Court Opinion

ID: 3173660
Source: CourtListenerOpinion
Date Created: 2016-01-29 22:01:04.987152+00
Date Added: 2024-06-11T07:38:50.612766
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JAN 29 2016

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: GEORGE T. KELLY; LORI                     No. 13-56792
SAVOY-KELLY,
                                                 D.C. No. 3:12-cv-00754-GPC-
              Debtors,                           DHB

J.A.W. LAND & TRADING, LLC, a                    MEMORANDUM*
California Limited Liability Company,

              Plaintiff - Appellee,

 v.

GEORGE T. KELLY; LORI SAVOY-
KELLY,

              Defendants - Appellants.

                    Appeal from the United States District Court
                      for the Southern District of California
                    Gonzalo P. Curiel, District Judge, Presiding

                            Argued November 3, 2015
                            Submitted January 27, 2016
                               Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: SCHROEDER, PREGERSON, and FRIEDLAND, Circuit Judges.

      Debtors George and Lori Kelly appeal the district court’s judgment

affirming the bankruptcy court’s ruling that their debt to J.A.W. Land & Trading,

LLC (“J.A.W.”) was nondischargeable as fraudulent pursuant to 11 U.S.C.

§ 523(a)(2)(A). The bankruptcy court found, after a three-day bench trial, that the

Kellys had failed to disclose the existence of a stop work order on the Boulevard

property securing the loan. The bankruptcy court further found that J.A.W.

believed the property had substantial equity and the value of the property was a

“substantial factor” in its decision to make the loan. The findings are fully

supported by the record.

      The Kellys contended for the first time on appeal that the debt should be

dischargeable as to Lori Kelly because she was not sufficiently involved in the

fraud. Because the Kellys failed to adequately present this argument to the

bankruptcy court, it is waived. See Lowenschuss v. Selnick (In re Lowenschuss),

171 F.3d 673, 682 n.11 (9th Cir. 1999).

      Even assuming the March 2009 Modification Agreement lacked independent

consideration, the Kellys still would have been obligated to repay the March 2009

disbursement, as well as all prior disbursements, pursuant to the original

agreement.

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      In their post-argument supplemental brief, Appellants contend that the debt

should be allocated among the properties, so that only a portion, that attributable to

the Boulevard and Fourth Place properties, would be nondischargeable. This

argument fails because the bankruptcy court found that the value of the Boulevard

property was a critical factor in J.A.W.’s decision to lend the money in the first

place. See 11 U.S.C. § 523(a)(2)(A); see also Cohen v. De La Cruz, 523 U.S. 213,

218–19 (1998).

      AFFIRMED.

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