Court Opinion

ID: 4192840
Source: CourtListenerOpinion
Date Created: 2017-08-03 17:02:55.299155+00
Date Added: 2024-06-11T14:40:22.280802
License: Public Domain

FILED
                                                             OCT 07 2015
 1                         NOT FOR PUBLICATION
                                                         SUSAN M. SPRAUL, CLERK
 2                                                         U.S. BKCY. APP. PANEL
                                                           OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.     OR-14-1145-FJuKi
                                   )
 6   SALLY JANE BRANDENFELS,       )      Bk. No.     13-32532-ELP7
                                   )
 7                  Debtor.        )      Adv. No.    13-03159-ELP
     ______________________________)
 8                                 )
     SALLY JANE BRANDENFELS,       )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     TICOR TITLE INSURANCE CO.,    )
12                                 )
                    Appellee.      )
13   ______________________________)
14              Argued and Submitted on September 25, 2015
                          at Seattle, Washington
15
                            Filed – October 7, 2015
16
              Appeal from the United States Bankruptcy Court
17                      for the District of Oregon
18      Honorable Elizabeth L. Perris, Bankruptcy Judge, Presiding
19
     Appearances:     James Huffman argued for Appellant Sally Jane
20                    Brandenfels; Jonathan Mark Radmacher of McEwen
                      Gisvold LLP argued for Appellee Ticor Title
21                    Insurance Co.
22
     Before: FARIS, JURY and KIRSCHER, Bankruptcy Judges.
23
24
25
26        *
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1                             INTRODUCTION
 2        Appellant Sally Jane Brandenfels (“Appellant” or
 3   “Ms. Brandenfels”) appeals from the bankruptcy court’s denial of
 4   discharge under 11 U.S.C. § 727(a)(3) (2005).1   Because we hold
 5   that the trial court did not err in determining that
 6   Ms. Brandenfels’s financial records were inadequate or
 7   nonexistent, we AFFIRM.
 8                  FACTUAL AND PROCEDURAL BACKGROUND2
 9        Oregon Holly Company (“Oregon Holly”) is owned and operated
10
11        1
            Unless specified otherwise, all chapter and section
12   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
     all “Rule” references are to the Federal Rules of Bankruptcy
13   Procedure, Rules 1001-9037.
14        2
            Ms. Brandenfels cites the transcript of the trial before
15   the bankruptcy court, but fails to include the relevant portions
     of the transcript in her excerpts of record. See Rule
16   8018(b)(1)(F) (2014) (an appellant’s appendix must include “any
     relevant transcript or portion of it”). We are not obligated to
17   examine portions of the record not included in the excerpts of
     record. See Kritt v. Kritt (In re Kritt), 190 B.R. 382, 386-87
18   (9th Cir. BAP 1995); 9th Cir. BAP R. 8009-1 (“The Panel is
19   required to consider only those portions of the transcript
     included in the excerpts of the record.”).
20
          Ms. Brandenfels also fails to provide support in the   record
21   for many of her arguments. The Panel is not obligated to    search
     the entire record for error. See Dela Rosa v. Scottsdale    Mem’l
22
     Health Sys., Inc., 136 F.3d 1241 (9th Cir. 1998); Fed. R.   App. P.
23   10(b)(2).

24        Moreover, Ms. Brandenfels’s appendix lumps numerous distinct
     documents into single tabs, contrary to 9th Circuit BAP Rule
25   8018(b)-1(b) (“Documents in a paper appendix shall be divided by
26   tabs.”). Puzzlingly, her opening brief does not refer to most of
     the documents included in the appendix.
27
          Despite these deficiencies, we will consider all relevant
28   documents provided to us.

                                     2
 1   by Ms. Brandenfels or her husband and is engaged in the business
 2   of producing and selling holly wreaths.   Oregon Holly was
 3   incorporated in Oregon in 1993.
 4        In April 2008, Ms. Brandenfels or her husband incorporated
 5   Oregon Holly Wreaths Company (“Oregon Holly Wreaths”) in Oregon.
 6   Appellee Ticor Title Insurance Co. (“Appellee” or “Ticor”)
 7   alleges that Oregon Holly Wreaths “actually conducts no business,
 8   or simply conducts the business of Oregon Holly Company, under a
 9   new name.”
10        On June 24, 2010, Ticor filed suit against Ms. Brandenfels
11   and Oregon Holly for breach of a promissory note.   In July 2012,
12   the court entered a judgment in Ticor’s favor for $149,999
13   against Ms. Brandenfels and Oregon Holly.
14        Beginning in or around December 2012, Ticor issued writs of
15   garnishment for Oregon Holly’s and Ms. Brandenfels’s accounts at
16   St. Helens Community Federal Credit Union (“St. Helens FCU”).     At
17   some point thereafter, Ms. Brandenfels opened an account at Wauna
18   Federal Credit Union (“Wauna FCU”) on behalf of Oregon Holly or
19   Oregon Holly Wreaths.   Ms. Brandenfels testified that she opened
20   the account “so that Ticor wouldn’t be able to go get money owned
21   by Oregon Holly[.]”   She deposited checks made out to Oregon
22   Holly and her husband into the Wauna FCU account, thus
23   commingling corporate and personal funds.
24        Around this same time, Ms. Brandenfels also began taking
25   cash withdrawals from Oregon Holly’s and Oregon Holly Wreath’s
26   bank accounts.   She testified that she took these withdrawals to
27   pay contract labor in cash.   Ms. Brandenfels admitted that she
28   often did not receive any receipts for those payments and that

