From Casetext: Smarter Legal Research

In re Soliman

United States District Court, E.D. California
Mar 21, 2008
2:07-cv-469-GEB (E.D. Cal. Mar. 21, 2008)

Opinion

2:07-cv-469-GEB.

March 21, 2008


ORDER

This matter was determined to be suitable for decision without oral argument. L.R. 78-230(h).


Appellant Debtor Maged Soliman ("Debtor") appeals bankruptcy court's denial of the discharge of his debt following a trial, arguing the denial was based on grounds outside the scope of the pleadings and was not supported by the evidence.

"[T]he bankruptcy court's findings of fact [are reviewed] for clear error, and its conclusions of law [are reviewed] de novo. . . . Findings of fact based on credibility are given particular deference by reviewing courts." In re Beauchamp, 236 B.R. 727, 729-30 (9th Cir. B.A.P. 1999) (internal citations omitted). "[W]hen the bankruptcy court's weighing of the evidence is plausible in light of the record taken as a whole, a finding of clear error is precluded. . . ." In re Bradley, 501 F.3d 421, 434 (5th Cir. 2007). Debtor "has the burden of showing [the bankruptcy court's] findings of fact [we]re clearly erroneous."In re Burkhart, 84 B.R. 658, 660 (9th Cir. B.A.P. 1988).

Debtor argues the bankruptcy court erred since the complaint filed by Susan Smith, the bankruptcy trustee ("Trustee"), did not specifically allege discharge should be denied for the reasons on which the bankruptcy court relied. (Appellant's Opening Br. at 11-13.) The bankruptcy court denied Debtor's discharge on the grounds that Debtor: (1) knowingly and fraudulently withheld a document from the Trustee, specifically, a lease agreement whereby Debtor leased a property in Lodi, California, to tenants ("the Lodi property lease agreement"); and (2) Debtor made a false oath when he filed an unlawful retainer complaint against those tenants and stated in the complaint that he was the "owner" of the Lodi property when in fact ownership had passed to the Debtor's bankruptcy estate. (Appellant's Excepts of Record ("AER") at 372-78.) Debtor argues that since the Trustee never moved to amend her complaint to include these grounds for discharge, the bankruptcy court improperly denied discharge. (Id.)

The Trustee counters that no amendment to the complaint was necessary since the issue of whether Debtor knowingly and fraudulently withheld the Lodi property lease agreement was tried by the parties' implied consent under Federal Rule of Civil Procedure ("Rule") 15(b)(2). (Appellee's Br. at 13-15.) Under Rule 15(b)(2), "When an issue not raised by the pleadings is tried by the parties' . . . implied consent, it must be treated in all respects as if raised in the pleadings . . . [and] failure to amend does not affect the result of the trial on that issue." Fed.R.Civ.P. 15(b)(2). Debtor contends that the issue of Debtor's withholding of the Lodi property lease agreement was not tried by his implied consent since it was "litigated over the objection of the Debtor." (Appellant's Opening Br. at 19.) However, Debtor did not object to trial of the issue whether Debtor knowingly and fraudulently withheld the lease agreement from the Trustee. (AER at 311-15.) Since Debtor has not demonstrated that he objected to trial of this issue during the bankruptcy trial, the Trustee has shown that this issue was tried by the parties' implied consent. Accordingly, Debtor has failed to show the bankruptcy court erred on this ground.

Rule 15 applies in this bankruptcy case. Fed.R.Bankr.P. 7015.

Earlier in the trial, Debtor did object to introduction of the unlawful retainer complaint (which contained the alleged false oath) on the ground that the unlawful retainer complaint "took place long after the [Trustee's] complaint was filed . . . and it's not relevant to this case." (AER at 221.) The portion of the appeal concerning the sufficiency of this objection and the bankruptcy court's reliance on this evidence to deny Debtor's discharge need not be decided because of decision on the lease agreement withholding issue, infra.

Debtor also argues the bankruptcy court erred since its finding that he knowingly and fraudulently withheld the Lodi property lease agreement was not supported by the evidence. (Appellant's Opening Br. at 16-19.)

Under 11 U.S.C. § 727(a)(4)(D), Debtor's discharge may be denied if "the debtor knowingly and fraudulently, in or in connection with the case . . . withheld from [the Trustee] . . . any recorded information, including books, documents, records, and papers, relating to the [D]ebtor's property or financial affairs." On January 29, 2006, the Trustee requested documents from the Debtor, including "[c]opies of all agreements" of Debtor's real property that was rented or leased. (Id. at 111-112.) Although Debtor had leased Lodi property to the tenants pursuant to the lease agreement, Debtor did not provide the Trustee with a copy of the lease agreement. (Id. at 66, 373.) The bankruptcy court found:

I don't think there can be much doubt that the Trustee requested copies of the documents in respect to the rental property . . . [Debtor's counsel] has argued that the Debtor turned over everything that he had at the time that the Trustee requested all of the documents, and yet he did not turn over the lease agreement. . . . I cannot accept the Debtor's explanations in respect to the residential real property. That, of course, relates to Debtor knowingly and fraudulently in or in . . . connection with the case . . . withheld from [the Trustee] . . . any recorded information. . . . I find that after reviewing all of the testimony here and the documentary evidence that was introduced, the testimony of the witnesses and so forth, that under a preponderance of the evidence that the Debtor . . . failed to provide all the documents that were required to be provided to the Trustee.

Although the bankruptcy court referred to the property at issue as the "Folsom" property, it is clear from the context that the court is referring to the Lodi property.

(Id. at 373, 377.) Debtor argues that the bankruptcy court's findings were erroneous because there was insufficient evidence that Debtor knowingly and fraudulently withheld the lease agreement, Debtor's withholding of the lease agreement was not material, and the Trustee never specifically asked for the lease agreement. (Appellant's Opening Br. at 16-19.) However, Debtor has not shown the bankruptcy court's findings that he knowingly and fraudulently withheld the Lodi property lease agreement from the Trustee, that the lease agreement was material, and that the Trustee asked for the lease agreement were not "plausible in light of the record viewed in its entirety." Bradley, 501 F.3d at 434. (See AER 373-77.) Accordingly, Debtor has failed to show the bankruptcy court erred in denying discharge on this ground.

For the stated reasons, the bankruptcy court's decision is affirmed.


Summaries of

In re Soliman

United States District Court, E.D. California
Mar 21, 2008
2:07-cv-469-GEB (E.D. Cal. Mar. 21, 2008)
Case details for

In re Soliman

Case Details

Full title:In re MAGED SOLIMAN, Debtor. MAGED SOLIMAN, Appellant, v. SUSAN SMITH…

Court:United States District Court, E.D. California

Date published: Mar 21, 2008

Citations

2:07-cv-469-GEB (E.D. Cal. Mar. 21, 2008)

Citing Cases

In re Lebbos

" Judgment April 27, 2009. Upon review, this conclusion by the bankruptcy judge is plausible. "When the…