Court Opinion

ID: 4183162
Source: CourtListenerOpinion
Date Created: 2017-07-03 20:01:26.822267+00
Date Added: 2024-06-11T07:47:18.639090
License: Public Domain

NOT FOR PUBLICATION                          FILED
                    UNITED STATES COURT OF APPEALS                         JUL 3 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                        U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

In re: MARTIN PEMSTEIN; DIANA                   No. 15-60070
PEMSTEIN,
                                                BAP No. 15-1019
             Debtors.
______________________________
                                                MEMORANDUM*
MARTIN PEMSTEIN,

                Appellant,

 v.

HAROLD PEMSTEIN,

                Appellee.

                           Appeal from the Ninth Circuit
                             Bankruptcy Appellate Panel
              Kurtz, Perris, and Taylor, Bankruptcy Judges, Presiding

                              Submitted June 26, 2017**

Before:      PAEZ, BEA, and MURGUIA, Circuit Judges.

      Martin Pemstein (“Martin”) appeals pro se from the Bankruptcy Appellate

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Panel’s (“BAP”) judgment affirming the bankruptcy court’s order determining that

Martin’s debt to Harold Pemstein (“Harold”) was nondischargeable under 11

U.S.C. § 523(a)(4). We have jurisdiction under 28 U.S.C. § 158(d). We review de

novo BAP decisions and apply the same standard of review that the BAP applied

to the bankruptcy court’s ruling. Boyajian v. New Falls Corp. (In re Boyajian),

564 F.3d 1088, 1090 (9th Cir. 2009). We affirm.

      The bankruptcy court properly held that the debt based on the 2010 state

court judgment was nondischargeable under § 523(a)(4) because a preponderance

of the evidence established that Martin’s misconduct was intentional and amounted

to defalcation. See Bullock v. BankChampaign, N.A., 133 S. Ct. 1754, 1757 (2013)

(explaining that “defalcation” in § 523(a)(4) includes a “culpable state of mind”

requirement involving “knowledge of, or gross reckless in respect to, the improper

nature of the relevant fiduciary behavior”); see also Grogan v. Garner, 498 U.S.

279, 291 (1991) (setting forth standard of proof for dischargeability exceptions in

§ 523(a)); Ragsdale v. Haller, 780 F.2d 794, 796-97 (9th Cir. 1986) (California

partners are fiduciaries within the meaning of § 523(a)(4)).

      The bankruptcy court properly held that the 2010 state court judgment had

preclusive effect over the issue of whether Martin’s debt to Harold arose out of

Martin’s breach of a fiduciary duty with regard to the collection of rent for their

former partnership, HMS Holding Company. See Harmon v. Kobrin (In re

                                          2                                    15-60070
Harmon), 250 F.3d 1240, 1245 (9th Cir. 2001) (explaining that collateral estoppel

applies in proceedings seeking exceptions from discharge under § 523(a),

preclusive effect of a state court judgment in a subsequent bankruptcy proceeding

is determined by state law, and setting forth issue preclusion requirements under

California law); see also Cal. Corp. Code § 16404(a), (c) (setting forth fiduciary

duties for partnerships); cf. Robi v. Five Platters, Inc., 838 F.2d 318, 322-23 (9th

Cir. 1988) (explaining the “last in time” rule regarding inconsistent judgments on

the same claim or issue).

      The bankruptcy court did not abuse its discretion by denying Martin’s

motion under Federal Rule of Civil Procedure 59(e) because Martin failed to

demonstrate any basis for relief. See Fed. R. Bankr. P. 9023 (Fed. R. Civ. P. 59

applies to bankruptcy cases); Zimmerman v. City of Oakland, 255 F.3d 734, 737,

740 (9th Cir. 2001) (setting forth standard of review and discussing factors for

granting a motion for reconsideration under Fed. R. Civ. P. 59(e)).

      Harold’s request for oral argument (Docket Entry No. 14) is denied.

      AFFIRMED.

                                          3                                    15-60070