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FILED

NOV 13 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-17-1010-STaL

)

JAMES DONZIL ROBERTS, SR. and ) Bk. No. 1:12-bk-16474-MT

DEENA WALDMAN ROBERTS, )

) Adv. No. 1:12-ap-01371-MT

Debtors. )

______________________________)

)

JAMES DONZIL ROBERTS, SR., )

)

Appellant, )

)

v. ) MEMORANDUM*

)

MICHAEL BARNES; CALIFORNIA )

FARMS INVESTORS LLC, )

)

Appellees. )

______________________________)

Argued and Submitted on September 29, 2017

at Pasadena, California

Filed – November 13, 2017

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Maureen A. Tighe, Bankruptcy Judge, Presiding

 

Appearances: Peter T. Steinberg of Steinberg, Nutter & Brent

argued for appellant; Cathrynne Dale argued for

appellees

 

Before: SPRAKER, TAYLOR, and LAFFERTY, Bankruptcy Judges.

* This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

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

See 9th Cir. BAP Rule 8024-1.
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INTRODUCTION

Chapter 71 debtor James Donzil Roberts appeals from a

judgment excepting from discharge the debt arising from his

scheme to defraud Michael Barnes and California Farms Investors

LLC (collectively, “Barnes”). Roberts contends that the

bankruptcy court committed reversible error by not crediting the

value of the farm equipment collateral that secured repayment of

Barnes’ loan against his damages. According to Roberts, there

was no loss caused by his fraud because the value of the

collateral was more than sufficient to offset the amount lent. 

Roberts’ disposition of collateral argument ignores the

bankruptcy court’s determination that Barnes was forced to assign

his interest in the collateral to third party produce suppliers

in order to obtain a release of potentially massive liability

under the Perishable Agricultural Commodities Act – liability

that flowed from Roberts’ fraud. Roberts’ disposition of

collateral argument, furthermore, relies on California Commercial

Code statutes enacted to restrict the collection of contractbased debts and attempts to apply them without any supporting

authority to a nondischargeable fraud claim.

Most importantly, Roberts admits that he failed to raise the

disposition of collateral argument at or before trial. Having

not raised this argument in response to the foreclosure of the

collateral or in the nondischargeability adversary proceeding,

1 Unless specified otherwise, all chapter and section

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

all "Rule" references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037.

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Roberts forfeited this argument under clear and longstanding

doctrines of appellate process and as a matter of substantive

commercial law.

Accordingly, we AFFIRM.

FACTS

We primarily rely on the findings of fact set forth in the

bankruptcy court’s Memorandum Decision. Roberts has not directly

challenged any of those findings, and the incomplete record

provided by the parties supports the findings made.

Roberts and two other individuals formed a joint venture 

in 2009 for the stated purpose of producing and selling direct to

retail packages containing gourmet organic salads. Roberts and

his colleague Daniel Fantz were in charge of soliciting

financing. The third joint venturer – Santos Martinez – had

extensive farming experience as well as some 450 or so acres of

farmland that were to be used to grow at least some of the

lettuce varieties needed for the salads. Martinez also agreed to

contribute millions of dollars of farming equipment to the joint

venture.

The corporate structure of the joint venture was

straightforward. Roberts and Fantz formed California Farms, Inc.

(“California Farms”) which became one of the two members of the

joint venture, California Farms II, LLC. The other member was

Manjar, Inc. – Martinez’s wholly-owned farming business. The

joint venture was later renamed California Organics LLC

(“Organics”).

In October 2009, a third party introduced Roberts and Fantz

to Barnes. Roberts and Fantz, through emails, phone calls and

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in-person meetings made over the next several months, marketed

their Organics investment opportunity to Barnes. During the

course of that marketing, Roberts and Fantz presented a good deal

of information – much of it false or deceptive. As the

bankruptcy court later put it, this information included:

A. a business plan providing “projections” which

Defendant did not verify;

B. misleading “use of proceeds” projections;

C. false assurances regarding the status of accounts

receivable; 

D. false assurances about guaranteed purchase contracts

which in fact did not exist.

Mem. Dec. (Sep. 9, 2015) at 3:13-16.

Overall, Roberts represented to Barnes that the joint

venture was an ongoing farming business already selling their

self-grown organic produce to wholesalers and that a short-term

bridge loan would enable the venture to shift their operations

into much more lucrative sales to retail grocers like Stater

Bros., Albertsons and others - some of whom already were

supposedly lined up to buy from the venture. 

