Court Opinion

ID: 4514572
Source: CourtListenerOpinion
Date Created: 2020-03-11 00:01:42.711843+00
Date Added: 2024-06-11T09:44:11.126651
License: Public Domain

FILED
                                                                            AUG 7 2019
                           NOT FOR PUBLICATION                          SUSAN M. SPRAUL, CLERK
                                                                          U.S. BKCY. APP. PANEL
                                                                          OF THE NINTH CIRCUIT

             UNITED STATES BANKRUPTCY APPELLATE PANEL
                       OF THE NINTH CIRCUIT

In re:                                               BAP Nos. HI-18-1302-TaSKu
                                                              HI-18-1306-TaSKu
TRENT ALLEN BATEMAN; MOUNTAIN                                 HI-18-1307-TaSKu
THUNDER COFFEE PLANTATION
INTERNATIONAL, INC.; NATURESCAPE
HOLDING GROUP INTERNATIONAL, INC.,                   MEMORANDUM*

                    Debtors.

TRENT ALLEN BATEMAN,                                 Bk. No. 1:17-bk-01101

                    Appellant,                       Adv. No. 1:18-ap-90002

v.

GEMCAP LENDING I, LLC,

                    Appellee.

         *
        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.
TRENT ALLEN BATEMAN, individually; LISA   Bk No. 1:16-bk-00984
J. BATEMAN, individually; LISA J.
BATEMAN, Co-Trustee; TRENT ALLEN          Adv. No. 1:17-ap-90008
BATEMAN, Co-Trustee; BROOKE DECKER,

                Appellants,

v.

GEMCAP LENDING I, LLC; ELIZABETH A.
KANE, TRUSTEE; UNITED STATES TRUSTEE,

                Appellees,

TRENT ALLEN BATEMAN, individually; LISA   Bk No. 1:16-bk-00982
J. BATEMAN, individually; LISA J.
BATEMAN, Co-Trustee; TRENT ALLEN          Adv. No. 1:17-ap-90007
BATEMAN, Co-Trustee; BROOKE DECKER,

                Appellants,

v.

GEMCAP LENDING I, LLC; ELIZABETH A.
KANE, TRUSTEE; UNITED STATES TRUSTEE,

                Appellees.

                                  2
                     Argued and Submitted on July 18, 2019
                            at Pasadena, California

                               Filed – August 7, 2019

               Appeal from the United States Bankruptcy Court
                          for the District of Hawaii

          Honorable Robert J. Faris, Chief Bankruptcy Judge, Presiding

Appearances:        Frederick John Arensmeyer of Dubin Law Offices argued
                    for appellants; and Mark C. Taylor of Waller Lansden
                    Dortch & Davis, LLP argued for appellee GemCap
                    Lending I, LLC.

Before: TAYLOR, SPRAKER, and KURTZ, Bankruptcy Judges.

                                INTRODUCTION

      Despite appointment of a chapter 111 trustee, renewed litigation

involving prepetition lender GemCap Lending I, LLC rapidly erupted in

the involuntary cases of Mountain Thunder Coffee Plantation

International, Inc. and Naturescape Holding Group, International, Inc.

GemCap confronted obstacles to realization on its collateral, subsequently

filed an adversary complaint, and obtained orders compelling cooperation

      1
        Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.

                                           3
from the Mountain Thunder and Naturescape principals, Trent A.

Bateman, Lisa J. Bateman, and Brooke Decker. When it discerned a

violation of the bankruptcy court’s directives, it requested contempt

sanctions against the individuals. And when Mr. Bateman filed his own

chapter 7case, it sought determinations of nondischargeability on account

of the contempt and alleged prepetition fraud and conversion. After a four

day trial, the bankruptcy court found in GemCap’s favor in all respects.

       The Batemans and Ms. Decker appeal from these judgments.2 Their

appellate strategy, however, does not lead to success. As to Ms. Bateman

and Ms. Decker, they ignore the consequences of their decision to refrain

from testimony before the bankruptcy court, the fact that the bankruptcy

court orders at issue required affirmative action, and the record that

evidences no such effort on their part. As to Mr. Bateman, he contests the

bankruptcy court’s factual findings by reproducing his trial testimony and

faulting the bankruptcy court for believing GemCap’s witnesses and

finding him not credible.

       We owe significant deference to the bankruptcy court’s findings of

credibility and fact, and we discern no error on the record before us.

