William R. Cessna, individually and as Trustee of the Cessna 1993 Trust v. James Clay Brock, individually and as Trustee of the James C. and Dorothy E. Brock Family Trust dated November 14, 1996

• Court: United States Bankruptcy Court, E.D. California
• Decided: February 18, 2026
• Docket: 25-02021
• Status: Unknown

Opinion

1 UNITED STATES BANKRUPTCY COURT 2 EASTERN DISTRICT OF CALIFORNIA 3 In re: ) Case No. 24-24919-B-7 4 ) JAMES CLAY BROCK, ) Adversary No. 25-2021 5 ) ) 6 Debtor(s). ) ________________________________) 7 ) WILLIAM R. CESSNA, individually ) 8 and as Trustee of the Cessna ) 1993 Trust, ) 9 ) ) 10 Plaintiff(s), ) ) 11 v. ) ) 12 JAMES CLAY BROCK, individually ) and as Trustee of the James C. ) 13 and Dorothy E. Brock Family ) Trust dated November 14, 1996, ) 14 ) ) 15 Defendant(s). ) ________________________________) 16 17 DECISION AFTER TRIAL 18 I. 19 Introduction 20 Trial on claims alleged under 11 U.S.C. §§ 523(a)(2) and 21 523(a)(6) was held on January 26, 2026.1 David A. Diepenbrock 22 and Carly M. Moran appeared for plaintiff William R. Cessna 23 (“Plaintiff”). David A. Smyth appeared for defendant and chapter 24 7 debtor James C. Brock (“Defendant”). 25 Plaintiff testified, Defendant testified, Defendant’s son 26 27 1The Complaint identifies the § 523(a)(2) claim without 28 distinction between §§ 523(a)(2)(A) and (a)(2)(B). The trial 1 Randy Brock testified. The alternate direct testimony 2 declaration of Shasta County Sheriff’s Department Lt. Timothy 3 Estes and its attached report were admitted into evidence without 4 appearance by Lt. Estes upon the parties’ stipulation.2 5 Plaintiff’s and Defendant’s trial exhibits were all admitted into 6 evidence in the absence of objections. Plaintiff’s late- 7 submitted Exhibit 17 was admitted into evidence by stipulation. 8 Plaintiff’s Request for Judicial Notice in Support of Trial 9 Brief filed on January 5, 2026, and Plaintiff’s Supplemental 10 Request for Judicial Notice filed on January 26, 2026, were 11 granted in part and denied in part for the reasons stated on the 12 record. Plaintiff’s Memorandum of Points and Authorities in 13 Support of Motion for Judgment [FRCP, 52(c)] filed on January 26, 14 2026, was denied for the reasons stated on the record. All 15 evidentiary objections stated on the record are incorporated 16 herein and made a part hereof by this reference. 17 Having heard and considered the testimony, observed the 18 demeanor of the witnesses as they testified, read and considered 19 the parties’ trial briefs, and thoroughly reviewed and considered 20 all of the evidence, the court issues its findings of fact and 21 conclusions of law below. See Fed. R. Civ. P. 52(a); Fed. R. 22 Bankr. P. 7052. If there are any conflicts between these written 23 findings of fact and conclusions of law and the court’s oral 24 25 2Lt. Estes testified about a report he prepared following an investigation he conducted into Defendant’s financial activities 26 after he was contacted out of concern by Plumas Bank manager Donna Hamilton. Ms. Hamilton suspected Defendant may be the 27 victim of elder abuse due to irregular banking transactions and withdrawals of large amounts of cash Defendant reported he was 28 sending to undisclosed third-parties. 1 statements on the record, these written findings of fact and 2 conclusions of law control. Playmakers LLC v. ESPN, Inc., 376 3 F.3d 894, 896 (9th Cir. 2004). 4 5 II. 6 Findings of Fact and Conclusions of Law 7 Plaintiff and Defendant are both octogenarians. Both reside 8 in a small, close-knit community where they have lived for most, 9 if not the entirety, of their lives. Plaintiff and Defendant 10 differ significantly in their physical condition and mental 11 acuity.3 12 Prior to events that led to this adversary proceeding, 13 Plaintiff and Defendant were very close friends for over 40 14 years. They met when they worked together at a lumber facility 15 where they often ate lunch together. They played music together, 16 danced on what apparently was an impressive dance floor Defendant 17 built at his house, and they generally socialized with each other 18 and with each other’s family for four decades. 