In reality, the venture was entirely dependent on Martinez’

and Manjar’s farming expertise, acreage and certified organic

growers license to grow the produce they wanted to sell. At the

time Roberts began soliciting investment funds from Barnes,

however, Manjar had not started growing any produce. In fact,

neither Manjar nor the venture ever grew any produce for the

venture’s business. Martinez and Manjar refused to grow any

produce for Organics unless Organics paid Manjar $375,000, which

was never paid. Organics either was unable or unwilling to pay

that amount in order to grow its own produce.

This was a critical departure from the business model and

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projections Roberts presented to Barnes in his solicitation

materials. The exceptional profits Roberts represented Organics

was poised to realize were dependent on self-grown produce sold

to retail grocers. Instead, Organics began purchasing produce

from third party growers and suppliers and then processed it and

resold it – mostly in the wholesale market. These operations

effectively enabled Organics to present itself to the investors

as a going concern, but they came at a steep cost: the incurrence

of massive debt. To make matters worse, unbeknownst to Barnes,

Organics’ management – including Roberts, Fantz, Martinez and

others – paid themselves hundreds of thousands of dollars in

draws or “management fees.”2

Between November 2009 and April 2010, Barnes loaned Organics

the aggregate amount of $822,000.3 The loans were secured by

substantial personal property – mostly Manjar’s farm equipment. 

In addition, as one of a number of preconditions to investment,

Barnes was named in the venture’s amended operating agreement as

a “class B manager.” We do not specifically know all of Barnes’

rights and duties as a class B manager because the parties have

not included in their excerpts of record any of the exhibits

admitted at trial. But, the trial testimony indicated that

Barnes was entitled to routinely receive from the company

financial and operating reports and to approve or reject certain

2 On top of this, Roberts failed to disclose to Barnes that

Organics' executive manager – Geoffrey Mousseau – was a convicted

felon. Roberts, a licensed attorney, knew that Mousseau's

criminal record should have been disclosed to the investors.

3 Barnes also paid an additional $3,000 as an equity

investment in California Organics.

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transactions. In the event of a loan default Barnes could, and

eventually did, assume control of Organics’ assets and operations

as manager of the joint venture.

The naming of Barnes as a manager, and his rights and duties

with respect to Organics’ operations, is a key point because his

role in the venture potentially exposed him to personal liability

to Organics’ produce suppliers under the Perishable Agricultural

Commodities Act – also known as PACA – 7 U.S.C. § 499a, et seq. 

Pursuant to PACA, all commission merchants, dealers and brokers

of perishable agricultural goods hold those goods (and their

proceeds) in trust for the benefit of the vendor of such goods

unless and until the vendor is repaid. 7 U.S.C. § 499e(c)(2). 

Those entities, and their control persons, are liable for any

dissipation of the trust’s assets under ordinary trust

principles. Sunkist Growers v. Fisher, 104 F.3d 280, 282-283

(9th Cir. 1997); see also Nickey Gregory Co., LLC v. AgriCap,

LLC, 597 F.3d 591, 595 (4th Cir. 2010) (“[g]eneral trust

principles govern PACA trusts unless the principle conflicts with

PACA”); Weis-Buy Servs. v. Paglia, 411 F.3d 415, 421 (3d Cir.

2005) (“[i]ndividual liability in the PACA context is not derived

from the statutory language, but from common law breach of trust

principles”). The record below is devoid of any analysis of

either PACA or its application. What is clear, however, is that

the unpaid produce suppliers asserted substantial PACA claims

against Organics and Barnes individually. 

At the time of his investment in Organics, Barnes had no way

of knowing of his potential PACA liability because he did not

know that Organics was purchasing produce from third party

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suppliers. To the contrary, Roberts’ offering materials and

projections created the false impression that all of Organics’

produce would be self grown. During the loan funding period,

Roberts affirmatively concealed from Barnes that Organics was

buying all of its produce from third party suppliers and that

Organics was incurring a large amount of PACA debt in the

process. 