Accordingly, we AFFIRM.

       2
         The parties filed combined briefs addressing all three appeals. Because of the
substantial overlap in the appeals, which resulted in a joint trial, we dispose of them in
a single decision.

                                             4
                                    FACTS

      Prepetition, Trent Bateman, Lisa Bateman, and Brooke Decker

operated Mountain Thunder and Naturescape (collectively, “Borrowers”).

The Batemans are married; Brooke Decker is their daughter. Mr. Bateman

was Mountain Thunder’s president, but despite being involved in its day-

to-day management, he was not an officer or shareholder of Naturescape.

Ms. Bateman was also an officer of Mountain Thunder and both she and

Ms. Decker were Naturescape officers.

      Borrowers purchased coffee from growers, processed it, and sold it at

wholesale and retail.

      In 2011, Borrowers entered into a lending agreement (the

“Agreement”) with GemCap and obtained a $440,000 term loan and a

$1,550,000 revolving line of credit. They provided a first priority lien on all

assets to secure their repayment obligations. The Agreement required

Borrowers to deposit collections in a lockbox account.

      The Batemans, as Mountain Thunder officers, and Ms. Bateman and

Ms. Decker, as Naturescape officers, signed certificates confirming

corporate ownership of the identified collateral and affirming the

correctness of the Agreement’s representations.

      The Agreement was amended in 2013. As relevant here, it reduced

the term loan amount to $327,775.77 but increased the line of credit to

$2,550,000.

                                       5
      The Batemans and Ms. Decker unconditionally guaranteed the

Borrowers’ obligations under the Agreement and reaffirmed the

guarantees whenever the loan documents were amended.

      As is customary in asset-based lending, Borrowers’ ability to draw on

the line of credit was limited by the amount of their eligible accounts and

inventory. Thus, in connection with each draw, GemCap required

submission of a borrowing base certificate that identified the asset basis for

borrowing and was certified by a responsible officer. Mr. or Ms. Bateman

signed most of the borrowing base certificates.

      Borrowers were also required to provide monthly certificates listing

all equipment in their possession. They delivered many; Mr. or

Ms. Bateman signed all of them, and Mr. Bateman actively participated in

their preparation.

      But Borrower’s business operations were not successful; they were

unable to make required payments in 2015 and defaulted under the

Agreement. Unknown to GemCap, however, there were also two

additional relevant defaults already in existence. First, at the direction of

the Batemans and Ms. Decker, Borrowers had diverted $771,669 from the

lockbox account; GemCap never received these proceeds. Second,

Borrowers had provided inflated borrowing base certificates that

overstated receivables for years. The initial misrepresentation was

allegedly inadvertent, but the Borrowers and the Batemans discovered it

                                       6
shortly thereafter and neither corrected it nor otherwise informed GemCap.

Indeed, over a two-year period, they repeated the misrepresentation 102

times, and, in reliance on the false borrowing base certificates, GemCap

lent an additional $2,049,179.10.

      Unaware of these additional serious defaults, GemCap provided

formal notice of default based on the missed payments but then entered

into a forbearance agreement.3 In it, Borrowers, the Batemans, and

Ms. Decker acknowledged the payment default, reaffirmed their respective

obligations, and confirmed their representations and warranties.

      But forbearance was short-lived; GemCap discovered the additional

defaults. In December 2015, GemCap filed suit in state court against the

Batemans, Ms. Decker, and Borrowers. The state court appointed a receiver

but allowed Mr. Bateman to resume management under the receiver’s

supervision. It also deferred enforcement proceedings after partial

summary judgment to allow Borrowers an opportunity to refinance their

obligations.

      Eventually, GemCap became dissatisfied with both the state court

proceedings and the receiver’s performance. So it (and others) filed

involuntary chapter 11 petitions against Naturescape and Mountain

      3
         In its findings, the bankruptcy court did not identify when GemCap discovered
the additional defaults. During trial, GemCap submitted testimony that it did not
discover them until it audited Mountain Thunders’ books and records in 2015 and that
it did not know about them when it signed the forbearance agreement.

                                          7
Thunder. The bankruptcy court entered orders for relief and also ordered

appointment of a trustee, who shut down Borrowers’ business operations

in January 2017.

