N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT In re : JOSEPH H. PAR

KS and TIFFANY M . PARKS, De

btors, JOSEPH H. PAR

KS, DB A Pool C onstruc tion Se rvic e s, Appe lla

nt, v. ANGELUS B LOC K C O., INC ., Appe lle e . No. 12-60073 B AP No. 11-1565
AM ENDED M EM OR

ANDUM *

Appe a l from

the Ninth C irc uit B ankruptc y

Appe lla te Pane l Kirsc he r, M arke ll, a

nd Dunn, B ankruptc y

Judge s, Pre s iding Argue d a nd Subm itte d April 11, 2014 Pa sa de n a , C a l ifornia B e fore : N.R . SM ITH a

nd M UR GUIA, C irc uit Judge s, a nd M C NAM EE, Se nior Distric t Judge
. ** 

# FIL ED
JUN 06 2014 M OLLY C. DW Y ER, CLERK U

. S

. CO URT O F APPEALS

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

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

by 9th C ir. R . 36-3.

** The Honora

ble Ste phe n M . M c Nam e e , Se nior U.S. Distric t Judge for the D istric t of Ariz ona , sitting by de signa t ion.Parks a ppe a ls the ba

nkruptc y c ourt’ s de c i sion (a ffirm e d by the ba nkruptc y
a ppe lla te pa ne l) tha t his obliga

tion to Ange lus B l oc k C o., Inc ., is e x c e pte d from disc ha rge unde r 11 U.S.C
. § 523(a )(2)(A). W e re vie w de novo theba nkruptc y a ppe lla te pa n e l’ s de c ision. Ste e lc aseInc
. v . J ohnston (In re

J ohnston) , 21 F.3d 323, 326 (9th C ir. 1994). W e re vie w the ba nkruptc y c ourt’ s findings of fa c t for c le ar e rror a nd its c onc lusions of la

w de
novo. Id. Our re vie w a lso c onside rs the “ fre sh sta rt polic y ” : “ e xc e ptions to disc ha rge should bestric tly

c onstrue d a ga inst a

n obje c ting c re ditor a

nd in fa vor of the d e btor.” Snok

e v . Riso (In reRiso) , 978 F.2d 1151, 1154 (9th C ir. 1992). W e will re ve rse a

ba nkruptc y c ourt’ s e vide ntia

ry ruling only

for an a buse of disc re tion tha

t a lso pre judic e d t he c om pla i ning pa

rty . J ohnson v . N

e i lson (In re Slatk in) , 525 F.3d 805, 811 (9th C ir. 2008). I. A de btor is not discha

rge d in ba nkruptc y from any de b t “ for m one y , prope rty , se rvic e s, or a

n e xte nsion, re ne wa l , or re fina nc ing of c re dit, to the

e xte nt obta ine d by

— fa lse pre t e nse s , a

fa lse re pre se n tation, or a c tua l fra u d.” 11 U.S.C
. § 523(a )(2)(A). To pre va il on a § 523(a )(2)(A) c la i m , a

“ c re d i tor m

ust de m o nstra

te by a pre p onde ranc e of the e vide nc e ” the following five fa c tors:

-2-(1) m isre pre se ntation, fra udule n t om ission or de c e ptive c onduc t by the de btor; (2) knowle dge of the fa lsity or de c e ptive ne ss of his sta te m e nt or c onduc t; (3) a

n inte nt to de c e ive ; (4) justifia ble re lia nc e by the c re ditor on thede btor’ s sta te m e nt or c onduc t; a

nd (5) da m a ge to the c re ditor proxim ate ly c a use d by its re l ia nc e on the de btor’ s sta te m e nt or c onduc t. Turtle Roc k Me adow s Home ow ne rs Ass’n v . Sly man (In re Sly man) , 234 F.3d 1081, 1085 (9th C ir. 2000). W he the r the c re ditor ha s e sta blishe d e a c h