                                       3
 1   her Quickbooks files did not always reflect those transactions.
 2   While Ms. Brandenfels’s records prior to December 2012 documented
 3   cash payments for contract labor, there are no such records
 4   beginning in December 2012.
 5        Ms. Brandenfels used credit cards for both business and
 6   personal expenses, without differentiating the expenses in her
 7   records and sometimes without even including such transactions in
 8   her records.   Moreover, she sometimes withdrew cash from the
 9   corporate accounts for mixed business and personal purposes,
10   without documenting the split in her records.
11        Ms. Brandenfels also used money from the business accounts
12   for personal purposes or purposes that are not clearly business-
13   related.   For example, Ms. Brandenfels wrote a $2,500 check to
14   “Cash” that she paid to a neighbor out of Oregon Holly’s Wauna
15   FCU account. She stated that it was to repay a loan from November
16   or December 2012,3 but she did not record either the loan or the
17   repayment in her Quickbooks files.   Ms. Brandenfels also used
18   Oregon Holly’s funds to pay for legal services provided to the
19   estate of her deceased father-in-law.4   Ms. Brandenfels
20
21        3
            The record is unclear as to whether the loan constituted a
22   business or personal expense, as Ms. Brandenfels testified that
     the loan related to postage. However, she could not explain why
23   she wrote the check out to “Cash” as opposed to the neighbor
     personally.
24
          4
            The record is unclear as to the nature of the law firm’s
25   services. On the one hand, Ms. Brandenfels testified that her
26   father-in-law’s estate owed the law firm money, so it might be
     inferred that she was paying non-business debt out of company
27   funds. On the other hand, she also implied that the payment may
     be related to the companies’ use of holly and andromeda from the
28                                                      (continued...)

                                      4
 1   acknowledged that taking money from the St. Helens FCU account
 2   and depositing it into the Wauna FCU account allowed her to avoid
 3   garnishment and repay such creditors.
 4        Ms. Brandenfels admitted that, after Ticor’s garnishment
 5   became effective, she used Oregon Holly Wreaths’s accounts to
 6
 7        4
           (...continued)
 8   land held in trust by the estate, which may be a legitimate
     business expense. She testified:
 9
                    Q. Who owed Mr. Vanden Bos money?
10                  A. The estate.
                    Q. What estate?
11
                    A. The trust. The estate of Carl
12             Brandenfels.
                    Q. Is that your husband’s deceased
13             father?
                    A. Yes.
14                  Q. And why did your deceased father’s
15             estate owe Mr. Vanden Bos money?
                    A. Because we grow variegated holly and
16             andromeda that we use from that estate. We
               have 500 trees of andromeda that we planted
17             on that estate. And we use that.
                    . . . .
18                  Q. Did [Mr. Vanden Bos] provide legal
19             services?
                    A. Yes. For the –- I’m not sure.
20                  Q. You thought it was for the estate,
               but you’re not sure?
21                  A. No, I know that we owe –- that it is
               an estate bill, and that we paid that bill
22
               because we use variegated holly and andromeda
23             from that estate, that trust.
                    Q. So Oregon Holly Company paid Mr.
24             Vanden Bos for legal services he provided to
               your husband’s father’s estate?
25                  A. Correct.
26
     Trial Tr. (Day 1) at 69:4-70:14 (Jan. 22, 2014). In any event,
27   she testified that she could not point to any documentation
     reflecting an agreement for Oregon Holly or Oregon Holly Wreath
28   to pay the trust’s debts.