      GemCap and the trustee entered into a purchase agreement allowing

GemCap to acquire its collateral. The bankruptcy court approved the

transaction over objections from Naturescape, the Batemans, and

Ms. Decker, and GemCap designated Palani Farms, LLC as the acquiring

entity.

      But an order approving the sale did not lead to an orderly turnover of

collateral. As the bankruptcy court put it: “The Batemans [took] many

actions to interfere with GemCap’s effort to enforce its rights in its

collateral. These actions began around the time that the state court

appointed the receiver, and continued and accelerated when the

bankruptcy trustee sought approval of the Asset Purchase Agreement.”

      GemCap responded to this interference with adversary proceedings

and requests for injunctive relief against the Batemans and Ms. Decker (and

others).4 After a hearing, the bankruptcy court entered a temporary

restraining order:

      prohibiting the [] Batemans and Ms. Decker from using,
      transferring, or physically moving any of the purchased assets,
      or interfering with the sale of the assets, and requiring them to

      4
      GemCap filed adversary proceedings in both Naturescape and Mountain
Thunder’s cases; the parties and bankruptcy court treated them as consolidated.

                                          8
     turn over to GemCap the domain and website
     www.mountainthunder.com, emails, telephone numbers
     associated with the Borrowers, and customer lists, to give
     GemCap access to the wet mill portion of the Kaloko Property,
     and to promptly identify the location and condition of all assets
     which the defendants claimed were their personal property.

     The temporary restraining orders did not yield compliance. Thus,

after a two-day evidentiary hearing, the bankruptcy court issued

preliminary injunctions. The injunctions required the Batemans and

Ms. Decker very specifically:

•    “to, immediately upon entry of this preliminary injunction, (I)

     comply with Sale Order . . ., (ii) turnover possession, custody, control,

     title and (if applicable) passwords, lock combinations, keys or other

     information needed for access and use for any and all items identified

     in the Asset Schedule, . . . (viii) transfer all collateral as identified in

     Section 5 of the Loan and Security Agreement . . .”;

•    “to immediately permit GemCap or its designee full, unfettered, and

     continuing unimpeded access to the Kaloko Property, including, but

     not limited to, the orchard, driveway and area around all offices and

     commercial buildings, the Kaloko Wet Mill, and the Kainaliu

     Property;”

•    “to identify the location and condition of inventory, and turnover all

     of the assets on the Asset Schedule, within three (3) days of the entry

     of this preliminary injunction;” and

                                        9
•    “to immediately identify the location and condition of inventory and

     turnover all assets any Enjoined Party contested as a Purchased

     Asset, including, without limitation, all equipment, machinery, tools,

     merchandise, inventory, cash, accounts, merchant accounts,

     Square.com accounts, roasted and unroasted coffee, and coffee

     cherry[.]”

The bankruptcy court also enjoined them “from interfering with any access

to any part of the Kaloko Property (except the personal residences of Trent

and Lisa Bateman and Brooke Decker), Kainaliu Property, and any other

property used in connection with or otherwise related to the Business and

from interfering with GemCap or [its designee’s] possession of any of the

assets on the Asset Schedule located on any of those properties, including

Kainaliu.”

     While the tumult in the Borrowers’ bankruptcies was evolving,

Mr. Bateman filed his own chapter 7 petition. GemCap filed a claim based

on his guaranty of the Borrowers’ obligations and damages for conversion

and contempt and commenced an adversary complaint seeking a

nondischargeability determination as to the entire amount.

     Leading up to a joint trial in the adversary proceedings commenced

by GemCap in the three bankruptcy cases, the parties submitted

declarations in lieu of direct and rebuttal testimony. The bankruptcy court

then held a four day evidentiary hearing. Ms. Bateman and Ms. Decker

                                     10
neither provided a declaration nor testified at trial.

      The bankruptcy court issued findings of fact and conclusions of law.

      As to the request for sanctions based on noncompliance with the

temporary restraining order and the preliminary injunction, the

bankruptcy court found that the Batemans and Ms. Decker knew about its

orders, could have complied with them, but failed to do so because they

did not provide full, unfettered, and continuing, unimpeded access to the

Kainaliu Property and otherwise interfered with the turnover of equipment

collateral. This lack of required cooperation made it impossible for

GemCap or its designee to recover collateral worth $262,330.

