NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 16 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: JAMES MANUEL RODRIGUEZ, No. 21-60018
Debtor, BAP No. 17-1245
------------------------------ MEMORANDUM* JAMES MANUEL RODRIGUEZ,
Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
Appellee.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel Faris, Lafferty III, and Brand, Bankruptcy Judges, Presiding
Submitted December 9, 2022** Pasadena, California
Before: BEA, IKUTA, and CHRISTEN, Circuit Judges.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). James Manuel Rodriguez appeals pro se the Bankruptcy Appellant Panel’s
(“BAP”) decision affirming the bankruptcy court’s decisions, which held Appellee’s
subrogation claim against Appellant nondischargeable under 11 U.S.C. § 523(a)(6).
The parties are familiar with the facts and arguments, so we do not recount them
here. We review the BAP’s decision de novo. In re Boyajian, 564 F.3d 1088, 1090
(9th Cir. 2009). We review the bankruptcy court’s conclusions of law de novo and
review its factual findings for clear error. In re Su, 290 F.3d 1140, 1142 (9th Cir.
2002). Because we hold that the bankruptcy court did not commit clear error in
determining that the elements required for a finding of nondischargeability under §
523(a)(6) were met, and that the BAP decision is correct, we affirm.
1. The bankruptcy court did not commit clear error in holding that Appellant’s
conduct was tortious under state law, as required by our caselaw interpreting
§ 523(a)(6). See 11 U.S.C. § 523(a)(6); Lockerby v. Sierra, 535 F.3d 1038, 1041 (9th
Cir. 2008). Appellant’s taking of the Ferrari was an illegal conversion under
California law. The elements of a conversion claim under California law are: “(1)
the plaintiff’s ownership or right to possession of the property; (2) the defendant’s
conversion by a wrongful act or disposition of property rights; and (3) damages.”
Sheley v. Harrop, 215 Cal. Rptr. 3d 606, 626 (Ct. App. 2017) (quoting Lee v. Hanley,
354 P.3d 334, 344 (Cal. 2015)). Appellant’s taking possession of the Ferrari was an
illegal conversion of Sun’s property under California law because Sun had the right
2 to possession of the Ferrari as its title was in her name, Appellant wrongfully took
the Ferrari without Sun’s permission, and Sun necessarily suffered damages because
she was deprived of her property.
2. The bankruptcy court did not commit clear error in holding that Appellant’s
conduct was willful within the meaning of § 523(a)(6). Conduct is willful within the
meaning of § 523(a)(6) if the debtor (1) had a subjective motive to inflict injury, or
(2) knew that injury was substantially certain to result from his conduct. In re Su,
290 F.3d at 1143–46. The bankruptcy court’s determination that Appellant intended
to inflict harm on Sun by taking possession of the Ferrari is supported by Appellant’s
expressions of ill-will toward Sun in his trial brief. For example, Appellant described
Sun as a “conniving entrepreneur, an Asian Cruella-De-Ville of sorts” and stated
that he was going to drop a “nuclear bomb” on Sun and Curtis and did not want to
be anywhere near “ground zero” when it hit. These statements support the
bankruptcy court’s finding that Appellant intended to inflict harm on Sun and belie
Appellant’s argument that his taking of the Ferrari was the result of only benign
motives.
3. The bankruptcy court did not commit clear error in holding that Appellant’s
conduct was malicious within the meaning of § 523(a)(6). Malicious conduct
“involves ‘(1) a wrongful act, (2) done intentionally, (3) which necessarily causes
injury, and (4) is done without just cause or excuse.’” In re Jercich, 238 F.3d 1202,
3 1209 (9th Cir. 2001) (quoting In re Bammer, 131 F.3d 788, 791 (9th Cir. 1997) (en
banc)). The first three elements of maliciousness are easily met because Appellant
intentionally committed the wrongful act of illegal conversion of the Ferrari, which
resulted in the deprivation of Sun’s property. We reject Appellant’s argument that
he had just cause for his conduct because he relied on the advice of an attorney. The
bankruptcy court found that, although Appellant’s lawyer advised him to keep the
Ferrari in a safe and neutral location, Appellant’s lawyer never advised him to take
the Ferrari in the first place, which is the relevant conduct here. Appellant does not
challenge this factual determination on appeal. Moreover, regardless of any legal
advice Appellant may have received, there is significant evidence that Defendant
had the specific intent to injure Sun, which is enough to negate any just cause or
excuse for Defendant’s behavior. See In re Armstrong, 2006 WL 2850527, at *11
(Bankr. D. Idaho Oct. 3, 2006). The bankruptcy court therefore did not commit clear
error in holding that Defendant’s conduct was malicious.
