In re Caneva
- Reporters:
- , ,
- Before:
- Alfred T. Goodwin, Robert R. Beezer, Jay S. Bybee (per curiam)
ORDER AMENDING OPINION AND AMENDED OPINION
ORDER
The opinion filed November 5, 2008, appearing at slip op. 15129, 547 F.3d 1082, is amended as follows:
At slip op. 15132, 547 F.3d at 1082, line 2, change “plaintiff-appellant” to “defendant-appellant.”
At slip op. 15132, 547 F.3d 1082, line 4, change “defendant-appellee” to “plaintiff-appellee.”
At slip op. 15133, 547 F.3d at 1085, first full paragraph, 3rd line, after ”
Because the bankruptcy court specifically concluded that its summary judgment grant effectively disposed of all claims raised in Sun‘s adversary complaint, we
determine that the appeal from the district court‘s affirmance thereof was from a final judgment for jurisdictional purposes. Where there is any doubt about finality, a bankruptcy or district court can always avail itself of the direct appeal certification procedures of 28 U.S.C. § 158(d)(2) .
OPINION
PER CURIAM.
Marc Scott Caneva (Caneva) appeals the district court‘s order affirming the bankruptcy court‘s grant of summary judgment in favor of Sun Communities Operating Limited Partnership (Sun). The bankruptcy judgment denied Caneva discharge pursuant to
The district court had jurisdiction pursuant to
FACTS AND PROCEDURAL HISTORY
Prior to filing his voluntary Chapter Seven Petition, Caneva owned or controlled numerous business entities, recreational vehicle and mobile home parks in Florida, and an airplane. Sun, one of Caneva‘s creditors, filed an adversary complaint objecting to discharge pursuant to
Sun argued that Caneva was not entitled to discharge under
Sun questioned Caneva about the nature of his interests in these companies and the existence of financial records for them during a Bankruptcy Rule 2004 Examination. Caneva admitted that he kept no records for the entities, despite the fact that some of them had business operations and others existed as holding companies for active businesses. Caneva also admitted during the Rule 2004 Examination that he had no documentation regarding the payment of $500,000 to Bowden as a brokerage fee for a $20 million loan that Caneva stated he did not receive, although he indicated that Sun could contact the Federal Bureau of Investigation for details on Bowden‘s criminal prosecution and conviction.
The bankruptcy court applied the analysis described in Lansdowne v. Cox (In re Cox), 41 F.3d 1294 (9th Cir.1994), and found that Sun had shown a prima facie case that Caneva failed to keep or preserve adequate records and that such failure made it impossible for Sun to accurately determine his financial condition and the nature and extent of material business transactions. The court stated that “[t]his case presents a situation factually different than most cases where the question is whether the information produced was adequate” because Caneva admitted to “not providing any documentation on several business entities and transactions” despite admitting “that some had operations or held assets as holding companies.” The court found this to be fatal, reasoning that “[b]y definition ... the failure to have any documents or records is inadequate” because “the absence of any documents for these entities makes it impossible to determine their value, their significance and their impact on [Caneva‘s] estate.”
After finding that Sun had shown a prima facie case, the bankruptcy court found that Caneva failed to carry his burden of explaining why his failure to keep or preserve records was justified under the circumstances. The court faulted Caneva for “simply parrot[ing] back in his affidavit the text of Section 727(a)(3), conclusorily denying its elements,” rather than providing affidavits or testimony from the accountants who set up the companies that might have supported his assertion that nothing related to these entities existed because there was nothing to document.
Caneva filed a motion to reconsider, which the bankruptcy court denied, and then appealed to the district court. The district court affirmed the orders granting summary judgment and denying Caneva‘s motion to reconsider. It focused on Caneva‘s admissions during the Rule 2004 Examination that “he had no books or records for several of his business entities despite that some of the entities had business operations” and “that he had no documents to substantiate an alleged $500,000 transfer to Anita Bowden. ...” This appeal followed.
