FILED MAY 5 2023 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. SC-22-1182-SGB LAURA A. VALENTE, Debtor. Bk. No. 19-01594-CL7

LAURA A. VALENTE, Adv. No. 19-90056-CL Appellant, v. MEMORANDUM* THOMAS NOWLAND, Appellee.

Appeal from the United States Bankruptcy Court for the Southern District of California Christopher B. Latham, Chief Bankruptcy Judge, Presiding

Before: SPRAKER, GAN, and BRAND, Bankruptcy Judges.

INTRODUCTION

In a prior decision, this Panel vacated and remanded the bankruptcy

court’s judgment under

(a)(2)(A)1 that debtor Laura Valente

was indebted to Thomas Nowland for “actual fraud.” We remanded the

* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. Unless specified otherwise, all chapter and section references are to the 1

Bankruptcy Code, 11 U.S.C. §§ 101–1532. case for additional findings regarding the value of assets Valente caused to

be fraudulently transferred from Valente Hair & Co., Inc. (“VHCI”) to

Valente Bella Industries, Inc. (“VBI”). On remand the parties and the

bankruptcy court examined specific VHCI cash transfers made by Valente.

The bankruptcy court concluded that Valente had VHCI fraudulently

transfer the identified funds to various entities for VBI’s benefit. The

bankruptcy court held Valente individually liable for the fraudulent

transfers and entered an amended judgment for Nowland in the amount of

$33,775.83. Because her debt arose from a fraudulent transfer scheme, the

court held that it was excepted from discharge under § 523(a)(2)(A).

Valente again appeals. Because she has not established that the

bankruptcy court’s amended judgment was based on any clearly erroneous

factual findings or on any error of law, we AFFIRM.

FACTS 2

Most of the facts material to this appeal are found in our prior

decision. See Valente v. Nowland (In re Valente), BAP No. SC-21-1225-SFB,

(9th Cir. BAP June 16, 2022). In turn, they were largely

derived from the bankruptcy court’s original findings of fact rendered

prior to remand. Valente did not challenge in her prior appeal the

bankruptcy court’s determination that she orchestrated a fraudulent

2 We exercise our discretion to take judicial notice of documents electronically filed in the underlying bankruptcy case and adversary proceeding. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),

, 233 n.9 (9th Cir. BAP 2003). 2 transfer scheme using VHCI and VBI. See id. at *6. Thus, to the extent she

now attempts to challenge matters she failed to challenge in her prior

appeal, she cannot. Those issues have been forfeited. See de Jong v. JLE-04

Parker, L.L.C. (In re de Jong),

(9th Cir. BAP 2018), aff'd,

(9th Cir. 2020) (citing cases).

A. VHCI’s formation, capitalization, and operations.

Valente and Nowland began regularly seeing each other in 2014. At

the time, Valente was a hairstylist in her early twenties. Nowland was a

businessman and attorney in his fifties, as well as a licensed general

contractor. Nowland provided Valente with a monthly allowance, a new

car, payments for her personal rent, and occasional gifts and vacations.

In 2015, Valente told Nowland that she hoped to open a hair salon.

Based on their discussions, Valente incorporated VHCI to operate the hair

salon, and Nowland invested $25,000.00. In exchange, he received half of

the ownership of VHCI. Valente owned the other half. They further agreed

that Valente would serve as VHCI’s chief executive officer, president,

secretary, and manager. Nowland would serve as the company’s chief

financial officer.

VHCI rented a vacant shop on Girard Avenue in La Jolla, California

(“Girard Salon”), renovated it, and opened the salon for business in

February 2016. Both before and after the Girard Salon opened, Nowland

made dozens of small infusions of capital to VHCI, usually ranging from

$1,000.00 to several thousand dollars. Nowland treated the transactions as

3 loans and required Valente to sign promissory notes on behalf of VHCI.

By the end of June 2016, the personal relationship between Nowland

and Valente had soured. Nowland stopped infusing capital into VHCI and

began to sever his ties with VHCI. He formally resigned as VHCI’s chief

financial officer and had no ongoing role in the business by March 2017. By

the time he resigned, VHCI had borrowed more than $200,000.00 from him.

B. VHCI’s struggles and its ultimate demise.

VHCI continued to operate after Nowland stopped making loans to

support the Girard Salon. Valente contributed no less than $68,111.50 to

maintain VHCI’s operations between February and November 2017. These

funds came from another benefactor, Barton Siggson. Similar to Nowland,

Valente took promissory notes from VHCI for virtually all of the funds she

claimed to have invested in VHCI in both 2017 and 2018. The face amount

of her notes from VHCI totaled over $210,000.00.

Valente’s testimony during the trial demonstrated that VHCI relied

on these loans to continue its operations. She testified that VHCI typically

had a monthly operating loss of roughly $10,000.00, sometimes

significantly more. The court found that VHCI struggled to pay its

employees and its rent throughout its existence. On October 24, 2018,

VHCI’s landlord sued to evict VHCI from the Girard Avenue premises.

Even before that, however, the landlord’s attorneys were demanding

payment of $103,000.00 in unpaid past due rent by letter dated October 11,

2018. According to Nowland, he discovered upon receipt of that letter that

4 VHCI had failed to pay any rent to its landlord in 2018. On November 30,

2018, Valente executed on behalf of VHCI a stipulated judgment for

damages and agreed to turnover possession of the premises by December

16, 2018. This marked the end of VHCI’s operations.

C. VBI’s formation, operations, and sale to a third party.

While the eviction proceedings were pending, Valente was working

on opening a new salon on Prospect Street in La Jolla (“Prospect Salon”).

The Prospect Salon was to be owned and operated by VBI. At least

nominally, VBI was owned by Valente’s father, John Valente. He

incorporated VBI in December 2018, “very shortly after VHCI was evicted

and closed its doors.” However, Valente had begun working on securing a

new salon location by no later than mid-October 2018. Emails between

Valente and the landlord of the Prospect Salon show that Valente was

negotiating a sublease for the premises and had submitted a lease

application by that time. Valente’s father and her boyfriend, Andrew Somo,

signed the Assignment, Assumption, Modification and Consent Agreement

for the sublease of the Prospect Salon on October 31, 2018. Valente signed a

consent to the sublease and guaranteed the obligation on that same date.

