In re: Richard Jay Blaskey

Opinion

FILED

1 NOT FOR PUBLICATION AUG 08 2016

2 SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

3 UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

4 OF THE NINTH CIRCUIT 5 6 In re: ) BAP No. CC-15-1348-FDKu )

7 RICHARD JAY BLASKEY, ) Bk. No. 8:11-bk-21187-ES )

8 Debtor. ) Adv. Pro. 8:11-ap-01462-ES _____________________________ )

9 )

BARTON PROPERTIES, INC.; )

10 STEPHEN SELINGER, )

)

11 Appellants, )

)

12 v. ) MEMORANDUM* )

13 RICHARD JAY BLASKEY, )

)

14 Appellee. )

______________________________)

15 Argued and Submitted on July 28, 2016 16 at Pasadena, California 17 Filed – August 8, 2016 18 Appeal from the United States Bankruptcy Court for the Central District of California 19 Honorable Erithe A. Smith, Bankruptcy Judge, Presiding 20 21 Appearances: Anthony A. Patel argued for Appellants Barton Properties, Inc. and Stephen Selinger; Chad V.

22 Haes of Marshack Hays LLP argued for Appellee Richard Jay Blaskey.

23 24 Before: FARIS, DUNN, and KURTZ, Bankruptcy Judges. 25 26 * This disposition is not appropriate for publication.

27 Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 28 9th Cir. BAP Rule 8024-1.

1 INTRODUCTION 2 This appeal arises out of a $1,000,320 state court judgment 3 against appellee/chapter 71 debtor Richard Jay Blaskey in favor 4 of appellants Barton Properties, Inc. and Stephen Selinger. In 5 summary, the bankruptcy court determined that the state court 6 judgment was not nondischargeable debt under §§ 523(a)(2)(A), 7 (a)(4), or (a)(6). On appeal, we affirmed as to § 523(a)(4), but 8 vacated and remanded the bankruptcy court’s judgment as to 9 §§ 523(a)(2)(A) and (a)(6) for the court to apply the correct 10 standard of proof. On remand, the court articulated the ordinary 11 preponderance of the evidence standard and reaffirmed its prior 12 determination that Appellants failed to establish that 13 Mr. Blaskey’s debt was nondischargeable under §§ 523(a)(2)(A) and 14 (a)(6). We find no error in the court’s conclusion. 15 Accordingly, we AFFIRM. 16 FACTUAL BACKGROUND2 17 A. Proceedings before the bankruptcy court3 18 Appellants retained Mr. Blaskey, an attorney, in 2004 to 19 represent them in various state court cases. Among other legal 20 matters, the parties agreed that Mr. Blaskey would represent 21 Appellants in three unrelated lawsuits. 22

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23 Unless specified otherwise, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.

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We have exercised our discretion to review the bankruptcy 25 court’s docket, as appropriate. See Woods & Erickson, LLP v. 26 Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2 (9th Cir. BAP 2008).

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The following facts are taken from our decision in the 28 previous appeal, BAP No. CC-14-1340-KuDKi, with some alterations.

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1 In 2007, Appellants discovered that Mr. Blaskey had been 2 derelict in representing them in the underlying actions to such 3 an extent that the state court presiding over the underlying 4 actions had entered adverse orders and judgments against Barton 5 Properties. As a result, in 2008, Barton Properties sued 6 Mr. Blaskey in state court for legal malpractice, breach of 7 contract, fraud, and breach of fiduciary duty. The state court 8 entered a default judgment against Mr. Blaskey in 2010. 9 Mr. Blaskey commenced his bankruptcy case in August 2011, 10 and Appellants filed their nondischargeability adversary 11 proceeding shortly thereafter. Appellants alleged three distinct 12 claims for relief under §§ 523(a)(2)(A), (a)(4), and (a)(6). 13 The court held the trial on Appellants’ claims in March 14 2014. Appellants offered into evidence a handful of exhibits and 15 presented the testimony of Mr. Selinger, who at all relevant 16 times was the president of Barton Properties. Mr. Selinger 17 testified that, in 2006, Mr. Blaskey told him that he was taking 18 care of all of the litigation and settlement tasks in the 19 underlying actions. If Mr. Selinger had known the truth – that 20 Mr. Blaskey was derelict in his duties – Barton Properties would 21 not have paid Mr. Blaskey’s 2006 invoices for legal fees to the 22 tune of roughly $50,000. Mr. Selinger also testified that, if 23 Mr. Blaskey had not lied to him about the performance of his 24 duties, he would have hired new counsel, who might have had 25 opportunities to prevent or have set aside some or all of the 26 adverse orders and judgments entered in the underlying actions. 27 Notably, Mr. Selinger’s testimony contained virtually no 28 specifics about what Mr. Blaskey reported to him about the status

