Unpublished Disposition, 851 F.2d 361 (9th Cir. 1988)

Annotate this Case
U.S. Court of Appeals for the Ninth Circuit - 851 F.2d 361 (9th Cir. 1988)

In re Norman TILBURY, Debtor,Norman TILBURY, Appellant,v.Max W. WALDEN, Appellee.

No. 87-2178.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 11, 1988.Decided June 27, 1988.

Before JAMES R. BROWNING, ALARCON and NORRIS, Circuit Judges.

Norman Tilbury, a Chapter 7 debtor, appeals a judgment of the Bankruptcy Appellate Panel affirming the bankruptcy court's summary judgment in favor of appellee Max Walden, a judgment creditor. Tilbury challenges the bankruptcy court's decision that an indemnity judgment Walden had obtained against Tilbury in Contra Costa County Superior Court in 1967 for fraud was not dischargeable in bankruptcy based on the state court's determination that Tilbury had committed fraud.

On appeal from a decision of the BAP, this court reviews the bankruptcy court's conclusions of law de novo. In re American Mariner Indus., Inc., 734 F.2d 426, 429 (9th Cir. 1984). The question whether the standards of proof of fraud are the same under California law and under 11 U.S.C. § 523(a) is a legal question subject to de novo review. See In re Comer, 723 F.2d 737, 739 (9th Cir. 1984).

Certain debts are not dischargeable in bankruptcy. Among those are debts "for obtaining money, property, services ... by ... false pretenses, a false representation, or actual fraud." 11 U.S.C. § 523(a) (2) (A). To prove a debt is nondischargeable under 11 U.S.C. § 523(a) (2) (A), the fraud must be proven by clear and convincing evidence. Knoxville Teachers Credit Union v. Parkey, 790 F.2d 490, 491 (6th Cir. 1986); In re Black, 787 F.2d 503, 505 (10th Cir. 1986); In re Hunter, 780 F.2d 1577, 1579 (11th Cir. 1986); In re Kimzey, 761 F.2d 421, 423-24 (7th Cir. 1985). In finding that this debt was not dischargeable, the bankruptcy court followed the procedure authorized by In re Houtman, 568 F.2d 651, 653-55 (9th Cir. 1978) (per curiam), according to which a state court's finding of fraud establishes a prima facie case of nondischargeability. We note that in opposing Walden's motion for summary judgment, Tilbury offered no evidence, other than his own conclusory and self-serving declaration, to rebut the state court findings that he had committed fraud.

Tilbury contends that the bankruptcy court erred in holding that the California state court findings established that the judgment debt was for money obtained by fraud because under California law fraud could be proved by a preponderance of evidence, a less stringent standard than the clear and convincing evidence standard required to prove nondischargeability.

The state court proceeding was a bench trial. The court did not state the standard of proof it applied. All parties agree that we must look to California law at the time of the trial to determine the standard that the court probably applied.

The most recent pronouncement of the California Supreme Court on this issue before 1967 was contained in Aggregates Associated, Inc. v. Packwood, 58 Cal. 2d 580, 25 Cal. Rptr. 545, 375 P.2d 425 (1962), in which the court stated that fraud must be proved by clear and convincing evidence. Although it is true that a subsequent California Supreme Court decision observed that Aggregates was an isolated case and that previous decisions by the supreme court and courts of appeal applied the preponderance of the evidence standard, Liodas v. Sahadi, 19 Cal. 3d 278, 137 Cal. Rptr. 635, 562 P.2d 316 (1977), we must nevertheless assume that the Contra Costa County Superior Court followed the California Supreme Court's most recent decision at the time, which was Aggregates.

Tilbury contends that, notwithstanding the supreme court's recent statement in Aggregates, the Contra Costa County Superior Court would have applied the preponderance of the evidence standard because a decision of the court of appeal in the First Appellate District (the district encompassing Contra Costa County) rendered four years later determined that the preponderance of the evidence standard governed proof of fraud. Sierra Nat'l Bank v. Brown, 18 Cal. App. 3d 98, 104-06, 95 Cal. Rptr. 742 (1971). If, however, Sierra National Bank was the first decision in the First Appellate District to consider the issue, as Tilbury asserts, it is not clear that the trial court applied that standard. Rather, if there was no authority on the issue from the First Appellate District, it seems even more likely that the superior court would have followed the clear and convincing evidence standard articulated by Aggregates, the most recent supreme court case on the issue.

The judgment is AFFIRMED.


* This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Circuit Rule 36-3.