Valente insists she never had any ownership interest in VBI. She

claims she merely worked for her father by providing the Prospect Salon

with secretarial, marketing, and management services. But she was

involved in, or controlled, essentially every facet of the business. As noted

above, she found and negotiated the lease for the Prospect Salon.

5 Additionally, Valente was instrumental in transferring assets and staff

from the Girard Salon to the Prospect Salon. Valente later maintained that

the Prospect Salon was “new” and had little or no connection to the Girard

Salon, but VBI advertised the Prospect Salon as a “relocation” of the prior

salon. Evidence at trial showed that VBI celebrated its commencement of

operations with a “reopening party.”

The exact date VBI opened for business is not clear from the record.

Nowland claimed that it started its business on December 20, 2018, only

four days after VHCI was required to turn over possession of the Girard

Salon. The bankruptcy court, however, noted that VBI held its “reopening

party” in early 2019. Valente did not operate VBI for long. VBI sold the

Prospect Salon to a third party, Ediane Crawford, in July 2019 for

$41,000.00. The sale included the salon’s assets, an assignment of the

salon’s lease, and a three-year noncompete agreement.

D. Valente files bankruptcy and Nowland sues for nondischargeability based on actual fraud.

Shortly after opening the Prospect Salon, but before VBI sold the

business to Crawford, Valente filed her chapter 7 case. In June 2019,

Nowland filed his adversary proceeding against Valente, her father, VBI,

and others. By the time the court entered its pretrial order in February

2021, Nowland had abandoned or dismissed all claims against all

defendants except his § 523(a)(2)(A) claim against Valente.

The bankruptcy court held eleven days of trial over the course of two

6 months and entered detailed findings of fact and conclusions of law. It

found for Valente on all but one aspect of Nowland’s § 523(a)(2)(A) claim

for actual fraud. It held that she actively participated in, orchestrated, and

coordinated the fraudulent transfer of VHCI’s inventory, equipment, and

other hard and intangible assets to VBI with the intent and purpose of

defrauding Nowland and VHCI’s other creditors.

However, the court rejected Nowland’s arguments that Valente had

fraudulently transferred $350,522.02 in cash, comprised of more than 1,500

transactions, to herself and other entities for her personal benefit. The court

did not analyze any individual cash transfers. Instead, after considering the

cash transfers as a whole, it concluded that Valente, and therefore VHCI,

did not have the requisite intent to defraud VHCI’s creditors in making the

cash transfers. On the other hand, the bankruptcy court found the requisite

culpable intent existed with respect to the noncash assets and determined

that the value of the fraudulently transferred non-cash assets was equal to

the $41,000.00 purchase price Crawford paid to VBI when she bought the

Prospect Salon. The court entered a $41,000.00 judgment against Valente

based on Nowland’s § 523(a)(2)(A) claim. Valente appealed.

In June 2022, this Panel issued a memorandum decision vacating the

judgment. The Panel affirmed the bankrupt court’s uncontested findings as

to Valente’s participation in a scheme to fraudulently transfer VHCI’s

assets to VBI, and her personal liability for the transfers. The Panel

remanded, however, for further findings as to the valuation of VHCI’s non-

7 cash assets supporting the $41,000.00 judgment. In re Valente,

, at *9. We additionally instructed that the bankruptcy court was

free to consider on remand alternate means of measuring Nowland’s

damages resulting from Valente’s fraudulent transfer scheme.

E. Bankruptcy court proceedings on remand.

On remand, the bankruptcy court gave both parties the opportunity

to concurrently brief three issues:

(1) whether $41,000 accurately captures the value of [non-cash] assets transferred from [VHCI] to the Prospect Salon; (2) if so, whether the lease assignment, noncompete agreement, or any new improvements not funded with redirected VHCI capital to the [Prospect Salon] reduces that sum; and (3) if not, whether there is an alternative means supported by the record of valuing the assets transferred.

After the parties completed the additional briefing, the bankruptcy

court rendered its findings, conclusions, and order after remand.

Initially, the court reiterated its prior findings that VHCI transferred all of

its tangible and intangible non-cash assets to VBI in December 2018. It also

reaffirmed that Valente had knowingly and intentionally acted on behalf of

both entities to effectuate these fraudulent transfers. The court additionally

pointed to this Panel’s prior remarks that Valente had not challenged these

findings on appeal.

The court further noted that Nowland declined to defend or support

on remand the prior valuation of the non-cash assets fraudulently

transferred based on the sale of the Prospect Salon. Instead, Nowland

8 claimed that the alleged book value of the tangible and intangible assets

could be used to value those assets. The bankruptcy court rejected book

value as reliable evidence of the value of those assets at the time of transfer.

Lacking any reliable evidence of the value of these fraudulently transferred

assets, the bankruptcy court awarded nominal damages of $1.00 in

recognition that VHCI had fraudulently transferred non-cash assets to VBI.

Nowland has not appealed this determination, but Valente appeals the

award of $1.00 for the fraudulent transfer of VHCI’s non-cash assets to VBI.

At Nowland’s urging the bankruptcy court revisited VHCI’s cash

transfers. It focused on a handful of transactions that occurred after he

terminated his active involvement with the Girard Salon. The court

remarked that its findings before remand viewed all of the cash transfers as

a whole without reference to specific periods of time or payments. The

court was persuaded by Nowland’s post-remand brief that there was

sufficient evidence to justify reconsideration of its findings as to $33,774.83

in specific cash transfers that occurred during the last quarter of 2018. The

court explained that this period was significant as VHCI had already been

sued by its landlord for eviction, and Valente had decided she needed to

move her business out of the Girard Avenue premises. The court held that

Valente used VHCI’s funds to make the following fraudulent transfers to

benefit VBI in her efforts to open the Prospect Salon:

9 Date of Amount From To Use Transfer of Transfer 11/6/2018 $ 16,021.00 VHCI A-440 VBI Rent 12/6/2018 $ 2,701.43 VHCI State College Dstrb. Flooring 11/13/2018-12/24/18 $ 4,037.08 VHCI Various Misc. Purchases 10/9/1/-12/17/18 $ 7,865.92 VHCI Valente, Inc Net Transfers 12/14/18-12/20/18 $ 2,072.00 VHCI Home Depot 12/4/18-12/21/18 $ 1,077.40 VHCI Amazon TOTAL $ 33,774.83

As to each of these transfers from VHCI, the bankruptcy court found

virtually all of the badges of fraud were present. In turn, the court inferred

that Valente made each transfer from VHCI with the intent to hinder or

delay VHCI’s creditors. The court similarly found that Valente engaged in

“deceit, artifice, trick, or design involving direct and active operation of

mind, used to cheat another” when she received the benefits of the cash

transfers on behalf of herself and VBI.

