Bentley et al v. Grubb

MEMORANDUM OF DECISION - 1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF IDAHO
MEMORANDUM OF DECISION
Before the Court is a Motion for Summary Judgment, Doc. No. 21 (the “Motion”),
filed by Kevin Bentley and Laurie Bentley (“Plaintiffs”). The Motion seeks to except
Plaintiffs’ claim from discharge pursuant to § 523(a)(2)(A) and § 523(a)(6),1 and it relies
on a state court judgment obtained prior to the bankruptcy and the doctrine of issue
1 Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11
U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules of Bankruptcy Procedure, Rules
1001–9038, and all “Civil Rule” references are to the Federal Rules of Civil Procedure.
IN RE:
COREY JAMES GRUBB and
ALISHA MARIE GRUBB,
Debtors.
Case No. 25-01064-NGH
KEVIN BENTLEY and LAURIE
BENTLEY,
Plaintiffs,
v.
COREY JAMES GRUBB,
Defendant.
Adv. No. 25-06065-NGH
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preclusion. Corey Grubb (“Defendant”) opposes the Motion. The Court has considered
the briefing, declarations, and oral arguments, as well as the applicable law, and now
issues the following decision which resolves the motion. Fed. R. Bankr. P. 7052; 9014.
FACTS
A. 	Compliance with Local Bankruptcy Rule 7056-1
Civil Rule 56, which is made applicable here through Federal Rule of Bankruptcy
Procedure 7056, governs motions for summary judgment, and Local Bankruptcy Rule
7056-1 supplements Civil Rule 56. The local rule requires that a motion for summary
judgment be accompanied by a separate statement of asserted undisputed facts, setting
forth each fact in a separate, numbered paragraph with specific citations to the record.
LBR 7056-1(b)(1). The nonmoving party must then respond to each asserted undisputed
fact, also by a separate statement and with citation to the record. LBR 7056-1(b)(2). See
also Civil Rule 56(c)(1)(A).
Plaintiffs correctly point out that Defendant failed to comply with Local
Bankruptcy Rule 7056-1(b)(2). Defendant’s Statement of Disputed Facts, Doc. No. 32,
does not respond to each of Plaintiffs’ undisputed facts. Instead, it provides a general
response without citation to the record. Additionally, Defendant failed to comply with
Civil Rule 56(c) because he did not support his opposition with a declaration or other
admissible evidence necessary to raise a genuine issue of material fact. Accordingly,
pursuant to Civil Rule 56(e)(2), the Court will consider Plaintiffs’ asserted facts as
undisputed. While the material facts may be undisputed, the Court must still resolve the
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legal question of whether the state court’s prior findings satisfy the requirements of issue
preclusion.
B. 	Undisputed Facts2
1. 	The Construction Project
Prior to the bankruptcy, Plaintiffs entered into an agreement with Amoruso-Hill,
Inc. dba K&D Builders (“K&D Builders”) under which K&D Builders would act as a
construction manager and agent for Plaintiffs related to the construction of a house and
hangar on Plaintiffs’ property (the “Property”). The primary point of contact between
Plaintiffs and K&D was Dan Amoruso.
K&D Builders was responsible for hiring and directing all subcontractors on the
project. Plaintiffs did not hire any subcontractors directly. Amoruso initially contacted
Defendant by phone. Amoruso asked Defendant whether he was “fully insured and
licensed.” Defendant confirmed that he was. Defendant next met with Amoruso and
Plaintiffs (with Laurie Bentley participating virtually) to discuss tiling work on the
Property. At the meeting, Defendant acknowledged that he did not have workers’
compensation insurance but agreed to obtain it. He also did not disclose to Amoruso or
Plaintiffs that he was neither licensed nor registered.
Defendant provided an estimate for the tiling work in the amount of $65,826.20.