19 Things changed in 2018 when Defendant was convinced beyond 20 any doubt that he won a substantial cash price in a Spanish 21 22 23 3Plaintiff testified that he processes his own lumber, operates a meat packing business, and owned and operated a 24 logging business for over thirty years. Defendant testified that 25 he is skilled at operating and repairing machinery and tools; however, he left school before he finished the fourth grade, he 26 can read but often does not understand all the words, he does not understand complex, technical or legal terms, his math and 27 spelling skills are not good, and he suffers from long-term and some short-term memory problems. These differences are relevant 28 to this decision. 1 lottery.4 Although the dollar amount of the cash winnings 2 changed because Defendant was given different numbers by lottery 3 “agents” or “officials,” Defendant believed he won either four 4 million dollars, two-hundred fifty million dollars, or one 5 billion dollars. Defendant believed he won so much money that he 6 would “own the valley.” 7 Defendant was told by lottery “agents” or “officials” that 8 before he could collect his lottery winnings he had to pay 9 expenses associated with the winnings. Defendant was also told 10 these expenses had to be paid in cash sent in boxes to addresses 11 the lottery “agents” or “officials” designated. Defendant paid 12 these purported expenses with $85,000 of his own money. When 13 that was not enough, Defendant obtained more money from Plaintiff 14 that was also sent to lottery “agents” or “officials.” 15 The parties stipulated that between February 5, 2018, and 16 July 6, 2018, Plaintiff transferred $317,500 to Defendant. The 17 stipulated dates and amounts of the transfers are as follows: 18 (1) $ 15,000 on February 5, 2018; 19 20 4Defendant’s son testified that his father’s belief that he won a significant lottery cash prize was so firm and so 21 unshakeable that his father would have terminated their relationship had he tried to intervene in his father’s financial 22 affairs or otherwise prevent his father from acting on his belief he was a lottery winner. Valuing his relationship with his 23 father, and recognizing that his father needs assistance with daily living activities, Defendant’s son testified that he chose 24 to not intervene in his father’s financial affairs. Defendant’s 25 son has moved in with Defendant and assists Defendant with daily living activities. The emotion in Defendant’s voice and his 26 demeanor as he testified also leaves the court with no doubt that Defendant truly, honestly, and whole-heartedly believed he won a 27 substantial cash prize in a Spanish lottery. Of course, there was no lottery, Spanish or otherwise, and there were no lottery 28 winnings. More on this later. 1 (2) $100,000 on February 8, 2018; 2 (3) $150,000 on February 15, 2018; 3 (4) $ 2,500 on March 5, 2018; 4 (5) $ 25,000 on March 16, 2018; 5 (6) $ 5,000 on March 26, 2018; 6 (7) $ 15,000 on May 22, 2018; and 7 (8) $ 5,000 on July 6, 2018. 8 Witness Credibility & Additional Background 9 On the issue of credibility, the court finds Defendant to be 10 a very credible witness and the court believes Defendant’s 11 testimony. Defendant testified that his alternate direct 12 testimony declaration is truthful and he would not include 13 anything in the declaration that was untruthful or that would 14 subject him to perjury. Defendant understood what perjury 15 means.5 More important is that Plaintiff vouched for Defendant’s 16 credibility. Plaintiff testified during trial that he has known 17 Defendant to be an honest man his entire life and that he had 18 never known Defendant to lie in 2018 or at any other time. 19 Although Plaintiff appeared to be a good and forthright man, 20 his testimony on two critical points was inconsistent and 21 contradictory. These points of contradiction also provide 22 23 5Plaintiff introduced prior deposition testimony regarding non-disclosure of personal property owned by Defendant’s son and 24 stored on Defendant’s property or at Defendant’s residence as 25 evidence that Defendant and/or Defendant’s son somehow lack credibility because the property was not disclosed in Defendant’s 26 bankruptcy schedules. The court gives this testimony no weight. Property owned by Defendant’s son, regardless of where it is 27 located or stored, is not property of Defendant’s bankruptcy estate under 11 U.S.C. § 541(a) and therefore need not be 28 disclosed in Defendant’s bankruptcy schedules. 