4. Appellant’s argument that Sun had “unclean hands” in her dealings with
Appellee was raised for the first time before the BAP. Although as a general matter
we do not decide issues that the trial court did not decide, we may in our discretion
consider all issues raised on appeal by a pro se debtor when we determine that
“justice will be better served” if we do so. In re Jacksen, 105 B.R. 542, 543–544
(B.A.P. 9th Cir. 1989). The doctrine of unclean hands requires that a plaintiff seeking
4 equitable relief “shall have acted fairly and without fraud or deceit as to the
controversy in issue.” Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir.
1985). “In applying the doctrine, ‘[w]hat is material is not that the plaintiff’s hands
are dirty, but that he dirtied them in acquiring the right he now asserts, or that the
manner of dirtying renders inequitable the assertion of such rights against the
defendants.’” Id. (quoting Republic Molding Corp. v. B. W. Photo Utils., 319 F.2d
347, 349 (9th Cir. 1963)). However, the doctrine does not require that courts “always
permit a defendant wrongdoer to retain the profits of his wrongdoing merely because
the plaintiff himself is possibly guilty of transgressing the law.” Johnson v. Yellow
Cab Transit Co.,
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS DEC 16 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: JAMES MANUEL RODRIGUEZ, No. 21-60018
Debtor, BAP No. 17-1245
------------------------------ MEMORANDUM* JAMES MANUEL RODRIGUEZ,
Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
Appellee.
Appeal from the Ninth Circuit Bankruptcy Appellate Panel Faris, Lafferty III, and Brand, Bankruptcy Judges, Presiding
Submitted December 9, 2022** Pasadena, California
Before: BEA, IKUTA, and CHRISTEN, Circuit Judges.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). James Manuel Rodriguez appeals pro se the Bankruptcy Appellant Panel’s
(“BAP”) decision affirming the bankruptcy court’s decisions, which held Appellee’s
subrogation claim against Appellant nondischargeable under 11 U.S.C. § 523(a)(6).
The parties are familiar with the facts and arguments, so we do not recount them
here. We review the BAP’s decision de novo. In re Boyajian, 564 F.3d 1088, 1090
(9th Cir. 2009). We review the bankruptcy court’s conclusions of law de novo and
review its factual findings for clear error. In re Su, 290 F.3d 1140, 1142 (9th Cir.
2002). Because we hold that the bankruptcy court did not commit clear error in
determining that the elements required for a finding of nondischargeability under §
523(a)(6) were met, and that the BAP decision is correct, we affirm.
1. The bankruptcy court did not commit clear error in holding that Appellant’s
conduct was tortious under state law, as required by our caselaw interpreting
§ 523(a)(6). See 11 U.S.C. § 523(a)(6); Lockerby v. Sierra, 535 F.3d 1038, 1041 (9th
Cir. 2008). Appellant’s taking of the Ferrari was an illegal conversion under
California law. The elements of a conversion claim under California law are: “(1)
the plaintiff’s ownership or right to possession of the property; (2) the defendant’s
conversion by a wrongful act or disposition of property rights; and (3) damages.”
Sheley v. Harrop, 215 Cal. Rptr. 3d 606, 626 (Ct. App. 2017) (quoting Lee v. Hanley,
354 P.3d 334, 344 (Cal. 2015)). Appellant’s taking possession of the Ferrari was an
illegal conversion of Sun’s property under California law because Sun had the right
2 to possession of the Ferrari as its title was in her name, Appellant wrongfully took
the Ferrari without Sun’s permission, and Sun necessarily suffered damages because
she was deprived of her property.
2. The bankruptcy court did not commit clear error in holding that Appellant’s
conduct was willful within the meaning of § 523(a)(6). Conduct is willful within the
meaning of § 523(a)(6) if the debtor (1) had a subjective motive to inflict injury, or
(2) knew that injury was substantially certain to result from his conduct. In re Su,
290 F.3d at 1143–46. The bankruptcy court’s determination that Appellant intended
to inflict harm on Sun by taking possession of the Ferrari is supported by Appellant’s
expressions of ill-will toward Sun in his trial brief. For example, Appellant described
Sun as a “conniving entrepreneur, an Asian Cruella-De-Ville of sorts” and stated
that he was going to drop a “nuclear bomb” on Sun and Curtis and did not want to
be anywhere near “ground zero” when it hit. These statements support the
bankruptcy court’s finding that Appellant intended to inflict harm on Sun and belie
Appellant’s argument that his taking of the Ferrari was the result of only benign
motives.