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1 of the underlying actions, when Mr. Blaskey made particular 2 reports, when Barton Properties made payments to Mr. Blaskey, and 3 how much was paid in each instance. Furthermore, Mr. Selinger 4 offered no specifics regarding the remedial opportunities 5 available at the time but later lost because Barton Properties 6 was relying on Mr. Blaskey’s misstatements. 7 Appellants offered two distinct types of evidence to 8 demonstrate the amount of damages they suffered. First, there 9 was Mr. Selinger’s testimony. Mr. Selinger gave a generalized 10 account of damages, broken down by underlying action. According 11 to Mr. Selinger, as a result of Mr. Blaskey’s conduct, Barton 12 Properties suffered damages of roughly $470,000, $60,000, and 13 $450,000, respectively, in the three underlying actions. For the 14 most part, Mr. Selinger did not offer specific details concretely 15 demonstrating how Mr. Blaskey’s nondischargeable conduct caused 16 Barton Properties’ damages in the underlying actions. 17 Second, Appellants produced documentary evidence. They 18 offered as exhibits the complaint filed and the $1 million 19 default judgment entered in their state court action against 20 Mr. Blaskey. Appellants in essence asserted that issue 21 preclusion applied and that these two documents established their 22 damages of $1 million. But Appellants’ issue preclusion argument 23 went further. According to Appellants, the state court judgment 24 not only conclusively established Mr. Blaskey’s liability for 25 $1 million but also conclusively established that the judgment 26 debt was nondischargeable – that Mr. Blaskey was precluded from 27 arguing in the adversary proceeding that the $1 million in 28 damages resulted from anything other than nondischargeable

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1 conduct. 2 Mr. Blaskey was not present at trial, so the court struck 3 his written testimony. Mr. Blaskey’s counsel did not offer any 4 further evidence. 5 After the conclusion of the trial, the bankruptcy court 6 announced its findings of fact and conclusions of law. The 7 bankruptcy court rejected Appellants’ assertion that they were 8 entitled to issue preclusion based on the state court judgment. 9 The bankruptcy court pointed out that issue preclusion was not 10 available unless the issues in question were the subject of 11 explicit findings by the state court or, alternately, implicit 12 findings on those issues were essential to support the state 13 court’s judgment. The bankruptcy court pointed out that the 14 state court judgment was not supported by any explicit findings 15 and that it was impossible to tell on which causes of action 16 Appellants had prevailed. Consequently, the bankruptcy court 17 held that it could not apply issue preclusion to determine the 18 dischargeability of Mr. Blaskey’s $1 million judgment debt 19 because Appellants had not satisfied the “necessarily decided” 20 element for issue preclusion. 21 The court next addressed the trial record and whether 22 Appellants had made a sufficient showing that the $1 million 23 judgment debt, or any portion thereof, should be declared 24 nondischargeable under § 523(a)(2)(A). The court found that 25 Appellants had not established by a preponderance of the evidence 26 that their damages resulted from fraudulent conduct. According 27 to the court, there was either no evidence or insufficient 28 evidence connecting any particular misrepresentation Mr. Blaskey