1 additional background for this decision. 2 Point one concerns Defendant’s use of the money he received 3 from Plaintiff. Plaintiff’s trial testimony on this point is 4 conflicting. Plaintiff initially testified during trial that 5 Defendant did not tell him how the money was used. Plaintiff 6 later contradicted himself and testified that Defendant told him 7 the money was being used to “send in” to get lottery “winnings.” 8 Plaintiff’s initial trial testimony on this point is also 9 inconsistent with his prior testimony in an amended declaration 10 filed in a May 2023 state court action Plaintiff filed against 11 Defendant. The amended declaration was admitted into evidence 12 without objection as Defendant’s Exhibit D. Plaintiff testified 13 in ¶ 4 of the declaration that Defendant told him “he needed the 14 money to pay expenses for transaction under which he expected to 15 receive a substantial monetary payment.” For his part, Defendant 16 testified convincingly during a deposition that he told Plaintiff 17 the money was being used to pay lottery winning collection 18 expenses. The transcript of Defendant’s deposition was admitted 19 into evidence without objection as Plaintiff’s Exhibit 16. 20 Point two concerns collateral. Plaintiff testified that 21 Defendant gave him deeds to three parcels of real property and 22 that he relied on these deeds as collateral in the event he was 23 not repaid by Defendant.6 Plaintiff testified during trial and 24 in ¶¶ 7-8 of his alternate direct testimony declaration that he 25 asked Defendant for this collateral after the first two transfers 26 27 6Plaintiff testified that he did not consult a lawyer after he received the deeds, he did not have loan documents drafted, 28 and he did not know what a deed of trust was. of $15,000 and $100,000, respectively, and before the third 2 transfer of $150,000. However, in 7 5 of the amended state court 31 declaration referenced above, Plaintiff testified he asked Defendant for the three properties as collateral after the first 5] transfer of $15,000 and before the second transfer of $100,000. 6] Plaintiff also testified in @ 21 of his alternate direct 7! testimony declaration that he transferred the “money discussed 8 || above [i.e., the $317,500] solely as a personal accommodation to longtime friend.” (Emphasis added). 10 Giving substantial weight to Plaintiff’s unequivocal 11 |} endorsement of Defendant’s life-long honesty and integrity, and 12 || considering Plaintiff’s inconsistent and contradictory testimony 13 at least two critical issues, the court finds Defendant to be 14 |} the more credible witness overall. Defendant’s testimony is 15 || consistent, credible, reliable, and probative and the court 16 || believes Defendant. The court gives Defendant’s testimony 17} substantially more weight than it gives Plaintiff’s testimony. 18 The § 523 (a) (2) (A) Claim 19 One of the elements Plaintiff must prove to prevail on the § 20 (2) (A) claim is justifiable reliance. Field v. Mans, 516 59, 74-75 (1995). Plaintiff bears the burden of proving 22 this element by a preponderance of the evidence. Grogan v. 23 Gardner, 498 U.S. 279, 291 (1991); American Express Travel Related Services Company Inc. v. Hashemi (In re Hashemi), 104 25 F.3d 1122, 1125 (1996) (stating that creditor must prove each 26 element of a § 523(a) (2) (A) claim by a preponderance), cert. 27 || denied, 520 U.S. 1230 (1997). Plaintiff has not met this burden. 28 Plaintiff has not established by a preponderance of the -7-