The bankruptcy court also rejected Valente’s affirmative defense

based on

(a), which provides that a transfer is not

avoidable if it is taken in good faith and for reasonably equivalent value. In

so holding, the court once again found that Valente was an “active

participant in the fraud.” As the court put it, she controlled both VHCI and

VBI and acted as “instigator and puppeteer” in effecting the fraudulent

transfer scheme. Given her involvement in this scheme, the court held that

she failed to prove good faith. The bankruptcy court additionally rejected

Valente’s reasonably equivalent value allegations as unsupported by the

record.

On August 25, 2022, the bankruptcy court entered its judgment after

10 remand determining that Valente was liable to Nowland for $33,775.85

resulting from her fraudulent transfer scheme ($33,774.85 in cash

fraudulently transferred plus $1.00 in nominal damages for noncash

transfers). This debt was declared nondischargeable under § 523(a)(2)(A).

Valente timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction under

and

157(b)(2)(I). We have jurisdiction under

.

ISSUES

1. Did the bankruptcy court properly award nominal damages of $1.00

based on the value of all non-cash assets fraudulently transferred

from VHCI to VBI?

2. Did the bankruptcy court clearly err when it found that Valente made

cash transfers from VHCI for VBI’s benefit?

3. Did the bankruptcy court clearly err when it found that the funds

Valente deposited into VHCI did not negate the cash fraudulent

transfers she orchestrated between VHCI and VBI?

4. Were any of the bankruptcy court’s intent findings clearly erroneous?

5. Did Nowland have standing to seek nondischargeability under

§ 523(a)(2)(A) concerning Valente’s liability for orchestrating the

fraudulent transfer of assets between VHCI and VBI?

STANDARDS OF REVIEW

Except for her standing issues, all of Valente’s issues on appeal are

11 factual issues, which are subject to a clearly erroneous standard of review.

“A court's factual determination is clearly erroneous if it is illogical,

implausible, or without support in the record.” Retz v. Samson (In re Retz),

(9th Cir. 2010).

Standing issues are questions of law subject to de novo review. All.

United Ins. v. Krasnoff (In re Venegas),

, 560 (9th Cir. BAP 2020).

When we consider a matter de novo, we give no deference to the

bankruptcy court’s decision. Francis v. Wallace (In re Francis),

(9th Cir. BAP 2014).

DISCUSSION

Typically, creditors of the transferor may recover against either the

transferee of a fraudulent transfer, or the entity for whose benefit the

transfer was made.3 In re Valente,

, at *4 (citing

, and Lo v. Lee,

, 1072–73 (2018)).

Valente is neither the transferee nor the entity benefitted by the transfers.

Nonetheless, California law provides that an individual who perpetrates a

fraudulent transfer scheme through an entity may be held individually

liable for the resulting damages even though she is not the transferee or

transfer beneficiary. See, e.g., Sanger v. Ahn, Case No. 18-cv-07204-JCS, 2019

3 We previously addressed Valente’s personal liability for VHCI’s fraudulent transfers in In re Valente,

, at *4-6, but we summarize our prior analysis here because the legal theory underlying Valente’s liability is not a garden-variety fraudulent transfer claim.

, at * 7 (N.D. Cal. Mar. 15, 2019) (citing Filip v. Bucurenciu,

(2005), and holding that an active participant who

conspires to commit a fraudulent transfer may be held liable even if not the

transferee or beneficiary of the transfer). 4

The bankruptcy court originally found that VHCI, acting through

Valente, had fraudulently transferred tangible and intangible assets, other

than money, to VBI and valued the transfers based on a subsequent sale of

the business to a third party. In our prior decision, we noted that “Valente

has not challenged the court’s determination that both VHCI and VBI,

acting through Valente, fraudulently transferred assets from VHCI to VBI,

or her active and knowing participation in those fraudulent transfers.” In re

Valente,

, at *6. Valente’s active and knowing participation

in the scheme on behalf of both companies established her debt and that

her liability arose from actual fraud for purposes of excepting it from

discharge under § 523(a)(2)(A). Husky Int’l Elecs., Inc. v. Ritz,

,

365 (2016); Bonnett v. Moirbia Scottsdale, LLC (In re Bonnett), BAP No. AZ-19-

1293-BTL,

, at *4 (9th Cir. BAP July 30, 2020), aff'd sub nom.

4 Under California agency law, a plaintiff sufficiently pleads fraud against a defendant agent by alleging that the agent “had knowledge of, and participated in” the principal’s fraud scheme. PowerPC Comercio De Equipamentos De Informatica LTDA v. Sky Glob. Servs. Inc., Case No. 8:18-CV-614-JLS-JDE,

, at *3 (C.D. Cal. Aug. 8, 2018); see also Aleo Solar Deutschland GmbH v. Innovative Mech. & Elec., Inc., Case No. 2:12-CV-2629-ODW SPX,

, at *3 (C.D. Cal. Aug. 28, 2012) (“an agent who knowingly participates in a fraudulent transaction is responsible for his or her own misconduct.” (citing Jacobs v. Freeman,

(1980))).

13 Bonnett v. Moirbia Scottsdale, LLC,

(9th Cir. 2021). As stated

in Bonnett, a fraudulent transfer debt falls within § 523(a)(2)(A) when:

1) the transferor conveyed the property with the intent to hinder or delay his creditors; and 2) the transferee was a participant in the fraud, such that it could be said that the debtor engaged in “deceit, artifice, trick, or design involving direct and active operation of the mind, used to circumvent and cheat another.”

