In re: PAUL WILLIAM MARTIN v. Kevin Hunter

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: PAUL WILLIAM MARTIN,
Debtor,
------------------------------
PAUL WILLIAM MARTIN,
Appellant,
v.
KEVIN HUNTER,
Appellee.
No. 21-60026
BAP No. 19-1336
MEMORANDUM*
Appeal from the Ninth Circuit Bankruptcy Appellate Panel
Lafferty, Gan, and Faris, Bankruptcy Judges, Presiding
Submitted January 12, 2022**
Pasadena, California
Before: RAWLINSON and WATFORD, Circuit Judges, and RAKOFF, *** District
Judge.
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
*** The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
FILED
JAN 14 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Paul Martin appeals from a decision of the Bankruptcy Appellate Panel
(BAP) affirming the bankruptcy court’s grant of an exception from discharge under
11 U.S.C. § 523(a)(2)(A) and its grant of attorney’s fees. We affirm.
1. The bankruptcy court did not err as a matter of law in concluding that the
$10,000 Martin gained from the sale of the Porsche was a debt obtained by actual
fraud. 11 U.S.C. § 523(a)(2)(A). For purposes of § 523(a)(2)(A), “actual fraud”
includes transfers made with an intent to evade creditors. Husky International
Electronics, Inc. v. Ritz, 578 U.S. 356, 361 (2016). Under the doctrine of “badges
of fraud,” the court may infer fraudulent intent from “certain objective facts,”
including “a secret transfer.” BFP v. Resolution Trust Corp., 511 U.S. 531, 540–
41 (1994). In this case, Martin does not challenge the court’s factual findings that
(1) he sold the Porsche while knowing that the car was collateral for the debt he
owed Kevin Hunter, and (2) he failed to disclose the sale or remit its proceeds to
Hunter. The court properly inferred fraudulent intent from those facts. That
inference is fully consistent with the court’s conclusion that Martin did not act for
the purpose of injuring Hunter. See Husky, 578 U.S. at 363–64 (distinguishing
between “actual fraud” under § 523(a)(2)(A) and “willful and malicious injury”
under § 523(a)(6)).
2. The bankruptcy court did not abuse its discretion in awarding attorney’s
fees to Hunter. Martin contends that attorney’s fees are available only to the extent

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that the substantive issues before the bankruptcy court are governed by state law.
But under binding precedent, attorney’s fees may be awarded if they are permitted
under state law even when the fees were incurred litigating issues of bankruptcy
law. Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co.,
549 U.S. 443, 449 (2007). California Code of Civil Procedure § 1021 allows for
fees according to an express agreement of the parties. Martin does not challenge
the bankruptcy court’s determination that the note memorializing the loan from
Hunter authorized an award of attorney’s fees to the prevailing party in a
dischargeability action. The fee award was therefore permitted under California
law.
AFFIRMED.

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