      As for Mr. Bateman’s specific interference, we quote the bankruptcy

court’s decision extensively:

      Other items of GemCap’s collateral are located on the Kainaliu
      Property. When the state court receiver was in possession of
      the Kainaliu Property, he would not allow Palani Farms and
      GemCap access unless his representative and a representative
      of the Batemans was present. GemCap was able to enter the
      Kainaliu Property once and removed items that the receiver’s
      representative believed were included in GemCap’s collateral.
      But the receiver would not allow GemCap to remove other
      items claimed by GemCap and Palani Farms because the
      Batemans refused to meet again for a coordinated access to the
      property. These assets . . . were part of GemCap’s collateral, are
      included in the purchased assets, remain on the Kainaliu
      Property, and belong to GemCap and Palani Farms.

      Mr. Bateman testified that all of the items left on the Kainaliu

                                       11
      Property ‘has [sic] considered abandoned and either has been
      or will be removed or destroyed.” This statement about
      abandonment is factually false (GemCap and Palani Farms
      never voluntarily gave up their rights in those items) and
      legally unsustainable (Mr. Bateman has offered no authority for
      the proposition that these items should be deemed abandoned).
      If any of these items have been destroyed, Mr. Bateman is
      accountable.

      The bankruptcy court thus held the Batemans and Ms. Decker in

contempt. But it limited sanctions to the value of the equipment that they

put beyond GemCap’s reach, $262,300, and made the sanction award

subject to reduction if the Batemans or Ms. Decker turned over equipment

in the future. It also concluded that the sanction was nondischargeable in

Mr. Bateman’s bankruptcy case.

      It also concluded that GemCap’s claim against Mr. Bateman was

otherwise nondischargeable. Dischargeability under § 523(a)(2) was

appropriate in part because he provided false borrowing base certificates

that caused GemCap to lend an additional $2,049,179.10 to Borrowers. It

also found and concluded that Mr. Bateman’s diversion and conversion of

$771,669 of lock box cash collateral warranted nondischargeability under

§ 523(a)(6).

      The bankruptcy court entered separate, final judgments in both

adversary proceedings. The Batemans and Ms. Decker timely appealed.

                                     12
                                JURISDICTION

      The bankruptcy court had jurisdiction under 28 U.S.C. § 1334

157(b)(2)(A), (E), and (I). We have jurisdiction under 28 U.S.C. § 158.

                                     ISSUES

      Did the bankruptcy court abuse its discretion in finding Appellants in

civil contempt and imposing sanctions?

      Did the bankruptcy court clearly err when it found that Mr. Bateman

provided false borrowing base certificates and diverted $771,669 from the

lockbox accounts?

                          STANDARD OF REVIEW

      “We review for abuse of discretion the bankruptcy court’s finding of

civil contempt and imposition of sanctions.” Kismet Acquisition, LLC v. Diaz-

Barba (In re Icenhower), 755 F.3d 1130, 1138 (9th Cir. 2014). “We review for

clear error the bankruptcy court’s findings of fact in connection with the

civil contempt order.” Id.

      Whether a claim is excepted from discharge under § 523(a) presents

mixed issues of law and fact. Carrillo v. Su (In re Su), 290 F.3d 1140, 1142

(9th Cir. 2002). Mixed questions of law and fact are usually reviewed

de novo. Id. But in the context of a dischargeability analysis, the bankruptcy

court’s factual findings are reviewed under the clearly erroneous standard.

Candland v. Ins. Co. of N. Am. (In re Candland), 90 F.3d 1466, 1469 (9th Cir.

1996); see In re Su, 290 F.3d at 1142.

                                         13
      “Clearly erroneous review is significantly deferential, requiring that

the appellate court accept the [trial] court’s findings absent a definite and

firm conviction that a mistake has been made.” United States v. Syrax,

235 F.3d 422, 427 (9th Cir. 2000) (internal quotation marks omitted); see

Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985). The bankruptcy

court’s choice among multiple plausible views of the evidence cannot be

clear error. United States v. Elliott, 322 F.3d 710, 714 (9th Cir. 2003). Put

differently, a factual finding is clearly erroneous if it is illogical,

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

facts in the record. See TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832

(9th Cir. 2011).

                                  DISCUSSION

      Appellants argue that the bankruptcy court erred in three respects:

first, in finding Ms. Bateman and Ms. Decker in contempt; second, in

finding Mr. Bateman in contempt; and, third, in finding that Mr. Bateman

provided false borrowing base certificates and diverted money from the

lockbox. We disagree.

