Van Zandt v. Mbunda (In Re Mbunda), 484 B.R. 344

Mbunda filed a Chapter 7 case in 2010; Malis’s estate asserted a $165,000 debt from Mbunda’s 2005 loans to the Twiga Gallery partnership.
Thomas, as executor for Malis’s estate, alleged the debt nondischargeable under §523(a)(2)(A), (4), and (6) based on misrepresentations by Mbunda to obtain the loan.
Bankruptcy court dismissed most claims; trial on the remaining §523(a)(2)(A) claim proceeded to a judgment on partial findings in Mbunda’s favor.
Evidence showed Mbunda used loan proceeds to pay her debts; the court found no admissible proof of knowingly false representations.
Bankruptcy court concluded Mbunda intended to repay the loan; Thomas’s other evidentiary challenges were rejected.
The panel affirmed, holding the record supported the absence of essential elements for each §523 claim and that errors were harmless, if any.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §523(a)(2)(A) was proven with clear error review	Kilian Mbunda made knowingly false representations	No admissible evidence of affirmative misrepresentations	Not proven; no clear error in finding absence of misrepresentations
Whether the bankruptcy court properly excluded hearsay and admitted evidence	Exclusions were error and would prove fraud	Exclusions were proper; statements lacked trustworthiness	Exclusions upheld; no reversible error affecting outcome
Whether §523(a)(4) claim should have been allowed to amend for partnership fiduciary duty	Claim could be cured by alleging a partnership	Amendment would be futile; no partnership facts pled	Dismissal without leave to amend affirmed
Whether §523(a)(6) claim should have been allowed to proceed or amended	Elder abuse could establish willful and malicious injury	W&I §15610.30 does not satisfy willful/malicious elements for §523(a)(6)	affirmed dismissal; amendments would be futile or harmless
Due process claim regarding trial proceedings	Adverse rulings and rushed trial denied meaningful hearing	No prejudice; rulings did not affect outcome	No due process violation; no prejudice shown

Ghomeshi v. Sabban (In re Sabban), 600 F.3d 1219 (9th Cir. 2010) (elements of fraud under §523(a)(2)(A))
Lee v. W. Coast Life Ins. Co., 688 F.3d 1004 (9th Cir. 2012) (standard for Rule 52(c) review and involuntary dismissal)
Candland v. Ins. Co. of N. Am. (In re Candland), 90 F.3d 1466 (9th Cir. 1996) (clear error review of factual findings in Rule 52(c) context)
In re Slatkin, 525 F.3d 805 (9th Cir. 2008) (abuse of discretion standard for evidentiary rulings; prejudice required)
In re Honkanen, 446 B.R. 373 (9th Cir. BAP 2011) (fiduciary capacity under §523(a)(4) and narrow definition)
In re Cantrell, 329 F.3d 1119 (9th Cir. 2003) (narrow fiduciary definition; precludes broad application)
In re Ormsby, 591 F.3d 1199 (9th Cir. 2010) (willful/malicious standard and circumstantial evidence for §523(a)(6))
In re Su, 290 F.3d 1140 (9th Cir. 2002) (subjective motive or certainty standard for willful/malicious intent)
U.S. v. Bonds, 608 F.3d 495 (9th Cir. 2010) (residual exception—trustworthiness considerations in evidence rule 807)