In re: JOSEPH ELLISON v. JP MORGAN CHASE BANK NA and J.P. MORGAN SECURITIES, LLC

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: JOSEPH ELLISON,
Debtor,
______________________________
JOSEPH ELLISON,
Appellant,
v.
JP MORGAN CHASE BANK NA and J.P.
MORGAN SECURITIES, LLC,
Appellees.
No. 17-60071
BAP No. 16-1328
MEMORANDUM*
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Pappas, Kurtz, and Taylor, Bankruptcy Judges, Presiding
Argued and Submitted March 8, 2019
Pasadena, California
Before: SCHROEDER and OWENS, Circuit Judges, and CHRISTENSEN,**
Chief District Judge.
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable Dana L. Christensen, Chief United States District
Judge for the District of Montana, sitting by designation.
FILED
MAR 15 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Joseph Ellison, a Chapter 7 debtor, appeals from the Bankruptcy Appellate
Panel’s (“BAP”) decision affirming the bankruptcy court’s judgment denying him
a discharge under 11 U.S.C. § 727(a)(2)(A). As the parties are familiar with the
facts, we do not recount them here. We have jurisdiction under 28 U.S.C.
§§ 158(d) and 1291, and we affirm.
A debtor is denied a discharge under § 727(a)(2)(A) if two requirements are
met: “1) a disposition of property, such as transfer or concealment, and 2) a
subjective intent on the debtor’s part to hinder, delay or defraud a creditor through
the act disposing of the property.” Hughes v. Lawson (In re Lawson), 122 F.3d
1237, 1240 (9th Cir. 1997). Ellison does not dispute that he conducted multiple
property transfers within one year prior to filing for bankruptcy, but he argues that
he did not have the requisite intent to satisfy the second requirement.
However, the bankruptcy court did not clearly err in concluding that Ellison
acted with intent to hinder or delay a creditor. See id. (stating that, on appeal from
the BAP, we review the underlying bankruptcy court’s factual findings for clear
error); Bernard v. Sheaffer (In re Bernard), 96 F.3d 1279, 1281 (9th Cir. 1996)
(explaining that a finding of intent to “defraud” is not needed because “[i]ntent to
hinder or delay is sufficient”). The bankruptcy court here evaluated numerous
factors in the totality of the circumstances, and the record reflects sufficient
evidence of Ellison’s intent. See Emmett Valley Assocs. v. Woodfield (In re

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Woodfield), 978 F.2d 516, 518 (9th Cir. 1992) (“We may infer the intent from the
circumstances surrounding the transaction.”).
Specifically, the bankruptcy court properly considered Ellison’s sizeable
prepayments on his mortgages. While “[t]he mere fact that a bankrupt has made a
preferential payment or transfer to one of his creditors is no ground for denying a
discharge,” Hultman v. Tevis, 82 F.2d 940, 941 (9th Cir. 1936), courts may
consider preferential payments as part the broader “course of conduct” that may
establish intent, First Beverly Bank v. Adeeb (In re Adeeb), 787 F.2d 1339, 1343
(9th Cir. 1986) (citation omitted). Similarly, the bankruptcy court did not err in
considering Ellison’s conversion of nonexempt assets into exempt assets. After all,
the general rule that courts should have “tolerance of basic bankruptcy exemption
planning” does not prevent courts from inferring discharge-disqualifying intent
from such transfers and the surrounding circumstances. Wolkowitz v. Beverly (In
re Beverly), 374 B.R. 221, 242 (BAP 9th Cir. 2007). The bankruptcy court also
correctly determined that Ellison’s transfer of community property funds from his
personal bank account to his wife’s law office bank account was additional
evidence of his intent to “hinder or delay” a creditor because of the practical
difficulties in collecting these funds. In re Bernard, 96 F.3d at 1281.
In addition, the bankruptcy court properly analyzed Ellison’s admissions in
his Bankruptcy Rule 2004 examination and trial as part of the totality of the

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circumstances. See In re Woodfield, 978 F.2d at 518. For instance, Ellison
admitted that his transfer of funds from his personal bank account to a corporation
owned entirely by him “was a panicky thing” he did because he “didn’t know what
was going to happen” and “was afraid people were going to come and take all [his]
money away.” Ellison also testified that his prepayments on his mortgages were
an attempt to prioritize keeping his home. Ellison even stated that he was
particularly concerned that his former attorney would be “coming in and attaching
his assets” to collect unpaid fees. The bankruptcy court’s finding that Ellison
intended to hinder or delay a creditor—based on these admissions and additional
circumstantial evidence—was not “illogical, implausible, or without support in the
record.” Retz v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010); see id.
(“When factual findings are based on determinations regarding the credibility of
witnesses, we give great deference to the bankruptcy court’s findings . . . .”).
Finally, the record does not support Ellison’s assertion that he conducted his
pre-bankruptcy transfers in good-faith reliance on the advice of his former counsel.
AFFIRMED.

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