While the estimate called for a 50% deposit, Defendant agreed to accept a $22,000
2 Unless otherwise indicated, the facts come from the state court findings of fact attached as
Exhibit A to the Declaration of Kevin Bentley in Support of Plaintiffs’ Motion for Summary Judgment,
Doc. No. 24 (“Plaintiff’s Declaration”).
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MEMORANDUM OF DECISION - 4
deposit, which K&D Builders paid to Defendant from funds that originated from
Plaintiffs. Plaintiffs and Defendant had no written contract. Defendant later delivered
$9,000 worth of materials to the Property, which did not include any tile. Following that
delivery, he demanded an additional $11,000 claiming he had delivered all materials and
was not responsible for providing tile.
Defendant eventually provided Amoruso with a certificate of workers’
compensation insurance for “Bennett Mountain Tile.” Since he was unfamiliar with this
company, Amoruso began a deeper inquiry into Defendant and learned that Defendant
was not a licensed contractor. Plaintiffs did not have any agreement with Bennett
Mountain Tile & Flooring LLC, and Defendant did not hold himself out as Bennett
Mountain Tile & Flooring LLC in his dealings with Plaintiffs.
Once Plaintiffs learned Defendant was not a licensed contractor, they terminated
their agreement with Defendant. Plaintiffs offered to pay for the materials Defendant had
already purchased, but they demanded he return the balance of the $22,000 deposit.
Defendant, however, removed the construction materials he previously delivered to the
Property and refused to return any of the deposit. Defendant later used at least part of the
materials purchased with Plaintiffs’ deposit on jobs for other clients.
2. 	State Court Litigation
Plaintiffs subsequently filed a lawsuit against Defendant in the District Court of
the Fourth Judicial District of the State of Idaho (the “State Court”), in Elmore County.
Plaintiffs alleged three claims against Defendant: (1) breach of contract; (2) unjust
enrichment; and (3) violation of the Idaho Consumer Protection Act (the “ICPA”). The
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State Court conducted a trial where both parties were represented by counsel. The parties
submitted stipulated facts and the State Court considered the testimony of three
witnesses, including plaintiff Kevin Bentley and Defendant. On the breach of contract
claim, the State Court found that Plaintiffs had terminated their contract with Defendant
upon learning he was not a licensed contractor and ruled in Defendant’s favor because a
party cannot maintain an action for breach of a contract it has rescinded. On the unjust
enrichment claim, the State Court ruled in Plaintiffs’ favor, concluding the equities of the
case made it unfair for Defendant to retain Plaintiffs’ deposit. On the ICPA claim, the
State Court likewise ruled in Plaintiffs’ favor. The State Court concluded that
Defendant’s representation that he was a registered and/or licensed contractor was
misleading, false, and deceptive under the ICPA, and that Plaintiffs reasonably relied on
that representation. The State Court ultimately entered an Amended Judgment awarding
Plaintiffs $22,000 in damages, plus attorney fees totaling $18,006, and costs totaling
$352.74, for a total award of $40,358.74. Plaintiff’s Declaration at Ex. B.
3. 	The Bankruptcy Filing
Defendant filed a chapter 7 bankruptcy on December 19, 2025. Plaintiffs timely
filed this adversary proceeding seeking to except their claim against Defendant from
discharge pursuant to § 523(a)(2)(A) and (a)(6).
ANALYSIS
A. 	Summary Judgment Standards
Civil Rule 56(a) provides that summary judgment is appropriate when there is no
genuine dispute as to any material fact, and, when viewing the evidence most favorably
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to the non-moving party, the movant is entitled to judgment as a matter of law.
