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*

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.

1

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-11-1696-MkDKi

)

JAVIER TOVAR, ) Bk. No. LA-10-41664-BR

)

Debtor. ) Adv. No. LA-10-03016-BR

______________________________)

)

JAVIER TOVAR, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

HERITAGE PACIFIC FINANCIAL, ) 

LLC, )

)

Appellee. ) )

Argued and Submitted On

July 20, 2012 at Pasadena, California

Filed – August 3, 2012

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Barry Russell, Bankruptcy Judge, Presiding

 

Appearances: Christopher L. Hoglin of the Law Offices of

Christopher L. Hoglin, P.C. for Appellant Javier

Tovar; Brad A. Mokri of the Law Offices of Mokri &

Associates for Appellee Heritage Pacific

Financial, LLC.

 

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

FILED

AUG 03 2012

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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1Unless otherwise specified, 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, Rules 1001-9037; all “Civil Rule” references are to

the Federal Rules of Civil Procedure; and all “Evidence Rule”

references are to the Federal Rules of Evidence.

2The Excerpts of Record provided by Tovar do not include all

the documents listed in his Designation of Record and Statement

of Issues to be Presented on Appeal (“Designation of Record”). 

Accordingly, we exercise our discretion to independently review

the docket in Tovar’s above referenced adversary proceeding, and

documents electronically filed therein through the court’s CM/ECF

system. See O'Rourke v. Seaboard Sur. Co. (In re E.R. Fegert,

Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989) (appellate court may

take judicial notice of underlying bankruptcy records); Kirton v.

Valley Health Sys. (In re Valley Health Sys.), 471 B.R. 555, 558

n.2 (9th Cir. BAP 2012) (same).

2

INTRODUCTION

Appellant-Debtor Javier Tovar (“Tovar”) appeals the

bankruptcy court’s judgment against him with respect to a

nondischargeability claim brought by Heritage Pacific Financial,

LLC (“HPF”) pursuant to Section 523(a)(2)(B).1

 For the reasons

set forth below, we AFFIRM. 

FACTS2

Some years prior to filing his bankruptcy petition, on

November 15, 2006, Tovar executed a promissory note (“Note”) for

a secured, cash-out refinance loan (“Refinance Loan”) in the

amount of $120,000. The collateral for the Note was a second

deed of trust on real property located in Sylmar, California

91342 (“Property”). Both the Note and deed of trust were made in

favor of WMC Mortgage Corp. (“WMC”). Tovar signed and submitted

a Uniform Residential Loan Application (“Loan Application”) for

the Refinance Loan. Tovar subsequently defaulted on some or all
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3

The order further provided that no other declarations or

briefs were permitted, and that any oral testimony would be

limited to rebuttal testimony or cross-examination.

3

of the obligations relating to the Property, and the Property was

sold at a non-judicial foreclosure sale. 

Tovar filed a voluntary chapter 7 bankruptcy petition on

July 30, 2010. On November 5, 2010, HPF initiated the adversary

proceeding giving rise to the instant appeal by filing a

nondischargeability complaint against Tovar. In its complaint,

HPF contended it now owned the Note; sought judgment in the

amount of $120,000; and requested a determination that such

judgment was nondischargeable within the meaning of Section

523(a)(2)(A) and (a)(2)(B) due to misrepresentations made when

the loan was originated. 

The bankruptcy court scheduled a bench trial for November 9,

2011. On July 26, 2011, the bankruptcy court entered an Order of

Representation of Evidence by Declaration For Court Trial

(“Evidence Order”). This order required both parties to submit

witness testimony by declaration; conditioned the admission of

such declarations on the declarant’s presence at trial; and set

deadlines to submit the declarations, optional trial briefs and

evidentiary objections.3

 The bankruptcy court next entered a Pre-Trial Order on

August 3, 2011, which the parties had jointly submitted to the

court. The Pre-Trial Order established certain admitted facts,

and provided that only certain issues of law remained to be

litigated, including the elements of reasonable reliance and

intent to deceive under Section 523(a)(2)(B). The parties also
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4HPF also submitted the declaration of Mark Schuerman. The

admission of that declaration, however, is not presented for

review; Schuerman was not present at trial and thus, his

declaration was not admitted into evidence.

5The Amended Exhibit List consisted of 13 exhibits:

1. Loan Application; 

2. Note;

3. Deposition transcript;

4. Borrower's Certification & Authorization

(“Certification Form”);

5. Deed of Trust;

6. Settlement Statement;

7. Occupancy Statement;

8. Amortization Schedule;

9. Latin Services Letter (“Latin Services Letter”);

10. Tovar Landscape Design brochure (“Brochure”);

11. Wells Fargo Bank Statements (“Bank Statements”);

12. Letter of Employment: To Support Purpose of Refinance

(“Letter in Support of Refinance”); 

13. Allonge.

4

included a list of the exhibits they intended to introduce, and a

list of witnesses they planned to call at trial. 

