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FILED

OCT 28 2015

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NOT FOR PUBLICATION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-14-1421-PeTaKu

)

ANDREW STEPHAN HUTCHINGS and ) Bk. No. 2:12-bk-46632-ER

GINA AUTORE HUTCHINGS, )

) Adv. No. 2:12-ap-02723-ER

Debtors. )

)

)

ANDREW STEPHAN HUTCHINGS, )

)

Appellant, )

)

v. ) MEMORANDUM1

)

BONDCORP REALTY SERVICES, )

INC., )

)

Appellee. )

)

Argued and Submitted on July 23, 2015

at Pasadena, California

Filed - October 28, 2015

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Ernest M. Robles, Bankruptcy Judge, Presiding

_____________________________

Appearances: David B. Lally argued for appellant; Edward P. Kerns

argued for appellee.

_____________________________

1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may have

(see Fed. R. App. P. 32.1), it has no precedential value. See 9th

Cir. BAP Rule 8024-1.
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Before: PERRIS,2 TAYLOR, and KURTZ, Bankruptcy Judges.

In this adversary proceeding to determine the dischargeability

of a debt under § 523(a)(2)(A),3 debtor Andrew Hutchings (“debtor”)

appeals the judgment against him for $821,647.68, which the court

found nondischargeable. He challenges a number of the court’s

findings of fact. The judgment arose from a scheme in which debtor

used strawmen to obtain a loan for the purchase of property,

directing the purchase and loan application process in other

people’s names.

We conclude that the bankruptcy court did not err in finding

that the debt is nondischargeable under § 523(a)(2)(A), but REVERSE

and REMAND for the bankruptcy court to enter an amended judgment for

damages of $302,000.

FACTS4

Debtor is a licensed real estate agent/broker. During the

2 Honorable Elizabeth L. Perris, Bankruptcy Judge for the

District of Oregon, sitting by designation.

3 Unless otherwise indicated, all chapter and section

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

1532, and all “Rule” references are to the Federal Rules of

Bankruptcy Procedure, Rules 1001-9037. References to “FRE” are to

the Federal Rules of Evidence, FRE 101-1103.

4 Debtor failed to designate all of the pertinent documents

as part of the record on appeal. Where as here the documents are

included in the court’s electronic docket, the panel can retrieve

them from the docket and consider them on appeal. See O’Rourke v.

Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957-958

(9th Cir. 1989).

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events in 2006 and 2007 that led to this adversary proceeding, he

owned and was the sole employee of Clubhouse Properties, Inc. The

office for Clubhouse Properties was at debtor’s house.

In late September 2006, debtor’s father, Alfred Hutchings, Sr.

(“Hutchings, Sr.”), purchased a house on Ximeno Ave., Long Beach,

California (“the property”), for $629,500. On October 18, 2006,

Hutchings, Sr. transferred the property to Marc Anthony, who worked

for Hutchings, Sr. as a handyman, as a gift for no consideration. 

On that same date, Anthony deeded the property to Isabel Esparza

through a grant deed evidencing a purchase price of $835,000.

In connection with the transaction from Anthony to Esparza,

Fred Rivera, a mortgage banker, submitted a loan application to

Bondcorp Realty Services, Inc. (“Bondcorp”), the appellee in this

appeal, seeking a loan based on the purchase price of $835,000. The

loan file included a Uniform Residential Loan Application, the

purchase agreement, a verification of employment, Esparza’s credit

report, and an appraisal showing the property was worth in excess of

$835,000. The loan application indicated that Esparza was selfemployed as a stock trader/investor earning approximately $30,000

per month. 

Rivera obtained all of the information for the loan application

from debtor, who was the contact person for the loan. Before he

submitted the loan file to Bondcorp, Rivera contacted debtor and

told him that he needed verification of Esparza’s self-employment

income from an accountant, based on lender requirements of such

verification. The verification provided was a letter from Tax

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Professionals, LLC, purportedly signed by Don Abrams, which was sent

via facsimile from debtor’s home office of Clubhouse Properties. It

verified that Esparza had been a customer of Tax Professionals since

1999 and that she generated income from her self-employment as a

stock trader/investor.

In fact, Esparza, who was the girlfriend of debtor’s brother,

had not been a customer of Tax Professionals. Instead, she was a

kindergarten teacher and had never been self-employed as a stock

trader/investor.