                                     5
 1   conduct Oregon Holly’s business, pay Oregon Holly’s debts, and
 2   avoid garnishment.   She stated that “Oregon Holly Company and
 3   Oregon Holly Wreaths worked jointly together to try to pay the
 4   debts [of Oregon Holly].”   She decided as an officer and
 5   controller of Oregon Holly “to transfer these funds or to cash
 6   these funds not into Oregon Holly Company account but into an
 7   Oregon Holly Wreaths Company account[.]”
 8        In April 2013, Ms. Brandenfels filed for chapter 7
 9   bankruptcy.   Ticor timely initiated an adversary proceeding
10   against Ms. Brandenfels and Oregon Holly.    Among other things,
11   Ticor objected to Ms. Brandenfels’s discharge under § 727(a)(3).
12        The bankruptcy court held a trial on January 22-23, 2014.
13   On February 12, 2014, the court issued its oral ruling in Ticor’s
14   favor regarding its § 727(a)(3) claim.5    The court based its
15   decison on three deficiencies in Ms. Brandenfels’s records.
16        First, Ms. Brandenfels failed to document the use of cash
17   withdrawn from the corporate accounts, particularly after Ticor
18
          5
19          Ticor also argued that the bankruptcy court should deny
     Ms. Brandenfels’ discharge under §§ 727(a)(2)(A) and
20   727(a)(4)(A), but the bankruptcy court rejected these claims.
     Regarding the § 727(a)(2)(A) claim for transferring or concealing
21   the debtor’s assets to hinder or delay creditors, the court
     stated that Ticor failed to allege and prove a piercing of the
22
     corporate veil theory in order to hold Ms. Brandenfels liable for
23   the transfer of assets between Oregon Holly and Oregon Holly
     Wreaths. Furthermore, regarding Ms. Brandenfels’s personal
24   assets, the court held that Ms. Brandenfels likely did not intend
     to hinder or delay creditors, but rather just deposited personal
25   money into whatever account was readily accessible. Regarding
26   the § 727(a)(4)(A) claim for false oaths, the court found that
     Ms. Brandenfels did not knowingly, intentionally, or fraudulently
27   make a false oath on her bankruptcy schedules regarding certain
     bank accounts, because she thought those accounts were her
28   mother’s accounts.

                                      6
 1   began garnishing Oregon Holly’s primary bank account.   The court
 2   calculated a discrepancy totaling $41,000 between 2010 and 2012,
 3   with a $28,000 discrepancy in 2012, when Ticor began its
 4   collection efforts.   She testified that she used the cash to pay
 5   contract labor, but she produced no records to confirm her
 6   statements.   The court also highlighted Ms. Brandenfels’s
 7   testimony that she opened new bank accounts and moved assets from
 8   Oregon Holly to Oregon Holly Wreaths to avoid paying Oregon
 9   Holly’s creditors.    Considering these facts together, the court
10   concluded that the missing records made it impossible to
11   determine whether she had misused the funds: “Ms. Brandenfels was
12   concealing the contract labor cash payments or [sic] under cover
13   of a chaotic or incomplete set of records.   Another possibility
14   is she was doing something else with the cash.   We’ll just never
15   know.”
16        The second deficiency is “the lack of clarity between cash
17   withdrawals and credit card payments that satisfy business
18   obligations and those that satisfy Ms. Brandenfels’s personal
19   obligations.”   The bankruptcy court noted that Ms. Brandenfels
20   used her various credit cards and withdrew cash indiscriminately
21   for both business and personal uses, but seldom recorded those
22   transactions or distinguished between personal and business use.
23   For example, the court calculated that Ms. Brandenfels made
24   credit card payments of approximately $9,500 in 2012 from one of
25   Oregon Holly Wreath’s accounts, but her records fail to indicate
26   whether and to what extent the payments were for business
27   expenses, as opposed to personal expenses.
28        The third deficiency is the “string of payments to third

                                       7
 1   parties that were made with company money but do not appear to be
 2   company expenses.”   For example, Ms. Brandenfels paid law firms
 3   from Oregon Holly Wreath’s account for undefined services related
 4   to her deceased father-in-law’s estate.     She testified that the
 5   records do not show that Oregon Holly or Oregon Holly Wreaths had
 6   been the beneficiaries of the legal services.     She also issued a
 7   $2,500 check to repay a loan from a neighbor, but did not keep a
 8   record of the loan or the repayment.
 9        Based on these three deficiencies, the bankruptcy court
10   denied Ms. Brandenfels’s discharge pursuant to § 727(a)(3).
11   Ms. Brandenfels timely filed her notice of appeal on March 30,
12   2014.
13                               JURISDICTION
14        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
15   §§ 1334 and 157(b)(2)(J).   We have jurisdiction under 28 U.S.C.
16   § 158.
17                                  ISSUE
18        Whether the bankruptcy court erred in denying Appellant’s
19   discharge for failure to maintain adequate records under
20   § 727(a)(3).
21                           STANDARDS OF REVIEW
22        In an action for denial of discharge, we review: (1) the
23   bankruptcy court’s determinations of the historical facts for
24   clear error; (2) its selection of the applicable legal rules
25   under § 727 de novo; and (3) its determinations of mixed
26   questions of law and fact de novo.     Searles v. Riley
27   (In re Searles), 317 B.R. 368, 373 (9th Cir. BAP 2004), aff’d,
28   212 Fed. App’x 589 (9th Cir. 2006).

