Court Opinion

ID: 4177205
Source: CourtListenerOpinion
Date Created: 2017-06-13 20:04:29.775804+00
Date Added: 2024-06-11T14:39:01.753102
License: Public Domain

NOT FOR PUBLICATION                        FILED
                        UNITED STATES COURT OF APPEALS                       JUN 13 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS
                                 FOR THE NINTH CIRCUIT

In re: SALLY JANE BRANDENFELS,                     No.   15-60075

                   Debtor,                         BAP No. 14-1145

------------------------------
                                                   MEMORANDUM*
SALLY JANE BRANDENFELS,

                   Appellant,

  v.

TICOR TITLE INSURANCE CO.,

                   Appellee.

                             Appeal from the Ninth Circuit
                              Bankruptcy Appellate Panel
                Kirscher, Jury, and Faris, Bankruptcy Judges, Presiding

                                  Submitted June 9, 2017**
                                     Portland, Oregon

Before: GOULD and RAWLINSON, Circuit Judges, and RAYES,*** District

       *
             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).
       ***
             The Honorable Douglas L. Rayes, United States District Judge for the
District of Arizona, sitting by designation.
Judge.

      Chapter 7 debtor Sally Brandenfels appeals a decision of the Bankruptcy

Appellate Panel (“BAP”) affirming the bankruptcy court’s decision granting Ticor

Title Insurance Company’s (“Ticor”) motion to deny a discharge under 11 U.S.C.

§ 727(a)(3). We have jurisdiction under 28 U.S.C. § 158(d)(1) and affirm.

      We conclude, contrary to Brandenfels’s argument, that the bankruptcy court

applied the correct legal standard when addressing Ticor’s claim that Brandenfels

did not keep adequate records. Under our case law, Section 727(a)(3) creates a

burden-shifting framework. The creditor must first prove “(1) that the debtor

failed to maintain and preserve adequate records, and (2) that such failure makes it

impossible to ascertain the debtor’s financial condition and material business

transactions.” Caneva v. Sun Cmtys. Operating Ltd. P’ship (In re Caneva), 550

F.3d 755, 761 (9th Cir. 2008) (internal quotation marks omitted). “[T]he burden of

proof then shifts to the debtor to justify the inadequacy or nonexistence of the

records.” Id. (internal quotation marks omitted).

      Here, the bankruptcy court properly concluded that Brandenfels unjustifiably

failed to keep adequate records. The bankruptcy court identified three valid

grounds for concluding that the records were inadequately kept: (1) that

Brandenfels could not account for substantial cash withdrawals taken from her

company’s corporate account; (2) that she failed to split her records by indicating

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which expenditures were personal and which were business related; and (3) that

she failed to explain her payments of corporate funds to third parties. See Stewart

Enters., Inc. v. Horton (In re Horton), 621 F.2d 968, 971–92 (9th Cir. 1980);

Caneva, 550 F.3d at 761–62. In light of Brandenfels’s own testimony that she took

measures to avoid Ticor’s garnishments, the bankruptcy court properly found that

the inadequacies in Brandenfels’s records were unjustified.

      Ticor did not abandon its claim under Section 727(a)(3). The bankruptcy

court and the parties discussed the issue of Brandenfels’s recordkeeping at length

at trial and the bankruptcy court expressly confirmed with Ticor’s counsel that

Ticor was not withdrawing its Section 727(a)(3) claim.

      AFFIRMED.

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