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1 made either to the $50,000 in legal fees Appellants paid 2 Mr. Blaskey or to the roughly $1 million in damages Appellants 3 apparently suffered in the underlying actions. 4 The court further explained that Appellants’ evidentiary 5 deficiencies were exacerbated by the lack of any documentation to 6 support the amounts Mr. Blaskey billed them or the amounts they 7 actually paid. The court also pointed out that Appellants’ lack 8 of specificity regarding the alleged representations worked 9 against them proving their nondischargeability claims by a 10 preponderance of the evidence. 11 As for Appellants’ § 523(a)(4) claim, the bankruptcy court 12 found that there was no evidence of any express or technical 13 trust as to any of the monies Appellants paid to Mr. Blaskey and 14 there was insufficient evidence of a defalcation within the 15 meaning of the statute. And as for Appellants’ § 523(a)(6) 16 claim, the bankruptcy court found there was insufficient evidence 17 that Mr. Blaskey subjectively intended to injure Appellants. 18 During its ruling, the bankruptcy court stated multiple 19 times that Appellants bore the burden of proof to establish all 20 of the nondischargeability elements by a preponderance of the 21 evidence. However, the bankruptcy court also made a couple of 22 statements indicating that the preponderance of the evidence 23 standard has a special meaning or gloss in nondischargeability 24 litigation. For instance, the bankruptcy court stated that it 25 was “required to view the evidence strictly against the creditor 26 and liberally in favor of the debtor” and “in the light most 27 favorably to the defendant and strictly against the plaintiff.” 28 On June 20, 2014, the bankruptcy court entered judgment in

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1 favor of Mr. Blaskey and against Appellants. 2 B. Appellate review by the BAP 3 Appellants appealed the bankruptcy court’s decision to the 4 BAP, BAP No. CC-14-1340-KuDKi (“First Appeal”). 5 The Panel held that the bankruptcy court correctly 6 determined that issue preclusion did not apply to the state 7 court’s default judgment. The Panel also affirmed the bankruptcy 8 court’s decision in favor of Mr. Blaskey on the § 523(a)(4) 9 claim. 10 The Panel held, however, that the court misapplied the 11 standard of proof on the §§ 523(a)(2)(A) and (a)(6) claims. 12 While the court correctly identified the standard as a 13 preponderance of the evidence, it conflated the strict 14 construction of the statutory language of § 523(a) with the 15 standard of proof, which only requires that a fact is more likely 16 than not. 17 Accordingly, the Panel remanded the case to the bankruptcy 18 court for consideration of the §§ 523(a)(2)(A) and (a)(6) claims 19 under a non-heightened standard of proof. The Panel did not 20 direct any particular procedure or result on remand, but only 21 required that the bankruptcy court apply the ordinary 22 preponderance of the evidence standard. 23 C. The bankruptcy court’s decision on remand 24 Without holding any further hearings or receiving additional 25 materials from the parties, the bankruptcy court issued its order 26 in response to the Panel’s decision in the First Appeal (“Order 27 on Remand”). The court summarized the procedural history of the 28 case and stated that it had reviewed the entire trial record

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1 under the preponderance of the evidence standard. It concluded 2 that “1) no further court proceedings or briefing is necessary 3 and 2) judgment should be entered in favor of Defendant as to the 4 § 523(a)(2)(A) and (6) claims based upon the findings and 5 conclusions set forth in the Oral Ruling, which is incorporated 6 by reference herein.” In other words, the court reaffirmed its 7 previous ruling in its entirety. 8 Appellants timely filed their notice of appeal from the 9 Order on Remand. 10 JURISDICTION 11 The bankruptcy court had jurisdiction pursuant to 28 U.S.C. 12 §§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C. 13 § 158. 14 ISSUES 15 (1) Whether the bankruptcy court erred in its application of 16 the preponderance of the evidence standard. 17 (2) Whether the bankruptcy court erred when it determined 18 that Appellants did not establish their §§ 523(a)(2)(A) and 19 (a)(6) claims. 20 (3) Whether the bankruptcy court erred in its consideration 21 of the parties’ evidence and objections. 22 (4) Whether the bankruptcy court violated public policy and 23 equitable principles in ruling in favor of Mr. Blaskey. 24 (5) Whether the bankruptcy court correctly followed the 25 BAP’s decision in the First Appeal. 26 STANDARDS OF REVIEW 27 In bankruptcy discharge appeals, we review the bankruptcy 28 court’s findings of fact for clear error and conclusions of law