STANDARD OF REVIEW
“The roles of this Court and the district court are essentially the same in the bankruptcy appellate process.” Parker v. Community First Bank (In re Bakersfield Westar Ambulance, Inc.), 123 F.3d 1243, 1245 (9th Cir.1997) (citing In re DAK Indus., 66 F.3d 1091, 1094 (9th Cir.1995)). Thus, we directly review the bankruptcy court‘s decision. Id. “We review the bankruptcy court‘s grant of summary judgment de novo,” and must view the evidence in the light most favorable to the non-moving party and “determine whether there are any genuine issues of material fact and whether the bankruptcy court correctly applied the substantive law.” Id. (citing Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir.1996)). A material fact is one that, “under the governing substantive law ... could affect the outcome of the case.” Thrifty Oil Co. v. Bank of America Nat‘l Trust & Savings Ass‘n, 322 F.3d 1039, 1046 (9th Cir.2003) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A genuine issue of material fact exists when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The party moving for summary judgment must initially identify “those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,\’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party meets its burden, the non-moving party must “set out specific facts showing a genuine issue for trial.”
DISCUSSION
I. Failure to Keep or Preserve Records
Section 727(a) of the Bankruptcy Code provides that a debtor is entitled to discharge unless one of eight conditions is met.
the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor‘s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all the circumstances of the case.
We have stated that the purpose of
A creditor states a prima facie case under
Caneva argues that because he turned over a substantial quantity of documents to both the bankruptcy trustee and Sun, a genuine issue of material fact necessarily exists as to whether these documents were adequate to determine his financial condition and business transactions notwithstanding his admission that he has no records for some of his business entities. Caneva further contends that because Sun could have obtained information about Bowden from the public record generated by her criminal prosecution, the district court erred in finding that his admission that he had no records related to the payment
We disagree. The Seventh Circuit has held that
Caneva‘s continued focus throughout these proceedings on the quantity of the records that he produced misses the crucial point that the total absence of records related to his business entities and to his alleged $500,000 payment to Bowden necessarily makes it impossible for Sun to accurately determine his financial condition and business transactions.
As the Third Circuit has stated “`[c]omplete disclosure is in every case a condition precedent to the granting of the discharge, and if such a disclosure is not possible without the keeping of books or records, then the absence of such amounts to that failure to which the act applies.\‘” Meridian Bank, 958 F.2d at 1230(quoting In re Underhill, 82 F.2d 258, 259-60 (2d Cir.1936)). Without the records that Caneva admitted he did not keep, Sun cannot determine what assets his business entities held or may still hold, what assets passed through them and where they might have gone, and what their present value is, if anything. Without any documentation related to the payment to Bowden, Sun cannot determine the details of that transaction or verify that it actually took place.
Caneva‘s testimony given during the Bankruptcy Rule 2004 Examination unequivocally establishes that he failed to keep or preserve any recorded information related to certain of his business entities and to the $500,000 payment to Bowden. Although
II. The Debtor‘s Burden to Justify the Failure to Keep or Preserve Records
If a creditor establishes a prima facie violation of
In Cox, we stated that “`[j]ustification for [a] bankrupt‘s failure to keep or preserve books or records will depend on ... whether others in like circumstances would ordinarily keep them.\‘” 41 F.3d at 1299 (quoting Matter of Russo, 3 B.R. 28, 34 (Bankr.E.D.N.Y.1980)). The Third Circuit has stated that the fact that a debtor was honest in producing all the records he had was not sufficient to satisfy the requirements of
CONCLUSION
In support of its motion for summary judgment, Sun submitted uncontested testimony from Caneva that he did not have records with respect to certain of his business entities and to a $500,000 payment to a third party. Sun carried its burden under
This is not enough. The terms of
The district court‘s order affirming the bankruptcy court‘s grant of summary judgment is AFFIRMED.