In re Bonnett, at *4–5 (quoting Fisher v. Quay (In re Quay), Adv. No. 04-6065,

, at *9 (Bankr. N.D. Ga. Mar. 29, 2005)).

Based on the post-remand briefing, the bankruptcy court held that

Nowland had not adequately proven the value of the non-cash assets

fraudulently transferred by VHCI to VBI but awarded Nowland $1.00

against Valente in recognition that she had fraudulently transferred those

assets to VBI. Valente appeals the court’s valuation on remand of the non-

cash assets at $1. As to these assets, the only viable issue in this appeal is

the valuation issue because Valente did not challenge in her prior appeal

the court’s determination that VHCI had fraudulently transferred them or

that she had fraudulently orchestrated those transfers. See In re de Jong,

.

The bankruptcy court did make new findings on remand as to several

cash transfers from VHCI between October and December 2018, to various

entities. The court held that VHCI made specific transfers of funds for the

benefit of VBI while closing VHCI, or afterwards. As detailed above, the

transfers were grouped into categories: $16,021.00 for VBI’s first month’s

14 rent and security deposit for the Prospect Street premises, $2,701.43 to

purchase flooring for the Prospect Salon, $7,865.92 in net transfers made for

hair products and related inventory from Valente, Inc. (a separate Valente

company), $4,037.08 to purchase additional inventory from other

companies, $2,072.00 for tools and hardware needed from Home Depot,

and $1,077.40 to purchase additional items from Amazon.com. The court

found that VHCI, acting through Valente, intended to defraud VHCI’s

creditors when it made each of the challenged cash transfers. As to each of

these transfers, it was undisputed that the cash withdrawn from VHCI was

used to procure items “for the salon.” Except for the rent, security deposit,

and flooring, however, Valente asserted that the items were for the Girard

Salon and not the Prospect Salon. The bankruptcy court found to the

contrary. As in its original decision, the court found that Valente’s knowing

participation in making the transfers, and in VBI’s receipt of the benefit of

the transfers, established her culpability for purposes of excepting her

liability from discharge under § 523(a)(2)(A).

Valente does not deny that she withdrew the funds from VHCI’s

bank account to make these purchases or the nature of the purchases. She

does, however, contend that there is no evidence to support a finding that

VHCI made the cash transfers for VBI’s benefit.5 She argues, therefore, that

5 Unlike the court’s decision as to the non-cash assets, the bankruptcy court did not make individualized findings as to specific cash transfers prior to remand. Because Valente had no opportunity to address the court’s post-remand findings as to the cash transfers in her prior appeal, she properly raises them in this appeal. 15 there are no underlying fraudulent transfers for which she is liable. She

also contends that in light of the monies she and others deposited into

VHCI the court erred when it found that VHCI’s subsequent transfers were

made with the actual intent to defraud its creditors. Finally, she repeats

arguments we rejected in the first appeal that Nowland lacked standing to

sue her for damages arising from her involvement in VHCI’s fraudulent

transfers.

Before we address these arguments, we first address Valente’s

argument that the bankruptcy court erred in awarding Nowland $1.00 in

damages for the transfer of VHCI’s non-cash assets as it raises a much

narrower question than the claims based on the cash transfers.

A. The bankruptcy court properly awarded Nowland $1.00 for the fraudulent transfer of VHCI’s non-cash assets.

Valente contests the bankruptcy court’s award after remand of $1.00

for the fraudulent transfer of the non-cash assets. This argument is woven

into her broader argument that Nowland failed to prove that VHCI made

any transfer for VBI’s benefit. But the bankruptcy court originally held that

Valente was individually liable for VHCI’s transfer of its non-cash assets to

VBI including “salon chairs, mirrors, cabinets, computers, desks, products

to be used in the shop and sold to customers, customer lists, marketing

materials and products, different types of software, and a variety of

intellectual property.” The court also found that these assets were

transferred directly to VBI and used as part of the Prospect Salon. The court

16 originally found, and reaffirmed after remand, that VBI was the transferee

of the fraudulent transfer that Valente engineered on both ends. The record

supports these findings. Furthermore, Valente’s first appeal did not

challenge her liability for these transfers to VBI—only the valuation of the

assets transferred. It is too late for her to do so now after remand. See In re

de Jong,

.

Valente also baldly states that “the $1.00 in ‘nominal damages’

should not be allowed.” Having determined that Valente caused VHCI to

fraudulently transfer its non-cash assets to VBI, the award of nominal

damages was appropriate despite Nowland’s inability to prove any specific

value.

B. VHCI’s fraudulent cash transfers were for VBI’s benefit.

Turning to the cash transfers the bankruptcy court found to be

fraudulent transfers on remand, Valente first argues that the bankruptcy

court clearly erred because Nowland failed to “trace” the benefit of the

items purchased with VHCI’s funds to either Valente or VBI. Absent a

transfer to VBI, or proof that it benefitted from the transfer, Valente

contends that Nowland failed to prove a fraudulent transfer for which she

may be held liable.

As we previously stated, liability arises under California fraudulent

transfer law when a voidable transfer is made to a transferee or to a

“transfer beneficiary.” In re Valente,

, at *4 (citing

and Lo, 24 Cal. App. 5th at 1072–73). For purposes of 17 imposing liability for a fraudulent transfer, “[t]ransfer beneficiary status

depends on three aspects of the ‘benefit’: (1) [the benefit (as opposed to the

assets themselves)] must actually have been received by the beneficiary; (2)

it must be quantifiable; and (3) it must be accessible to the beneficiary.” Lo,

-74 & n.4 (cleaned up) (citing Baldi v. Lynch (In re

McCook Metals, L.L.C.),

, 590–94 (Bankr. N.D. Ill. 2005)).

VBI was not a direct transferee of the challenged cash transfers.