The verification letter was a forgery. Abrams, an employee of

Tax Professionals, had not prepared, signed, or transmitted the

letter, nor had he authorized debtor or Clubhouse Properties to use

his letterhead. Indeed, the letterhead was not one that Tax

Professionals used. Further, Abrams was acquainted with debtor, who

would come to the office on occasion. However, Abrams had never

spoken to Esparza.

Bondcorp obtained the loan documents from Rivera, with whom it

had done more than a hundred transactions. In approving the loan,

Bondcorp would check the borrower’s credit report and, for

applicants who were self-employed, would verify through an

accountant the borrower’s self-employment information. As already

discussed, Rivera provided such documents as part of the loan

package; he did not know that they were forged.

Bondcorp funded the loan in the amount of $751,250, using a

combination of two trust deeds, one for $626,250 and one for

$125,000. It relied on the forged income verification letter, along

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with other documents, in approving the loan.

From the sale of the property, Anthony was issued a check, c/o

Clubhouse Properties, for $238,794.49, which was sent to debtor at

Clubhouse Properties. Esparza as buyer was issued a check, c/o

Clubhouse Properties, for $393.00, which was also sent to debtor at

Clubhouse Properties. Debtor deposited both checks in the Clubhouse

Properties bank account. Debtor never paid any of the funds from

the loan to either Esparza or Anthony.

Bondcorp sold the loan to Countrywide. Its agreement with

Countrywide required Bondcorp to indemnify Countrywide for any loss

or costs if the loan went into default.

Esparza never made any payments on the loan, and Countrywide

foreclosed. The property was sold at a foreclosure sale for

approximately $549,900. Bondcorp was required to and did pay

Countrywide $302,000 for Countrywide’s losses in connection with

this loan.

After debtor filed bankruptcy, Bondcorp filed this complaint,

seeking a determination that the debt owed by debtor to Bondcorp is

nondischargeable under § 523(a)(2)(A) and (B). At trial, the court

held against Bondcorp on the § 523(a)(2)(B) claim but found that

debtor had defrauded Bondcorp by his conduct in providing the Tax

Professionals letter to Rivera, and concluded that a debt of

$821,647.68 was nondischargeable under § 523(a)(2)(A).

Debtor appealed, challenging the § 523(a)(2)(A) judgment. 

Bondcorp did not cross-appeal the judgment against it on the

§ 523(a)(2)(B) claim.

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JURISDICTION

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

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

§ 158.

ISSUES5

1. Whether the bankruptcy court erred in finding that debtor made

a representation.

2. Whether the bankruptcy court erred in finding that Bondcorp

relied on the representation.

3. Whether the bankruptcy court erred in finding damages in the

amount of $821,647.68.

STANDARD OF REVIEW

The panel reviews a court’s legal conclusions de novo, and its

findings of fact for clear error. Hansen v. Moore (In re Hansen),

368 B.R. 868, 874 (9th Cir. BAP 2007). “A finding is ‘clearly

erroneous’ when although there is evidence to support it, the

reviewing court on the entire evidence is left with the definite and

firm conviction that a mistake has been committed.” United States

v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). If the evidence

supports two views, “the trial judge’s choice between them cannot be

clearly erroneous.” Hansen, 368 at 875. Findings of fact based on

credibility are given particular deference. Oney v. Weinberg

(In re Weinberg), 410 B.R. 19, 28 (9th Cir. BAP 2009). The panel

5 We have consolidated the issues identified in debtor’s

Opening Brief because debtor’s numerous issues are difficult to

decipher.

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will affirm the court’s factual finding “unless that finding is

illogical, implausible, or without support in inferences that may be

drawn from the record.” United States v. Hinkson, 585 F.3d 1247,

1263 (9th Cir. 2009).6

The court’s evidentiary rulings are reviewed for abuse of

discretion. Hansen, 368 B.R. at 875. The court abuses its

discretion if it applies the wrong legal standard or if its

application of the correct legal standard “is illogical,

implausible, or without support in inferences that may be drawn from

the record.” Hinkson, 585 F.3d at 1263. “To reverse an evidentiary

ruling, we must conclude that the error was prejudicial.” Hansen,

368 B.R. at 875.

DISCUSSION

Debtor argues that the bankruptcy court erred in finding that

the debt to Bondcorp is nondischargeable under § 523(a)(2)(A). To

establish that a debt is nondischargeable under § 523(a)(2)(A), a

creditor must show:

(1) misrepresentation, fraudulent omission or deceptive conduct

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

his statement or conduct; (3) an intent to deceive;

(4) justifiable reliance by the creditor on the debtor’s

statement or conduct; and (5) damage to the creditor

6 Throughout his opening brief, debtor argues that the

court’s findings are reviewed for abuse of discretion, citing Cortez

v. Am. Wheel, Inc. (In re Cortez), 191 B.R. 174 (9th Cir. BAP 1995). 

