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In re Khalil

United States District Court, C.D. California

April 20, 2017

IN RE RAOUF ROAHDY KHALIL Bankruptcy No. 1:11-bk-16918-MB Adversary No. 1:11-ap-01533-AA

          Present: Honorable The CHRISTINA A. SNYDER, U.S. DISTRICT JUDGE



         Appellant Steven Goldman appeals from the Bankruptcy Court's Amended Judgment after Remand. Doc. 9. Appellee Raouf Roshdy Khalil filed a response in opposition, and Goldman replied. Docs. 12, 16. The Court AFFIRMS IN PART and VACATES AND REMANDS IN PART.

         I. BACKGROUND

         A detailed history of this case in set forth in Judge Morrow's Order Affirming in Part the Decision of the Bankruptcy Court and Vacating and Remanding in Part. Case No. 2:14-cv-06630-MMM (Doc. 46) (hereinafter “Morrow Order”). What follows is a summary of the pertinent facts.

         Goldman and Khalil co-owned a home healthcare company called Care Level Management Group, LLC (“CLM”). Id. at 2. In 2007, CLM obtained a $7 million loan from 1st Century Bank. Id. at 4. When CLM ran into financial difficulties, 1st Century Bank indicated that it would take direct action against the company to recover the loan amount. Id. at 5. Goldman and Khalil entered a Settlement Agreement, dated May 5, 2008, pursuant to which Goldman agreed to pay 1st Century Bank the entire $7 million debt, in exchange for Khalil's promise to reimburse Goldman for his share of the debt over time. Id. at 5-6. Specifically, Khalil agreed to “(1) sell his house in the Sherwood Country Club no later than February 28, 2009, and pay Goldman 50% of the net proceeds of . . . the sale; (2) execute a promissory note for his pro rata share of the $7 million credit line that bore interest at the rate of 5% annually, and required monthly payments not to exceed $8, 000 (the payments were contingent on Khalil selling his home); (3) make $500, 000 balloon payments on or before May 31, 2011 and May 31, 2014; (4) obtain a life insurance policy of not less than $1, 000, 000 naming Goldman as beneficiary by October 1, 2008; and (5) have his wife execute a spousal consent form.” Id. at 6.

         Khalil never made any of the payments required under the Settlement Agreement. AA 2951-52. However, he testified that he attempted to sell his house for $5, 995, 000, a price set by Coldwell-Bankers, and that he later lowered the price to $4.3 million after the onset of the 2008 financial crisis. AA 2963. He further testified that he made brochures and advertised the property on the internet. AA 2986. Nonetheless, he never received an offer. Id.[1]

         In February 2009, Goldman filed an action against Khalil in Los Angeles County Superior Court, seeking to enforce the Agreement. Id. at 6. On June 3, 2011, just three days before the state court action was to go to trial, Khalil filed a voluntary petition under Chapter 7 of the U.S. Bankruptcy Code. Id. On September 6, 2011, Goldman filed an adversary complaint against Khalil, arguing that Khalil's debt for his share of the $7 million debt was non-dischargeable. Id. at 7. The bankruptcy court rejected all of Goldman's arguments. Id. at 8. Goldman appealed, and Judge Morrow affirmed in part and vacated and remanded in part. Id. at 13, 56.

         Goldman appealed to the Ninth Circuit. The Ninth Circuit dismissed the appeal, holding that it lacked jurisdiction because Judge Morrow's order was not final. AA 3069. On July 25, 2016, the Bankruptcy Court issued its Amended Judgment after Remand. AA 3135-44. Goldman appealed again.


         A district court reviews a bankruptcy court's conclusions of law de novo; findings of fact are reviewed for clear error. Fed.R.Bankr.P. 8013; In re Gebhart, 621 F.3d 1206, 1209 (9th Cir. 2010). “The clear error standard is significantly deferential and is not met unless the reviewing court is left with a definite and firm conviction that a mistake has been committed.” Fisher v. Tucson Unified Sch. Dist., 652 F.3d 1131, 1136 (9th Cir. 2011) (citation and quotation marks omitted). Thus, a bankruptcy court's factual determinations will be sustained unless they are illogical, implausible, or “without support in inferences that may be drawn from the facts in the record.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009).

         III. ANALYSIS

         Goldman argues that the bankruptcy court erred in dismissing his claims under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(2)(B), 523(a)(4), 523(a)(6), 727(a)(2)(A), 727(a)(4) (A) & (B), 727(a)(3), and 727(a)(5). Doc. 9. Additionally, Goldman argues that the bankruptcy court erred in allowing Khalil to present rebuttal testimony despite his failure to present a case in chief. Id. Judge Morrow affirmed the bankruptcy court's dismissal of Goldman's claims under §§ 523(a)(2)(B), 523(a)(4), 727(a)(4) (A) & (B), 727(a)(3), and 727(a)(5), as well as its decision to consider Khalil's rebuttal testimony. Morrow Order at 35, 39, 49, 50-51, 55. In addition, Judge Morrow partially affirmed the bankruptcy court's decision with respect to Goldman's claims under §§ 523(a)(6) and 727(a)(4). Id. at 40, 48.

         Judge Morrow's decision is binding on this Court, Thomas v. Bible, 983 F.2d 152, 154 (9th Cir. 1993), at least absent a showing that reconsideration is warranted in light of new material facts or a change in law, L.R 7-18. Goldman has not identified any new material facts or change in law that would justify reconsideration of any aspect of Judge Morrow's order. The appeal is dismissed to the ...

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