                                      8
 1        De novo review is independent and gives no deference to the
 2   trial court’s conclusion.   Roth v. Educ. Credit Mgmt. Agency
 3   (In re Roth), 490 B.R. 908, 915 (9th Cir. BAP 2013) (citing
 4   Warfield v. Salazar (In re Salazar), 465 B.R. 875, 878 (9th Cir.
 5   BAP 2012)).   Conversely, review for clear error is “significantly
 6   deferential,” and an appellate court should not reverse unless it
 7   is left with “a definite and firm conviction that a mistake has
 8   been committed.”   Id. (quoting Baker v. Mereshian
 9   (In re Mereshian), 200 B.R. 342, 345 (9th Cir. BAP 1996)).    We
10   give great deference to the bankruptcy court’s findings that are
11   based on its determinations of witness credibility.   Retz v.
12   Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010).
13                               DISCUSSION
14   A.   Appellee did not waive its § 727(a)(3) argument.
15        Ms. Brandenfels first contends that Ticor waived its
16   argument under § 727(a)(3) because Ticor did not reference
17   § 727(a)(3) in its trial memorandum or its opening statement.      We
18   disagree.
19        First, we note that Ms. Brandenfels failed to include
20   Ticor’s trial memorandum in her excerpts of record.   “The
21   appellants bear the responsibility to file an adequate record,
22   and the burden of showing that the bankruptcy court’s findings of
23   fact are clearly erroneous.”   Kritt, 190 B.R. at 387 (citing
24   Burkhart v. FDIC (In re Burkhart), 84 B.R. 658, 660 (9th Cir. BAP
25   1988)).   “Appellants should know that an attempt to reverse the
26   trial court’s findings of fact will require the entire record
27   relied upon by the trial court be supplied for review.”   Id.
28   (quoting Burkhart, 84 B.R. at 661).   We are not obligated to comb

                                      9
 1   through the lower court’s docket in search of support for
 2   Ms. Brandenfels’s arguments.   Nevertheless, we will exercise our
 3   discretion to take judicial notice of the trial memorandum, which
 4   is available on the bankruptcy court’s docket.   See O’Rourke v.
 5   Seabord Surety Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957-
 6   58 (9th Cir. 1989).
 7        Second, we are not persuaded that Ticor waived its
 8   § 727(a)(3) argument by omitting it from its trial memorandum.
 9   Ms. Brandenfels argues that a party’s failure to include in its
10   trial memorandum an argument based on a properly pleaded claim
11   for relief precludes it from making that argument during the
12   trial.   Ms. Brandenfels cites no authority for the proposition,
13   and we have found no such authority.
14        Third, both the bankruptcy court and the parties addressed
15   § 727(a)(3) at trial.   The bankruptcy court noted at the outset
16   that Ticor’s § 727(a)(3) argument was not included in its trial
17   memorandum and specifically asked Ticor’s counsel whether Ticor
18   intended to abandon that argument.   In response, Ticor’s counsel
19   affirmed that the argument was “an important part of it.”6
20
21        6
            The bankruptcy court requested clarification as to Ticor’s
     position on its § 727(a)(3) claim:
22
23                   THE COURT: I did want to ask you one
                question.
24                   MR. RADMACHER: Yes?
                     THE COURT: What about the 727(a)(3)
25              claim? Is it abandoned or just not addressed
26              in the trial memo? That was –- that’s the
                records claim.
27                   MR. RADMACHER: I think -- no, it isn’t
                mentioned, perhaps -- but, no, that’s an
28                                                        (continued...)

                                     10
 1   During the course of trial, the court repeatedly addressed the
 2   issue of the adequacy of the “books and records.”7     Finally,
 3   Ticor raised its § 727(a)(3) argument in its closing statement.8
 4        Lastly, Ms. Brandenfels has not identified any prejudice
 5   that she suffered as a result of the omission of Ticor’s
 6   § 727(a)(3) argument from its trial memorandum.      As discussed
 7   above, this issue was repeatedly addressed during trial,
 8   Ms. Brandenfels did not raise her waiver argument at the trial
 9   level, and Ms. Brandenfels’s counsel even specifically addressed
10
11        6
              (...continued)
12                important part of it.
                       THE COURT: Okay.
13                     MR. RADMACHER: The corporate records
                  are –-
14
                       THE COURT: I just wanted clarification
15                since it isn’t separately talked about in the
                  trial memo.
16
     Trial Tr. (Day 1) at 7:8-17.
17
          7
              For example, the bankruptcy court stated:
18
19                Here’s the problem in this case. There’s two
                  problems in this case from the standpoint
20                that we’re applying 727 in this case. The
                  first problem is the hinder and delay
21                problem. The second problem is the books and
22                records are awful.