Pursuant to the Evidence Order, Tovar and HPF each submitted

declarations; Tovar filed a declaration on his own behalf, and

HPF submitted the declaration of Benjamin Ganter (“Ganter”),

HPF’s Director of Client Relations and a Managing Partner.4

Ganter’s declaration was accompanied by two exhibits: a copy of

the Loan Application and a copy of the Note. Both parties filed

trial briefs. HPF also filed a supplemental exhibit list on

September 7, 2011, then filed an amended exhibit list (“Amended

Exhibit List”)5 the next day so as to include a copy of an

allonge (“Allonge”) to the Note.

In his declaration, Ganter stated that HPF purchased the
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5

Refinance Loan from RP Financial Services, LLC (“RP Financial”),

and that HPF was currently in possession of the Note as a result 

of that purchase. Ganter further declared that through an

independent investigation, HPF discovered a number of material

misrepresentations on the Loan Application, including

misrepresentations related to Tovar’s monthly income, his

employment, and his intent to live on the Property.

In its trial brief, HPF asserted that it was the current

owner and holder of the Note, and accordingly, could enforce the

Note and all claims for relief against Tovar. HPF further

asserted that the disputed elements under Section 523(a)(2)(A)

and (a)(2)(B) were established by the false statements Tovar made

in his Loan Application. These included that the Loan

Application listed Tovar’s monthly income as $11,000; that he

owned Tovar Landscape Design and was self-employed through the

company; and that he lived at the Property. 

In his trial declaration, Tovar stated that he did not read

or understand English, and that a loan officer named Jannet

Medina translated and filled out the Loan Application on his

behalf, directing him where to sign. He also stated that he had

no knowledge as to the various documents that HPF asserted were

in his mortgage file.

Tovar’s trial brief countered HPF’s assertion of standing;

he argued that HPF had not shown that it was a “person entitled

to enforce” the Note pursuant to various provisions of the

California Commercial Code. He further argued that because he

was an uneducated man who did not read, write, or speak English,

it was impossible for him to ensure the accuracy of the
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6

statements made in the Loan Application. Finally, he argued

that HPF could not establish the reasonable reliance required by

Section 523(a)(2)(B), as only WMC, the original lender, could

have relied on Tovar’s Loan Application. 

Tovar also submitted evidentiary objections to Ganter’s

declaration, and HPF’s Amended Exhibit List. He objected to

Ganter’s declaration pursuant to Evidence Rules 401, 402, 602 and

701. Tovar also objected to HPF’s exhibits pursuant to Evidence

Rules 901, 1002, 802, and Civil Rule 37. 

At the bench trial, the bankruptcy court heard testimony

from both Ganter and Tovar. Ganter testified that HPF purchased

the Note from RP Financial at the beginning of 2009, as part of a

purchase of a pool of mortgage promissory notes. He stated that

at the time of the purchase, HPF was a relatively small company,

and he was a key employee; thus, he personally oversaw the

transaction relating to the Note. Ganter further testified

that HPF began investigating the Refinance Loan when it became

aware that Tovar had never actually lived on the Property. He

also stated that the Allonge was always attached to the Note

(both the Note and Allonge were produced at trial). Finally,

Ganter testified that HPF’s claim for $120,000 encompassed the

amount due under the Note, and did not include attorneys’ fees or

other costs and expenses incurred in litigating the

nondischargeability claims.

On cross examination, Tovar testified that it was his

signature that appeared on the Loan Application, the Note, the

Certification Form, and the Deed of Trust. He further stated

that he never: lived at the Property; earned monthly income in
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6

The Latin Services Letter is an undated letter signed by a

woman (whose printed name is illegible) on behalf of Latin

Services, which states that she had prepared Tovar’s individual

tax returns since 2004, and that he had been self-employed by

Tovar Landscaping Design during the two previous years.

7

the amount of $11,000; had a bank account at Wells Fargo Bank; or

owned his own business. Instead, Tovar testified that he

purchased the Property for his brother as his brother could not

finance a home on his own. 

Following cross examination testimony, the bankruptcy court

overruled Tovar’s evidentiary objections. In doing so, the

bankruptcy court stated:

I’m satisfied that these are the proper documents that

were in the file. So, I’m going to overrule the

objections. The question of discovery I’m not

concerned about that. As far as the allonge it’s

pretty clear to me. I listened to the testimony. As

far as the issue of the transfer that there’s no harm

on that. So, I’m going to admit the exhibits.

 Trial Tr. 48:10-17, Nov. 9, 2011.

Following the conclusion of all testimony, the bankruptcy

court ruled in favor of HPF. It found that Tovar’s testimony

lacked credibility, particularly in light of the other various

documents in Tovar’s mortgage file, including the Occupancy

Statement and Latin Services Letter.6

 The bankruptcy court

directed HPF to prepare a proposed judgment, and proposed

findings of fact and conclusions of law. After these were filed,

the court entered the judgment and findings of fact and

conclusions of law on December 21, 2011.

On December 7, 2011, Tovar filed the appeal presently before

the Panel. 
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8

JURISDICTION

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

§§ 1334 and 157(b)(2)(I). If the judgment is a final order, then

we have jurisdiction under 28 U.S.C. § 158(b).