Bankruptcy Rule 7056; Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986); Far Out
Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001). In resolving a motion for
summary judgment, the Court does not weigh the evidence but instead determines only
“whether a material factual dispute remains for trial.” Covey v. Hollydale Mobilehome
Ests., 116 F.3d 830, 834 (9th Cir. 1997). An issue of fact is “genuine” if there is
sufficient evidence for a reasonable finder of fact to find in favor of the non-moving
party, and a fact is “material” if it might affect the outcome of the case. Far Out Prods.,
247 F.3d at 992 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49 (1986)).
Where evidence is genuinely disputed on a particular issue, such as by conflicting
testimony, that issue is “inappropriate for resolution on summary judgment.” Direct
Techs., LLC v. Elec. Arts, Inc., 836 F.3d 1059, 1067 (9th Cir. 2016). In cases where
intent is at issue, summary judgment is seldom granted; however, “summary judgment is
appropriate if all reasonable inferences defeat the claims of one side, even when intent is
at issue.” Gertsch v. Johnson & Johnson, Fin. Corp. (In re Gertsch), 237 B.R. 160, 165
(9th Cir. BAP 1999). Summary judgment may be defeated by evidence “such that a
reasonable juror drawing all inferences in favor of the respondent could return a verdict
in the respondent’s favor.” Reza v. Pearce, 806 F.3d 497, 505 (9th Cir. 2015). On the
other hand, “‘[w]here the record taken as a whole could not lead a rational trier of fact to
find for the nonmoving party, there is no genuine issue for trial,’ and summary judgment
is appropriate.” Zetwick v. County of Yolo, 850 F.3d 436, 441 (9th Cir. 2017) (quoting
Ricci v. DeStefano, 557 U.S. 557, 586 (2009)).
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The moving party bears the initial burden of showing there is no genuine issue of
material fact. Martin v. Mowery (In re Mowery), 591 B.R. 1, 5 (Bankr. D. Idaho 2018)
(citing Esposito v. Noyes (In re Lake Country Invs.), 255 B.R. 588, 597 (Bankr. D. Idaho
2000)). Once the movant has come forward with uncontroverted facts entitling it to
relief, the burden shifts to the nonmovant to establish there is a specific and genuine issue
of material fact for trial. Celotex Corp., 477 U.S. at 322 n.3. The nonmovant “may not
rely on denials in the pleadings but must produce specific evidence, through affidavits or
admissible discovery materials, to show that the dispute exists.” Barboza v. New Form,
Inc. (In re Barboza), 545 F.3d 702, 707 (9th Cir. 2008) (citation omitted).
Plaintiffs argue they are entitled to summary judgment on both of their claims
asserted under § 523(a)(2)(A) and § 523(a)(6) because of the preclusive effect of the
State Court judgment.
B. 	Issue Preclusion
The doctrine of issue preclusion, also known as collateral estoppel, prevents a
party from relitigating an issue that was actually litigated and that the party lost in a prior
proceeding. Resol. Tr. Corp. v. Keating, 186 F.3d 1110, 1114 (9th Cir. 1999). Issue
preclusion applies in § 523(a) dischargeability proceedings. Khaligh v. Hadaegh (In re
Khaligh), 338 B.R. 817, 824 (9th Cir. BAP 2006) (citing Grogan v. Garner, 498 U.S.
279, 284–85 n.11 (1991)). “If an element of a claim under § 523(a) was decided in prior
litigation, the debtor will be precluded from contesting that element in the § 523 action.”
Mann Mortg., LLC v. Howell (In re Howell), 2026 WL 852297, at *4 (9th Cir. BAP Mar.
27, 2026).
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Bankruptcy courts apply the preclusion law of the jurisdiction where the judgment
was entered. Herrera v. Scott (In re Scott), 588 B.R. 122, 131 (Bankr. D. Idaho 2018).