In or around June 2010, after discovering that Organics was

accumulating massive debt, Barnes exercised his right under

Organics’ amended operating agreement to assume control over

Organics’ operations and assets. We cannot say with any greater

precision when, or even whether, Barnes triggered the PACA

liability provisions for two reasons. First, the testimony

regarding Barnes’ assumption of control did not provide a full

account of the timing and nature of Barnes’ control. Second, the

appellate record provided by the parties is gravely incomplete:

the parties did not include copies of their trial exhibits for

review. Regardless, the unpaid produce suppliers asserted that

when Barnes assumed control over Organics he became liable for

the company’s PACA debts. 

Organics eventually failed and a number of PACA creditors

sued Organics and Barnes in September 2010. As with the issue of

Barnes’ control over Organics, the specifics of the PACA lawsuit

are unknown. But, the trial record does disclose a handful of

critical facts. Namely, the litigation involved hundreds of

thousands of dollars in unpaid PACA debt. Additionally, as part

of that litigation, the produce suppliers asserted that the

equipment collateral securing the debt owed to Barnes was PACA

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trust property or the proceeds of PACA trust property, and the

produce suppliers threatened injunctive relief against Barnes if

he attempted to foreclose on the collateral.

 Faced with protracted litigation and potential exposure for

the alleged mishandling of PACA trust property, Barnes settled

with the PACA suppliers by assigning to them his security

interest in the equipment collateral.4 The precise nature of the

settlement and the assignment remains unclear given the record

provided. However, after the settlement was consummated, the

PACA suppliers commenced foreclosure proceedings in which they

claimed to be assignees of Barnes’ rights under the notes and

security agreements that Organics and Manjar executed in favor of

Barnes.

The PACA suppliers subsequently foreclosed on the equipment. 

The record on appeal does not disclose much about the foreclosure

either, other than it occurred in 2013. There are a few oblique

references to Exhibit 151, which was a copy of the PACA

creditors’ foreclosure notice. As for the value of the

collateral at the time of foreclosure, there is nothing in the

record. The limited discussion at trial regarding collateral

value varied widely and was not attributed to the relevant time

frame of the foreclosure. Moreover, the statements regarding

value of the collateral were entirely based on hearsay – the

witnesses’ recollections of other people’s representations

4 Again, the record is unclear whether Organics, Barnes, or

both, entered into the settlement or executed the assignment.

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concerning the collateral’s value.5

Roberts and his spouse filed a chapter 7 bankruptcy

petition, and Barnes thereafter filed an exception to discharge

complaint. While Barnes initially sought nondischargeability on

multiple grounds, the bankruptcy court after trial ruled in favor

of Barnes solely on his § 523(a)(2)(A) claim for relief.

According to the bankruptcy court, the solicitation

materials that Roberts presented to Barnes were “replete with

misrepresentations,” which created the false impression that

California Farms (one of Organics’ two members) was a going

concern when in reality that entity was nothing more than

Roberts’ and Fantz’ prospective plan to sell gourmet organic

salads. As the bankruptcy court further explained, Roberts’

offering materials concealed that no one at California Farms had

any material or relevant farming experience and that it had no

operational history with Martinez or Manjar.

The bankruptcy court also pointed to Roberts’

misrepresentations regarding California Farms’ ability to grow – 

and experience growing – its own produce. Roberts stated in his

offering brochure that “California Farms . . . was a ‘Direct Farm

- to Volume Retail Sales Model,’” and that it would use “‘farming

operations and processing equipment’ and ‘existing growing

fields.’” As the bankruptcy court put it: 

5 For instance, Barnes testified at trial that Roberts

represented to him, at the time of Barnes’ investment, that the

collateral was worth more than three million dollars. Roberts

later seized on this testimony and attempted to argue that it

constituted proof of the value of the collateral and proof that

Barnes gave the PACA creditors more than $3 million in

collateral.

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With reckless disregard, Roberts boasted how Organics

LLC could triple revenues, with negligible increase in

costs, through redirecting delivery of self-grown

lettuce from wholesalers to retailers. Roberts

claimed, “we have now successfully established the

mechanism to grow, harvest, process, sell and deliver

to major market retailers at levels that we believe

will be in excess of our own conservative projections.”

Mem. Dec. (Sept. 9, 2015) at 10:2-5.