23   Trial Tr. (Day 1) at 166:1-5.
          8
24          Among other things, Ticor argued: “With respect to books
     and records, . . . [t]here’s no separate accounts for the
25   companies of any kind. . . . [T]here’s no documentation of
26   inter-company transfers. . . . There’s no . . . effort to have
     separate accounting. . . . Undocumented cash is withdrawn and
27   expended. . . . And the final piece is her personal ability and
     knowledge, she clearly knows what she could do.” Trial Tr.
28   (Day 2) at 103:17-104:7 (Jan. 23, 2014).

                                       11
 1   the issues of cash payments and the adequacy of records in his
 2   opening and closing statements.
 3        Thus, Ticor did not abandon its § 727(a)(3) argument.
 4   B.   The bankruptcy court did not err in granting judgment in
          favor of Appellee pursuant to § 727(a)(3).
 5
 6        Ms. Brandenfels argues that the bankruptcy court erred in
 7   finding her records inadequate under § 727(a)(3)’s two-part test.
 8   We find no error.
 9        Section 727(a)(3) provides that the bankruptcy court must
10   deny a discharge when:
11             the debtor has concealed, destroyed,
               mutilated, falsified, or failed to keep or
12             preserve any recorded information, including
               books, documents, records, and papers, from
13             which the debtor’s financial condition or
               business transactions might be ascertained,
14             unless such act or failure to act was
               justified under all of the circumstances of
15             the case[.]
16   § 727(a)(3).
17        The Ninth Circuit has stated “that the purpose of
18   § 727(a)(3) is to make discharge dependent on the debtor’s true
19   presentation of his financial affairs.”   Caneva v. Sun Cmtys.
20   Ltd. P’ship (In re Caneva), 550 F.3d 755, 761 (9th Cir. 2008)
21   (citing Lansdowne v. Cox (In re Cox), 41 F.3d 1294, 1296 (9th
22   Cir. 1994)).   This “requirement removes the risk to creditors of
23   ‘the withholding or concealment of assets by the bankrupt under
24   cover of a chaotic or incomplete set of books or records.’”   Id.
25   (quoting Burchett v. Myers, 202 F.2d 920, 926 (9th Cir. 1953)).
26   This exception to dischargeability “should be strictly construed
27   in order to serve the Bankruptcy Act’s purpose of giving debtors
28   a fresh start.”   Id. (quoting Industrie Aeronautiche v. Kasler

                                       12
 1   (In re Kasler), 611 F.2d 308, 310 (9th Cir. 1979)).
 2        The debtor must “present sufficient written evidence which
 3   will enable his creditors reasonably to ascertain his present
 4   financial condition and to follow his business transactions for a
 5   reasonable period in the past.”    Id. (quoting Rhoades v. Wikle,
 6   453 F.2d 51, 53 (9th Cir. 1971)).      To assess the sufficiency of
 7   those records under § 727(a)(3), the court engages in a two-part
 8   analysis.   First, a creditor makes a prima facie case by showing
 9   “(1) that the debtor failed to maintain and preserve adequate
10   records, and (2) that such failure makes it impossible to
11   ascertain the debtor’s financial condition and material business
12   transactions.”    Id. (quoting Cox, 41 F.3d at 1296).   If the
13   creditor meets his burden of showing inadequate or nonexistent
14   records, “the burden of proof then shifts to the debtor to
15   justify the inadequacy or nonexistence of the records.”      Id.
16   (quoting Cox, 41 F.3d at 1296).
17        1.     The bankruptcy court correctly held that Appellee
                 established a prima facie case under § 727(a)(3).
18
19        The first step of the two-part test requires Ticor to
20   establish that Ms. Brandenfels’s records are inadequate and that
21   it is impossible to ascertain her financial condition and
22   material business transactions.    Ms. Brandenfels had “an
23   affirmative duty . . . to create books and records accurately
24   documenting [her] business affairs.”     Id. at 762 (quoting
25   Peterson v. Scott (In re Scott), 172 F.3d 959, 969 (7th Cir.
26   1999)).   “Complete disclosure is in every case a condition
27   precedent to the granting of the discharge, and if such a
28   disclosure is not possible without the keeping of books or

