In re: Satya Devi Jagar
NC-15-1251-BSKu
| 9th Cir. BAP | Apr 12, 2017Background
- Debtor Satya Devi Jagar (non‑English speaker) retained attorney Eugene Schneider to handle probate and related litigation concerning her late husband’s estate; three English retainer agreements (2005, 2007, 2009) were signed.
- The 2007 agreement changed compensation to hourly plus 7.5% of recovery; Jagar testified she understood it to mean only 7.5% (via her brother’s translation).
- Probate/401(k) proceeds of roughly $600,000 were ultimately received; Schneider received trust disbursements totaling $102,784.76, kept $70,000, and paid Jagar $32,784.76.
- Schneider sued prepetition for unpaid fees; Jagar filed Chapter 7 and listed the IRA (exempt) and a disputed claim by Schneider.
- Schneider filed an adversary complaint seeking nondischargeability under 11 U.S.C. § 523(a)(2)(A) (fraud/false pretenses) and denial of discharge under §§ 727(a)(4)(A) (false oath) and 727(a)(5) (failure to explain loss of assets).
- At trial the bankruptcy court granted judgment on partial findings under Civil Rule 52(c) for Jagar, finding Schneider failed to prove intent for fraud and failed to prove material false oaths or unexplained loss of assets; the BAP affirmed.
Issues
| Issue | Plaintiff's Argument (Schneider) | Defendant's Argument (Jagar) | Held |
|---|---|---|---|
| Whether debt for unpaid legal fees is nondischargeable under § 523(a)(2)(A) (fraud/false pretenses) | Jagar signed the 2007 agreement and misrepresented assent to its terms while intending not to pay the hourly fees; he relied on that representation and suffered damages | Jagar lacked intent to defraud; she is illiterate in English, relied on translation, and disbursements passed through Schneider | Court held Schneider failed to prove fraudulent intent or damages by preponderance; § 523 claim denied |
| Whether Jagar committed a false oath under § 727(a)(4)(A) by omissions/inaccuracies in bankruptcy schedules | Omitted rental income, misstated dates, and other schedule errors were material and knowingly fraudulent | Errors were small, not material, not shown to be knowingly fraudulent; some items remote or immaterial | Court held Schneider failed to show material, knowing, fraudulent omissions; § 727(a)(4)(A) claim denied |
| Whether Jagar failed to explain loss of assets under § 727(a)(5) | Funds received from probate were unaccounted for and unexplained in bankruptcy papers | Jagar accounted for receipt and rollover of funds into an IRA; transfers were remote (over 3 years before petition) and plausibly explained | Court held Schneider did not make a prima facie showing of unexplained loss tied to the petition date; § 727(a)(5) claim denied |
| Appropriateness of Civil Rule 52(c) judgment on partial findings | Schneider argued the court misapplied credibility standards and excluded evidence of damages | Court applied Rule 52(c) after Schneider rested; found plaintiff failed to carry burden and excluded belated documents | Court’s grant of judgment on partial findings affirmed (findings not clearly erroneous) |
Key Cases Cited
- Ghomeshi v. Sabban, 600 F.3d 1219 (9th Cir.) (elements required for § 523(a)(2)(A) fraud)
- Ritchie v. United States, 451 F.3d 1019 (9th Cir.) (trial court may make findings per its view of the evidence on Rule 52(c))
- Retz v. Sampson (In re Retz), 606 F.3d 1189 (9th Cir.) (standards for § 727(a)(4)(A) and § 727(a)(5))
- United States v. Yellow Cab Co., 338 U.S. 338 (choice between permissible views of the evidence not clearly erroneous)
- Husky Int’l Elecs., Inc. v. Ritz, 136 S. Ct. 1581 (Sup. Ct.) (intent requirement for fraud‑based nondischargeability claims)
- Bullock v. BankChampaign, N.A., 133 S. Ct. 1754 (Sup. Ct.) (fraud and nondischargeability principles)