“If a state court would give preclusive effect to a judgment rendered by courts of that
state, then the Full Faith and Credit Statute (28 U.S.C. § 1738) imports the same
consequence to an action in federal court based on the same award.” Khaligh, 338 B.R.
at 824. Here, Plaintiffs obtained a judgment against Defendant in Idaho state court. The
elements required for issue preclusion under Idaho law are:
(1) 	the party against whom the earlier decision was asserted
had a full and fair opportunity to litigate the issue
decided in the earlier case;
(2) 	the issue decided in the prior litigation was identical to
the issue presented in the present action;
(3) 	the issue sought to be precluded was actually decided in
the prior litigation;
(4) 	there was a final judgment on the merits in the prior
litigation; and
(5) 	the party against whom the issue is asserted was a party
or in privity with a party to the litigation.
Bach v. Bagley, 229 P.3d 1146, 1157 (Idaho 2010).
The party asserting preclusion bears the burden of establishing its threshold
requirements. Plyam v. Precision Dev., LLC (In re Plyam), 530 B.R. 456, 462 (9th Cir.
BAP 2015). “Any reasonable doubts as to what was decided by a prior judgment should
be resolved against a finding of issue preclusion.” Scott, 588 B.R. at 131.
The State Court held a trial between Plaintiffs and Defendant where both parties
were represented by counsel, which satisfies the first and fifth elements of issue
preclusion. After the conclusion of trial, the State Court entered an Amended Judgment
in favor of Plaintiffs, which satisfies the fourth element of issue preclusion. The claims
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MEMORANDUM OF DECISION - 9
of unjust enrichment and violation of the ICPA were actually decided in the State Court
litigation, satisfying the third element of issue preclusion. The second element of issue
preclusion, however, requires more attention. This Court must determine whether the
issues that were actually decided by the State Court were identical to the issues presented
in this case.
C. 	Comparing State Court Findings to Nondischargeability Elements
Plaintiffs argue that the State Court’s specific factual findings independently
satisfy the elements of § 523(a)(2)(A) and § 523(a)(6). The Court disagrees. Although
the State Court made factual findings regarding Defendant’s conduct and Plaintiffs’
reliance, the claims litigated in State Court did not require the State Court to make any
findings concerning Defendant’s intent. That omission is dispositive.
1. 	Section 523(a)(2)(A)
Section 523(a)(2)(A) excepts from the discharge otherwise afforded to a debtor
any debt obtained by “false pretenses, a false representation, or actual fraud.” The
elements of a claim under § 523(a)(2)(A) are:
(1) 	the debtor made representations;
(2) 	that at the time he knew they were false;
(3) 	that he made them with the intention and purpose of
deceiving the creditor;
(4) 	that the creditor relied on such representations; and
(5) 	that the creditor sustained the alleged loss and damage
as the proximate result of the misrepresentations
having been made.
Ghomeshi v. Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir. 2010). The creditor
bears the burden of establishing each of these elements by a preponderance of the
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evidence. Turtle Rock Meadows Homeowners Ass’n v. Slyman (In re Slyman), 234 F.3d
1081, 1085 (9th Cir. 2000).
2. 	Section 523(a)(6)
Section 523(a)(6) excepts from discharge “any debt . . . for willful and malicious
injury by the debtor to another entity or to the property of another entity.” B.K.L.N. v.
Finlay (In re Finlay), 2019 WL 3294804, at *3 (Bankr. D. Idaho July 22, 2019). The
determination of a “willful and malicious” injury requires a two-step analysis. Khaligh,
338 B.R. at 831. The first step of the § 523(a)(6) inquiry is whether there was a “willful”
injury, and the second step is to determine whether the conduct was “malicious.” Id.
“To satisfy the willfulness prong, the creditor must prove the debtor deliberately
or intentionally injured the creditor.” Krystal v. Haynie (In re Haynie), 621 B.R. 456,
470 (Bankr. D. Idaho 2020) (citation omitted). Nondischargeability requires a deliberate
or intentional injury and “not merely a deliberate or intentional act that leads to injury.”