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1 de novo. We apply de novo review to mixed questions of law and 2 fact that require consideration of legal concepts and the 3 exercise of judgment about the values that animate the legal 4 principles. Wolkowitz v. Beverly (In re Beverly), 374 B.R. 221, 5 230 (9th Cir. BAP 2007), aff’d in part & dismissed in part, 6 551 F.3d 1092 (9th Cir. 2008); see also Honkanen v. Hopper 7 (In re Honkanen), 446 B.R. 373, 382 (9th Cir. BAP 2011) (the 8 ultimate question of whether a particular debt is dischargeable 9 is a mixed question of fact and law reviewed de novo). 10 “Whether a requisite element of a § 523(a)(2)(A) claim is 11 present is a factual determination reviewed for clear error.” 12 Tallant v. Kaufman (In re Tallant), 218 B.R. 58, 63 (9th Cir. BAP 13 1998). Similarly, “[w]hether a debtor’s conduct is willful and 14 malicious under § 523(a)(6) is a question of fact reviewed for 15 clear error.” Banks v. Gill Distrib. Ctrs., Inc. (In re Banks), 16 263 F.3d 862, 869 (9th Cir. 2001). 17 Factual findings are clearly erroneous if they are 18 illogical, implausible, or without support in the record. Retz 19 v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010). If 20 two views of the evidence are possible, the trial judge’s choice 21 between them cannot be clearly erroneous. Anderson v. City of 22 Bessemer City, N.C., 470 U.S. 564, 574 (1985). 23 We review a bankruptcy court’s evidentiary rulings for abuse 24 of discretion, and then only reverse if any error would have been 25 prejudicial to the appellant. Mbunda v. Van Zandt 26 (In re Mbunda), 484 B.R. 344, 351 (9th Cir. BAP 2012), aff’d, 27 604 F. App’x 552 (9th Cir. 2015). To determine whether the 28 bankruptcy court has abused its discretion, we conduct a two-step

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1 inquiry: (1) we review de novo whether the bankruptcy court 2 “identified the correct legal rule to apply to the relief 3 requested” and (2) if it did, we consider whether the bankruptcy 4 court's application of the legal standard was illogical, 5 implausible, or “without support in inferences that may be drawn 6 from the facts in the record.” United States v. Hinkson, 7 585 F.3d 1247, 1262–63 & n.21 (9th Cir. 2009) (en banc). 8 “We afford broad discretion to a district court’s 9 evidentiary rulings. To reverse such a ruling, we must find that 10 the district court abused its discretion and that the error was 11 prejudicial. A reviewing court should find prejudice only if it 12 concludes that, more probably than not, the lower court’s error 13 tainted the verdict.” In re Mbunda, 484 B.R. at 352 (quoting 14 Harper v. City of L.A., 533 F.3d 1010, 1030 (9th Cir. 2008)). 15 We review de novo the bankruptcy court’s compliance with the 16 mandate of an appellate court. See United States v. Kellington, 17 217 F.3d 1084, 1092 (9th Cir. 2000). 18 DISCUSSION 19 A. The bankruptcy court correctly applied the preponderance of the evidence standard on remand as to Appellants’

20 §§ 523(a)(2)(A) and (a)(6) claims. 21 1. The bankruptcy court correctly followed the BAP’s instruction on remand.

22 23 Appellants argue that the bankruptcy court did not adhere to 24 the BAP’s instruction on remand from the First Appeal, because 25 the court did not hold further proceedings, request additional 26 briefing, explain how it applied the preponderance of the 27 evidence standard, or identify findings of facts and conclusions 28 of law. We disagree.

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1 Under the rule of mandate, “[o]n remand, a trial court may 2 not deviate from the mandate of an appellate court.” Commercial 3 Paper Holders v. Hine (In re Beverly Hills Bancorp), 752 F.2d 4 1334, 1337 (9th Cir. 1984). “‘The rule of mandate is similar to, 5 but broader than, the law of the case doctrine.’ A district 6 court that has received the mandate of an appellate court cannot 7 vary or examine that mandate for any purpose other than executing 8 it.” Hall v. City of L.A., 697 F.3d 1059, 1067 (9th Cir. 2012) 9 (quoting United States v. Cote, 51 F.3d 178, 181 (9th Cir. 10 1995)); see AT&T Universal Card Servs. v. Black (In re Black), 11 222 B.R. 896, 900 (9th Cir. BAP 1998) (“When a case has been 12 decided by an appellate court and remanded, the trial court ‘must 13 proceed in accordance with the mandate and such law of the case 14 as was established by the appellate court.’” (citation omitted)). 15 However, “the rule of mandate allows a lower court to decide 16 anything not foreclosed by the mandate.” Hall, 697 F.3d at 1067. 17 The Panel only ordered that the bankruptcy court apply the 18 proper standard of proof on remand. It did not require the 19 bankruptcy court to hold further proceedings, and it specifically 20 stated that it did not require “the bankruptcy court [to] make 21 different findings.” Rather, it said that, “before we can review 22 the bankruptcy court’s findings, we need to ensure that the 23 bankruptcy court applied the ordinary preponderance of the 24 evidence standard.” 25 The bankruptcy court stated in its Order on Remand that it 26 reviewed the entire trial record under the ordinary preponderance 27 of the evidence standard and that, under the normal preponderance 28 standard, it would reach the same result. This is exactly