e le m e nt is a finding of fa c t tha

t w e re vie w for c l e ar e rror. Se e , e . g. , Euge n e Park

s Law C orp. Be ne fit Pe nsion Plan v. K

irsc h (In reK

irsc h) , 973 F.2d 1454, 1456 (9th C ir. 1996) (pe r c uriam ); First Be v e r ly Bank v . Ade e b (In reAde e b) , 787 F.2d 1339, 1342 (9th C ir. 1986). 1. “ [T] he nondisc losure of a m ate ria l fa c t in thefa c e of a duty to disc l ose ”
c onstitute s a

fra u d ule nt re pre s e ntation unde r § 523(a )(2)(A). Se e Apte v . J apra (In
reApte ) , 96 F.3d 1319, 1323-24 (9th C ir. 1996). Pa rtie s to a busine ss tra

nsa c tion
owe e a c h othe r a

duty of disc losure “ if [one ] knows tha t the othe r is a

bout to e nte r into [thetra

nsa c tion] unde r a

m ista ke a s to [fa c ts ba sic to the tra nsa c tion] , a

nd tha t the o the r, be c a

use of the re lationship be twe e n the m , the c u stom s of the tra d e or othe r obje c tive c irc um s ta

nc e s , would re a sona

b ly e xpe c t a disc losure of those fa c t s.” Id. at 1324 (inte rna l quota tion m arks om itte d).

-3-The ba nkruptc y c o urt did not c l e arly

e rr in finding tha

t Pa rks fa i le d to disc lose a m ate ria l fa c t whe n he did not disc lose to Ange lus the owne r of the four Lang prope rtie s. 1 That nondisc losure is m ate ria l, be c a use Parks wa s a

ware of the im porta nc e to Ange lus of knowing “ t he de stina tion a nd use of the m ate ria ls in que stion.” Furthe r, this omission is ac tiona ble unde r § 523(a )(2)(A), be c a use Parks
owe d Ange lus a duty

to disc lose . Though Ange lus submi tte d no e v ide nc e of a spe c ia l re lationship or custom s of the tra de , othe r obje c tive c irc um s ta nc e s, In re Apte , 96 F.3d a

t 1324, ga v e rise to the duty
. Spe c ific a l ly , the num be r of prior transa c tions be t

we e n Parks a nd Ange lus, theratio of R e ige r prope rtie s to La ng prope rtie s in thesubdivision, a nd Pa rks’ s knowle d ge tha

t Ange lus ne e de d to know the o wne r of e a c h prope rty to file a m e c ha nic ’ s lie n toge the r c re ate d a duty to disc lose b e twe e n Parks a

nd Ange lus. S

e e also C itibank (S.D.), N .A. v . Eashai (In re Eashai) , 87 F.3d 1082, 1089 (9th C ir. 1996) (noting tha t a duty to disc lose e xists whe n a de btor c re at e s a

“ fa c a de ” tha

t c onc e a ls fra

udule nt inte ntions not to pa y ba c k a de bt). 2. The ba

nkruptc y c o urt did not c l e arly

e rr whe n it c o nc lude d tha t “ Parks kne w he wa s giving the

im pre ssion through nondisc losure tha t the m ate ria ls” orde re d for

1 Parks c la im s his disc losure of the prope rtie s ’ a ddre sse s wa s e quiva l e nt to disc losing the

owne r. He ha s not provide d re le va nt a uthority supporting this vie

w. -4-the four La

ng prope rtie s we re for R ie ge r prope rtie s. Tha t Pa rks kne w of his nondisc losure is substa

ntia te d by the ba

nkruptc y c ourt’ s “pla

usible ” vie w of the
e vide nc e , Ande rson v . C

ity of Be sse me r , 470 U.S. 564, 573-74 (1985), tha t Pa rks
wa s try ing to ge t R ie ge r to pa y for the supplie s use d on the La ng prope rtie s . 3. The ba

nkruptc y c o urt did not c l e arly

e rr in finding tha

t Pa rks “ fa ile d to disc lose [the owne r of the four La ng prope rtie s] with a

