IN RE: Anthony THOMAS; et al. (2018)

MEMORANDUM ***

Anthony Thomas appeals the decision of the Bankruptcy Appellate Panel (“BAP”) affirming the bankruptcy court’s judgment of nondischargeability under 11 U.S.C. § 523(a)(2)(A). The bankruptcy court and the BAP each concluded that Thomas’s debt to Kenmark was nondischargeable because it was incurred by fraud. We have jurisdiction pursuant to 28 U.S.C. § 158(d), and we affirm.

I

As an initial matter, we deny Thomas’s Motion to Supplement the Record with evidence that purports to challenge the legitimacy of the state court judgment debt underlying this appeal. At the time of the bankruptcy trial, Thomas was aware of all facts related to his personal liability for the judgment, but he failed to raise these arguments. Because “exceptional circumstances are lacking, we refuse to consider them now.” Scovis v. Henrichsen ( In re Scovis), 249 F.3d 975, 984 (9th Cir. 2001).

II

Turning to the substance of Thomas’s appeal, Thomas argues that (1) he had no duty to disclose to Kenmark certain information regarding the Thomas Emerald; (2) Kenmark’s reliance on Thomas’s representations was not justifiable; and (3) there is not sufficient evidence that Thomas had the requisite intent to deceive Kenmark.

We independently review the bankruptcy court’s rulings on appeal from the BAP. Citibank (South Dakota), N.A. v. Eashai ( In re Eashai), 87 F.3d 1082, 1086 (9th Cir. 1996). Whether a creditor has proven an essential element of a claim is a “factual determination reviewed for clear error.” Anastas v. American Savings Bank ( In re Anastas), 94 F.3d 1280, 1283 (9th Cir. 1996). We hold that the bankruptcy court did not clearly err in concluding that Kenmark proved the elements of fraud to support the nondischargeability judgment.

Kenmark’s claim of fraud was based on Thomas’s failure to disclose that the Thomas Emerald, the collateral pledged for Kenmark’s loan to Electronic Plastics (“EP”), had been previously valued at amounts far lower than the amount of the loan. Therefore, Kenmark was required to prove that (1) the omitted information was “material,” and (2) the debtor had a duty to disclose the omitted information. See Apte v. Japra ( In re Apte), 96 F.3d 1319, 1323 (9th Cir. 1996). The lower valuations of the Thomas Emerald were “material” because a reasonable lender would have considered them important in agreeing to the loan. See id. Further, Thomas had a duty to disclose those lower valuations because he selectively disclosed to Kenmark that the Thomas Emerald had, at one point, been valued at an amount substantially greater than the amount of the loan. See Restatement (Second) of Torts § 551(2)(b) (1976) (“[A] party to a business transaction is under a duty to exercise reasonable care to disclose ․ matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading.”); In re Apte, 96 F.3d at 1324 (applying the Restatement (Second) of Torts to determine the existence of a duty to disclose).

The element of justifiable reliance may be presumed where, as here, the fraud claim is based on the debtor’s concealment of material facts. In re Apte, 96 F.3d at 1323. Therefore, because Thomas’s omissions relating to the value of the Thomas Emerald were material, Kenmark’s justifiable reliance may be presumed.

Thomas’s intent to deceive can be inferred from the fact that Thomas knew that lower valuations of the Thomas Emerald existed and selectively disclosed to Kenmark only the higher valuation. Cowen v. Kennedy ( In re Kennedy), 108 F.3d 1015, 1018 (9th Cir. 1997), as amended (Mar. 21, 1997) (“Intent to deceive can be inferred from surrounding circumstances.”).

III

Separately, Thomas argues that the bankruptcy court erred in failing to clarify whether the nondischargeability judgment applies to Thomas’s wife, Wendi. We construe a judgment so as to give effect to the stated intention of the issuing court. United States v. 60.22 Acres of Land, 638 F.2d 1176, 1178 (9th Cir. 1980). Wendi Thomas was not a subject of the bankruptcy court’s judgment. No evidence was presented at trial that implicated Wendi Thomas in the fraud, and the bankruptcy court made no findings of fact as to her. Therefore, we do not find any error in the bankruptcy court’s judgment.

AFFIRMED.