J.A.W. Land & Trading v. George Kelly , 633 F. App'x 652 ( 2016 )

FILED
NOT FOR PUBLICATION JAN 29 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: GEORGE T. KELLY; LORI No. 13-56792
SAVOY-KELLY,
D.C. No. 3:12-cv-00754-GPC-
Debtors, DHB
J.A.W. LAND & TRADING, LLC, a MEMORANDUM*
California Limited Liability Company,
Plaintiff - Appellee,
v.
GEORGE T. KELLY; LORI SAVOY-
KELLY,
Defendants - Appellants.
Appeal from the United States District Court
for the Southern District of California
Gonzalo P. Curiel, District Judge, Presiding
Argued November 3, 2015
Submitted January 27, 2016
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: SCHROEDER, PREGERSON, and FRIEDLAND, Circuit Judges.
Debtors George and Lori Kelly appeal the district court’s judgment
affirming the bankruptcy court’s ruling that their debt to J.A.W. Land & Trading,
LLC (“J.A.W.”) was nondischargeable as fraudulent pursuant to 11 U.S.C.
§ 523(a)(2)(A). The bankruptcy court found, after a three-day bench trial, that the
Kellys had failed to disclose the existence of a stop work order on the Boulevard
property securing the loan. The bankruptcy court further found that J.A.W.
believed the property had substantial equity and the value of the property was a
“substantial factor” in its decision to make the loan. The findings are fully
supported by the record.
The Kellys contended for the first time on appeal that the debt should be
dischargeable as to Lori Kelly because she was not sufficiently involved in the
fraud. Because the Kellys failed to adequately present this argument to the
bankruptcy court, it is waived. See Lowenschuss v. Selnick (In re Lowenschuss),
171 F.3d 673, 682 n.11 (9th Cir. 1999).
Even assuming the March 2009 Modification Agreement lacked independent
consideration, the Kellys still would have been obligated to repay the March 2009
disbursement, as well as all prior disbursements, pursuant to the original
agreement.
2
In their post-argument supplemental brief, Appellants contend that the debt
should be allocated among the properties, so that only a portion, that attributable to
the Boulevard and Fourth Place properties, would be nondischargeable. This
argument fails because the bankruptcy court found that the value of the Boulevard
property was a critical factor in J.A.W.’s decision to lend the money in the first
place. See 11 U.S.C. § 523(a)(2)(A); see also Cohen v. De La Cruz, 523 U.S. 213,
218–19 (1998).
AFFIRMED.
3