                                       13
 1   records, then the absence of such amounts to that failure to
 2   which the act applies.”   Id. at 762 (quoting Meridian Bank v.
 3   Alten, 958 F.2d 1226, 1230 (3d Cir. 1992)).
 4        Ms. Brandenfels implies that the bankruptcy court should
 5   only be concerned with whether or not it can ascertain her
 6   ultimate financial situation.    For example, she argues in her
 7   opening brief that the court could piece together an “adequate
 8   picture” of her finances, because it “was able to conclude that
 9   over the period of three calendar years, her family earned
10   $98,000 . . . .”   She contends that her records are complete
11   because she provided nearly 1,500 pages of her financial records,
12   which “include all of the relevant bank accounts, tax returns,
13   and profit and loss statements, and the Quickbooks detail for
14   these accounts of her transactions . . . .    Every material
15   transaction is accounted for.”    She argues that Ticor was able to
16   “fully scrutinize” her records, because it asked her to admit
17   that “almost all of the deposits to the account were payable to
18   ‘Oregon Holly’ or to ‘Oregon Holly Company.’”    She states that
19   “[t]he tax returns accounted for all of the money that the
20   defendant had any access to.”    She relies on Caneva for the
21   proposition that her records only need to demonstrate (1) the
22   debtor’s business entities’ assets; (2) the assets that pass
23   through the business entities; and (3) the present value of those
24   assets.
25        However, Ms. Brandenfels ignores Caneva’s mandate that a
26   debtor must “present sufficient written evidence which will
27   enable his creditors reasonably to ascertain his present
28   financial condition and to follow his business transactions for a

                                      14
 1   reasonable period in the past.”    Caneva, 550 F.3d at 761 (quoting
 2   Rhoades, 453 F.2d at 53) (emphasis added).   As we have stated
 3   recently, “where a business is involved, simply producing a
 4   bottom line number as to income earned, expenses incurred, or
 5   losses suffered during a calendar year may be insufficient. . . .
 6   This is particularly true in the context of a cash intensive
 7   business where creditors cannot easily identify possible
 8   preferences or fraudulent transfers without more detail.”
 9   Hussain v. Malik (In re Hussain), 508 B.R. 417, 425 (9th Cir. BAP
10   2014).   It is not enough for Ms. Brandenfels to provide records
11   about her overall financial situation; she must also provide
12   records adequate to allow creditors to trace all of her
13   transactions.
14        The bankruptcy court enumerated three areas in which it
15   found Ms. Brandenfels’s records to be deficient: (1) lack of
16   documentation of cash payments to contract labor; (2) lack of
17   clarity between business and personal credit card payments and
18   cash withdrawals; and (3) payments to third parties that were
19   made with company money for non-business expenses.   We address
20   each in turn.
21              a.   Cash payments to contract workers
22        First, the bankruptcy court’s foremost concern was the
23   undocumented cash withdrawals and claimed cash payments to
24   contract workers.   The bankruptcy court calculated a discrepancy
25   of over $41,000 between 2010 and 2014.   The court noted that the
26   unaccounted funds amount to 22.5 percent of Ms. Brandenfels’s
27   total contract labor costs.   In 2012, around the time Ticor began
28   its collection actions, the discrepancy more than quadrupled, to

                                       15
 1   $28,000 from $6,200 the previous year.       After Ticor’s garnishment
 2   became effective, Ms. Brandenfels’s records do not reflect a
 3   single payment by check to contract labor, even though records
 4   from the three previous years show dozens of checks for that
 5   purpose during the same season.    Furthermore, Ms. Brandenfels
 6   admitted that she opened new bank accounts and moved assets from
 7   Oregon Holly to Oregon Holly Wreaths to avoid paying creditors.
 8   Based on these facts, the bankruptcy court concluded that she
 9   “was concealing the contract labor cash payments . . . under
10   cover of a chaotic or incomplete set of records[,]” or “doing
11   something else with the cash.”
12        On appeal, Ms. Brandenfels argues that her records
13   adequately account for all of the cash payments to contract
14   labor.   She contends that “[t]here was no shortage of records or
15   missing transactions,” although she quickly admits that she
16   failed to include one of her accounts and does not have records
17   for November and December 2012.9       She claims that payments to
18   contract labor during this time are recorded in her bank
19   statements, which reflect multiple “round number” checks.
20   Finally, she argues generally that she “could explain each and
21   every one of her transactions.”
22        The bankruptcy court did not commit clear error in its
23   consideration of Ms. Brandenfels’s cash transactions.       Her
24   records do not allow a creditor to “determine the details of that
25
          9
26          Ms. Brandenfels argues that “she had failed to include one
     of her accounts in the Quickbooks exhibit D, but she provided
27   6 years of back records, and missed only November and December of
     2012, and all profit and loss statements through April 2013.”
28   Opening Br. at 12.