The only question we see to the finality of the judgment on

appeal is that it only refers to the Section 523(a)(2)(B) claim,

notwithstanding that the complaint was brought pursuant to both

Section 523(a)(2)(A) and Section 523(a)(2)(B). 

In response to a clerk’s order from this Panel requesting an

explanation as to why the judgment was final, Tovar filed a

written response in which he asserted that the elements of

Section 523(a)(2)(B) essentially encompassed the elements of

Section 523(a)(2)(A); and thus, the judgment was final. This, of

course, is wrong, as well as unhelpful.

Not relying solely on Tovar, a motions panel considered the

matter, and on May 25, 2012, entered an order deeming the

judgment to be a final disposition of the adversary proceeding. 

The motions panel determined that judgment on one of two mutually

exclusive claims for relief renders the claim not addressed

denied, and that no further action was necessary. See McCrary v.

Barrack (In re Barrack), 217 B.R. 598, 605 (9th Cir. BAP 1998)

(“It is well established that [Section 523(a)(2)(A) and

523(a)(2)(B)] are mutually exclusive.”). Although we are not

bound by determinations made by the motions panel, see Couch v.

Telescope Inc., 611 F.3d 629, 632 (9th Cir. 2010), here, we agree

with them, and hold that the judgment is a final order.

Therefore, we have jurisdiction over this appeal.
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In his Designation of Record, Tovar presented 33 enumerated

issues for review on appeal. Tovar, however, did not address a

majority of these issues in his opening brief. The Panel thus

declines to address any issues that Tovar did not fully argue in

his brief. See Padgett v. Wright, 587 F.3d 983, 986 n.2 (9th

Cir. 2009)(per curiam)(appellate courts “will not ordinarily

consider matters on appeal that are not specifically and

distinctly raised and argued in appellant's opening brief.”).

9

ISSUES7

1. Whether HPF established its standing as a real party in

interest in relation to pursuing its nondischargeability

claims against Tovar?

2. Whether the bankruptcy court erred by overruling Tovar's

evidentiary objections with respect to the Allonge? 

3. Whether the bankruptcy court erred by overruling Tovar's

evidentiary objections with respect to Ganter’s declaration

and testimony? 

4. Whether the bankruptcy court erred by finding that Tovar

obtained the Refinance Loan through fraud, and that the debt

was nondischargeable under Section 523(a)(2)(B)? 

STANDARDS OF REVIEW

Standing is a legal issue that the Panel reviews de novo. 

Veal v. Am. Home Mortg. Servicing, Inc. (In re Veal), 450 B.R.

897, 906 (9th Cir. BAP 2011).

The bankruptcy court's evidentiary rulings, such as

admission of testimony, are reviewed for abuse of discretion. See

Int’l Ass’n of Firefighters v. City of Vallejo (In re City of

Vallejo), 408 B.R. 280, 291-92 (9th Cir. BAP 2009). Moreover, an

erroneous evidentiary ruling will only be reversed if that error

was prejudicial. Id. at 292.
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10

Abuse of discretion is determined under a two-prong inquiry. 

United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009)

(en banc). The Panel first determines de novo whether the

bankruptcy court applied the correct legal standard. See id. If

the bankruptcy court failed to do so, it necessarily abused its

discretion. See id. at 1262. 

If, however, the bankruptcy court applied the correct legal

standard, the inquiry moves to the second prong and the Panel

examines whether the bankruptcy court’s factual findings were

clearly erroneous. See id. at 1262. The bankruptcy court's

factual findings are clearly erroneous if they are "illogical,

implausible, or without support in inferences that may be drawn

from the record." See id. at 1263 (internal quotation marks

omitted).

As indicated above, factual issues, such as credibility and

the authenticity of documents, are reviewed under the clearly

erroneous standard. Rule 8013(a). Retz v. Samson (In re Retz),

606 F.3d 1189, 1196 (9th Cir. 2010) (citing Hinkson, 585 F.3d at

1261-62 & n.21). Under this standard, when there are two

permissible views of the evidence, the bankruptcy court’s choice

between them cannot be clearly erroneous. Palmdale Hills Prop.,

LLC v. Lehman Commerical Paper, Inc. (In re Palmdale Hills Prop.,

LLC), 457 B.R. 29, 40 (9th Cir. BAP 2011) (citing Anderson v.

City of Bessemer City, N.C., 470 U.S. 564, 574 (1985)).

Many of the issues in this case – including whether a

creditor reasonably relied on a debtor’s written statement, and

whether a debtor made that statement with intent to deceive – 

are factual questions that are reviewed for clear error. Smith
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8Civil Rule 17 applies in bankruptcy proceedings through

Rules 7017 and 9014(c).

11

v. Lachter (In re Smith), 242 B.R. 694 (9th Cir. BAP 1999); see

also Candland v. Ins. Co. of N. Am. (In re Candland), 90 F.3d

1466, 1469 (9th Cir. 1996). 

