In re: STERLING G. HIGASHI v. Sterling G. Higashi

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: STERLING G. HIGASHI,
Debtor,
______________________________
HALE TAKAZAWA,
Plaintiff-Appellee,
v.
STERLING G. HIGASHI,
Defendant-Appellant.
No. 17-16844
D.C. No. 1:16-cv-00368-LEK
MEMORANDUM*
Appeal from the United States District Court
for the District of Hawaii
Leslie E. Kobayashi, District Judge, Presiding
Submitted February 14, 2019**
Honolulu, Hawaii
Before: TALLMAN, BYBEE, and N. RANDY SMITH, Circuit Judges.
* 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
FEB 19 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Chapter 7 debtor Sterling Higashi appeals the bankruptcy court’s
determination after trial in an adversary proceeding that Hale Takazawa’s claim
against Higashi arising out of a promissory note (and the eventual state court
judgment) was not dischargeable under section 523(a)(2) of the Bankruptcy Code.
The district court affirmed the judgment. We also affirm.
We review de novo the bankruptcy court’s conclusions of law and for clear
error its findings of fact. Jones v. U.S. Trustee, 736 F.3d 897, 899 (9th Cir. 2013).
Whether a claim is not dischargeable under section 523(a) is a mixed question of
law and fact reviewed de novo. In re Hamada, 291 F.3d 645, 649 (9th Cir. 2002).
But an individual “finding of whether a requisite element of [a section]
523(a)(2)(A) claim is present is a factual determination reviewed for clear
error.” In re Anastas, 94 F.3d 1280, 1283, 1286–87 (9th Cir. 1996). We review
the bankruptcy court’s decision independently, without deference to the district
court. Jones, 736 F.3d at 899.
The bankruptcy court did not err in finding that Takazawa and his
predecessor-in-interest, Active Sportswear, Inc., justifiably relied on Higashi’s
misrepresentation that his wife signed the promissory note. The evidence clearly
supports that conclusion. Nothing in the promissory note revealed any
misrepresentation—there was no duty to investigate the veracity of the signature
here. See Field v. Mans, 516 U.S. 59, 70–71, 77 (1995) (holding a creditor had no

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duty to investigate under the justifiable reliance standard). The promissory note
did not need to be recorded or secured to be enforceable. See IndyMac Bank v.
Miguel, 184 P.3d 821, 835 (Haw. Ct. App. 2008), as corrected (July 17, 2008)
(citing Bank of Honolulu, N.A. v. Anderson, 654 P.2d 1370, 1375 (Haw. Ct. App.
1982)) (providing the elements to enforce commercial paper).
The bankruptcy court also did not err in finding that the misrepresentation
proximately caused damages. The damages caused by the forgery stem from what
would have happened if Higashi’s wife had signed the promissory note as Higashi
represented. Had she signed it, Takazawa could have sued her, received a
judgment, and collected on any assets she has. Because she did not sign it,
Takazawa was unable to enforce the judgment against her and was thereby
damaged. The parties’ state-court settlement agreement neither (1) created issue or
claim preclusion in any relevant way in the adversary proceeding, nor (2) somehow
precludes a hypothetical lawsuit against Higashi’s wife to eliminate damages here.
See Archer v. Warner, 538 U.S. 314, 323 (2003) (settlement agreement does not
bar a creditor from a non-dischargeability finding under section 523(a)(2) where
the settlement debt was incurred by false representation).
To the extent Higashi argues anything else on either issue, we reject those
arguments as meritless.
AFFIRMED.

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