                                       16
 1   transaction or verify that it actually took place.”    Caneva,
 2   550 F.3d at 762.    There is no indication whom Ms. Brandenfels
 3   paid, or how much she paid a particular person.    The bankruptcy
 4   court meticulously combed through 1,500 pages of
 5   Ms. Brandenfels’s records and calculated a $41,000 deficiency,
 6   which Ms. Brandenfels does not challenge on appeal.    Rather,
 7   Ms. Brandenfels argues that her payments to contract labor, while
 8   not recorded in her business records, are reflected in her bank
 9   statements, which the bankruptcy court “did not notice.”10
10   However, the bank statements fail to identify the payee or the
11   purpose of the transaction, and we cannot assume that the checks
12   and cash withdrawals were all used to pay contract labor.    The
13   bankruptcy court was in the best position to evaluate the facts
14   before it, and we find no clear error in its findings.    See Retz,
15   606 F.3d at 1196.
16        At oral argument, Ms. Brandenfels argued that, even if her
17   records were insufficient, her oral explanation at trial was
18   sufficient to cure the deficiency.    Ms. Brandenfels did not offer
19   any authority in support of this proposition, other than to claim
20   that “jury instructions” permitted such an interpretation.    This
21   contention is unpersuasive, not least because there is no right
22   to a jury trial in a § 727 action.    More importantly,
23   Ms. Brandenfels’s argument ignores the fact that § 727(a)(3)
24
          10
            Ms. Brandenfels does not provide us with any citation to
25   the record evidencing that she directed the bankruptcy court to
26   the St. Helens FCU bank statements as the source of the cash to
     pay contract labor. Given that she admittedly inundated the
27   court with approximately 1,500 pages of documents and apparently
     could not explain the discrepancies at the time of trial, we
28   cannot say the bankruptcy court erred.

                                      17
 1   requires the debtor to keep and maintain “books, documents,
 2   records, and papers,” not merely oral explanations or
 3   recollections.    Section § 727(a)(3) requires “sufficient written
 4   evidence,” Caneva, 550 F.3d at 761, because a debtor’s post-
 5   bankruptcy oral statements can be unreliable or subject to
 6   manipulation.
 7        Ms. Brandenfels also claimed at oral argument that Ticor had
 8   copies of the checks evidencing payment to contract labor and
 9   should have offered them at trial.     However, Ticor did not bear
10   the burden of supplementing her deficient books and records.      If
11   Ms. Brandenfels had other documents that would have completed her
12   records, she could and should have offered them at trial.     She
13   provides no convincing explanation of her failure to do so.
14        Ms. Brandenfels also does not dispute her earlier testimony
15   that she transferred assets between bank accounts to avoid
16   garnishment.    Coupling this testimony with the large cash
17   discrepancy suspiciously coinciding with Ticor’s collection
18   actions, we share the bankruptcy court’s concern that
19   Ms. Brandenfels intended to engage in “withholding or concealment
20   of assets . . . under cover of a chaotic or incomplete set of
21   books or records.”    Caneva, 550 F.3d at 761 (quoting Burchett,
22   202 F.2d at 926).    The bankruptcy court did not err in finding
23   Ms. Brandenfels’s records inadequate to explain the cash
24   transactions under § 727(a)(3).
25             b.     Mixed personal and business expenses
26        Second, the bankruptcy court stated that Ms. Brandenfels
27   would mingle business and personal expenses, but would rarely
28   differentiate the expenses in her records.    The court totaled

                                       18
 1   $9,500 in credit card payments in 2012, but the records do not
 2   reflect the extent the payments concerned personal expenses or
 3   business expenses.   The court also noted that Ms. Brandenfels
 4   obtained cash back of approximately $5,000 between November 2012
 5   and January 2013, but did not maintain any records regarding
 6   those funds.    Similarly, Ms. Brandenfels’s ATM withdrawals that
 7   were split between business and personal expenses were not
 8   adequately recorded in her financial records.
 9        We find no error in the bankruptcy court’s findings that
10   Ms. Brandenfels failed to produce adequate records regarding her
11   co-mingled personal and business expenses.   She does not attempt
12   to explain the credit card charges of $9,500 or the cash
13   withdrawals of $5,000, other than to state–-without any citation
14   to the record--that she was able to account for all of her
15   transactions.
16        Ms. Brandenfels’s only other argument is that “both personal
17   and small business records were considered together in order to
18   determine the status of the defendant’s financial affairs.    It is
19   incongruous to consolidate the finances for this analysis, and
20   then to insist on segregating them to critique her records.”
21   Opening Br. at 14.   Ms. Brandenfels misses the point.   Reviewing
22   the personal and business records together is necessary to
23   ascertain Ms. Brandenfels’s overall financial condition, but
24   Ms. Brandenfels was also obligated to keep adequate records of
25   her businesses’ finances such that a creditor could follow the
26   individual transactions.   See Caneva, 550 F.3d at 761 (the
27   debtor’s records must allow a creditor “to follow his business
28   transactions for a reasonable period in the past” (citation