Rather, Nowland argued that they were made for VBI’s benefit in setting

up VBI’s new salon while VHCI was closing. Valente maintains that VBI

was not a transfer beneficiary. She contends that Nowland failed to prove

that any of the miscellaneous purchases from Valente Inc., Home Depot,

Amazon, and others for supplies, inventory, and equipment were actually

transferred to VBI. Though she concedes that the inventory, supplies, tools,

equipment, and other items were purchased “for the salon” during the last

quarter of 2018, she argues that they were purchased for VHCI’s Girard

Salon, and there was nothing fraudulent in maintaining its business

operations. Valente contends that the transfers made between October and

December 2018 did not materially differ from the year before. But VHCI

was not closing its business in late 2017. For most of that time she was still

getting funds from Siggson to lend to VHCI.

Valente’s argument presupposes that VHCI remained a viable,

ongoing business in late 2018. As explained by the bankruptcy court, the

challenged cash transfers were “limited to payments made in VHCI’s final

18 months that were not consented to, did not go to legitimate or fringe VHCI

purposes, and were not used for Defendant’s personal support.” The

transfers were made in VHCI’s last quarter of existence, between October 9,

2018 and December 31, 2018, though overwhelmingly the specific transfers

occurred in November and December including many dates near or after

VHCI’s stipulated date to turn over the Girard Salon.

Nowland argued, and the court found, that these transfers “were

clearly for VBI purposes.” The rent payment VHCI made for VBI on

November 6, 2018, and the payment on December 6, 2018, for VBI’s

flooring, were clearly made for VBI’s benefit and established that VHCI

was using its funds to benefit VBI during this time. The payments for

inventory and equipment are not as obvious. But the court reviewed the

amounts and the timing of the transfers and found that Valente used

VHCI’s funds to make specific purchases to help open VBI for business

during the last three months of 2018.

Valente maintains that the bankruptcy court should not have

discredited her testimony that VHCI needed these items for the busy

holiday season. But based on the timing, frequency, and amounts of the

transfers, the bankruptcy court held that VHCI had no legitimate need for

these items and that Valente purchased them for VBI’s benefit. Throughout

this period VHCI could not pay its operating expenses and owed its

landlord roughly $100,000.00 in back rent. The landlord had sued for

eviction. Valente was working to procure and remodel the Prospect Salon

19 as VBI’s business premises. Valente’s father signed the sublease for VBI on

October 31, 2018. At the same time, Valente consented to the sublease and

guaranteed VBI’s lease obligations. Valente, on behalf of VHCI, then signed

a Stipulated Judgment with its landlord on November 30, 2018. That

judgment acknowledged the landlord’s right to a writ of possession, but

the landlord agreed that VHCI would not be locked out until December 16,

2018. In short, this chronology demonstrates that as of October 2018, VHCI

should have been in the process of winding down its business while facing

imminent closure. Valente’s actions demonstrate that VHCI was not

moving to the Prospect Street location to continue its business. Rather, she

was starting a new company, using a new entity. Moreover, there was no

legitimate business purpose for VHCI to be purchasing inventory, supplies,

and equipment for future business in light of its debts, its inability to pay

operating expenses, and its imminent eviction. The timing of events

ultimately leading to VHCI’s closing amply supports the bankruptcy

court’s conclusion that VHCI’s challenged cash transfers, made by Valente,

were for VBI’s benefit. 6

6 The only other evidence Valente points to is a chart showing amounts withdrawn from VHCI’s bank account for hardware store purchases throughout 2017 and 2018. Valente says that the amounts in the chart demonstrate the routine nature of the roughly $2,000 in Home Depot purchases Valente paid from VHCI’s account in December 2018. We disagree. The chart shows that VHCI’s December 2018 Home Depot expenditures were roughly 10 times more than the sum of VHCI’s hardware store purchases during the preceding two-year period. If anything, this chart supports the bankruptcy court’s inference. 20 The bankruptcy court was not required to accept Valente’s

explanation. “Where there are two permissible views of the evidence, the

factfinder's choice between them cannot be clearly erroneous.” Anderson v.

City of Bessemer City,

(1985). The circumstantial evidence

that the purchases were for the benefit of the business that was starting

rather than the one that was closing strongly supports the court’s finding

that Valente used VHCI’s funds to purchase items for VBI’s benefit. Its

finding that the challenged transfers were for the benefit of VBI was not

clearly erroneous.

C. Valente used VHCI’s assets to pay VBI’s rent, security deposit, and flooring.

Valente separately challenges her liability for VHCI’s payment of

VBI’s first month’s rent, security deposit, and flooring based on the

bankruptcy court’s finding that VHCI fraudulently transferred those funds

for VBI’s benefit. She does not seriously dispute that these payments were

made for VBI’s benefit. Nor does she argue that VHCI somehow benefitted

from making these payments. Rather, she contends that they were not

made from VHCI’s property and therefore cannot constitute fraudulent

transfers for which she may be held liable. She maintains that she (through

Valente, Inc.), her boyfriend Andrew Somo, and her friend Jim Nickel

deposited roughly $23,000.00 into VHCI’s checking account to pay for the

rent, security deposit, and flooring.

By way of explanation, Valente contends that VBI’s landlord required

21 that the rent and security deposit be paid by cashier’s check. She maintains

that her father was unable to accomplish this, so she transferred money

from Valente, Inc. into VHCI to assist her father. VHCI’s bank records

show that on November 1, 2018, Valente, Inc. deposited $12,387.78 into

VHCI’s account, and there was a separate deposit of $2,000.00, which

Valente says was from Nickel. VHCI’s bank records also show another

$2,000.00 deposited on November 6, 2018, which Valente says came from

Somo. That same day, November 6, 2018, Valente withdrew $16,021.00

from VHCI’s bank account and obtained a cashier’s check payable to A-440

Enterprises, Inc., VBI’s landlord, to pay VBI’s first month of rent and its

security deposit.

The bankruptcy court noted that Nickel and Somo required VHCI to

execute promissory notes for their deposits. This establishes that VHCI

borrowed the funds. As such, the funds were VHCI’s property. The

resulting debt also was VHCI’s. Those funds were placed into VHCI’s bank

account. This was the same account Valente used to pay VBI’s rent and

security deposit. As the bankruptcy court properly noted, VHCI received

reasonably equivalent value for the debt it created. Stone v. Morton Cmty.