That case was an appeal of an order denying reopening of a case. 

Here, the main issues are whether there is evidence to support the

bankruptcy court’s findings. A court’s findings are reviewed for

clear error, not abuse of discretion. Fed. R. Bankr. P. 7052; Fed.

R. Civ. P. 52(a)(6); Hansen, 368 B.R. at 874.

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proximately caused by its reliance on the debtor’s statement or

conduct.

Turtle Rock Meadows Homeowners Ass’n v. Slyman (In re Slyman),

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

Debtor argues that the bankruptcy court erred in finding

(1) that debtor made a representation; (2) that Bondcorp relied on

any representation and that any reliance was reasonable or

justifiable; and (3) that Bondcorp’s damages were $832,647.68.

1. Representation

The bankruptcy court found that, in connection with the loan

application, debtor submitted a forged letter on a Tax Professionals

letterhead verifying that Esparza “generates income through self

employment as a stock trader/investor.” Exh. 85. The letter was

provided to Rivera to submit to Bondcorp in response to a request to

verify that Esparza was a self-employed bond trader with income of

$30,000 per month. There is no dispute that the representation in

the letter was false; in fact, Esparza was a kindergarten teacher.

Debtor argues in passing that the bankruptcy court erred in

admitting Exhibit 85 into evidence. The entirety of the argument in

his brief is:

Finally, the Court made errors of law by admitting into

evidence Trial Exhibits 85, 95 and 96. They lacked foundation,

were hearsay, and lacked authentication. Appellant repeatedly

objected to the introduction of those Exhibits yet without any

foundation or authentication the Court allowed them into

evidence. See TR of 7/1/13 Page 83, lines 13-25. All of Pages

84 and 85, Page 86, Lines 1-17. This was an error of law.

Appellant’s Opening Brief at 15.

We need not consider whether admission of Exhibits 95 and 96

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was proper; the bankruptcy court did not rely on those documents and

did not find that they constituted representations of debtor that

supported the § 523(a)(2)(A) claim. The court relied solely on

Exhibit 85; it is the admission of that exhibit that we must review.

As discussed above, evidentiary rulings are reviewed for abuse

of discretion. Hansen, 368 B.R. at 875. Although it is true that a

court abuses its discretion if it makes an error of law, Hinkson,

585 F.3d at 1261, debtor does not identify any error of law that the

bankruptcy court made. A court’s determination that the proponent

of an exhibit has laid an adequate foundation and properly

authenticated the exhibit is a factual determination.

In this case, the court admitted the exhibit after Rivera

testified that he had received the document from debtor, and that

the document had a Clubhouse Properties facsimile legend at the top. 

Debtor does not explain why this testimony did not lay a proper

foundation or properly authenticate the document. The document is

not hearsay; it is not offered to prove the truth of the matter

asserted but instead to show that the statement was made.7 See

Vol. 2, Hon. Barry Russell, BANKRUPTCY EVIDENCE MANUAL § 801:4 at p.934

(2014-2015 Ed.). Debtor has not demonstrated that the court abused

7 The truth of the matter asserted in the letter was that

Esparza had been a customer of Tax Professionals since 1999 and that

she had self-employment income as a stock trader/investor. The

court did not admit the exhibit or consider it as proof of those

statements; it admitted and considered the exhibit as proof that the

statements, which were false, had been made and were transmitted to

Bondcorp.

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its discretion in admitting the document.

Debtor argues that the evidence does not support the court’s

finding that debtor made a representation. Specifically, he argues

that there is no evidence that debtor wrote the Tax Professionals

letters, particularly in light of debtor’s testimony that he did not

write the letters.

The only letter on which the bankruptcy court relied is

Exhibit 85. Debtor is correct that there is no direct evidence that

debtor wrote the letter. Debtor denied that he wrote the letter or

that he sent it via facsimile to Rivera. However, the bankruptcy

court explained that debtor’s testimony was not credible. It relied

on the fact that the facsimile legend on the top of the letter

showed a telephone number that belonged to debtor’s business,

supporting its finding that the letter came from debtor’s home

office.8 Although debtor testified that he never used the main home

8 Debtor testified that he had phone records showing that

there was no call to Rivera from his home office on the date the fax

was sent, but the phone records were not admitted into evidence

because they failed to include the date on which the fax was sent.

