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In re Resler

United States District Court, D. Idaho

August 29, 2019

In re TIMOTHY RESLER and KIMBERLY RESLER, Debtors,
v.
UNITED STATES TRUSTEE, Appellee. TIMOTHY RESLER and KIMBERLY RESLER, husband and wife, Appellants,

          MEMORANDUM DECISION AND ORDER

          David C. Nye Chief U.S. District Court Judge.

         I. INTRODUCTION

         This matter comes before the Court on Debtor-Appellants Timothy Resler and Kimberly Resler's appeal from the United States Bankruptcy Court for the District of Idaho. The appeal is fully briefed and ripe for the Court's review. Having fully reviewed the record herein, the Court finds the parties have adequately presented the facts and legal arguments in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court finds that the decisional process would not be significantly aided by oral argument, the Court decides this appeal without oral argument. Dist. Idaho Loc. Civ. R. 7.1(d)(1)(B). For the reasons set forth below, the Court hereby AFFIRMS the bankruptcy court.

         II. BACKGROUND

         The general factual background underlying this dispute is set forth in the bankruptcy court's prior Decision and Order. Dkt. 16-2, at 49-55, 60-66. The Court incorporates that background by reference here.[1]

         On April 6, 2015, Tim and Kimberly Resler (the “Reslers”) filed for chapter 7 bankruptcy in the District of Idaho. No. 15-00477-TLM.[2] On December 21, 2015, the United States Trustee (the “Trustee”) pursued an adversary proceeding seeking to deny the Reslers a discharge. The complaint alleged, among other things, that the Reslers' bankruptcy discharge should be denied: (1) under 11 U.S.C. § 727(a)(4) because they knowingly and fraudulently made false oaths about their interests in a diamond ring valued at about $46, 000-which they had thrown into a lake behind their home- and a cabin in High Valley, Idaho; and (2) under 11 U.S.C. § 727(a)(2) because they transferred or concealed their interests in the ring and the cabin with intent to hinder, delay, or defraud creditors and/or the bankruptcy trustee. A trial in the adversary case was held on June 6, 7, and 8, 2017. The Parties submitted post-trial written closing arguments, after which the bankruptcy court issued its written opinion and entered judgment denying the Reslers' discharge. The Reslers now appeal the bankruptcy court's judgment.

         III. STANDARD OF REVIEW

         In an action for denial of discharge, the Court reviews the bankruptcy court's findings of fact for clear error; its selection of the applicable legal rules under 11 U.S.C. § 727 de novo; and the application of the facts to the rules requiring exercise of judgements about values animating the rules de novo. In re Retz, 606 F.3d 1189, 1196 (9th Cir. 2010). “Where there are two permissible views of the evidence, the [bankruptcy court]'s choice between them cannot be clearly erroneous.” Anderson v. City of Bessemer City, N.C. , 470 U.S. 564, 574 (1985). Additionally, the Court's review of factual findings is particularly deferential when those findings are based on judgments of witness credibility. Id. at 577.

         IV. ANALYSIS

         The Reslers raise several issues in their appeal. The vast majority of the findings the Reslers claim to be in clear error are questions of fact. The Court only addresses these insofar as they are relative to the actual claims raised by the Reslers. That said, there are two main legal issues the Court must resolve. First, whether the bankruptcy court clearly erred in denying the Reslers' bankruptcy discharge under 11 U.S.C. § 727(a)(4) for knowingly and fraudulently making false oaths in their bankruptcy case about a $46, 000 diamond ring and a cabin. And second, whether the bankruptcy court clearly erred by denying the discharge under 11 U.S.C. § 727(a)(2) for concealing the ring, transferring their interests in the cabin, and concealing their retained interest in the cabin with the intent to hinder, delay, or defraud.

         A. § 727(a)(2) Concealment of the Ring

         The Reslers claim that the facts do not support the bankruptcy court's finding that the Reslers concealed a diamond ring with intent to hinder, delay, or defraud the Trustee. The Trustee's § 727(a)(2) cause of action required the Court to determine whether (1) The Reslers concealed the ring and (2) whether such concealment was done with actual intent to hinder, delay, or defraud a creditor or the trustee. The Court finds that the facts do support the bankruptcy court's finding and will address each of the Resler's relevant arguments in turn.

         First, the Reslers claim that the bankruptcy court erred in finding that the Reslers met with their personal bankruptcy counsel in Fall 2014. In their attempt to show an error, the Reslers simply cite Tim Resler's self-serving testimony offering an alternate explanation- that Tim Resler was meeting with his counsel about corporate bankruptcy, not personal bankruptcy. But a restatement of an alternate explanation already presented at trial is insufficient to overturn a finding of fact. The bankruptcy court is entitled to discredit Tim Resler's alternate explanation and chose to do so. As already noted, the Court will not disturb the bankruptcy court's credibility determinations on appeal absent clear error. See Anderson, 470 U.S. at 572; In re Taylor, 884 F.2d 478, 484 (9th Cir. 1989); Fed.R.Civ.P. 56(a)(6). Upon review, the Court finds no clear error.

         The Reslers also claim the bankruptcy court erred in finding that there was insufficient evidence establishing when the ring entered the lake. The Reslers say that the Reslers' testimony, as well as Kim Resler's sister Paula's testimony-in which she offered a date on which the ring was thrown into the lake-was “ignored.” But the fact that the bankruptcy court found that certain testimony was not conclusive or ...


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