DISCUSSION

I. HPF Established its Standing as a Real Party in Interest to

Pursue its Nondischargeability Claims Against Tovar.

Tovar challenges whether HPF established its standing as a

“real party in interest” pursuant to Civil Rule 17(a)(1). He

contends that HPF never provided proof that it was the current

holder of the Note, and thereby, that it was a “person entitled

to enforce” the note under California commercial law. 

Standing is required in every federal case and determines

whether the court may entertain the proceeding. In re Veal,

450 B.R. at 906. Standing has both constitutional and prudential

dimensions. See Edwards v. Wells Fargo Bank, N.A. (In re

Edwards), 454 B.R. 100, 103 (9th Cir. BAP 2011). In turn,

prudential standing implicates the real party in interest

requirement under Civil Rule 17.8 In re Veal, 450 B.R. at 907. 

A party requesting relief must establish that it is the real

party in interest under applicable substantive law. See id. at

907-08. 

In mortgage cases involving a negotiable instrument secured

by real property, the substantive law is generally supplied by

the Uniform Commercial Code (“UCC”), as adopted or implemented by

state law. See id. at 908-10 (discussing Article 3 and Article 9

of the UCC). Under this construct, a party may establish its
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9See Cal. Com. Code § 1201(b)(21) (defining “holder”).

10A person may also be a person entitled to enforce if they

are not in possession of the negotiable instrument but are

entitled to enforce pursuant to Cal. Com. Code §§ 3309 or

3418(d).

11Application and analysis under the California Commercial

Code is appropriate here given that the situs of the Property is

California and pursuant to the governing law provision in the

Deed of Trust.

12

standing by showing it is the “person entitled to enforce” the

promissory note as that phrase is defined by UCC Article 3. See

id. When a person is not the original payee identified on the

note, the person establishes that it is a “person entitled to

enforce” the note by showing it is either a holder9

 of the note,

or a nonholder in possession of the note with the rights of a

holder.10 See Cal. Com. Code § 3301.11 

Negotiation is defined as a “transfer of possession, whether

voluntary or involuntary, of an instrument by a person other than

the issuer to a person who thereby becomes its holder.” Id.

§ 3201(a). When the note is payable to an identified person,

“negotiation requires transfer of possession of the instrument

and its endorsement by the holder.” See id. § 3201(b) (emphasis

added). An endorsement is “a signature . . . that alone or

accompanied by other words is made on an instrument for the

purpose of (1) negotiating the instrument . . . .” Id.

§ 3204(a). Once a note is negotiated, the subsequent party

becomes a holder, and thereby, a person entitled to enforce the

note. See id. §§ 3201(a); 1201(b)(21); 3301.

It is undisputed here that WMC was the original payee on the
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Note. Because HPF was not the original payee, it had to show it

was a person entitled to enforce the Note, either as a “holder”

of the Note, or a “nonholder” in possession of the Note who has

the rights of a holder. See id. § 3301. 

The court found that the evidence established that the Note

was properly negotiated by WMC to RP Financial. The last page of

the Note contains a stamp endorsing the Note to RP Financial. 

There was no evidence presented that this was made for a purpose

other than endorsement. As such, this constituted a proper

endorsement to RP Financial. See id. § 3204(a). Ganter

testified that HPF took possession of the Note when it purchased

the Note from RP Financial, and thus, it is inferred

that transfer of possession occurred as RP Financial was not the

original holder. Therefore, the Note was properly negotiated to

RP Financial. See id. § 3201(b). 

The inquiry thus moves to whether the Note was properly

negotiated or transferred from RP Financial to HPF. This, in

turn, requires examination of the validity of the Allonge, since

it is the paper that bears the signature of RP Financial

indicating a negotiation to HPF. Tovar argues that HPF failed to

show that the Allonge was affixed to the Note, as it must be to

effectuate a valid negotiation. Cal. Comm. Code § 3204(a) (“For

the purpose of determining whether a signature is made on an

instrument, a paper affixed to the instrument is a part of the

instrument.”). He also continues to challenge the effect of the

Allonge as it was undated and unrecorded. 

Contrary to Tovar’s argument, there is nothing in the UCC or

the California Commercial Code requiring that an allonge be dated
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or recorded with the county recorder. Tovar advances no

substantive argument or case law to support this proposition. 

Nor, at least since the 1992 amendments to UCC Article 3, is it

relevant that there may be space on a promissory note for

additional endorsements. See Comment 1 to UCC § 3-204 ("An

indorsement on an allonge is valid even though there is

sufficient space on the instrument for an indorsement."). 

Here, the Allonge attached to the Amended Exhibit List is a

single exhibit titled “Allonge to Promissory Note.” The document

identifies Tovar, the Property and his loan number. There is

language stating “Without Recourse, Pay to the Order of: Heritage

Pacific Financial, LLC d/b/a/ Heritage Pacific Financial,”

followed by the signature of Richard A. Panter, on behalf of RP

Financial. If affixed to the Note, this information would be

sufficient to constitutes an endorsement from RP Financial to

HPF. See Cal. Com. Code § 3204(a). 