The bankruptcy court also specified that Roberts’ deception

continued during the entire investment period, from November 2009

through April 2010. During this period, the bankruptcy court

noted, Roberts concealed that Organics was not growing any

produce, was still primarily selling to wholesalers in threepound packages and was relying on third party produce vendors who

were PACA trust beneficiaries to supply Organics with all produce

necessary to maintain operations.6

Based on these and other findings, the bankruptcy court

concluded that Roberts’ scheme to defraud Barnes had resulted in

the complete loss of his $825,000 investment: “Plaintiffs’ loss

of its $825,000 investment in the Venture was actually and

proximately caused by Roberts’ misrepresentations. . . . But for

6 The following paragraph is representative of the

bankruptcy court’s findings:

Roberts also withheld disclosing the PACA orders

because he knew that if he sought permission from

Plaintiffs to undertake the purchasing from third party

growers that Plaintiffs would have learned the true

state of affairs of the Venture and would have

exercised their remedies, which would have frustrated 

and prevented the additional funding the Venture was

seeking. 

Mem. Dec. (Sept. 9, 2015) at 12:1-11.

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Roberts’ misrepresentations, Plaintiffs would not have invested

in the Venture and subsequently lost their investment when the

Venture could [no] longer pay the PACA creditors it was

purchasing from.” Mem. Dec. (Sept. 9, 2015) at 14:4-11.

The bankruptcy court entered judgment in favor of Barnes on

December 8, 2016. Roberts timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(I), and we have jurisdiction under

28 U.S.C. § 158.

ISSUE

Did the bankruptcy court err by not crediting the value of

the equipment collateral against the $825,000 Barnes invested?

STANDARDS OF REVIEW

In nondischargeability appeals, we review the bankruptcy

court's findings of fact under the clearly erroneous standard and

its conclusions of law de novo. Oney v. Weinberg

(In re Weinberg), 410 B.R. 19, 28 (9th Cir. BAP 2009), aff’d,

407 Fed. Appx. 176 (2010).

DISCUSSION

Section 523(a)(2)(A) excepts from discharge debts for money,

property or services “obtained by false pretenses, a false

representation, or actual fraud . . . .” There are five

elements bankruptcy courts typically look for in order to

conclude that debtor’s liability arose from a fraudulent,

nondischargeable act. Those elements are:

(1) misrepresentation, fraudulent omission or deceptive

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

deceptiveness of his statement or conduct; (3) an

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intent to deceive; (4) justifiable reliance by the

creditor on the debtor's statement or conduct; and

(5) damage to the creditor proximately caused by its

reliance on the debtor's statement or conduct.

Id. at 35 (quoting Turtle Rock Meadows Homeowners Ass'n v. Slyman

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

In his appeal brief, Roberts does not challenge the

bankruptcy court’s determination that he defrauded Barnes or that

Barnes lost $825,000 as a result of his fraud. Rather, he

maintains that the bankruptcy court did not credit him for the

value of the equipment collateral in calculating Barnes’ fraud

damages. According to Roberts, there was evidence in the record

demonstrating that the collateral was worth millions of dollars. 

Roberts, therefore, posits that once the value of the collateral

is taken into account Barnes really did not suffer any loss. He

argues that the bankruptcy court’s failure to credit the value of

the collateral against the amount of Barnes’ damages constitutes

reversible error. 

Barnes points out Roberts did not raise this argument in the

bankruptcy court and contends that he may not raise this argument

for the first time on appeal. Roberts concedes that he did not

raise the disposition of collateral issue at trial.7 Rather, he

argues that this Panel has the equitable discretion to consider

this argument for the first time on appeal.

Before we address the propriety of potentially considering

Roberts’ application of the collateral argument for the first

7 Roberts never raised the value of the collateral or its

disposition, nor any legal argument related to these facts, in

his answer, statement of pretrial issues, or closing brief.

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time on appeal, it is important to note the substantive legal

context in which this argument is made. Roberts attempts to

invoke commercial law principles governing the recovery of a

deficiency judgment for contract-based debts in the context of a

nondischargeable fraud claim. He does so without citing any

authority that would enable him to insert the square peg of the

California Commercial Code into the round hole of

nondischargeability litigation for fraud. 

Equally important, although Roberts never raised the

collateral issue at trial, there was enough evidence generally

concerning the collateral that the bankruptcy court did, in fact,

take into account both the PACA liability and the foreclosure of

the collateral in assessing the consequences of Roberts’ fraud. 