      A.     The bankruptcy court did not clearly err in finding
             Ms. Bateman and Ms. Decker in contempt and did not abuse
             its discretion in imposing sanctions.

      “Under traditional principles of equity practice, courts have long

imposed civil contempt sanctions to ‘coerce the defendant into compliance’

with an injunction or ‘compensate the complainant for losses’ stemming

                                         14
from the defendant’s noncompliance with an injunction.” Taggart v.

Lorenzen, 139 S. Ct. 1795, 1801 (2019); cf. In re Dual-Deck Video Cassette

Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993) (“Civil contempt in

this context consists of a party’s disobedience to a specific and definite

court order by failure to take all reasonable steps within the party's power

to comply.”). Bankruptcy courts have authority to hold parties in contempt.

Taggart, 139 S. Ct. at 1801.

      To find a party in civil contempt, the movant must prove by clear and

convincing evidence that the alleged contemnor violated a specific and

definite order of the court. Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178,

1190–91 (9th Cir. 2003). The bankruptcy court must also find that the

contemnor had sufficient notice of the order’s terms and the fact that

sanctions would follow a failure to comply. Hansbrough v. Birdsell (In re

Hercules Enters., Inc.), 387 F.3d 1024, 1028 (9th Cir. 2004). Whether the

contemnor violated a court order is not based on subjective beliefs or intent

in complying with the order, “but [based on] whether in fact [the] conduct

complied with the order at issue.” In re Dyer, 322 F.3d at 1191 (citation

omitted). The standard for evaluating civil contempt, thus, is an objective

one. Taggart, 139 S. Ct. at 1804. It asks whether there was a “fair ground of

doubt” about whether the conduct was proper. Id.

      Once a contemnor’s noncompliance with a court order is established,

the burden shifts, and it must produce sufficient evidence of its inability to

                                       15
comply to raise a question of fact. In re Icenhower, 755 F.3d at 1139. This is

because a “contemnor in violation of a court order may avoid a finding of

civil contempt only by showing it took all reasonable steps to comply with

the order.” Kelly v. Wengler, 822 F.3d 1085, 1096 (9th Cir. 2016).

      And, under § 105(a), a bankruptcy court may both hold a party in

civil contempt and impose compensatory or coercive sanctions. In re Dyer,

322 F.3d at 1189–90; Renwick v. Bennett (In re Bennett), 298 F.3d 1059, 1069

(9th Cir. 2002); Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 506–07 (9th Cir.

2002); Nash v. Clark Cnty. Dist. Attorney’s Office (In re Nash), 464 B.R. 874,

880 (9th Cir. BAP 2012).

      On appeal, Ms. Bateman and Ms. Decker argue that no evidence

implicated them in any failure to provide access to collateral or showed

that they interfered with the asset transfer. At oral argument, they argued

that GemCap failed to meet its evidentiary burden. But Ms. Bateman and

Ms. Decker miss the point.

      In reviewing a determination of contempt, we first ask whether there

was a clear and definite order—there was: the preliminary injunction.

Appellants do not dispute that the preliminary injunction required them to

provide GemCap or its assignee with full access to specific real property

and to identify and turnover specific assets.

      Second, we ask whether there was clear and convincing evidence that

Ms. Bateman and Ms. Decker knew about the preliminary injunction. The

                                        16
bankruptcy court found that they did; we agree that the evidentiary record

supports this conclusion.

      Next, we consider whether Ms. Bateman and Ms. Decker knew that

the preliminary injunction applied to their actions or inactions. They assert

that they cannot be held in contempt because there was no testimony

establishing that they actively interfered with the transfer of assets. But this

argument ignores that the preliminary injunction required their active

participation in identifying and turning over the assets. Put simply, the

order required action, and they did not act as required.

      At oral argument, Ms. Bateman and Ms. Decker’s counsel suggested

that GemCap failed to meet its burden of going forward because it did not

provide evidence of active interference with asset turnover. But this

evidence was unnecessary; the bankruptcy court found, based on clear and

convincing evidence, that Ms. Bateman and Ms. Decker failed to act as

required by the preliminary injunction; this failure to act, standing alone, is

noncompliance with the preliminary injunction.