                                      19
 1   omitted)).   The bankruptcy court did not err in finding that
 2   Ms. Brandenfels’s failure to do so renders her records incomplete
 3   and inadequate.
 4             c.      Non-business expenses
 5        Third, the bankruptcy court found that Ms. Brandenfels’s
 6   records did not adequately explain payments to third parties that
 7   were made with company money for non-business expenses.
 8   Ms. Brandenfels states generally that she had offered “a valid
 9   explanation” and notes that the “unidentified neighbor” to whom
10   she paid $2,500 of company funds was identified by name at trial.
11   In fact, Ms. Brandenfels utterly failed at trial to provide any
12   written records explaining these transactions.    Therefore, we
13   find no error in the bankruptcy court’s findings.
14        Thus, the bankruptcy court correctly determined that Ticor
15   made a prima facie showing of the incompleteness and inadequacy
16   of Ms. Brandenfels’s records.
17        2.   The bankruptcy court correctly held that Appellant
               failed to justify her inadequate records.
18
19        Since the bankruptcy court did not err in finding that
20   Ms. Brandenfels failed to maintain and preserve adequate records,
21   the burden then shifts to Ms. Brandenfels to justify the
22   inadequacy of her records.    The bankruptcy court stated that Ms.
23   Brandenfels argued at trial that her records “were justified
24   under all the circumstances of this case. . . .    She’s had two
25   bouts of cancer; her husband is not well after his stroke; the
26   economic downturn in 2008 hit her business particularly hard, and
27   as a result [she] has been struggling to keep her business afloat
28   almost singlehandedly.”    The court concluded, however, that,

                                       20
 1   “[n]otwithstanding [Ms. Brandenfels’s situation], these records
 2   are still not adequate under 727(a)(3).”
 3        On appeal, Ms. Brandenfels does not assign any error to this
 4   finding.11    The only mention of her burden is a passing statement
 5   that, “[e]ven if the plaintiff may have met its burden of proof,
 6   the missing records for November and December have been
 7   adequately explained under the burden shifting analysis of
 8   Caneva.”     The record, however, contains no such explanation.
 9   Ms. Brandenfels also conceded at oral argument that she did not
10   assign error to the second prong on appeal, because she felt that
11   the burden never shifted from Ticor to her.     Therefore, the
12   bankruptcy court correctly found that Ms. Brandenfels failed to
13   carry her burden to justify the inadequacy of her records.
14   C.   The bankruptcy court did not err in selecting the
          appropriate legal standard.
15
16        For her second point of error, Ms. Brandenfels contends that
17   the bankruptcy court applied an erroneous standard in determining
18   the adequacy of the records at issue.    However, Ms. Brandenfels
19   fails to present any argument on this matter in her opening
20   brief.12
21
          11
22          Ms. Brandenfels’s first question on appeal asks only,
     “Did the plaintiff meet its burden of proof to demonstrate that
23   the debtor’s records were not adequate under 11 USC
     § 727(a)(3)[?]”
24
          12
            We note that Ms. Brandenfels includes a subsection
25   entitled “Standard for adequacy” toward the end of her opening
26   brief. However, even construing Ms. Brandenfels’s arguments
     liberally, we cannot discern any proper assignment of error by
27   the bankruptcy court. Ms. Brandenfels cites Caneva and a number
     of other Ninth Circuit cases for the general test to determine
28                                                      (continued...)

                                       21
 1        As the Ninth Circuit has stated, “we cannot ‘manufacture
 2   arguments for an appellant’ and therefore we will not consider
 3   any claims that were not actually argued in appellant’s opening
 4   brief.    Rather, we ‘review only issues which are argued
 5   specifically and distinctly in a party’s opening brief.’”
 6   Indep. Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th Cir.
 7   2003) (quoting Greenwood v. Fed. Aviation Admin., 28 F.3d 971,
 8   977 (9th Cir. 1994)).    “Significantly, ‘[a] bare assertion of an
 9   issue does not preserve a claim.’”    Id. (quoting D.A.R.E. Am. v.
10   Rolling Stone Magazine, 270 F.3d 793, 793 (9th Cir. 2001)).
11   Ms. Brandenfels identifies the bankruptcy court’s application of
12   an “erroneous legal standard to the adequacy of the defendant’s
13   records” as one of her points of error, yet fails to
14   “specifically and distinctly” argue that point anywhere in her
15   opening brief.    See id.; Rule 8014(a)(8) (2014) (an appellant’s
16   brief must include “the argument, which must contain the
17   appellant’s contentions and the reasons for them, with citations
18   to the authorities and parts of the record on which the appellant
19   relies”).
20        Moreover, in response to the Panel’s questions at oral
21   argument, Ms. Brandenfels’s counsel said that he was not
22   challenging the bankruptcy court’s articulation of the legal
23   standard, but rather was arguing that the bankruptcy court erred
24   in its application of the relevant standard to the facts.
25
26        12
           (...continued)
27   the adequacy of records, but does not identify any way in which
     the bankruptcy court applied an erroneous standard, especially
28   given that the court also relied primarily on Caneva.

                                      22
 1        Thus, we hold that the bankruptcy court did not err in
 2   selecting the appropriate legal standard.
 3                              CONCLUSION
 4        For the reasons set forth above, we AFFIRM the bankruptcy
 5   court’s nondischargeability judgment.
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