According to Ganter’s testimony at the trial, the Note and

Allonge were in HPF’s possession since its purchase of the Note,

and in fact, were both produced at the trial during Ganter’s

cross-examination. This infers that transfer of possession

occurred as HPF was not the prior holder of the Note.

Even so, in order for RP Financial to have properly

negotiated the Note to HPF through the Allonge, the Allonge must

have been affixed to the Note. See id. § 3204 ("For the purpose

of determining whether a signature is made on an instrument, a

paper affixed to the instrument is a part of the instrument."). 

The record before us raises some questions as to this. The Note

attached to Ganter’s declaration and HPF’s Amended Exhibit List
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contains two faint hole punch marks at the top of the document. 

The Allonge attached to the Amended Exhibit List, however, does

not bear any indication of similar punch hole marks. There are

no other visible marks that are consistent between the copies of

the Note in the record and the Allonge. 

Even slightly more perplexing, the copy of the Allonge

that Tovar included in his Excerpts of Record clearly bears

visible hole punch marks at the top of the document. This

seemingly appears to be consistent with the facial marks on the

copy of the Note. Tovar’s copy of the Allonge, however, does not

contain ECF markings at the top of the document, which indicates

that it was not filed on the docket. In fact, Tovar’s copy

appears to be different than HPF’s copy of the Allonge attached

to the Amended Exhibit List. It is unclear where Tovar obtained

his copy of the Allonge. 

 While these issues may be debated, it is undisputed that

the Allonge was produced and examined by the bankruptcy court at

trial. Ganter testified that the Allonge was always affixed to

the Note. Tovar’s counsel examined the Allonge, and did not

address any issues as to inconsistent facial marks between the

Note and Allonge; in fact, Tovar’s counsel only inquired as to a

post-it note that was apparently affixed to the Allonge. Based

on the testimony and production of the Note and Allonge at trial,

it was reasonable to assume that the Allonge was affixed to the

Note. And that finding is implicit in the bankruptcy court’s

ruling, which is entitled to stand unless clearly erroneous, as

it goes to identity or authenticity. See Rule 8013(a). On this

record, with various possible inferences, we cannot say the
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bankruptcy court erred in picking one of the possible scenarios

and validating the Allonge. Anderson, 470 U.S. at 574; In re

Palmdale Hills Prop., LLC, 457 B.R. at 40.

For the reasons stated above, the bankruptcy court’s finding

that the Note was properly negotiated from RP Financial to HPF

was not clearly erroneous. The bankruptcy court was thereby

entitled to treat HPF as the “holder” of the Note, and thus, the

“person entitled to enforce” the instrument. See Cal. Com. Code

§§ 3201(a); 1201(b)(21); 3301. In turn, this conferred the

status of real party in interest on HPF pursuant to In re Veal. 

Therefore, HPF had standing to pursue its nondischargeability

action against Tovar. 

II. The bankruptcy court did not err in overruling Tovar’s

evidentiary rulings.

A. The Allonge

Tovar focuses a significant portion of his appeal on the

admission of the Allonge into evidence at trial. He contends

that the bankruptcy court erred by admitting the Allonge when HPF

failed to properly authenticate or satisfy the best evidence rule

under the Federal Rules of Evidence. Tovar also contends that

the bankruptcy court erred by admitting the Allonge when HPF

failed to produce the document pursuant to the Evidence Order, or

during the discovery period.

1. Best Evidence Rule – Evidence Rule 1002 

Evidence Rule 1002 provides that “[a]n original writing,

recording, or photograph is required in order to prove its

content unless these rules or a federal statute provides

otherwise.” A copy is admissible to the same extent as an
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original “unless a genuine question is raised about the

original's authenticity or the circumstances make it unfair to

admit the duplicate.” Fed. R. Evid. 1003. 

Tovar argues that HPF failed to prove that the Allonge was

affixed to the Note, particularly when the Note was originally

executed in 2006; thus, without a “certified copy of the

original, in its complete form,” the Allonge was inadmissible to

show that HPF owned the Note. Appellant’s Opening Brief (“Op.

Br.”) at 12.

The bankruptcy court admitted the Allonge into evidence

following Ganter’s testimony. Contrary to Tovar’s arguments, the

Best Evidence Rule does not require that HPF have submitted a

certified or dated copy of the Allonge. The Allonge was produced

at trial, subject to inspection, and Ganter was available for

questioning. Although the bankruptcy court did not explicitly

state the basis for doing so, all of the elements were present to

allow admission of the Allonge, and Tovar’s misplaced and

irrelevant best evidence objection was not a bar to admitting the

Allonge.

2. Authentication – Evidence Rule 901

Evidence Rule 901 provides that a “proponent must produce

evidence sufficient to support a finding that the item is what

the proponent claims it is.” Fed. R. Evid. 901(a). A witness

with knowledge of the item can authenticate it by testifying that

the “item is what it is claimed to be.” Fed. R. Evid. 901(b)(1). 

The proponent of the evidence “need make only a prima facie

showing of authenticity.” See United States v. Iribe, 564 F.3d

1155, 1159 (9th Cir. 2009) (internal citation and quotation marks
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omitted).