In his opening brief, debtor argues that, “when confronted with

Defendant’s telephone invoice for the day and time of the alleged

Exhibit 85 fax from Appellant to Rivera, he could not explain how

his telephone number was on Appellant’s Exhibit 1.” Appellant’s

Opening Brief at ¶ 57. Debtor’s counsel repeated the assertion at

oral argument, but did not provide any reference to the record. The

portions of the transcript cited in the brief do not support that

statement; in fact, the transcript shows that debtor’s counsel

attempted to question Rivera regarding a document that he

represented was debtor’s phone records, but the court sustained

(continued...)

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office telephone to send faxes, he did not testify that it was

impossible to do that. The court also relied on the fact that

debtor was the only person who had access to the fax machine in his

home office. 

The court also rejected the argument that the faxed letter came

from either Rivera or Bondcorp, explaining that those parties had

too much to lose by using falsified information for the loan. It

also considered the testimony of Abrams, the person who purportedly

signed the faxed letter, that the letterhead was not the letterhead

used by Tax Professionals, that he did not prepare the letter, and

that the signature on the document under his name was not in fact

his signature. The court noted that debtor was familiar with Tax

Professionals and knew Abrams personally.

Based on the evidence presented at trial, the court found that

debtor was the point person for the loan transaction: he opened the

escrow; he directed documents to go from escrow to him; and he

filled out escrow documents. Given all of this evidence, the court

concluded that debtor had in fact been the person who prepared and

sent the falsified Tax Professionals letter to Rivera.

Debtor has not shown that this finding was clear error. There

was evidence to support the finding that the facsimile telephone

8(...continued)

objections to the document and the questions based on the document

because the records were not the witness’s records, they had not

been admitted into evidence and there had been no foundation laid

for them. Rivera never testified that his telephone number was or

was not on Appellant’s Exhibit 1 (the phone records).

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number on the document was the number from debtor’s home office;

that debtor was the only person who worked in his home office; that

debtor was the mastermind behind the loan and was the person with

whom Rivera communicated; that Rivera had asked debtor for

verification of Esparza’s income; that Abrams had not written or

sent the letter himself; and that debtor deposited the loan proceeds

in the Clubhouse Properties bank account. Particularly in light of

the trial court’s finding that debtor’s testimony denying his

involvement in the preparation and transmission of the letter to

Rivera was not credible, we cannot say that the finding that debtor

prepared and transmitted the letter, which made the false

representation, was “illogical, implausible, or without support in

inferences that may be drawn from the record.” See Hinkson,

585 F.3d at 1263.

Debtor argues that there is no evidence of a loan because the

loan application that was offered into evidence was not admitted

because it was not signed. It is not clear what debtor is trying to

establish with this argument. It is undisputed that there was a

loan made to Esparza. The lack of a signed loan application does

not change that undisputed fact.

Debtor’s main complaint seems to be that debtor could not be

liable for a misrepresentation if he was not the buyer or the seller

or the applicant for the loan. However, the bankruptcy court found,

and there is evidence to support the finding, that debtor directed

the loan application process and provided the income verification

letter, which was a misrepresentation. A debtor need not have

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received a benefit as a result of a misrepresentation; “whether the

debt arises from fraud is the only consideration material to

nondischargeability.” Muegler v. Bening, 413 F.3d 980, 983 (9th

Cir. 2005).9 Thus, the fact that debtor was not the named buyer,

seller, borrower, or agent for either buyer or seller is irrelevant,

where he made the misrepresentation that was fraudulent.10

The bankruptcy court did not err in finding that debtor made

the representation.

2. Reliance

Debtor next argues that the bankruptcy court erred in finding

that Bondcorp relied on the misrepresentation contained in the Tax

Professionals verification letter and that any reliance was

justifiable.

9 There is evidence that debtor did, in fact, receive a

benefit. The testimony was that the proceeds of the loan that were

to go to the buyer and the seller were deposited into debtor’s

Clubhouse Properties bank account, and that the proceeds were not

disbursed to either the buyer or the seller.

Debtor argues in his opening brief that Anthony signed the

proceeds check and that after the check cleared, Clubhouse

Properties disbursed funds to Alfred Hutchings Jr. and Alfred

Hutchings Sr. He does not cite to any evidence to support those

assertions. The only testimony we could find that would support the

assertions is debtor’s testimony that some of the proceeds of the

sale went to Hutchings Sr. In light of the trial court’s finding

that debtor was not credible, the trial court was entitled to

disbelieve that testimony.