As the bankruptcy court found: “Without Plaintiffs' knowledge or

consent, Barnes was exposed to personal liability for [Organics’

PACA] debts. . . . Ultimately, Barnes was forced to assign the

collateral securing repayment of [his] investment to the PACA

creditors in order to settle his liability under the PACA

lawsuits.” Mem. Dec. (Sept. 9, 2015) at 4:10-13. In other

words, Barnes “lost” the collateral when it was used to satisfy

the PACA related damages that also flowed from Roberts’ fraud.

Roberts simply ignores this finding and its consequences in

making his collateral argument.

We decline to dwell on the above-referenced deficiencies in

Roberts’ argument. There is a simpler response to his argument:

neither sound doctrines of appellate process nor substantive

commercial law permit us to consider Roberts’ application of the

collateral argument for the first time on appeal. We explain why

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below.

We start with the unremarkable proposition that issues not

raised before appeal ordinarily are forfeited on appeal. Scovis

v. Henrichsen (In re Scovis), 249 F.3d 975, 984 (9th Cir. 2001). 

Absent exceptional circumstances, the appellate court can refuse

to consider them. Id.; El Paso City of Tex. v. Am. W. Airlines,

Inc. (In re Am. W. Airlines), 217 F.3d 1161, 1165 (9th Cir.

2000).

The Ninth Circuit Court of Appeals has recognized the

following as exceptional circumstances that may permit the

appellate court to consider an issue for the first time on

appeal:

(1) when review is required to “prevent a miscarriage

of justice or to preserve the integrity of the judicial

process,” (2) “when a new issue arises while appeal is

pending because of a change in the law,” and (3) “when

the issue presented is purely one of law and either

does not depend on the factual record developed below,

or the pertinent record has been fully developed.” 

Mano–Y & M, Ltd. v. Field (In re Mortg. Store, Inc.), 773 F.3d

990, 998 (9th Cir. 2014) (quoting In re Mercury Interactive Corp.

Sec. Litig., 618 F.3d 988, 992 (9th Cir. 2010)).

Roberts has not presented anything on appeal that suggests

his failure to raise the collateral issue at trial has resulted

in a miscarriage of justice. Nor has he established that the

disposition of collateral issue arose from a change in the law. 

Finally and most importantly, the disposition of collateral issue

is decidedly not an issue of law but is closely tied to the

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facts.8 The record was never developed to address this factual

issue because Roberts failed to raise it. 

Even if well settled principles of appellate procedure did

not prevent Roberts from raising the disposition of collateral

argument for the first time on appeal, the substantive commercial

law he relies upon does. The sole legal basis now advanced by

Roberts in support of his disposition of collateral argument is

premised on California Commercial Code section 9626. Generally

speaking, this provision governs a creditor’s right to a

deficiency judgment and incorporates the requirement that secured

creditors dispose of their collateral in a commercially

reasonable manner. California Commercial Code section 9610(b)

requires secured creditors to dispose of collateral in a

commercially reasonable manner.9 In turn, California Commercial

Code section 9626(a)(3) provides:

(3) Except as otherwise provided in Section 9628, if a

secured party fails to prove that the collection,

enforcement, disposition, or acceptance was conducted

in accordance with the provisions of this chapter

relating to collection, enforcement, disposition, or

acceptance, the liability of a debtor or a secondary

obligor for a deficiency is limited to an amount by

which the sum of the secured obligation, expenses, and

attorney's fees exceeds the greater of either of the

following:

8 The factual nature of Roberts’ sole argument on appeal is

further discussed below.

9 That commercial code provision states:

(b) Every aspect of a disposition of collateral,

including the method, manner, time, place, and other

terms, must be commercially reasonable. If

commercially reasonable, a secured party may dispose of

collateral by public or private proceedings, by one or

more contracts, as a unit or in parcels, and at any

time and place and on any terms.

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(A) The proceeds of the collection, enforcement,

disposition, or acceptance.

(B) The amount of proceeds that would have been

realized had the noncomplying secured party proceeded

in accordance with the provisions of this chapter

relating to collection, enforcement, disposition, or

acceptance.

Roberts now seeks to reduce his liability to Barnes by

citing California Commercial Code section 9626(a)(3) and by

alleging that he failed to dispose of the collateral in a

commercially reasonable manner. 