Tovar argues that “unrecorded documents, which are required

to be recorded, fail to satisfy the authentication requirements

of [Evidence Rule] 901 or the self-authenticating provisions of

[Evidence Rule] 902.” Op. Br. at 13. Once again, he argues that

without a “certified copy of the original, in its complete form,”

the Allonge was inadmissible to show that HPF owned the Note. 

Id. at 14. 

This is simply not the law. Indeed, under state substantive

law related to negotiable instruments, a note’s “signature[s are]

presumed to be authentic and authorized” without the need for

certifications of signatures. Cal. Comm. Code § 3308(a); see

also Comment 1 to UCC § 3-308. As previously stated, the

bankruptcy court admitted the Allonge into evidence following

Ganter’s testimony. Ganter testified that the Allonge had always

been affixed to the Note. Moreover, he testified that HPF was a

relatively small company at the time that it purchased the Note,

and he was a key employee; thus, he personally oversaw the

transaction relating to the Note. As such, Ganter sufficiently

testified that the document was what HPF claimed it was – an

allonge to the Note executed by Tovar. 

Contrary to Tovar’s arguments, Evidence Rule 901 does not

require that HPF have submitted a certified or dated copy of the

Allonge. Although the bankruptcy court did not explicitly state

the basis for doing so, the record supports that the Allonge was

properly admitted pursuant to Evidence Rule 901.
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12This is in reference to the Local Bankruptcy Rules for the

United States Bankruptcy Court for the Central District of

California. 

13In fact, we observe that Tovar did not file his exhibits

on the docket.

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3. Untimely Submission

Tovar next argues that the bankruptcy court erred by

admitting the Allonge into evidence when HPF submitted the

exhibit one day after the deadline established by the court.

It is unclear from the record whether the bankruptcy court

required that the exhibits be filed on the docket, and if so,

whether it imposed a deadline to do so. Local Bankruptcy

Rule12 7016 states that a joint pre-trial order must include an

attached list of exhibits that each party intends to offer at

trial. See LBR 7016(b)(2)(D) (C.D. Cal). This rule, however,

does not require that the parties file their actual exhibits on

the docket.13

Tovar and HPF each listed their exhibits in the Pre-Trial

Order entered by the bankruptcy court on August 3, 2011. It

appears that HPF supplemented its exhibit list on September 7,

2011, and then filed its Amended Exhibit List the following day

on September 8, 2011. The Evidence Order established deadlines

for HPF and Tovar to submit their declarations, optional trial

briefs, or optional evidentiary objections to the bankruptcy

court in advance of trial. In terms of other evidence, the

Evidence Order further provided that “[t]he only additional

evidence a party may offer at trial is true rebuttal evidence.” 

EOR, Ex. 9 ¶ 2(e).
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Even assuming that the Pre-Trial Order or Evidence Order

established some sort of deadline to identify or file exhibits,

the bankruptcy court generally has discretion during discovery to

admit evidence if there is no prejudice to the other party. 

Although Tovar argues that the Allonge was submitted past the

“deadline,” HPF amended its exhibit list just one day after its

declarations were due pursuant to the Evidence Order. Given that

Tovar still had over one month to submit evidentiary objections,

and that Tovar actually did so, it does not appear that he

suffered any prejudice. Accordingly, the record supports that

the court properly admitted the Allonge despite Tovar’s objection

based on HPF’s purported untimeliness.

4. Civil Rule 37

In relevant part, Civil Rule 37(d) provides that a court may

issue appropriate sanctions where a party fails to serve its

answers, objections, or written responses to interrogatories

under Civil Rule 33, or to requests for production under Civil

Rule 34. Fed. R. Civ. P. 37(d)(A)(ii).

Tovar argues that the bankruptcy court erred by admitting

the Allonge under Civil Rule 37 when HPF failed to produce the

Allonge despite Tovar’s discovery requests. Admittedly, HPF

initiated the nondischargeability action in November 2010; yet,

the record reflects that the Allonge was first identified as an

exhibit in September 2011, just two months prior to trial. It

appears that none of HPF’s pleadings or other documents include

or refer to the Allonge prior to filing the Amended Exhibit List. 

Even so, HPF responded to Tovar’s interrogatories and

requests for production. This is not a situation where HPF
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refused to provide any documents prior to trial. See Advisory

Committee’s Notes to Fed. R. Civ. P. 37(d)(1970) (Civil Rule

37(d) is concerned with “total noncompliance . . . [that] may

impose severe inconvenience or hardship on the discovering party

and substantially delay the discovery process.”) (emphasis

added). Tovar still filed his evidentiary objections within the

deadline established in the Evidence Order.

Moreover, Tovar initially raised this issue in his

evidentiary objections to HPF’s exhibits; he did not

independently move for sanctions under Civil Rule 37(d), nor move

to exclude the Allonge under Civil Rule 37(c). Although HPF

should have identified the Allonge as an exhibit sooner than two

months prior to trial, the record supports the bankruptcy court’s

ruling.

