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In re Ashai

United States District Court, C.D. California

November 19, 2017

In re Tony Ashai, Debtor
v.
Tony Ashai, Defendant-Appellee Kamran Ghadimi & Haleh Turkaman, Plaintiffs-Appellants

          Present: The Honorable Valerie Baker Fairbank, U.S. District Judge

          CIVIL MINUTES - GENERAL

         Proceedings:In Chambers (No Proceedings Held) - ORDER DENYING RECONSIDERATION AND REMANDING:

Construing “Appellee's Brief Re: Award of Damages” as Fed.R.Civ.P. 60(b) Motion for Relief from Judgment;
Dismissing Post-Judgment Motion (Doc #21) as Barred by Movant's Pending Appeal & Determining that the Motion is Late & Unsupported;
Remanding to U.S. Bankruptcy Court to Determine Damages & Interest;
Terminating and Closing the Case (JS-6)

         On July 25, 2013, creditors Ghadimi and Turkaman (together “Ghadimi” or “creditors”) initiated an adversary proceeding in United States Bankruptcy Court for the Central District of California (“the bankruptcy court”) case number 2:13-11265-ER, AP 2:13-01448-ER. See CM/ECF Document (“Doc”) 16, First Amended Complaint (“FAC”) at 24 ¶ 1. Ghadimi claimed that the debt Tony Ashai (“Ashai”) owed to him was non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A) because Ashai had employed fraud to induce Ghadimi to sign the July 29, 2010 final settlement. See Doc 16 (FAC) at 26-28 ¶¶ 16-24. Ghadimi alleged that as a proximate result of Ashai's fraud, Ghadimi lost “the $175, 000 to which they were entitled to recover from Emil [Youssefzadeh] per the Settlement Agreement.” See Doc 16(FAC) at 28 ¶ 24. Ghadimi further alleged that Ashai's fraud caused the creditors to lose “the deficiency liability owed by Emil, measured by the difference between the foreclosure sale price of the property and the amount of: the Vineyard loan, plus interest, fees and costs. Id.

         The bankruptcy court denied creditor Ghadimi's claim and issued a judgment discharging Ashai's debt on June 9, 2014. Ghadimi appealed, and this Court initially affirmed as follows:

The Court will deny creditor Ghadimi's appeal on a ground not discussed by the parties' appellate briefs. In In re Pateel Boyajian . . . , 367 B.R. 138 (9th Cir. BAP 2007) . . ., aff'd, 564 F.3d 1088 (9th Cir. 2009) (“Boyajian”), the . . . Circuit held that a deceptive misrepresentation or omission cannot render a debt non-dischargeable under § 523(a)(2)(A) unless [it] occurred prior to the creditor lending the money and played a role in inducing the creditor to lend the money.
According to Boyajian, if the misrepresentation occurred after the creditor lent the money, it cannot be said that the loan was “obtained by” the misrepresentation as required for non-dischargeability under section 523(a)(2). Here, even according to the creditors' version of events, all of the alleged misrepresentations or omissions by Ashai occurred after Vineyard Bank (the creditors' predecessor) extended the loan at issue.

Ashai, 211 F.Supp.2d at 1218. The Court directed the parties to submit post-judgment briefs as to “whether the Court should sanction the Ghadimis for bringing an appeal that was frivolous within the meaning of Federal Rule of Bankruptcy Procedure (“FRBP”) 8020(a) (“the OSC”).” Appellant Ghadimi timely filed a brief that consisted of both a response to the OSC and a motion to reconsider the merits. Ghadimi's postjudgment brief ably explained, for the first time, why the Circuit's Boyajian decision is distinguishable from our case and thus does not defeat their nondischargeability claim. Ashai timely filed an opposition that did not meaningfully respond to Ghadimi's argument on this score. This Court previously granted the creditor-appellants' motion for reconsideration, vacated the prior judgment in favor of appellee-debtor Ashai, and affirmed the decision of the Bankruptcy Court. The Court's Order stated in pertinent part as follows:

         As a matter of law, the Court DETERMINES that:

(1) the Settlement entered by Ghadimi, Turkaman, Ashai, and others on July 29, 2010 was an “extension, renewal, or refinancing” for purposes of 11 U.S.C. § 523(a)(2);
(2) in order to win a ruling that appellee's remaining debt to Ghadimi and Turkaman is not dischargeable, appellants must demonstrate that the criteria of 11 U.S.C. § 523(a)(2) are met as to Ashai's conduct inducing them to execute the July 29, 2010 Settlement;
(3) conversely, appellants need not show that the criteria of 11 U.S.C. ยง 523(a)(2) are met with regard to the debt for which Ashai would have been liable pursuant to the Term Sheet issued after the July 14, 2010 settlement conference and before the execution of the Settlement ...

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