Bank (In re Int’l Supply Co.),

, 343-44 (Bankr. C.D. Ill. 2021). But

VHCI received nothing for paying VBI’s obligations.

The bankruptcy court similarly rejected Valente’s contention that

Valente, Inc.’s November 1, 2018 deposit of $12,387.78 into VHCI did not

become property of VHCI. The bankruptcy court found that on October 29,

22 2018, VHCI had transferred out $13,000.00 to Valente, Inc. The court

concluded that Valente, Inc.’s deposit into VHCI three days later was in

substantial repayment of VHCI’s prior $13,000.00 transfer. On appeal,

Valente does not address the bankruptcy court’s finding. Rather, she

reiterates that Valente, Inc. deposited $12,387.78 into VHCI ‘s account to

fund VBI’s rent and security deposit. Simply rearguing on appeal one of

two inferences the court permissibly could have drawn from the facts

presented at trial does not establish that the bankruptcy court clearly erred.

Anderson,

.

Even under Valente’s version of events, it remains unclear why

Valente, Inc. did not simply pay VBI’s rent and security deposit directly

rather than deposit funds into VHCI’s account for that purpose. More

importantly, there is no contemporaneous evidence that VHCI accepted

any deposit for a limited purpose. Indeed, the promissory notes issued to

Nickel and Somo demonstrate that VHCI was borrowing money. It had no

reason to borrow money for VBI’s benefit. Nor did it have any reason to

accept a deposit from Valente, Inc. for VBI’s benefit. Rather, VHCI was a

separate entity with its separate obligations to its creditors, including its

landlord, Nowland, Nickel, and Somo.

Valente, Inc. voluntarily deposited its funds into VHCI’s bank

account without limitation. Once it did so those funds became VHCI’s

unrestricted assets. See Parker v. First Cmty. Bank (In re Bakersfield Westar

Ambulance, Inc.),

(9th Cir. 1997) (citing Cal. cases) (upon

23 deposit title to the deposited funds passed to the bank, and account owner

became a creditor of the bank with a contract claim for the amount of the

funds deposited.) This had consequences. VHCI’s assets, including the

funds held in its bank account, were liable for VHCI’s debts. Given its

apparent insolvency at the time, VHCI owed a fiduciary duty to its

creditors. See generally Berg & Berg Enters. v. Boyle,

(2009) (explaining that upon insolvency corporate insiders owe a

fiduciary duty under California law to the corporation’s creditors not to

divert, dissipate, or unduly risk “corporate assets that might otherwise

have been used to satisfy creditors’ claims.”). The record amply

demonstrates that the $16,021.00 paid for VBI’s rent and security deposit

was property of VHCI, that VHCI received nothing for the transfer, and

that it constituted a fraudulent transfer from the perspective of VHCI’s

creditors.

Finally, the analysis supporting the bankruptcy court’s finding that

VHCI, acting through Valente, fraudulently transferred $2,701.43 to pay for

VBI’s flooring is virtually identical to that set forth above regarding VBI’s

first month’s rent and security deposit. Valente claims on appeal that funds

to pay for VBI’s flooring were deposited into VHCI’s bank account but

originally came from Valente, Inc., Nickel, and Somo in the same manner

she alleged the funds for VBI’s rent and security deposit came to VHCI. We

reject this argument for the exact same reasons we rejected her argument

with respect to the rent and the security deposit.

24 D. VHCI, acting through Valente, made the cash transfers with the actual intent to defraud its creditors.

Valente further contends that the bankruptcy court’s findings of

fraudulent intent for the fraudulent transfers that serve as the predicate for

her liability are clearly erroneous. Under California law, a transfer is

avoidable as fraudulent under

(a)(1) if the debtor

made the transfer with the actual intent to hinder, delay, or defraud any

creditor. Whether the conveyance was made with the requisite culpable

intent is a question of fact that typically must be inferred from the

surrounding circumstances. Filip,

(citing Annod

Corp. v. Hamilton & Samuels,

(2002)).

(b) sets forth well-known “badges of fraud” that can assist

the trier of fact in determining whether the transfer was made with the

required intent, which include:

(1) Whether the transfer or obligation was to an insider. (2) Whether the debtor retained possession or control of the property transferred after the transfer. (3) Whether the transfer or obligation was disclosed or concealed. (4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit. (5) Whether the transfer was of substantially all the debtor's assets. (6) Whether the debtor absconded. (7) Whether the debtor removed or concealed assets. (8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred. (9) Whether the debtor was insolvent or became insolvent shortly

25 after the transfer was made or the obligation was incurred. (10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred. (11) Whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.

However, as Filip cautioned:

these factors do not create a mathematical formula to establish actual intent. There is no minimum number of factors that must be present before the scales tip in favor of finding of actual intent to defraud. This list of factors is meant to provide guidance to the trial court, not compel a finding one way or the other.

Filip,

.

The court considered the badges of fraud and applied them to each

set of cash transfers. It found that substantially all the badges were present

in each instance.

In her opening brief, Valente recites the badges of fraud and states

that none apply. This is simply not the case. Again, Valente’s mere

disagreement with the court’s findings does not constitute reversible error.

The bankruptcy court properly found that VHCI made the challenged

transfers to benefit VBI, an insider of VHCI, by virtue of her control of both

entities. There was no legitimate reason for VHCI to use its assets to fund

VBI’s opening. VHCI never disclosed that it was paying VBI’s expenses.

During these transfers, VHCI was being sued by its landlord for substantial

nonpayment of rent and was facing immediate eviction from its sole place

of business and a judgment of roughly $170,000.00. The unrefuted evidence 26 shows that VHCI could not pay its rent or employees and depended on

regular “business loans” from Nowland, Siggson, and others that it did not

and could not repay. In short, VHCI was insolvent and facing entry of a

judgment and immediate eviction from its sole place of business. The

challenged transfers served no business purpose for VHCI, and the

bankruptcy court duly found that it received no value for making any of

the challenged transfers. The record is replete with evidence of VHCI’s

fraudulent intent for the transfers identified by the bankruptcy court.

