral findings

and conclusions, it authorized the parties to submit further

proposed findings and conclusions consistent with its oral

ruling. Subsequently, the Debtor submitted thirty-five detailed

proposed additional findings.

The bankruptcy court ultimately declined to adopt the

Debtor’s additional proposed fact findings, but the Debtor is

simply wrong in asserting that the bankruptcy court refused to

consider them.

In its Order Denying Request to Adopt Additional Findings of

Fact (“Proposed Fact Findings Order”), the bankruptcy court

explicitly declined to adopt the Debtor’s additional proposed

fact findings “as unnecessary.” The bankruptcy court necessarily

reviewed and considered the Debtor’s proposed additional fact

findings in arriving at that conclusion. The bankruptcy court

then went on to state in the Proposed Fact Findings Order that,

The Court did not, as represented in the Request,

invite the parties to submit “additional” findings;

rather the Court, at the June 10, 2011 oral ruling

hearing, advised the parties that they could submit

written findings and conclusions that reflected the

court’s oral findings and conclusions as stated on the

record. (emphasis in original).
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Based on the record before us, we perceive no abuse of discretion

in the bankruptcy court’s decision not to adopt the Debtor’s

proposed additional fact findings in these circumstances.

Conclusion

For the foregoing reasons, we AFFIRM.