In conclusion, the bankruptcy court did not abuse its

discretion on its evidentiary rulings as to the Allonge.

B. Ganter’s Declaration and Trial Testimony - Evidence

Rule 602

Tovar next argues that the bankruptcy court erred by

admitting Ganter’s declaration and testimony at trial when Ganter

lacked personal knowledge with respect to the Note and its

transfer. He asserts that whether the Note was transferred, and

the effect of any such transfer, is a conclusion of law that

Ganter lacked knowledge to testify as to. Evidence Rule 602

provides that “[a] witness may testify to a matter only if

evidence is introduced sufficient to support a finding that the

witness has personal knowledge of the matter.”

Ganter testified at the trial that the Refinance Loan was
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purchased by HPF in 2009. At that time, HPF consisted of nine or

ten employees, and Ganter was then a key employee who was

personally involved with HPF’s transactions and purchases of

secondary mortgages such as the Refinance Loan. The bankruptcy

court was well within its discretion in finding that this

testimony established sufficient personal knowledge as to HPF’s

purchase of the Note.

C. Relevance of Exhibits – Evidence Rules 401 and 402

Tovar finally argues that the bankruptcy court erred by

admitting HPF’s 13 exhibits pursuant to Evidence Rules 401 and

402. He asserts that extrinsic evidence is inadmissible under

the Federal Rules of Evidence to determine an action, that HPF

failed to cite to any exhibits in its trial brief, and thus, it

failed to demonstrate the probative value of the exhibits. He

concludes that the bankruptcy court should have excluded all of

HPF’s exhibits based on the lack of probative value or relevancy. 

Tovar, however, did not make these evidentiary objections

before the bankruptcy court. Instead, he perfunctorily attempts

to advance these arguments for the first time on appeal. To the

extent that he lodged such objections against Tovar’s declaration

and testimony before the bankruptcy court, Tovar does not make

any substantive arguments on that issue in his brief. Therefore,

the Panel declines to address this issue. See Padgett, 587 F.3d

at 986 n.2 (appellate courts “will not ordinarily consider

matters on appeal that are not specifically and distinctly raised

and argued in appellant's opening brief.”).
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III. The bankruptcy court did not err in determining that the

Refinance Loan was Nondischargeable Pursuant to 11 U.S.C.

§ 523(a)(2)(B).

Lastly, Tovar argues that the bankruptcy court erred by

finding that he committed fraud when he applied for and obtained

the Refinance Loan, and that this fraud gave rise to a

nondischargeable debt within the meaning of Section 523(a)(2)(B).

In relevant part, Section 523(a)(2)(B) provides that a debt

is nondischargeable if the debtor obtained "money, property,

services, or an extension, renewal, or refinancing of credit" by

using a statement in writing-

(I) that is materially false;

(ii) respecting the debtor's or an insider's financial

condition;

(iii) on which the creditor to whom the debtor is liable

for such money, property, services, or credit

reasonably relied; and

(iv) that the debtor caused to be made or published with

intent to deceive . . . .

11 U.S.C. § 523(a)(2)(B).

The first two elements were not contested at trial, and are

not contested on appeal. That is, we take as given that the

documents at issue were materially false, and were made with

respect to Tovar’s financial condition.

Tovar maintains that the bankruptcy court erred in finding

that HPF satisfied the last two elements of Section 523(a)(2)(B);

namely, that Tovar acted with the requisite intent to deceive the

original lender, and that HPF satisfied the reasonable reliance

requirement. These arguments are addressed in reverse order. 

A. Reasonable Reliance

For the purposes of Section 523(a)(2)(B)(iii), a creditor/

assignee is not required to independently establish its own
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reasonable reliance. See New Falls Corp. v. Boyajian (In re

Boyajian), 367 B.R. 138, 141-44 (9th Cir. BAP 2007), aff'd,

564 F.3d 1088 (9th Cir. 2009). Rather, the creditor need only

establish reasonable reliance by the original lender who extended

credit to the debtor. See id. at 145-46. Accordingly, the only

party’s reliance at issue here is that of WMC, the original

lender.

Tovar first argues that information as to WMC’s lending

practices was necessary to determine whether WMC relied on the

Loan Application. He contends that despite his discovery

requests for this information, HPF failed to produce any of this

information, including whether WMC adhered to those practices on

Tovar’s application. HPF counters that the Loan Application is

in and of itself sufficient to establish WMC’s reasonable

reliance, as it represented Tovar’s financial and employment

information when WMC approved and disbursed the Refinance Loan.