n inte n t to de c e ive so a s to
a c c om plish thegoa l of ha

ving M r. R ie ge r pa

y for the am ounts tha

t would ha

ve be e n owe d on the La

n g proje c t.” Aga in, we de c l ine to upse t the ba nkruptc y c ourt’ s pla u sible vie w of the e vide nc e , e spe c ia lly whe re he avily

inte rtwine d with its
c re d ibility

de te rm inat ions. Se e Duc k e tt v . Godine

z , 109 F.3d 533, 535 (9th C ir. 1997). 4. The ba

nkruptc y c o urt did not c l e arly

e rr in finding tha

t Ange lus’ s re l ia

nc e on Pa rks’ s om ission wa s justifia ble . Ange lus ha d

re c e ive d the ne c e ssa

ry inform at ion from

Parks on ove r 82 Ri e ge r prope rtie s. Whe n Parks orde re d
m ate ria l s for the first La

ng prope rty , he notifie d Ange lus of its owner. Unde r those
c irc um s ta nc e s , it wa s not unjustifia ble for Ange lus to re ly

on Pa rks to inform

it whe n he orde re d m ate ria ls within the sam e vic i nity of so m any R ie ge r prope rtie s for a n on-R ie ge r prope rty . Se e Fie ld v . Mans , 516 U.S. 59, 71 (1995).

-5-5. He re , the ba nkruptc y c o urt did not c le arly

e rr in finding tha

t Pa rks’ s
om i ssion c a

use d Ange lus’ s da

m a ge : “ A s a

c onse que nc e of the non-disc losure , [Ange lus] wa s una

ble to obta in a

lie n on the La

ng proje c t a

nd the e vide n c e is tha

t the re re m a i n am ounts due with re spe c t to them ate ria ls supplie d to theLa ng proje c t.” Ac c o rd In re A

pte , 96 F.3d a

t 1323. Parks’ s c la im

of no c a u sation, be c a

use Ange l us wa s a c tua lly pa id by R ie ge r for the m ate ria ls use d

on the La

ng prope rtie s , fa ils. Theba nk ruptc y c ourt found, within its disc

re t ion, tha

t Pa rks im prope rly dire c te d Ange lus to a pply pa ym e nt from R ie g e r to the La

ng proje c ts, a

nd this e rror wa s e ve ntua lly c orre c te d by Ange l us. II. The ba nkruptc y c o urt’ s disc re tiona

ry e vide ntia ry rulings ne e d not be
re ve rse d. Spa soje vic ’ s te stim o ny struc k for la c k of pe rsona l knowle dge wa s
c um ulat ive of othe r e vide n c e , so the re wa s no pre judic e ; Spa soje vic ’ s te stim ony struc k a s he arsay

wa s prope rly e xc lude d, be c a use Parks offe re d it for the truth of the m atte r a sse rte d
. In reSlatk in , 525 F.3d a

t 811. 2

2 To the e xte nt Spa soje v ic ’ s te stim ony wa s offe re d to im pe a c h R ie ge r’ s te stim ony , the ba

nkruptc y c ourt did not a

buse its disc re tion in c onc l uding tha t Spa soje vic ’ s te stim o ny

did not c ontra dic t

R ie ge r’ s “ spe c ific ” te stim ony re ga rding the l a c k of a n a gre e m e nt be twe e n Parks a nd R ie ge r. In reSlatk

in , 525 F.3d a

t 811. -6-III.

The ba nkruptc y c o urt’ s ora l ruling, whic h inc o rporate d

by re fe re n c e Ange l us’ s post-tria l brie f, wa s e xplic it e nough to give us a c le ar unde rsta

n d ing of its fa c tua l findings a

nd le ga l c o nc lusions. Tha t suffic e s unde r Fe de ra l R ule of Proc e d ure 52(a ). Irish v . Unite d State s , 225 F.2d 3, 8 (9th C ir. 1955). AFFIRM E D
.

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