1 evidence that he relied on the deeds (or on anything else) as 2 collateral for repayment of the money transferred to Defendant. 3 The evidence is clear that the parties did not contemplate 4 collateral at the inception of the transfers and Plaintiff’s 5 conduct after he received the deeds is inconsistent with 6 Plaintiff obtaining the deeds as security for repayment. More 7 important is that contradictions and inconsistencies in 8 Plaintiff’s testimony about the timing of the purported request 9 for collateral render the entirety of Plaintiff’s testimony about 10 reliance on the deeds as collateral suspect, not credible, and 11 unreliable. But the most convincing and probative evidence that 12 Plaintiff did not rely on the deeds (or anything else) as 13 collateral for the money he transferred to Defendant is 14 Plaintiff’s own direct testimony that he transferred the entirety 15 of the $317,500 to Defendant “solely as a personal accommodation 16 to a longtime friend.” (Emphasis added). 17 What is an accommodation or, more specifically, what is a 18 “personal accommodation?” Blacks’s Law Dictionary defines an 19 “accommodation” as follows: “An arrangement or engagement made 20 as a favor to another, not upon a consideration received. . . . 21 The word implies no consideration.” Accommodation, Black’s Law 22 Dictionary, (rev. 5th Ed., 1979); see also Svenhard’s Swedish 23 Bakery v. Bakery and Confectionary Union and Industry 24 International Pension Fund (In re Svenhard’s Swedish Bakery), 154 25 F.4th 1100, 1104 (9th Cir. 2025) (referring to Black’s Law 26 Dictionary for a common definition of “accommodation” as “[a]n 27 arrangement or engagement made as a favor to another”); 28 Corinthian Pharmaceutical Systems, Inc. v. Lederle Laboratories, 1 724 F.Supp. 605, 610-11 (S.D. Ind. 1989) (referring to Black’s 2 Law Dictionary for definition of “accommodation” to mean no 3 expectation of consideration). Adding “solely” and “personal” 4 into the context of the “accommodation” term highlights the 5 “accommodation” testimony and reinforces the court’s conclusion 6 that Plaintiff gave Defendant the $317,500 as a favor-a personal 7 favor-to a longtime friend whose honesty he did not question and 8 without any expectation of or reliance on collateral. 9 So then, on what, if anything, did Plaintiff rely for the 10 return of the money he transferred to Defendant? The weight of 11 the evidence, primarily Defendant’s prior deposition testimony, 12 supports the conclusion that Plaintiff relied on Defendant’s 13 representations regarding the collection and sharing of lottery 14 winnings for repayment. However, Plaintiff’s reliance on these 15 representations, even if misrepresentations, would not be 16 justifiable. 17 “[J]ustifiable reliance is a subjective standard that looks 18 to the qualities and characteristics of the particular plaintiff, 19 the knowledge and relationship of the parties, and the 20 circumstances of the particular case[.]” In re Robinson, 640 21 B.R. 741, 745 n.5 (Bankr. D. Nev. 2021). There generally is no 22 duty to investigate unless there are “red flags.” Field, 516 23 U.S. at 71-72. As the BAP explained in Obara v. AFC Cal, LLC (In 24 re Obara), 2014 WL 2211768 (9th Cir. BAP May 28, 2014): 25 The justifiable reliance standard generally does not entail a duty to investigate; a person may be justified 26 in relying on a representation even if he might have ascertained the falsity of the representation had he 27 made an investigation. However, a creditor’s duty to investigate arises by virtue of suspicious 28 circumstances. Thus, justifiable reliance does not 1 Id. at *10 (cleaned up); Wickman v. Ivar (In re Werner), 2019 WL 2 641411, *13 (9th Cir. BAP Feb. 13, 2019) (“[T]he justifiable 3 reliance standard does not permit the plaintiff to ignore red 4 flags that obviously call into question the truth of the debtor’s 5 representations regarding the transaction[.]”), aff’d,, 817 6 Fed.Appx. 432 (9th Cir., July 23, 2020). 7 Defendant’s deposition testimony reflects that there were 8 numerous “red flags” here that Plaintiff, a businessman of over 9 thirty years who is in good physical health and mentally acute, 10 should have investigated as suspicious but which Plaintiff 11 deliberately chose to ignore because, as Plaintiff testified, how 12 Defendant used the $317,500 was none of his business. For 13 example, Defendant’s assertion that he won a substantial cash 14 prize in a foreign lottery should have triggered some suspicion 15 for Plaintiff. Another “red flag” for Plaintiff should have been 16 Defendant’s explanation that lottery expenses had