“Reasonable reliance” is not defined by the Code, but is

analyzed under a “prudent person” test, which “courts can apply

without additional help.” Cashco Fin. Servs., Inc. v. McGee

(In re McGee), 359 B.R. 764, 774 (9th Cir. BAP 2006) (internal

citations omitted). While a creditor cannot claim reliance on 

representations that are obviously false, “minor clues of falsity

in financial statements that on the whole have the appearance of

being very complete and reliable . . .” do not negate reasonable

reliance. Gosney v. Law (In re Gosney), 205 B.R. 418, 421 (9th

Cir. BAP 1996); Gertsch v. Johnson & Johnson, Fin. Corp. (In re

Gertsch), 237 B.R. 160, 170 (9th Cir. BAP 1999). “[W]hen there

is evidence of materially fraudulent statements, little
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investigation is required for a creditor to have reasonably

relied on the representations.” In re Gertsch, 237 B.R. at 170

(citing In re Gosney, 205 B.R. at 421). This determination is

made on a case-by-case basis, based on the totality of the

circumstances. In re McGee, 359 B.R. at 774.

Here, in rendering its decision, the bankruptcy court did

not explicitly state its findings as to reasonable reliance. 

During Tovar’s closing argument at trial, however, the bankruptcy

court referred to various loan documents with respect to the

element of reliance. Specifically, Tovar’s counsel stated: 

WMC’s standard of reliance would have been to verify

the information that was being provided on the stated

income loan. There’s been no evidence produced showing

that WMC took any of those steps to confirm the

information.

To which the bankruptcy court responded:

What about the additional documents that were done

about three weeks later? They’re in the file. That is

the statement, the bank statement, the statement as to

residency, the -- let’s see there were four of them. 

There was the occupancy statement. There’s the bank

statement. There’s the Latin services statement, and

then there’s that landscaping brochure. 

[Trial Tr. 58:12-23.]

We also observe that the record contains a Certification

Form, which Tovar signed on November 15, 2006. In this document,

Tovar certified that he applied for a mortgage loan from WMC; and

that by applying for the loan, he “completed a loan application

containing various information on the purpose of the loan, the

amount and source of the down payments, employment and income

information, and assets and liabilities.” Pl.’s Ex. 11 at 193.

Tovar also certified that he understood and agreed that WMC

reserved the right to change the mortgage loan review process to
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a full documentation program,” including “verifying the

information provided on the application with the employer and/or

financial institution.” Id.

Contrary to Tovar’s arguments, a creditor’s actual

verification of information is not an explicit requirement as to

reasonable reliance. See In re Smith, 242 B.R. at 702 (“[W]hen

there is evidence of materially fraudulent statements, little

investigation is required for a creditor to have reasonably

relied on the representations.”). Nothing in the record suggests

that WMC did not adhere to normal business practices, or that

Tovar’s misrepresentations were blatantly apparent in the Loan

Application. Based on the totality of the circumstances, the

record supports the bankruptcy court’s inference of reasonable

reliance on the Loan Application and other documents in the

record.

B. Intent to Deceive

Tovar next argues that the bankruptcy court erred in finding

that he satisfied the requisite intent to deceive WMC (and

subsequently HPF) when he applied for and obtained the Refinance

Loan.

For the purposes of Section 523(a)(2)(B), intent is

“established by showing either actual knowledge of the falsity of

a statement, or reckless disregard for its truth . . . .” In re

Gertsch, 237 B.R. at 167. 

The bankruptcy court did not find Tovar’s testimony

credible. It specifically noted that in order to make Tovar’s

account plausible, it would have to find that WMC essentially

fabricated various documents in Tovar’s mortgage file – including
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a brochure for a business that Tovar said existed on his Loan

Application but which was fictitious:

I mean that portion of it weighs heavily in my mind

that it would have been an extraordinary event

happening at the lender to prepare to go through and

prepare a brochure for Tovar Landscape Design, to

prepare all that. I just can’t believe that that

actually happened.

[Trial Tr. 64:12-23.] 

The court further noted:

Mr. Tovar added a dimension here to not only saying he

was going to live in there, it was clear this loan

would never have been made had they known. That's a

pretty basic thing for the very reason if you have no

interest in it yourself or not living there, you're

less likely to perform.

[Trial Tr. 65: 4-9.]

 The bankruptcy court thus found that Tovar submitted the

Loan Application with the requite intent to deceive based on a

number of factors: that Tovar Landscape Design never existed;

that Tovar’s monthly stated income was never $11,000; and that

Tovar never intended to live on the Property. The court further

determined that other documents in Tovar’s loan file, such as the

Latin Services Letter and Brochure, similarly demonstrated

Tovar’s intent to deceive. 

We are unpersuaded by Tovar’s contention that he was not

aware of the misrepresentations stated in the Loan Application,

or the other documents submitted or contained in his mortgage

file. To the extent that there is any validity to his

allegations, Tovar nonetheless executed various legal documents

and certified that the information made therein was correct and

true. This is no different than signing and submitting a
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bankruptcy petition under the penalty of perjury, regardless of

whether the debtor is an individual with limited English

proficiency. Ultimately, the person signing a document bears the

legal responsibility as to the statements made therein.

Based on this record, the bankruptcy court did not err in

finding that Tovar made written statements with the intent to

deceive. We therefore conclude that the bankruptcy court did not

err in determining that HPF’s claim was nondischargeable under

Section 523(a)(2)(B).

CONCLUSION

For the reasons set forth above, the judgment of the

bankruptcy court is AFFIRMED.