In re: MICHAEL WILLIAM DEVINE, dba Devine Design, dba California Floor, dba OC… v. Ust - United States Trustee, Santa Ana

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: MICHAEL WILLIAM DEVINE,
dba Devine Design, dba California Floor,
dba OC Floors Shop,
Debtor,
______________________________
MICHAEL WILLIAM DEVINE,
Appellant,
v.
UST - UNITED STATES TRUSTEE,
SANTA ANA,
Appellee,
No. 22-60028
BAP No. 21-1238
MEMORANDUM*
Appeal From the Ninth Circuit
Bankruptcy Appellate Panel
Lafferty III, Gan, and Taylor, Bankruptcy Judges, Presiding
Submitted August 22, 2023**
Pasadena, California
* 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).
FILED
AUG 24 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Before: RAWLINSON and BRESS, Circuit Judges, and ZOUHARY,*** District
Judge.
In 2005, William Devine founded Devine Design, a sole proprietorship
home-remodeling business. Devine filed for bankruptcy in 2018; his schedules
listed 107 creditors holding over $1.5 million in unsecured claims. The bankruptcy
court held a trial and denied the discharge for two reasons. First, Devine
“transferred” funds with the intent to hinder creditors within one year before his
bankruptcy filing, in violation of 11 U.S.C. § 727(a)(2)(A). Second, Devine failed
to keep business records and commingled his personal and business bank accounts,
rendering it impossible to determine his revenue, in violation of 11 U.S.C. §
727(a)(3). Devine appealed; the Bankruptcy Appellate Panel (“BAP”) affirmed. We
have jurisdiction under 28 U.S.C. § 158(d)(1) and affirm the BAP decision.
“[T]he right to a discharge is a matter generally left to the sound discretion of
the bankruptcy judge.” Cox v. Lansdowne (In re Cox), 904 F.2d 1399, 1401 (9th
Cir. 1990) (citation omitted). The bankruptcy court’s legal determinations are
reviewed de novo, and its factual findings are reviewed for clear error. Retz v.
Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010). A factual finding is clearly
erroneous only “if it is illogical, implausible, or without support in the record.” Id.
*** The Honorable Jack Zouhary, United States District Judge for the
Northern District of Ohio, sitting by designation.

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1. The Bankruptcy Court did not err in denying a discharge on the ground
that Devine improperly transferred funds to hinder creditors. 11 U.S.C.
§ 727(a)(2)(A). A month before filing for bankruptcy, Devine opened a new bank
account and deposited a check. He admitted he opened the new account because he
feared that his lenders, who had obtained confessions of judgment, would “just
empty out [his] bank account[s].” Bernard v. Sheaffer made clear: “[A]ny transfer
of an interest in property is a transfer, including a transfer of possession, custody, or
control even if there is no transfer of title, because possession, custody, and control
are interests in property. A deposit in a bank account or similar account is a
transfer.” 96 F.3d 1279, 1282 (9th Cir. 1996) (citation omitted). And each case on
which Devine relies examines a fraudulent transfer under Section 550, not Section
727. See, e.g., Danning v. Miller (In re Bullion Rsrv. of N. Am.), 922 F.2d 544, 547
(9th Cir. 1991) (noting the panel was “faced with the narrow issue of whether
[defendant] was a ‘transferee’ . . . within the meaning of section 550(a)(1) or section
550(a)(2)”).
2. The Bankruptcy Court also did not err in denying discharge for Devine’s
failure to keep adequate records under 11 U.S.C. § 727(a)(3), which provides a
separate and independent basis for denying the discharge. Section 727(a)(3) “places
an affirmative duty on [] debtor[s] to create books and records accurately
documenting [their] business affairs.” Caneva v. Sun Cmtys. Operating Ltd. P’ship

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(In re Caneva), 550 F.3d 755, 762 (9th Cir. 2008) (per curiam) (citations omitted).
The statute requires debtors to “present sufficient written evidence which will enable
[their] creditors reasonably to ascertain [their] present financial condition and to
follow [their] business transactions for a reasonable period in the past.” In re Cox,
904 F.2d at 1402 (citation omitted). Devine failed to do so. He deposited all
customer payments into a single account, but admittedly failed to record amounts
from each customer. When the Trustee requested invoice documentation and backup
documents from Devine’s third-party payment processor, Devine “failed to
introduce evidence . . . that, at any time, he was keeping adequate records.”
3. The bankruptcy court did not deny Devine due process by precluding him
from testifying at trial. The parties agreed to declarations in lieu of live testimony,
and Devine neither requested to testify, nor explains how testimony about the Square
payment system would change the result here. Further, he had nearly a year to file
a trial brief responding to the issues raised in the declarations submitted by the
Trustee. Devine had ample opportunity to reconcile the gaps and discrepancies in
his records. But he failed to do so.
AFFIRMED.

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