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1 consistent with our mandate. 2 2. The court did not err in ruling in favor of Mr. Blaskey on Appellants’ § 523(a)(2)(A) claim.

3 4 Section 523(a)(2)(A) prohibits the discharge of any 5 obligation for money, property, services, or credit, to the 6 extent that the money, property, services, or credit were 7 obtained by fraud, false pretenses, or false representations. 8 § 523(a)(2)(A). The Ninth Circuit has consistently held that a 9 claim of non-dischargeability under § 523(a)(2)(A) requires the 10 creditor to demonstrate five elements: 11 (1) the debtor made . . . representations; 12 (2) that at the time he knew they were false; 13 (3) that he made them with the intention and purpose of deceiving the creditor;

14 (4) that the creditor relied on such representations;

15 [and] 16 (5) that the creditor sustained the alleged loss and damage as the proximate result of the 17 misrepresentations having been made. 18 Ghomeshi v. Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir. 19 2010) (quoting Am. Express Travel Related Servs. Co. v. Hashemi 20 (In re Hashemi), 104 F.3d 1122, 1125 (9th Cir. 1996)). 21 In the present case, the court determined that Appellants 22 failed to establish that the state court judgment was 23 nondischargeable. Although the court noted that it is 24 “undisputed . . . that Mr. Blaskey did not perform all services,” 25 it held that the evidence did not establish the nature and 26 substance of the alleged misrepresentations, the causal 27 connection between those misrepresentations and any damages, and 28 the amount of any resulting damages.

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1 The bankruptcy court did not clearly err when it found that 2 Appellants’ evidence - which all parties and the court agreed was 3 “thin” - was not sufficient to carry their burden of proof. The 4 Appellants failed to establish that Mr. Blaskey made false 5 statements that he knew to be false with the expectation that 6 Appellants would rely on those statements. They also failed to 7 establish damages attributable to the alleged 8 misrepresentations.4 The court did not commit clear error when 9 it held that Appellants failed to prove their case by a 10 preponderance of the evidence. 11 3. The court did not err by ruling in favor of Mr. Blaskey on Appellants’ § 523(a)(6) claim.

12 13 Similarly, the court did not err when it determined that 14 Appellants did not meet their burden of proof regarding their 15 § 523(a)(6) claim. 16 Section 523(a)(6) provides an exception to discharge for 17 debts “for willful and malicious injury by the debtor to another 18 entity or to the property of another entity.” “A determination 19 whether a particular debt is for ‘willful and malicious injury by 20 the debtor to another’ under section 523(a)(6) requires 21 application of a two-pronged test to apply to the conduct giving 22 23

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Appellants argue that the superior court judgment 24 established the amount of damages, such that the bankruptcy court must afford it issue preclusive effect. We rejected this 25 argument in the First Appeal and will not revisit it here. 26 In any event, the bankruptcy court properly determined that 27 Appellants failed to prove a causal relation between the alleged misrepresentations and their alleged damages, so we need not 28 examine the calculation of damages here.