10 Debtor argues in passing that there was no evidence of

intent, because debtor never made a representation. He does not

argue that, if there was a representation, the court erred in

finding intent.

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Debtor’s argument that Bondcorp did not rely on the Tax

Professionals’ letter is premised primarily on the facts that there

was no testimony from a person with personal knowledge of the loan

transaction, that Bryan Bond of Bondcorp testified that he did not

see the letter until after the loan went into default, and that

Bondcorp relied on many documents including Countrywide’s

guidelines, not debtor’s representation, in approving the loan.

There was evidence to support the bankruptcy court’s finding of

reliance. Most importantly, there was testimony that Bondcorp

needed verification of Esparza’s income and that it would not have

made this loan if it had not gotten that verification. The fact

that Bondcorp also relied on other documents and guidelines does not

belie the fact that it would not have made the loan without the

income verification provided by debtor.

It is of no consequence that Bond did not see the document

until after the loan had gone into default. He was not the broker

who approved the loan, but testified about the company’s practices

in making loans such as the one involved here.

The bankruptcy court’s finding of reliance is not implausible

or illogical and is supported by inferences supported by the record.

Debtor also argues that any reliance was not reasonable or

justifiable. He first argues that justifiable reliance is measured

by an objective standard: the degree of care exercised by a

reasonably cautious person in the same transaction under similar

circumstances, citing Gertsch v. Johnson & Johnson, Fin. Corp.

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(In re Gertsch), 237 B.R. 160, 167-168 (9th Cir. BAP 1999).11

Reliance for purposes of establishing fraud under

§ 523(a)(2)(A) need not be reasonable, but it must be justifiable. 

Field v. Mans, 516 U.S. 59, 74 (1995). This entails looking “to all

of the circumstances surrounding the particular transaction,” in

particular “the subjective effect of those circumstances upon the

creditor.” Eugene Parks Law Corp. Defined Benefit Pension Plan v.

Kirsch (In re Kirsh), 973 F.2d 1454, 1460 (9th Cir. 1992).

The general rule is that a person may justifiably rely on a

representation even if the falsity of the representation could

have been ascertained upon investigation. In other words,

negligence in failing to discover an intentional

misrepresentation is no defense. However, a person cannot rely

on a representation if he knows that it is false or its falsity

is obvious to him. In sum, although a person ordinarily has no

duty to investigate the truth of a representation, a person

cannot purport to rely on preposterous representations or close

his eyes to avoid discovery of the truth.

Romesh Japra, M.D., F.A.C.C., Inc. V. Apte (In re Apte), 180 B.R.

223, 229 (9th Cir. BAP 1995), quoted with approval in Citibank

(S.D.), N.A. v. Eashai (In re Eashai), 87 F.3d 1082, 1090 (9th Cir.

1996).

The bankruptcy court found that Bondcorp’s reliance on the Tax

Professionals’ letter was justifiable because of its long history of

11 In his brief, debtor also provides a partial citation to

another case, In re Hill. However, he provides only a year for the

decision but no other citation. At oral argument, counsel provided

the bankruptcy judge’s name for that case, and we have located a

case captioned Nat’l City Bank v. Hill (In re Hill), 2008 WL 2227359

(Bankr. N.D. Cal. 2008). That case arose under § 523(a)(2)(B),

which requires reasonable reliance. Here, the § 523(a)(2)(A) claim

requires proof of justifiable reliance.

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doing business with Rivera, including the fact that no loan Rivera

originated for Bondcorp had ever gone into default. Debtor does not

point to anything about the letter that made its falsity obvious or

preposterous. The evidence was sufficient for the bankruptcy court

to find that Bondcorp’s reliance on the Tax Professionals’ income

verification letter was justified.

3. Damages

Finally, debtor argues that the evidence does not support the

court’s award of $821,647.68 in damages.12 He acknowledges evidence

to support damages of $302,000, but says there is no evidence to

support the higher amount awarded. He also complains that the court

did not take into account other amounts received by Bondcorp in

separate litigation against other participants in the loan

transaction.

Debtor does not provide any legal authority to support his

argument that any damages should have been reduced by amounts

Bondcorp received from other parties who were sued in state court on

this transaction. He may be claiming a right to a reduction of

damages under Cal. Code Civ. Proc. § 877(a), which provides that a

release by one tortfeasor reduces the claims against the other

tortfeasors. This rule requires that the settling parties be joint

tortfeasors who are liable to the plaintiff for the same injury. 