to be paid in 17 advance before the lottery winnings could be collected. Another 18 should have been that the pre-collection lottery expenses had to 19 be paid in extremely large amounts of cash. And still another 20 should have been that the cash to pay these pre-collection 21 lottery expenses had to be sent to lottery “agents” or 22 “officials.” The point here is that Plaintiff intentionally 23 ignored Defendant’s suspicious activity and, in so doing, can not 24 now establish that any reliance on Defendant’s collection of 25 lottery winnings for repayment was justifiable.7 26 7Although a subjective standard, when determining 27 justifiable reliance the court may consider how far the purported 28 reliance strays from what would be objectively reasonable. See Robinson, 640 B.R. at 745 n.5. Plaintiff’s deliberate decision 1 The § 523(a)(6) Claim 2 Section 523(a)(6) excepts from discharge a debt for a 3 willful and malicious injury. See 11 U.S.C. § 523(a)(6). As the 4 Ninth Circuit explained in Barboza v. New Form, Inc. (In re 5 Barboza), 545 F.3d 702, 706 (9th Cir. 2008): 6 Section 523(a)(6) of the Bankruptcy Code provides that an individual debtor may not discharge a debt for 7 willful and malicious injury by the debtor to another entity or to the property of another entity. The 8 malicious injury requirement is separate from the willful injury requirement. A willful injury is a 9 deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury. A 10 malicious injury involves (1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and 11 (4) is done without just cause or excuse. 12 Id. at 706 (cleaned up). 13 The court is not persuaded that Defendant deliberately or 14 intentionally injured Plaintiff or that Defendant was 15 substantially certain Plaintiff would be injured by his conduct. 16 Quite the opposite. Defendant testified convincingly that he 17 intended to provide Plaintiff with a benefit for the money he 18 received from Plaintiff by sharing-perhaps splitting-his lottery 19 winnings with Plaintiff. In other words, Defendant’s intent was 20 to reward-not harm-Plaintiff for helping him collect lottery 21 winnings. This is not willful and malicious conduct. 22 23 24 any justifiable reliance here. Nevertheless, the court notes 25 that Defendant’s banking transactions involving large amounts of cash Defendant was sending to undisclosed third-parties caused 26 Plumas Bank’s manager enough concern to contact the Shasta County Sheriff’s Department and report Defendant as a potential victim 27 of elder abuse. These activities also caused Lt. Estes enough 28 concern to initiate an investigation, contact family members, and report Defendant’s activities to county Adult Protective 1 III. 2 Conclusion 3 William Shakespeare said it best: “Neither a borrower nor a 4 lender be; / For loan oft loses both itself and friend ...” 5 (Hamlet, Act 1, Scene 3). 6 Based on the foregoing: 7 Judgment will be entered for Defendant and against Plaintiff 8 with Plaintiff taking nothing on the claim under 11 U.S.C. § 9 523(a)(2)(A) in the First Cause of Action of the Complaint. 10 Judgment will be entered for Defendant and against Plaintiff 11 with Plaintiff taking nothing on the claim under 11 U.S.C. § 12 523(a)(6) in the Second Cause of Action of the Complaint. 13 Defendant’s debt to Plaintiff as alleged in the Complaint 14 and as filed in Claim 1-1 arising from and based on the transfers 15 referenced hereinabove is dischargeable and is discharged in 16 Defendant’s chapter 7 case. 17 Defendant is awarded costs as the prevailing party. A 18 signed Bill of Costs must be filed by February 25, 2026. 19 If supported by Fed. R. Bankr. P. 9011, Defendant may file a 20 motion for attorney’s fees under 11 U.S.C. § 523(d). Any such 21 motion shall be filed and served by March 18, 2026. 22 A separate judgment will issue. 23 24 25 26 27 28 1 INSTRUCTIONS TO CLERK OF COURT SERVICE LIST 2 The Clerk of Court is instructed to send the attached 3 document, via the BNC, to the following parties: 4 David A. Diepenbrock 400 Capitol Mall 11th Fl 5 Sacramento CA 95814 6 David Ashley Smyth 3478 Buskirk Ave., #1000 7 Pleasant Hill CA 94523 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28