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1 rise to the injury. The creditor must prove that the debtor’s 2 conduct in causing the injuries was both willful and malicious.” 3 Suarez v. Barrett (In re Suarez), 400 B.R. 732, 736 (9th Cir. BAP 4 2009), aff’d, 529 F. App’x 832 (9th Cir. 2013). First, 5 “[w]illfulness requires proof that the debtor deliberately or 6 intentionally injured the creditor, and that in doing so, the 7 debtor intended the consequences of his act, not just the act 8 itself.” Id. at 736-37. Second, “[f]or conduct to be malicious, 9 the creditor must prove that the debtor: (1) committed a wrongful 10 act; (2) done intentionally; (3) which necessarily causes injury; 11 and (4) was done without just cause or excuse.” Id. at 737. 12 The bankruptcy court held that Appellants failed to 13 establish the elements of § 523(a)(6). It said that the 14 conclusory statements in the complaint were insufficient to 15 establish willful and malicious injury. It also said that 16 Appellants did not focus on § 523(a)(6) at trial and could not 17 simply rely on their arguments concerning § 523(a)(2)(A). We 18 discern no error. 19 Appellants’ evidence fails to establish either the “willful” 20 or “malicious” prong required by § 523(a)(6). As noted by the 21 bankruptcy court, Mr. Selinger’s testimony did not prove 22 Mr. Blaskey’s intent to injure Appellants. Even on appeal, 23 Appellants fail to point to any evidence establishing 24 Mr. Blaskey’s willful and malicious conduct. Accordingly, the 25 court did not err in rejecting Appellants’ § 523(a)(6) claim. 26 4. Appellants’ other evidentiary arguments are misplaced. 27 Appellants also argue that the bankruptcy court 28 misunderstood the nature of the case or otherwise erred in

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1 discounting their evidence. We reject these arguments. 2 Appellants contend that the court misconstrued the facts to 3 reflect mere negligence, rather than “lies, deceit and cover-up.” 4 They imply that the court was reluctant to reach the latter 5 conclusion, because of “what it may say about our legal 6 system[,]” and the court “was loathe to go down that path.” 7 We find no merit in Appellants’ position. The bankruptcy 8 court properly found that Mr. Selinger’s testimony simply did not 9 establish, by a preponderance of the evidence, each of the 10 elements of their claims. See Hussain v. Malik (In re Hussain), 11 508 B.R. 417, 425 (9th Cir. BAP 2014) (“the bankruptcy court was 12 in the best position to evaluate the documentary and testimonial 13 evidence”). Nothing in the record suggests that the court was 14 biased by a desire to protect the reputation of lawyers or the 15 legal system. 16 They also contend that the court must accept Mr. Selinger’s 17 testimony, because Mr. Blaskey did not offer any testimony to 18 refute it. But they ignore the fact that they had the ultimate 19 burden of proving their claims by a preponderance of the 20 evidence. See generally Brown v. Electrolux Home Prods., Inc., 21 817 F.3d 1225, 1233 (11th Cir. 2016) (“And the entire point of a 22 burden of proof is that, if doubts remain about whether the 23 standard is satisfied, ‘the party with the burden of proof 24 loses.’”); United States v. 15 Bosworth St., 236 F.3d 50, 55 (1st 25 Cir. 2001) (“when there is insufficient evidence on a particular 26 issue, that issue must be resolved against the party who bears 27 the burden of proof” (emphasis in original)). The bankruptcy 28 court determined that Mr. Selinger’s testimony and evidence were

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1 insufficient to establish Appellants’ claims. The bankruptcy 2 court was not required to accept Mr. Selinger’s testimony. The 3 fact that Mr. Blaskey did not testify does not relieve Appellants 4 of their burden of proof. 5 Appellants further argue that the court erred in requiring 6 them to produce documentary evidence to support their claims, 7 because Mr. Selinger offered written and oral testimony. We 8 again find no error in the court’s determination. The court 9 stated that Mr. Selinger’s testimony alone was insufficient to 10 establish the various elements discussed above, and Appellants 11 failed to offer documentary evidence to fill in gaps in his 12 testimony. 13 B. The court did not err in considering Mr. Blaskey’s closing statement.

14 15 Appellants argue that the court erred in considering 16 Mr. Blaskey’s evidentiary objections and challenges raised in his 17 closing statement. However, they fail to provide us with 18 sufficient information to review this issue. An appellate court 19 “won’t consider matters on appeal that are not specifically and 20 distinctly argued in appellant’s opening brief. Applying this 21 standard, we’ve refused to address claims that were only argue[d] 22 in passing, or that were bare assertion[s] . . . with no 23 supporting argument.” Christian Legal Soc. Chapter of Univ. of 24 Cal. v. Wu, 626 F.3d 483, 487 (9th Cir. 2010) (internal citations 25 and quotation marks omitted). 26 Appellants do not identify any particular error. They 27 complain about two of Mr. Blaskey’s supposed objections: 28 (1) objections to testimony regarding Mr. Blaskey’s “doctoring”

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1 of documents; and (2) objections to “certain evidence” including 2 the $400,000 lost settlement. However, Mr. Blaskey did not 3 object to the inclusion of such evidence; rather, he merely 4 argued against the weight or relevance of the evidence, as he is 5 entitled to do during closing statements. 6 In any event, there is no indication that the court 7 sustained either of these “objections” or excluded any of 8 Appellants’ evidence. We find no error. 9 C. The court did not abuse its discretion in excluding Exhibits 5 and 6.

