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 : J. DOUGLASS JENNINGS, Jr.; PEGGY L. JENNINGS,

De btors,

------------------------------ J. DOUGLASS JENNINGS, Jr.; PEGGY L. JENNINGS,

Pla i ntiffs-Appe lla

nts,
v. R AM OS PR OPER TIES, L.P.; SSM C APITAL, INC .,

De fe nda n ts-Appe lle e s. No. 14-56649 D.C . No. 3:13-c v-02588-B EN-KSC
M EM O R ANDUM *

Appe a l from

the Unite d

Sta t e s Distric t C ourt for the Southe rn Distric t of C a lifornia R oge r T. B e nite z , Distric t Judge , Pre s iding Argue d an d Subm itte d Nove m be r 9, 2016 Pa sa de n a , C a l ifornia 

# FIL ED
D EC 02 2016 M OLLY C. DW Y ER, CLERK U
. S

. CO URT O F APPEALS

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

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

by Ninth C irc uit R

ule 36-3.B e fore : SC HR OEDER and B YB EE, C irc uit Judge s , a nd SM ITH, ** C hie f Distric t Judge
. M r. and M rs. Je nnings a p pe a l the distric t c ourt’ s a ffirm anc e of a ba nkruptc y
c ourt’ s gra

nt of sum m ary judgm e nt a ga inst the m . W e have jurisdic tion unde r 28 U.S.C . § 158(d), a

nd we a ffirm

in pa rt, re ve rse in pa

rt, a n d re m a n d. W e de te rm i ne de nov o “ w he the r, vie w ing the e vide nc e in the light m ost fa vora ble to the nonm oving pa

rty [M r. an d M rs. Je nnings] , ge nuine issue s of fa c t
re m a in for tria l.” In re Ste rn , 345 F.3d 1036, 1040 (9th C ir. 2003). C re dibility de te rm i na tions m

ust be le ft for the jury

and m ust not bere solve d on sum m ary judgm e nt. Se e De

ppe v . Unite d

Airline s , 217 F.3d 1262, 1266 (9th C ir. 2000) (noting tha

t a distric t c ourt “ m a

y not m a ke c re dibility

de te rm inations” on sum

m ary judgm e nt). 1. On sum

m ary judgm e n t, the ba

nkruptc y c ourt he ld tha

t the de bt wa s nondisc ha

rge a ble a s to M r. Je nnings be c a use , am o ng othe r re a sons, the de bt wa s

“ for fraud or de fa l c a tion while a c ting in a fiduc i ary c a pa c ity .” 11 U.S.C
. § 523(a )(4). De fa lc a tion is the “ m isa ppropria tion of trust funds or m

o ne y he ld in
any fiduc ia ry c a pa c i ty .” In re Le w i

s , 97 F.3d 1182, 1186 (9th C ir. 1996) (c ita tion
om i tte d). “ The fiduc ia

ry re lationship m

ust be one arising from

an e xpre ss or

* * The Honora

ble W illia m E. Sm ith, Unite d

Sta t e s C hie f Distric t Judge for the Distric t of R

hode Isla nd, sitting by de signa

tion. 2te c hnic a l trust tha t wa s im pose d be fore and without re fe re nc e to the wrongdoing that c a u se d the de bt.” Id. a t 1185. M r. Je nnings wa s holding the prope rty in a n
e xpre s s trust for Pla intiffs, a nd he m isa

ppropria te d the prope rty

with “ knowle dge of, or gross re c kle ssne ss in re spe c t to, the im prope r na ture of the re l e va nt fiduc ia ry be havior.” Bulloc k

v . Bank C hampaign, N

.A. , 133 S. C t. 1754, 1757 (2013). B e c a use the re we re no issue s of m at e ria l fa c t on the se points, sum m ary judgm e nt
wa s prope rly e nte re d a ga inst him
. 2. The ba nkruptc y c ourt he ld tha

t the de bt wa s nondisc ha

rge a ble a s to M rs. Je nnings a s we ll be c a

use the de bt wa s for “ e m

b e z z l e m e nt[] or la

rc e ny ” and “ for willful a nd m a lic ious injury

by the de btor to a

nothe r e ntity

or to the prope rty

of
anothe r e ntity .” 11 U.S.C . § 523(a )(4), (6). La rc e ny is the “ fe lonious ta

king of
anothe r’ s prope rty

with the inte nt to c onve rt it to de prive the owne r of the sa

m e .” In re O rmsby , 591 F.3d 1199, 1205 (9th C ir. 2010) (c i tation om itte d). Fe lonious inte nt, in turn, re quire s “ proc e e ding from an e vil he art of purpose ; m a lic i ous; [or] villa inous.” Id. a t 1205 n.4 (c ita tion om itte d). Em

be z z le m e nt sim i la

rly re quire s
c irc um s ta nc e s indic a t ing fra

udule nt inte nt. In re Little ton , 942 F.3d 551, 555 (9th C ir. 1991). M rs. Je nnings put forth evide nc e tha t c re a te d a ge nuine issue of
m a te ria l fa c t a s to he r inte nt by c la im ing tha

t she did not know wha

t she wa s

3signing a

nd signe d form s m e re l y

be c a use M r. Je nnings told he

r to. The re fore , sum m ary judgm e nt should not ha

ve be e n gra

nte d a s to M rs. Je nnings. 3. M ore ove r, the ba

nkruptc y c o urt gra nte d, a n d the distric t

c o urt a ffirm e d, a pre j udgm e nt inte re st rate of te n pe rc e n t. As a ge ne ra l rule , the fe de ra l pre judgm e nt inte re s t rate a

pplie s to ba

nkruptc y proc e e dings unle ss the e quitie s of the c a se c a ll for a d iffe re nt rate . Se e In re Bank s , 263 F.3d 862, 871 (9th C ir. 2001). He re , howe v e r, the ba

nkruptc y c ourt e rre d be c a

use it ga ve no justific a tion for using a diffe re nt rate . On re m and, the ba nkruptc y c ourt should e ithe r a

p p ly the fe de ra l pre j udgm e nt inte re st rate or provide a re a s ona ble justific at ion, ba se d on the
e quitie s of the c a se , for using a diffe re nt rate . 4. M r. and M rs. Je n n ings a lso c la im tha t a pre vious c o urt’ s de nia l of a pre j udgm e nt writ of a

tta c hm e nt in othe r litiga

tion se rve s a s a re

s judic ata ba

r to this litiga tion. The de nia l doe s not ha ve this e ffe c t be c a

use it wa s not a

fina l judgm e nt. Se e In re J

e n son , 980 F.2d 1254, 1257 (9th C ir. 1992). W e AFFIRM a s to M r. Je nnings’ s nondisc h arge a bility and the re

s judic ata issue , RE V E RSE a s to M rs. Je nnings’ s nondisc ha rge a bility and the se le c tion of a pre j udge m e nt inte re st rate , a n d RE M A ND for furthe r proc e e dings.

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