In attacking the court’s badges of fraud findings, Valente focuses

almost exclusively on reasonably equivalent value.7 As she stated in her

reply brief on appeal: “The Appellant is rightly perplexed as to how she is

unjustly facing $33,875.83 in fraudulent transfer charges, when it is

unrefuted that she has personally injected $99,282.58 in value into VHCI.”

The $99,282.58 Valente references is comprised of: $68,111.50 in monies she

received from Barton Siggson between February and November of 2017;

$27,171.08 in funds from Valente Inc. transferred between March and

December of 2018; and $4,000.00 from the November 1, 2018 deposit of

7 Reasonably equivalent value also is material to a transferee’s defense to a fraudulent transfer under

(a). As stated in the statute, “a transfer or obligation is not voidable . . . against a person that took in good faith and for reasonably equivalent value given to the debtor . . . .” Valente had the burden of proof to establish that VBI acted in good faith and gave VHCI reasonably equivalent value. See

(f). The bankruptcy court did not err in holding that Valente’s active and knowing orchestration of the fraudulent transfer scheme between VHCI and VBI vitiated any claim of good faith and precluded this affirmative defense.

27 $2,000.00 from Nickel, and the November 6, 2018 deposit of $2,000.00 from

Somo previously discussed. According to Valente, these contributions

prove that VHCI did not intend to defraud its creditors when it made the

challenged cash transfers.

Where a transfer is challenged as being made with the actual intent to

hinder, delay, or defraud, reasonably equivalent value is not a per se

defense. Rather, value is only one of the applicable badges of fraud the

court was entitled to consider. Filip,

; Betancourt v.

Ballmer (In re Betancourt), BAP No. CC-17-1016-KuLTa,

, at

*6 (9th Cir. BAP Aug. 14, 2017), aff'd,

(9th Cir. 2019) (“the

presence or absence of reasonably equivalent value is just one of several

factors courts typically consider when assessing whether the debtor had

the requisite state of mind to commit an actual fraudulent transfer.”). Even

if these deposits were given in exchange for some or all the transfers, the

bankruptcy court’s finding that the transfers were fraudulent was not

clearly erroneous on this record based on the existence of multiple other

badges of fraud. However, the timing and circumstances of the deposits

demonstrate that they were not made in exchange for the challenged

transfers.

defines value for fraudulent transfer

purposes as “given for a transfer or an obligation if, in exchange for the

transfer or obligation, property is transferred or an antecedent debt is

secured or satisfied, but value does not include an unperformed promise

28 made otherwise than in the ordinary course of the promisor's business to

furnish support to the debtor or another person.” (Emphasis added.) As the

bankruptcy court correctly observed, “the requirement that the debtor

must have ‘received’ the value in question expresses a temporal condition

demanding an element of contemporaneity in the determination of

whether something close to the reasonable equivalence has been

exchanged.” Greenspan v. Orrick, Herrington & Sutcliffe LLP (In re Brobeck,

Phleger & Harrison LLP),

(Bankr. N.D. Cal. 2009) (quoting

Jackson v. Mishkin (In re Adler Coleman Clearing Corp.),

, 466–67

(S.D.N.Y. 2001)). Thus, to support a transfer the value received by the

transferor must be “bargained for at the date of the original transaction.” In

re Brobeck, Phleger & Harrison LLP,

(citing 5 Collier on

Bankruptcy, ¶ 548.05[1][b] at 548-38 (15th ed. rev. 2002)). It is not necessary

that the value exchanged come from the transferee so long as it is

“sufficiently concrete and identifiable.”

at 341 (citing Frontier Bank v.

Brown (In re N. Merch., Inc.),

(9th Cir. 2004)).

Significantly, “[b]ecause the policy behind fraudulent transfer law is to

preserve assets of the estate, reasonably equivalent value is determined

from the standpoint of creditors; it is not determined from the defendant’s

perspective.”

(quoting Brandt v. nVidia Corp. (In re 3dfx Interactive, Inc.),

(Bankr. N.D. Cal. 2008)). Courts measure value at the time

29 of the transfer.

(citing BFP v. RTC,

(1994)). 8

The bankruptcy court acknowledged that VHCI received deposits

from various sources including the deposits identified by Valente. But the

monies deposited into VHCI had little to do with VHCI’s transfers shortly

before it closed and VBI opened its doors. There is no credible evidence

that these deposits were made in exchange for any of VHCI’s challenged

transfers. Indeed, most of the deposits substantially pre-date the subject

transfers. Deposits into VHCI predating the challenged transfers could not

be made in exchange for its subsequent transfers. 9

Moreover, it is undisputed that the monies from Siggson, Nickel, and

Somo were loans to VHCI. As the bankruptcy court noted, the lenders and

VHCI exchanged mutual value in the form of money lent to VHCI by the

lenders and the promissory notes from VHCI. This is the holding of cases

cited by Valente, such as In re International Supply Co., 631 B.R. at 343-44,

which recognized that debt incurred in exchange for monies lent

constitutes equivalent value. This simply means that the loans evidenced

8 California courts have long applied substantially the same standards. See Hansen v. Cramer,

(1952). Indeed, the latest version of

defining what constitutes value for fraudulent transfer purposes is derived from § 548(d)(2)(A) of the Bankruptcy Code. California courts typically look to bankruptcy court decisions for guidance when the California fraudulent transfer provision has its genesis in bankruptcy law. See Lo,

. 9 Siggson deposited $68,111.50 into VHCI’s bank account a year or more before

the first challenged transfer. Valente’s own accounting shows that $3,358.00 of Valente, Inc.’s deposits were made in small amounts months prior to the first challenged cash transfer. 30 by the promissory notes given to Siggson, Nickels and Somo were for

reasonable value. That is not the issue. The question is whether value was

received in exchange for the challenged transfers. Though the satisfaction

of antecedent debt may constitute value under

,

Valente does not argue, and there is no evidence, that any of the challenged

transfers satisfied VHCI’s obligations under the notes given to its lenders.

Rather, VHCI used its funds to benefit a third-party insider, VBI. VHCI

received no benefit from these transactions. Accordingly, the finding that

VHCI did not receive value for the identified cash transfers is not clearly

erroneous.