10 11 Appellants argue that the court should have admitted their 12 Exhibits 5 and 6 at trial. We hold that the bankruptcy court 13 correctly excluded both exhibits. 14 Exhibit 5 was Mr. Selinger’s declaration in superior court. 15 The court did not admit Exhibit 5 because the information therein 16 could have been offered by Mr. Selinger in written or rebuttal 17 testimony. Appellants offer no legal authority supporting the 18 admissibility of Exhibit 5. We will not consider unsupported 19 arguments. See Christian Legal Soc. Chapter of Univ. of Cal., 20 626 F.3d at 487. Moreover, Appellants’ counsel agreed with the 21 objection and did not preserve this error on appeal: “Okay. 22 We’ll - we will agree with the objection and not, you know - not 23 try to present it then . . . on the direct.” Finally, Appellants 24 do not provide us with a copy of Exhibit 5, so we are unable to 25 review it and determine whether it should have been admitted. 26 Exhibit 6 is a declaration of Appellants’ counsel. 27 Appellants claim that the document establishes Mr. Blaskey’s non- 28 cooperation and that his “behavior and habits are admissible to

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1 show how he acted in the past,” but they do not cite any relevant 2 legal authority supporting this proposition. Appellants have not 3 even provided the Panel with a copy of the document so that we 4 may evaluate its admissibility. Further, the declaration is 5 inadmissable hearsay, as it was an out-of-court statement by 6 counsel, who was not a witness at trial. Fed. R. Evid. 801. 7 Accordingly, the bankruptcy court properly excluded 8 Exhibits 5 and 6. 9 D. The bankruptcy court’s judgment does not violate public policy or equitable principles.

10 11 Appellants also state that the bankruptcy court’s ruling 12 contravened public policy and ignored the bankruptcy court’s role 13 as an equitable tribunal. These arguments are unsupported. 14 Appellants’ assertion that Mr. Blaskey “should not be 15 allowed to just walk away from his obligations” ignores the fact 16 that they were unable to establish the requisite elements of 17 §§ 523(a)(2)(A) and (a)(6). While it is true that public policy 18 dictates that bankruptcy protection is reserved for the “honest 19 but unfortunate debtor,” that maxim cannot save Appellants’ 20 failure to meet a statutory requirement. 21 In fact, congressionally enacted public policy favors 22 discharge. See Snoke v. Riso (In re Riso), 978 F.2d 1151, 1154 23 (9th Cir. 1992) (“One of the fundamental policies of the 24 Bankruptcy Code is the fresh start afforded debtors through the 25 discharge of their debts. In order to effectuate the fresh start 26 policy, exceptions to discharge should be strictly construed 27 against an objecting creditor and in favor of the debtor.”). 28 Sections 523(a)(2)(A) and (a)(6) represent Congress’ view of the

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1 correct public policy. We will not substitute our view of public 2 policy for the congressional view. 3 Similarly, while it is true that a bankruptcy court is a 4 court of equity, it cannot and should not ignore a statute merely 5 because a party complains that it is not “receiv[ing] a fair 6 result.” Appellants provide no authority for their novel 7 proposition to the contrary. See San Rafael Baking Co. v. 8 N. Cal. Bakery Drivers Sec. Fund (In re San Rafael Baking Co.), 9 219 B.R. 860, 866 (9th Cir. BAP 1998) (“Bankruptcy courts are 10 courts of equity but must follow the law and cannot ignore 11 express statutory commands.”); cf. Law v. Siegel, 134 S. Ct. 12 1188, 1197 (2014) (holding that there is “no authority for 13 bankruptcy courts to deny an exemption on a ground not specified 14 in the Code”). 15 CONCLUSION 16 For the reasons set forth above, we AFFIRM. 17 18 19 20 21 22 23 24 25 26