      As a result, the burden then shifted to Ms. Bateman and Ms. Decker to

show that they were unable to comply or substantially complied with the

preliminary injunction. But they provided no such evidence in connection

with the trial. They did not even testify. So we discern no error in the

bankruptcy court’s conclusion that they were in contempt of the

preliminary injunction order.

                                       17
      And finally, Ms. Bateman and Ms. Decker do not dispute the

bankruptcy court’s calculation of damages. To the extent Ms. Bateman or

Ms. Decker yet acts in good faith and assists in the turnover of the

equipment, they can seek a reduction in the amount of the sanction. The

bankruptcy court’s judgment of contempt, thus, amounts to more than just

a civil compensatory monetary award—it is also a civil coercive award,

designed to induce compliance. Appellants conceded this at oral argument.

      In sum, we conclude that the bankruptcy court did not err when it

held Ms. Bateman and Ms. Decker in contempt and imposed damages.

      B.    The bankruptcy court did not clearly err in finding
            Mr. Bateman in contempt and did not abuse its discretion or
            clearly err in imposing nondischargeable sanctions.

      The bankruptcy court held Mr. Bateman in contempt and entered a

corresponding nondischargeable judgment against him for $262,300.

      Our analysis above applies equally here. The preliminary injunction

was a specific and definite order, Mr. Bateman knew about it, and the

preliminary injunction required Mr. Bateman to actively assist in the

turnover of equipment and assets. Part of Mr. Bateman’s appellate

argument reduces to the supposition that he could do nothing and avoid

contempt. But that was not an option for Mr. Bateman. And Mr. Bateman

does not contest that GemCap was unable to acquire certain assets or that

they were worth $262,300.

      Mr. Bateman also argues, on appeal, that GemCap’s own witness

                                      18
conceded on cross-examination, first, that he never asked Mr. Bateman

where the various pieces of equipment were and, second, that he also

recalled that Mr. Bateman asked GemCap to remove assets from the

property. This, he supposes, absolves him of liability because he made an

effort to comply. And at oral argument, Mr. Bateman’s counsel emphasized

that Mr. Bateman was displaced by both the state court receiver and a

bankruptcy trustee.

      We acknowledge that Mr. Bateman presented and marshaled

evidence suggesting that he provided limited cooperation. The bankruptcy

court noted this cooperation, but then found that it was insufficient and

provided in order to mask actions inconsistent with the preliminary

injunction. As a result, Mr. Bateman’s appellate argument fails—his facial

compliance efforts do not amount to a showing that he took all reasonable

steps to comply with the preliminary injunction. Kelly, 822 F.3d at 1096. And

as with Ms. Bateman and Ms. Decker, Mr. Bateman does not dispute the

amount of the sanction and has the ability to reduce it through post-

judgment turnover of assets.

      Finally, Mr. Bateman does not dispute the bankruptcy court’s

accompanying conclusion that the $262,300 sanction is appropriately

nondischargeable in his bankruptcy case. We deem the matter waived.

Padgett v. Wright, 587 F.3d 983, 985 n.2 (9th Cir. 2009).

      As such, we conclude that the bankruptcy court did not err in holding

                                       19
Mr. Bateman in contempt, imposing sanctions, and concluding that the

sanction was nondischargeable.

      C.    The bankruptcy court did not err in entering a $2,820,848.10
            nondischargeable judgment against Mr. Bateman.

      Mr. Bateman next disputes the determination that an additional

$2,820,848.10 of GemCap’s claim was nondischargeable. The bankruptcy

court based this on its finding, first, that Mr. Bateman prepared false

borrowing certificates that GemCap relied on and, second, that Mr. Bateman

diverted $771,669 from the lockbox.

      Again, Mr. Bateman does not dispute the bankruptcy court’s legal

conclusions that the sums are nondischargeable under § 523 in

Mr. Bateman’s bankruptcy case. We treat any challenge to this legal

conclusion as waived. Instead, he focuses on the factual findings.

      Mr. Bateman’s appellate argument is not persuasive; he reproduces

substantial portions of his direct testimony, notes that he was cross-

examined, and then states that his testimony was consistent with his

declaration and was thus credible. He continues:

      There was absolutely no reason identified by the Bankruptcy
      Court that it should have been disregarded. Yet, for some
      unknonwn [sic] reason, the Bankruptcy Court seems to have
      completely disregarded his testimony, and instead rubber-
      stamped the unsupported allegations asserted by GemCap, that
      Trent Bateman prepared fraudulent borrowing base certificates
      and fraudulently diverted GemCap’s funds. In fact, the
      Batemans never prepared the borrowing base certificates. Those

                                      20
      certificates were always prepared by GemCap. And, when a
      mistake was made in inventory, Trent Bateman immediately
      notified GemCap of that error. That is far from fraud.

