Estate of Kimberly Kempton v. Michelle Clark
662 F. App'x 544
| 9th Cir. | 2016Background
- Judith Kempton, as personal representative of Kimberly Kempton’s estate, appealed three bankruptcy-related orders involving Chapter 7 debtor Michelle Clark: (1) a March 21, 2014 Dismissal Order dismissing Kempton’s nondischargeability claim; (2) a March 3, 2011 Lift Stay Order granting relief from the automatic stay to allow state-court litigation to proceed; and (3) an October 18, 2012 Abandon Property Order in the Main Case.
- The BAP affirmed the bankruptcy court; this appeal followed to the Ninth Circuit.
- Kempton’s nondischargeability claim under 11 U.S.C. § 523(a)(2)(A) and (a)(6) arose from alleged misrepresentations about real property (including a garage easement) and was litigated previously in California state court.
- The bankruptcy court dismissed the § 523 claims on issue preclusion grounds based on adverse state-court findings that Kempton lacked justifiable reliance and causation.
- The panel held it lacked jurisdiction to review the Lift Stay Order and the Abandon Property Order because Kempton’s appeals were untimely and/or not designated; it affirmed the Dismissal Order on the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Lift Stay Order is appealable and timely | Kempton argued the Lift Stay Order was improper and not a final decision because it was filed in the adversary proceeding rather than the Main Case | Clark argued the Lift Stay Order is a final, appealable order and Kempton’s appeal is untimely; also judicial estoppel and invited error bar belated challenge | Court: Appeal untimely and procedurally barred; lacked jurisdiction; judicial estoppel and invited error apply |
| Whether the bankruptcy court erred dismissing § 523(a)(2)(A) claim | Kempton argued nondischargeability cannot be resolved by preclusion/motion or was not precluded by state-court rulings | Clark argued state-court findings (no justifiable reliance) have preclusive effect under California issue-preclusion rules, barring § 523(a)(2)(A) claim | Court: Affirmed dismissal; issue preclusion bars § 523(a)(2)(A) because justifiable reliance was litigated and decided against Kempton |
| Whether the § 523(a)(6) claim survives despite state-court rulings | Kempton contended causation/intent issues were not precluded or decided against her in state court | Clark argued state court necessarily decided causation (no causal connection), so § 523(a)(6) relitigation is barred | Court: Affirmed dismissal of § 523(a)(6); causation was necessarily decided and precluded relitigation |
| Whether the Abandon Property Order is appealable | Kempton suggested the Main Case orders (including abandonment) were reviewable | Clark argued Kempton didn’t designate the Abandon Order in her notice of appeal and appeal would be untimely after case closure | Court: Lacked jurisdiction; Appeal not designated and appeal period long expired |
Key Cases Cited
- In re Wiersma, 483 F.3d 933 (9th Cir.) (finality and timeliness rules for appeals from bankruptcy orders)
- In re Conejo Enters., Inc., 96 F.3d 346 (9th Cir.) (order granting relief from stay is final for appeal)
- In re Morrissey, 349 F.3d 1187 (9th Cir.) (requirement to designate a complete record on appeal)
- PowerAgent Inc. v. Elec. Data Sys. Corp., 358 F.3d 1187 (9th Cir.) (judicial estoppel prevents challenging a forum after seeking its benefits)
- In re Oracle Corp. Sec. Litig., 627 F.3d 376 (9th Cir.) (invited error doctrine bars complaining about errors a party induced)
- In re Diamond, 285 F.3d 822 (9th Cir.) (issue preclusion can bar § 523 nondischargeability claims; summary disposition appropriate)
- In re Schimmels, 127 F.3d 875 (9th Cir.) (standard of review for dischargeability determinations)
- Grogan v. Garner, 498 U.S. 279 (U.S.) (issue preclusion applies in § 523 proceedings)
- In re Cantrell, 329 F.3d 1119 (9th Cir.) (apply state issue-preclusion rules under full faith and credit)
- In re Harmon, 250 F.3d 1240 (9th Cir.) (elements of issue preclusion)
- W. Radio Servs. Co. v. Qwest Corp., 678 F.3d 970 (9th Cir.) (appellate court will not craft arguments or comb the record for appellant)
- In re Wilbur, 126 F.3d 1218 (9th Cir.) (failure to raise an argument constitutes waiver)
- All. Mortg. Co. v. Rothwell, 10 Cal. 4th 1226 (Cal.) (no causal connection absent justifiable reliance)