Finally, Valente argues that since her associates lent or deposited

more monies in total than she used from VHCI to assist VBI’s new business

there was no harm to VHCI to support any fraudulent transfer claims. This

is simply a recast of her prior argument regarding reasonably equivalent

value. Valente has not shown that the prior deposits had any relationship

to the specific challenged transfers. As noted above, the monies deposited

by Nowland, Siggson, and Valente herself, were documented as loans to

VHCI, that it could not pay and further evidenced VHCI’s insolvency.

VHCI’s payment of VBI’s start-up costs provided no benefit to VHCI and

deprived it of the limited assets it had to repay its debts, including the

loans owed to Nowland and VHCI’s other creditors.

We find no error in the bankruptcy court’s consideration and

application of the badges of fraud or its conclusion that VHCI, acting

31 through Valente, had the actual intent to defraud its creditors. Nor was

there any error in the bankruptcy court’s determination under Bonnett that

Valente actively and knowingly participated in the fraudulent transfers on

behalf of both VHCI and VBI.

E. Valente has not established any error in the court’s determination that Valente transferred $7,865.92 in net funds out of VHCI to Valente, Inc. with fraudulent intent.

Valente’s reasonably equivalent value arguments extend equally to

VHCI’s transfers to Valente, Inc. Unlike the other challenged transfers, the

bankruptcy court netted the transactions between Valente, Inc. and VHCI.

The court found that VHCI transferred $30,669.00 to Valente, Inc. between

October and December 2018. The court subtracted $22,813.08 in deposits

from Valente, Inc. into VHCI’s bank account during the same period to

calculate the fraudulent transfers based on the “net” loss to VHCI of

$7,865.92 ($30,669.00 - $22,813.08 = $7,865.92). 10

The bankruptcy court reasoned that VHCI had historically purchased

products and inventory from Valente, Inc. for its hair salon business. It

accepted that VHCI had historically made certain valid purchases from

Valente, Inc. in furtherance of its business “because [Valente] produced

invoices demonstrating purchases and because those were logical—both in

time and amount—under her narrative.” However, the court questioned

10 Nowland proposed this calculation, though using slightly different amounts, in his supplemental briefing after remand. 32 why VHCI would transfer funds to Valente, Inc. after October 10, 2018, to

purchase products and inventory from Valente, Inc. for its own use given

VHCI’s impending closure. The court noted that Valente was unable to

produce invoices for these transactions, unlike those that occurred earlier

in 2018. Additionally, the court observed that in its last three months of

2018, VHCI’s transfers to Valente, Inc. differed from those supported by

invoices. The court explained that the later transfers were “inconsistent

temporally and numerically with her pattern of small purchases.”

Finally, the court found it implausible that VHCI purchased over

$30,000.00 in product when it knew it would be evicted from the Girard

Salon especially when Valente was already negotiating the Prospect Street

lease for VBI. Accordingly, the court agreed with Nowland that VHCI’s

$7,865.92 in net transfers to Valente, Inc. in and after October 2018 served

no business purpose and thus were for the purchase of products for the

benefit of VBI.

We find no clear error in these factual findings. Importantly, the

bankruptcy court did not find fraudulent the entire $30,669.00 in gross

transfers from VHCI to Valente, Inc. 11 Instead, the bankruptcy court

credited Valente for all of Valente, Inc.’s deposits into VHCI during the last

quarter of 2018.

11 This included the $13,000.00 transfer from VHCI to Valente on October 29, 2018, as the bankruptcy court otherwise held that Valente had paid $12,387.78 to VHCI on November 1, 2018, as substantial payment for the $13,000.00 it received from VHCI. 33 Nowland does not challenge the netting of these amounts on appeal.

But Valente would have us double count the $22,813.08 in Valente Inc.

deposits. These same deposits are a significant part of the funds Valente

claims she gave as reasonably equivalent value for the challenged cash

transfers overall. Valente cannot have it both ways. She cannot first accept

the court’s crediting of these deposits to reduce the $30,669.00 in gross

transfers from VHCI to Valente, Inc. to reach a net cash transfer amount of

$7,865.92 and then count the same deposits a second time as so-called

reasonably equivalent value given in exchange for the challenged cash

transfers in total.

F. Valente’s standing arguments have no merit.

Finally, Valente attempts to re-argue the same standing arguments

she raised in her prior appeal. She mischaracterizes Nowland’s

§ 523(a)(2)(A) claim against her as a fraudulent transfer or avoidance claim

belonging to VHCI. She further claims that Nowland unsuccessfully tried

to sue her as VHCI’s alter ego. According to Valente, she is not individually

indebted to Nowland; only VHCI is.

As we explained in our prior decision—and reiterated above—

Valente may be held personally liable for her tortious conduct in

orchestrating the fraudulent transfer scheme between VHCI and VBI.

In re Valente,

, at *7 (citing Sanger,

, at *7).

Consequently, Nowland is not asserting against Valente any rights he

holds against VHCI or that qualify as an asset belonging to VHCI.

34 Valente’s liability to Nowland is related to but independent of Nowland’s

claim against VHCI for the amounts VHCI owes him.

We made these same determinations in our prior decision before

remand. See

Those determinations are law of the case. See Blixseth v.

Credit Suisse,

(9th Cir. 2020) (citing Herrington v. Cnty. of

Sonoma,

, 904–05 (9th Cir. 1993)). Though the Ninth Circuit

recognizes some exceptions to the law of the case doctrine, none of those

exceptions are applicable here. See Gonzalez v. Arizona,

, 389 n.4

(9th Cir. 2012) (en banc), aff'd sub nom. Arizona v. Inter Tribal Council of Ariz.,

Inc.,

(2013). 12

CONCLUSION

For the reasons set forth above, we AFFIRM.

12 As stated in Gonzalez, the exceptions to the law of the case doctrine are: “(1) the [prior] decision is clearly erroneous and its enforcement would work a manifest injustice, (2) intervening controlling authority makes reconsideration appropriate, or (3) substantially different evidence was adduced at a subsequent trial.”

(quoting Jeffries v. Wood,

(9th Cir. 1997) (en banc)). 35