      In disregarding Trent Bateman’s testimony and instead rubber-
      stamping GemCap’s unsupported allegations, the Bankruptcy
      Court abused its discretion . . . .

Opening Br. at 15–16. This is far from convincing.

      To start, Mr. Bateman’s framing of his argument is nearly self-

defeating. As the Supreme Court once explained: “[W]hen a trial judge’s

finding is based on his decision to credit the testimony of one of two or

more witnesses, each of whom has told a coherent and facially plausible

story that is not contradicted by extrinsic evidence, that finding, if not

internally inconsistent, can virtually never be clear error.” Anderson,

470 U.S. at 575.

      Mr. Bateman is particularly flummoxed by the bankruptcy court’s

credibility finding: he concedes that the bankruptcy court found him not

credible, and he allegedly does not understand why. But his chagrin is of no

moment; a “trial court’s finding that a witness is not credible is entitled to

special deference.” Allen v. Iranon, 282 F.3d 1070, 1078 n.8 (9th Cir. 2002)

(citing, Anderson, 470 U.S. at 573); see Kirola v. City & Cty. of San Francisco,

860 F.3d 1164, 1179–82 & n.7 (9th Cir. 2017). Our review of the record and

the bankruptcy court’s decision discloses ample evidence in support of this

finding: the bankruptcy court found that Mr. Bateman testified falsely

                                         21
multiple times. Findings of Fact & Conclusions of Law at 9 (“Mr. Bateman

testified . . . . This testimony was false. . . . Mr. Bateman’s willingness to say

whatever suits his family’s interests at the moment makes his testimony

incredible.”), 18 (“Mr. Bateman took the position (indeed, he testified under

oath) . . . . Mr. Bateman’s testimony was false. . . . Mr. Bateman changes his

story intending to use the domain name for the benefit of himself and his

family . . . .”), 19 (“Mr. Bateman contended that . . . . These claims were false

. . . .”), and 21 (“Mr. Bateman testified that . . . . This statement about

abandonment is factually false . . . and legally unsustainable . . . .”).

      Mr. Bateman’s particular assertion that he never prepared borrowing

base certificates also provides no basis for reversal. He relies exclusively on

his direct testimony that “Lisa and I have NEVER done a borrowing base.”

This does not amount to a showing that the bankruptcy court clearly erred.

First, this is contradicted by the record; the exhibits presented at trial

include borrowing base certificates signed by both Mr. and Ms. Bateman

and support the bankruptcy court’s factual conclusions. And further, the

bankruptcy court also found that Mr. Bateman directed Borrowers to submit

false borrowing certificates to GemCap. This finding is adequately

supported by third party testimony in the record.

      Mr. Bateman’s attempt to downplay the magnitude of the borrowing

basis certificate error is also insufficient. He argues that the mistake was not

“unusual” and a “non-issue.” But the bankruptcy court found otherwise.

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And this finding was supported by other testimony in the record.

      Finally, other than reproducing Mr. Bateman’s direct testimony on the

matter, Mr. Bateman never discusses the diversion of the funds from the

lockbox beyond a categorical statement that the bankruptcy court erred in

so finding. This is not enough to dispute the finding. Cf. Christian Legal Soc.

Chapter of Univ. of California v. Wu, 626 F.3d 483, 487 (9th Cir. 2010) (“[W]e

won’t consider matters on appeal that are not specifically and distinctly

argued in appellant’s opening brief. Applying this standard, we have

refused to address claims that were only argued in passing or that were

bare assertions . . . with no supporting argument.”) (internal quotation

marks and alterations omitted). In any event, the finding was adequately

supported by testimony in the record.

      In short, Mr. Bateman does not adequately challenge the bankruptcy

court’s factual findings. They have support in the record. And he admits

that the bankruptcy court believed GemCap’s witnesses and disbelieved

him. He then fails to discredit GemCap’s witnesses by reference to anything

other than his discredited testimony. He fails to show clear error.

                                CONCLUSION

      Based on the foregoing, we AFFIRM.

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