In re: Barak Menashe Snapir
CC-17-1002-STaL
| 9th Cir. BAP | Nov 3, 2017Background
- Breliant (as trustee) hired Snapir’s company in 2008 for an extensive Beverly Hills home remodel; original contract ~$802,000 that grew to ~$1.45M via change orders.
- Breliant paid about $1.3M to Snapir between 2008–2010; project remained incomplete and she later paid a new contractor $615,074.59 to finish the work.
- Designer Roy Sklarin falsely represented a longstanding working relationship with Snapir and showed Breliant a model project; the court found Snapir ratified those representations.
- Sklarin extracted kickbacks from Snapir (5–10%); Snapir prepared invoices/change orders that overstated completed work and accepted payments for unperformed work.
- Construction consultant Sawyer concluded at least $582,000 was paid for incomplete work; the bankruptcy court found Breliant’s and Sawyer’s testimony credible and Snapir not credible.
- Bankruptcy court held Snapir’s debt nondischargeable under 11 U.S.C. § 523(a)(2)(A) and (a)(6), awarded damages of $615,074.59 plus prejudgment interest under California law; BAP affirmed fraud ruling but vacated the interest award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether debt is nondischargeable under § 523(a)(2)(A) (fraud) | Breliant argued Snapir made false representations (experience, completed work), induced payments, and Breliant justifiably relied causing damages | Snapir argued he did not make/ratify misrepresentations, intended to perform, and partial performance defeats fraud claim | Affirmed: sufficient evidence showed misrepresentations, intent to deceive (via invoices/ratified statements), justifiable reliance, and proximate damages — § 523(a)(2)(A) nondischargeable |
| Whether debt is nondischargeable under § 523(a)(6) (willful/malicious injury) | Breliant argued injury was willful and malicious supporting nondischargeability | Snapir contested liability (overlaps with fraud defense) | Bankruptcy court found willful/malicious; BAP declined to reach or expand because § 523(a)(2)(A) affirmation made further analysis unnecessary |
| Whether prejudgment interest should be calculated under California law or federal rate | Breliant relied on contract/state law to justify California rate | Snapir argued federal rate under 28 U.S.C. § 1961 applies to federal bankruptcy nondischargeability judgments | Vacated interest award: federal rate generally applies for § 523 claims; remanded for application of § 1961 rate or for reasoned justification (with substantial evidence) to depart from it |
| Standard of review for factual findings | N/A (context) | N/A | BAP applied clearly erroneous standard to facts and de novo to law; found bankruptcy court’s factual findings were not clearly erroneous |
Key Cases Cited
- Sabban v. Ghomeshi (In re Sabban), 384 B.R. 1 (9th Cir. BAP) (elements for § 523(a)(2)(A) fraud claim)
- Turtle Rock Meadows Homeowners Ass'n v. Slyman, 234 F.3d 1081 (9th Cir. 2000) (defining elements of nondischargeable fraud)
- Retz v. Samson (In re Retz), 606 F.3d 1189 (9th Cir. 2010) (clearly erroneous standard for bankruptcy findings)
- Blankenship v. Liberty Life Assurance Co. of Boston, 486 F.3d 620 (9th Cir. 2007) (postjudgment interest rate presumption and when equities may justify departure)
- Banks v. Gill Distribution Centers, 263 F.3d 862 (9th Cir. 2001) (applying federal interest rate to federal claims unless equities require otherwise)
- Blanton v. Anzalone, 813 F.2d 1574 (9th Cir. 1987) (requiring reasoned justification and substantial evidence to depart from federal rate)
- Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir. 2001) (abuse of discretion review of prejudgment interest awards)