Id. (emphasis removed). The debtor must either have a “subjective motive to inflict
injury” or a belief that “injury is substantially certain to result from his conduct.” Id. To
satisfy the maliciousness prong, the creditor “must prove (1) a wrongful act, (2) done
intentionally, (3) which necessarily causes injury, and (4) which is done without just
cause or excuse.” Finlay, 2019 WL 3294804, at *5 (citing Ormsby v. First Am. Title Co.
of Nevada (In re Ormsby), 591 F.3d 1199, 1207 (9th Cir. 2010)).
3. 	Unjust Enrichment
The State Court’s factual findings on unjust enrichment are not identical to the
elements required for nondischargeability. To establish unjust enrichment under Idaho
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law, a plaintiff must prove: “(1) there was a benefit conferred upon the defendant by the
plaintiff; (2) appreciation by the defendant of such benefit; and (3) acceptance of the
benefit under circumstances that would be inequitable for the defendant to retain the
benefit without payment to the plaintiff for the value thereof.” Turcott v. Est. of Bates,
443 P.3d 197, 204 (Idaho 2019).
Unlike a § 523(a)(2)(A) claim, unjust enrichment requires neither a finding that
the defendant made false representations upon which the plaintiff relied, nor a finding
that the defendant acted with any particular intent. Gilbert v. Progressive Nw. Ins. Co.,
577 P.3d 519, 533 (Idaho 2025) (“Unjust enrichment arises from a contract implied-in-
law, not from the intent of the parties, but as a remedy imposed to achieve equity.”). In
contrast, a claim under § 523(a)(2)(A) requires a finding that the defendant made a
knowingly false representation with the intent to deceive the creditor, In re Laraway,
2010 WL 3703272, at *7 (Bankr. D. Idaho Sept. 13, 2010), and the creditor justifiably
relied on that representation. Fetty v. DL Carlson Enters., Inc. (In re Carlson), 426 B.R.
840, 855 (Bankr. D. Idaho 2010). Because those elements are not required to establish
unjust enrichment, the State Court’s findings on that claim cannot support issue
preclusion as to the § 523(a)(2)(A) claim.
Similarly, § 523(a)(6) requires proof that the defendant acted both willfully, by
deliberately or intentionally causing injury, and maliciously, by intentionally committing
a wrongful act without just cause or excuse. Unjust enrichment under Idaho law requires
no such findings. Accordingly, the State Court’s findings on that claim cannot support
issue preclusion as to the § 523(a)(6) claim.
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4. 	ICPA
The State Court’s factual findings concerning the ICPA are not identical to the
elements required for nondischargeability.
The State Court found that Defendant violated Idaho Code § 48-603, which
provides in relevant part:
The following unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or
commerce are hereby declared to be unlawful, where a person
knows, or in the exercise of due care should know, that he has
in the past, or is:
. . .
(17) 	Engaging 	in 	any 	act 	or 	practice 	that 	is 	otherwise
misleading, false, or deceptive to the consumer;
(18) 	Engaging in any unconscionable method, act or practice
in the conduct of trade or commerce, as provided in section 48-
603C . . .
Idaho Code § 48-603. In turn, Idaho Code § 48-603C provides in relevant part:
(1) 	Any unconscionable method, act or practice in the
conduct of any trade or commerce violates the provisions of
this chapter whether it occurs before, during, or after the
conduct of the trade or commerce.
(2) 	In determining whether a method, act or practice is
unconscionable, the following circumstances shall be taken
into consideration by the court:
(a) Whether the alleged violator knowingly or with reason
to know, took advantage of a consumer reasonably unable
to 	protect 	his 	interest 	because 	of 	physical 	infirmity,
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ignorance, illiteracy, inability to understand the language of
the agreement or similar factor;
. . .
(d) Whether the sales conduct or pattern of sales conduct
would 	outrage 	or 	offend 	the 	public 	conscience, 	as
determined by the court.
Idaho Code § 48-603C.
“The ICPA is remedial legislation intended to deter unfair and deceptive trade
practices and is to be construed liberally.” Idaho v. Edwards (In re Edwards), 233 B.R.
