Deitz v. Ford (In Re Deitz), 469 B.R. 11

Chapter 7 debtor Deitz contracted with the Fords to build a home; license status was not in good standing at contract signing and later revoked.
Fords paid Deitz about $511,800; house construction was approximately 65% complete when litigation arose.
Deitz represented ADA/VA compliance and purported licensing/professional credentials to induce the Fords to enter the contract.
Bankruptcy court found Deitz’s representations were intentional, misrepresented license status, and that funds were misused for construction costs.
Trial court concluded Deitz embezzled funds and willfully misrepresented to obtain progress payments; damages awarded, with debt deemed nondischargeable under § 523(a)(2)(A), (a)(4), and (a)(6).
On appeal, Deitz challenged the bankruptcy court’s final judgment and authority post-Stern; panel held authority proper and affirmed nondischargeability.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Stern limits bankruptcy court finality in dischargeability cases	Deitz: Stern prohibits final judgments on state-law claims by Article I court	Ford: Stern narrowly limits only certain counterclaims	Bankruptcy court had authority to enter final judgment under Kennedy despite Stern
Whether § 523(a)(2)(A) supports nondischargeability	Deitz disputes intent or justifiable reliance	Fords prove misrepresentations, intent to deceive, justifiable reliance	Yes; elements satisfied; debt nondischargeable under § 523(a)(2)(A)
Whether § 523(a)(4) and (a)(6) were properly established	Deitz argues these theories were not timely argued	Fords relied on embezzlement and willful/malicious injury	Waived by Deitz; court found arguments not preserved in opening brief
Whether the amount and dischargeability determinations could be liquidated in a single judgment	Debtor lacks authority to liquidate under Stern	Ninth Circuit precedent permits liquidating nondischargeable debt with judgment	Bankruptcy court could determine both amount and dischargeability; final judgment affirmed

In re Kennedy, 108 F.3d 1015 (9th Cir. 1997) (bankruptcy court may liquidate a disputed state-law fraud claim in conjunction with nondischargeability)
In re Sasson, 424 F.3d 864 (9th Cir. 2005) (related-to jurisdiction supports final judgment/liquidation of claims)
Stern v. Marshall, 131 S. Ct. 2594 (Supreme Court 2011) (narrow holding limiting finality for certain non-claims-counterclaims)
Farooqi v. Carroll (In re Carroll), 464 B.R. 293 (Bankr. N.D. Tex. 2011) (discusses authority to determine nondischargeability within bankruptcy)