In re: Faramarz Bijan Khounani
16-1233-NTaL
| 9th Cir. BAP | Feb 2, 2017Background
- In 2002 Khounani filed Chapter 7 and listed Premier Capital’s guaranty/breach-of-contract claim (~$86,015) on Schedule F.
- Premier Capital sued in the 2002 adversary, obtained a default judgment in 2003 denying Khounani’s Chapter 7 discharge under § 727(a)(2), (3), and (4).
- After the 2002 case closed, Premier obtained a California Superior Court judgment on the same guaranty claim (entered 2005) that included principal, interest, costs and attorneys’ fees; the judgment was later renewed and grew to roughly $236,000 by 2012.
- Khounani filed a second Chapter 7 in 2015 and listed the Superior Court judgment; Premier filed an adversary under 11 U.S.C. § 523(a)(10) seeking a determination that the state-court judgment was non-dischargeable.
- The bankruptcy court granted Premier’s summary judgment, holding that § 523(a)(10) bars discharge of the Superior Court judgment (including accrued interest, costs, fees). Khounani appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a claim that matured into a later state-court judgment remains non-dischargeable under § 523(a)(10) | Premier: The Superior Court judgment is the same pre-petition claim listed in 2002 and thus non-dischargeable | Khounani: The later judgment (with accrued interest, costs, fees) is different in amount and character and thus dischargeable in 2015 | Court: Held non-dischargeable — a claim is a "right to payment" and may mature into a judgment; amount changes do not create a new claim for § 523(a)(10) purposes |
| Whether § 523(a)(10) requires the underlying claim to be based on fraud or tort | Premier: § 523(a)(10) is not limited to torts; only requires the claim existed and debtor was denied/waived discharge previously | Khounani: Argued Superior Court judgment was breach-of-contract (non-fraud) and thus not covered | Court: Held statute is not tort-based; coverage depends on prior listing and denial/waiver of discharge, not claim type |
| Whether res judicata/claim-preclusion identity-of-claim analysis is required to apply § 523(a)(10) | Premier: The earlier adversary and the later state action are the same claim; claim preclusion supports non-dischargeability | Khounani: Urged stricter identity (including amount) to limit § 523(a)(10) scope | Court: Applied § 523(a)(10) elements directly and rejected amount-based limitation; found identity satisfied by the same enforceable obligation |
Key Cases Cited
- Johnson v. Home State Bank, 501 U.S. 78 (discusses broad definition of "claim")
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden-shifting principles)
- Boyajian v. New Falls Corp. (In re Boyajian), 564 F.3d 1088 (9th Cir. standard of review for BAP summary judgment)
- Covey v. Hollydale Mobilehome Estates, 116 F.3d 830 (9th Cir. summary judgment does not weigh evidence)
- Far Out Prods., Inc. v. Oskar, 247 F.3d 986 (definition of "genuine" dispute for summary judgment)
- S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885 (plaintiff’s burden on summary judgment)
- First Ave. W. Bldg., LLC v. James (In re Onecast Media, Inc.), 439 F.3d 558 (de novo review requirement)
- Migra v. Warren City School Dist. Bd. of Educ., 465 U.S. 75 (use of term "claim preclusion")
- Robi v. Five Platters, Inc., 838 F.2d 318 (9th Cir. treatment of res judicata/claim preclusion terminology)