Roberts bases his argument upon the California Commercial

Code. However, Barnes has recovered damages for fraud, not a

deficiency judgment for breach of a secured contractual

obligation. Even if the court were to apply the commercial

reasonableness requirement set forth in California Commercial

Code section 9626(a)(3), additional issues abound. Roberts’

argument implicitly assumes that: (1) the assignment of the

collateral to the PACA creditors constituted a disposition of

collateral, (2) such disposition was not commercially reasonable,

and (3) the judgment entered by the bankruptcy court constituted

a “deficiency judgment” under California’s Commercial Code. 

Roberts fails to address these matters in any detail, saying only

that the bankruptcy court failed to credit the value of the

collateral against his liability. 

It is far from clear whether the Commercial Code would treat

the subject assignment as a disposition of collateral (or treat

the nondischargeability judgment as a deficiency judgment). The

Commercial Code indicates that some – but not all – assignments

qualify as dispositions of collateral. See generally Cal. Com.

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Code §§ 9406(e), 9618(b)(1). Case law confirms that not all

assignments of security interests constitute dispositions of

collateral that could result in a deficiency or surplus. See,

e.g., Lee & Mason Int'l Agency, Inc. v Daugherty, 828 S.W.2d 677,

679 (Ky. App. 1992); Reeves v. Assocs. Fin. Servs. Co.,

247 N.W.2d 434, 439 (Neb. 1976); but see also Charles E. Brauer

Co. v. NationsBank of Virginia, N.A., 251 Va. 28, 34 (Va. 1996)

(“[t]he term ‘disposition’ is not defined in the U.C.C., but the

language of [the predecessor to section 9610(a) and (b)]

indicates that it means an actual transfer of an interest in the

collateral by sale, lease, or contract”).

We need not decide whether the assignment at issue herein

qualified as a disposition of collateral. Even if the assignment

were a disposition resulting in a deficiency, Roberts is

precluded by substantive commercial law from arguing for the

first time on appeal that the assignment was commercially

unreasonable. Section 9626(a) of the California Commercial Code

provides:

(a) In an action arising from a transaction, other than

a consumer transaction, in which the amount of a

deficiency or surplus is in issue, the following rules

apply:

(1) A secured party need not prove compliance

with the provisions of this chapter relating

to collection, enforcement, disposition, or

acceptance unless the debtor or a secondary

obligor places the secured party's compliance

in issue.

(2) If the secured party's compliance is

placed in issue, the secured party has the

burden of establishing that the collection,

enforcement, disposition, or acceptance was

conducted in accordance with this chapter.

(Emphasis added.)

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As the Assembly Committee Comment accompanying the statute

explains, a debtor seeking to block a deficiency judgment must

raise the issue of noncompliance with the Commercial Code (i.e.,

the failure to act in a commercially reasonable manner) “in

accordance with the forum’s rules of pleading and practice.” Id.

If the debtor fails to do so, then “the secured party need not

prove compliance with the relevant provisions” of the Commercial

Code. Id. In short, Barnes was under no duty to prove that his 

conduct was commercially reasonable – and the bankruptcy court

was not obliged to make any sort of commercial reasonableness

finding – when Roberts never raised the issue. 

Requiring the obligor to raise the disposition of collateral

issue makes eminent sense. Commercial reasonableness is an

inherently factual issue whose resolution typically depends on

all of the particularized circumstances of each individual case. 

Ford & Vlahos v. ITT Commercial Fin. Corp., 8 Cal. 4th 1220, 1235

(1994); Crosby v. Reed (In re Crosby), 176 B.R. 189, 195 (9th

Cir. BAP 1994), aff'd, 85 F.3d 634 (9th Cir. 1996); see also

In re El Camino Charter Lines, Inc., 2012 WL 1514815, *2 (Bankr.

N.D. Cal. Apr. 27, 2012). When, as here, the debtor did not

properly raise the commercial reasonableness issue before trial,

the secured creditor is denied an opportunity to adequately

prepare and present evidence on the issue. A trial court

attempting to address the issue that has not been properly raised

or developed would be left to speculate whether all of the

relevant circumstances concerning reasonableness have been

disclosed. 

This Panel cannot consider Roberts’ disposition of

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collateral argument for the first time on appeal. The governing

commercial statute relied upon by Roberts, as well as sound

appellate practice, dictate this result. Given that Roberts has

not raised any other issues on appeal, we AFFIRM.

CONCLUSION

For the reasons set forth above, we AFFIRM the bankruptcy

court’s nondischargeability judgment.

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