461, 470 (Bankr. D. Idaho 1999) (citing W. Acceptance Corp. v. Jones (In re W.
Acceptance Corp), 788 P.2d 214, 216 (Idaho 1990)). Idaho Code § 48-608(1) then
requires three elements to establish a claim under the ICPA: “(1) the consumer
purchased goods or services from a seller; (2) the seller engaged in unfair or deceptive
act(s) or practice(s) that are declared unlawful under the ICPA; and (3) the unfair act(s)
or practice(s) caused the consumer to suffer an ascertainable loss of money or property
(real or personal).” Pickering v. Sanchez, 544 P.3d 135, 142 (Idaho 2024) (internal
quotations omitted). The ICPA prohibits any act or practice that misleads, deceives, or
makes false representations to consumers. Id. Proof of intention to deceive is not
required to find that an act is unfair or deceptive. Id. at 143 (citing Duspiva v. Fillmore,
293 P.3d 651, 656 (Idaho 2013). “The ICPA requires that the offending party must be a
person who ‘knows, or in the exercise of due care should know, that he has in the past, or
is’ committing an act or practice declared unlawful by Idaho Code section 48-603.” Id. at
142 (quoting Idaho Code § 48-603).
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The State Court found that Defendant’s representation to Plaintiffs that he was a
registered or licensed contractor was a false or misleading act prohibited by the ICPA,
which caused Plaintiffs damages. The State Court did not determine whether Defendant
made those statements with the intent to deceive Plaintiffs, and it was not required to do
so under the ICPA. In other words, the State Court was able to conclude Defendant
violated the ICPA without deciding whether he had actually intended to deceive
Plaintiffs.
In contrast to the ICPA, both claims under § 523(a)(2)(A) and (a)(6) require a
finding of intent. To prevail on a § 523(a)(2)(A) claim, the debtor must have had, among
other things, the intent to deceive the creditor when making a knowingly false
representation. Laraway, 2010 WL 3703272, at *7 (stating “[n]ot only must there be a
representation of material fact which is false, the representation must be made with the
intention and purpose to deceive.”). Section 523(a)(6)’s willfulness element requires
that, for a debt to be excepted from discharge, the infliction of an injury must have been
deliberate or intentional. Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998). This is a
subjective standard focusing on the debtor’s state of mind. Carrillo v. Su (In re Su), 290
F.3d 1140, 1142–43 (9th Cir. 2002). The State Court was not required to make factual
findings as to Defendant’s intent when determining Defendant violated the ICPA.
Therefore, the elements of issue preclusion have not been satisfied by the findings made
by the State Court regarding a violation of the ICPA.
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5. 	Conversion
Plaintiffs also argue that Defendant willfully and maliciously converted their
property by removing materials purchased with their funds from the jobsite and refusing
to return any portion of the deposit. The State Court did find that Defendant removed
those materials and refused to return Plaintiffs’ deposit, and that he later used at least part
of those same materials on jobs for other clients. However, the State Court did not
consider the legal claim of conversion at trial, as it addressed only the claims of breach of
contract, unjust enrichment, and violation of the ICPA. Because conversion was not
decided in the State Court litigation, issue preclusion is unavailable to Plaintiffs on that
theory in this case.
CONCLUSION
The State Court awarded judgment to Plaintiffs based on claims of unjust
enrichment and violation of the ICPA. The elements required to establish either of those
claims under Idaho law are not fully equivalent to the elements required for
nondischargeability under § 523(a)(2) or (a)(6). Consequently, the State Court’s factual
findings do not satisfy Plaintiffs’ full burden in this proceeding, as they address only
certain aspects of Defendant’s conduct and leave the essential element of intent
unresolved. As such, the Court will deny Plaintiffs’ Motion and enter a separate order.
DATED: July 28, 2026
_________________________
NOAH G. HILLEN
Chief U.S. Bankruptcy Judge
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