22 AM.JUR.2D “Damages” at § 401 (2013).

12 He does not argue that the damages were not proximately

caused by the misrepresentation.

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There is evidence that Bondcorp sued other participants in this

scheme, but no evidence of any amounts those defendants may have

paid in settlement of the claims. Nor does the evidence demonstrate

what claims Bondcorp pursued against the other parties. The nonsettling defendant, debtor, has the burden to show that he is

entitled to a reduction. 22 AM.JUR.2D “Damages” at § 401. In the

absence of evidence about what claims were pursued against other

parties and what amounts were paid in settlement of those claims,

debtor has not demonstrated that the court erred by failing to

reduce damages by amounts of settlement payments.

As for evidence supporting the amount of damages awarded, the

bankruptcy court said, “The Court finds that the plaintiff sustained

damages in the amount based upon the testimony – uncontradicted

testimony of Mr. Bond in the amount of $821,647.69.” 8/5/14 Tr. at

42:2-6.13

The transcript references to Bond’s testimony provided by the

parties in the briefs do not contain any testimony - uncontradicted

or otherwise - of Bond that Bondcorp’s damages were $821,647.69. 

The testimony on June 30 cited by Bondcorp shows a loan origination

fee, administrative fee, and processing fee of $9,393.75, $395.00,

and $595.00, respectively. It also demonstrates that Bondcorp

funded two loans, of $626,250 and $125,000. There is no testimony

or evidence about how much Bondcorp was paid when it sold the loans

13 Although the court said it was awarding $821,647.69, the

judgment awards $821,647.68.

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to Countrywide. The July 1 transcript includes Bond’s testimony

that, after Countrywide foreclosed on the property (which was sold

for $549,900), Bondcorp was required to and did indemnify

Countrywide by paying $302,000 for losses it incurred on these

loans.14

After oral argument, the panel issued an order requiring

Bondcorp to provide specific citations to the transcript that

support the amount of damages awarded. Bondcorp’s response does not

point to any testimony that supports the bankruptcy court’s

quantification of damages. We have reviewed the entire transcript

of Bond’s testimony and find no mention of damages in the amount

awarded by the court.

Bondcorp argues that the award of damages consisted of a number

of elements, “including attorney fees, costs, and other damages,”

Appellee’s Opening Brief at 23, and that it provided evidence of

even more damages than what the bankruptcy court actually found.

There was evidence of the amount of the loan, but the loan amount is

not the measure of damages; the loan was sold to Countrywide, for an

unspecified amount. There was no evidence of the amount of any

attorney fees or other damages. There was evidence of certain fees

charged for the loans (loan origination fee, administrative fee,

processing fee), but no explanation for why those fees should be

included in the award of damages.

14 The complaint in this case sought damages of $302,250 plus

interest and attorney fees.

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The only evidence of damages that we find in the record is the

$302,000 indemnification payment that Bondcorp made to Countrywide. 

Because the evidence at trial does not support the award of damages

in the amount of $821,647.68, the bankruptcy court clearly erred in

awarding that amount as damages.

4. Esparza’s testimony

Debtor argues that the court erred in holding debtor liable

when Esparza exercised her Fifth Amendment right against selfincrimination, and in finding that Esparza was damaged by this loan

transaction. He says that her assertion of her rights showed that

she had something to hide and had no bearing on the issues before

the court.15

Whether Esparza was damaged had no bearing on the issues before

the court. It does not appear that the court’s statements about

Esparza were anything other than an explanation for why it found

that debtor, not Esparza, was the person in charge of the loan

transaction. Debtor has not demonstrated any error by the court’s

consideration of Esparza’s testimony or its conclusion that she was

harmed by the transaction.

CONCLUSION

The bankruptcy court did not err in finding that debtor

committed fraud in connection with the Esparza loan transaction and

15 Debtor does not provide any citation to the record to show

that he objected to Esparza’s testimony, and we could not find an

objection to allowing her to testify despite her frequent assertions

of her Fifth Amendment right.

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that the debt arising from that transaction is therefore

nondischargeable under § 523(a)(2)(A). However, the evidence does

not support the amount of its award of damages. The trial evidence

supports an award of damages in the amount of $302,000.

Therefore, we REVERSE and REMAND for the bankruptcy court to

enter an amended judgment awarding damages in the amount of

$302,000. The judgment is AFFIRMED in all other respects.

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