3. The bankruptcy court did not commit clear error in holding that Appellant’s
conduct was malicious within the meaning of § 523(a)(6). Malicious conduct
“involves ‘(1) a wrongful act, (2) done intentionally, (3) which necessarily causes
injury, and (4) is done without just cause or excuse.’” In re Jercich, 238 F.3d 1202,
3 1209 (9th Cir. 2001) (quoting In re Bammer, 131 F.3d 788, 791 (9th Cir. 1997) (en
banc)). The first three elements of maliciousness are easily met because Appellant
intentionally committed the wrongful act of illegal conversion of the Ferrari, which
resulted in the deprivation of Sun’s property. We reject Appellant’s argument that
he had just cause for his conduct because he relied on the advice of an attorney. The
bankruptcy court found that, although Appellant’s lawyer advised him to keep the
Ferrari in a safe and neutral location, Appellant’s lawyer never advised him to take
the Ferrari in the first place, which is the relevant conduct here. Appellant does not
challenge this factual determination on appeal. Moreover, regardless of any legal
advice Appellant may have received, there is significant evidence that Defendant
had the specific intent to injure Sun, which is enough to negate any just cause or
excuse for Defendant’s behavior. See In re Armstrong, 2006 WL 2850527, at *11
(Bankr. D. Idaho Oct. 3, 2006). The bankruptcy court therefore did not commit clear
error in holding that Defendant’s conduct was malicious.
4. Appellant’s argument that Sun had “unclean hands” in her dealings with
Appellee was raised for the first time before the BAP. Although as a general matter
we do not decide issues that the trial court did not decide, we may in our discretion
consider all issues raised on appeal by a pro se debtor when we determine that
“justice will be better served” if we do so. In re Jacksen, 105 B.R. 542, 543–544
(B.A.P. 9th Cir. 1989). The doctrine of unclean hands requires that a plaintiff seeking
4 equitable relief “shall have acted fairly and without fraud or deceit as to the
controversy in issue.” Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir.
1985). “In applying the doctrine, ‘[w]hat is material is not that the plaintiff’s hands
are dirty, but that he dirtied them in acquiring the right he now asserts, or that the
manner of dirtying renders inequitable the assertion of such rights against the
defendants.’” Id. (quoting Republic Molding Corp. v. B. W. Photo Utils., 319 F.2d
347, 349 (9th Cir. 1963)). However, the doctrine does not require that courts “always
permit a defendant wrongdoer to retain the profits of his wrongdoing merely because
the plaintiff himself is possibly guilty of transgressing the law.” Johnson v. Yellow
Cab Transit Co., 321 U.S. 383, 387 (1944). The court must “balanc[e] the alleged
wrongdoing of the plaintiff against that of the defendant,” Northbay Wellness Grp.,
Inc. v. Beyries, 789 F.3d 956, 960 (9th Cir. 2015), and “weigh the substance of the
right asserted by plaintiff against the transgression which, it is contended, serves to
foreclose that right” to strike an “equitable balance.” Republic Molding Corp., 319
F.2d at 350. Here, Appellant argues that Sun was “disingenuous in her disclosures”
to Appellee and that Appellee “failed to exercise due diligence” in investigating
Sun’s claim. Even assuming the truth of these assertions, “had the bankruptcy court
weighed the parties’ respective wrongdoing, it necessarily would have concluded”
that Appellant’s willful and malicious conversion of the Ferrari far outweighed the
alleged wrongdoing by Sun and Appellee. See Beyries, 789 F.3d at 960. Regardless
5 whether it was forfeited, Appellant’s unclean hands argument fails on its merits.
Moreover, because Rodriguez stipulated that “[t]he appropriateness of State Farm's
subrogation claim is undisputed in that there is no issue that Sun was insured by
State Farm, she made a covered claim, the claim was paid, the payment was
reasonable and State Farm, standing in her shoes as subrogee, now has the right to
pursue recovery of the balance of the claim which is $42,003.51 from the parties
legally responsible for causing the loss,” In re Rodriguez, No. AP 15-90095-CL,
2021 WL 345571, at *7 (B.A.P. 9th Cir. Feb. 1, 2021), Rodriguez has waived the
argument that any wrongdoing on the part of Sun could be imputed to Appellee so
as to make its subrogation claim inappropriate.
5. Appellant waived his argument that damages were incorrectly calculated
because he stipulated to the amount of damages before trial. Stipulation to a fact
naturally implies the intentional relinquishment of any right to challenge that fact
and is a clear example of waiver. See United States v. Perez, 116 F.3d 840, 849,
851–52 (9th Cir.1997) (en banc) (Kleinfeld, J., concurring).
For these reasons, we affirm.