In Re Stephen J Haythorne

I. INTRODUCTION

This matter comes before the Court on appeal from the United States Bankruptcy Court for the Central District of California. In ruling on Appellee Hugh C. Damon’s (“Damon”) Motion for Default Judgment, the bankruptcy court entered default judgment in favor of Damon on his claim for relief made pursuant to 11 U.S.C. § 523(a)(2)(A) and denied judgment for Damon on his claims made pursuant to § 523(a)(4). For the following reasons, the Court AFFIRMS the Order of the bankruptcy court.

II. FACTUAL BACKGROUND

In or about 2011, Haythorne solicited a business loan from Damon in the amount of $460,000 on behalf of StellarCapital, Inc. (“Stellar”). Also in 2011, Damon asserts that he and Haythorne entered into a “joint venture business” to provide mortgage financing and that they organized Mortgage Fund Hawaii, LLC (“MFH”) for that purpose. Damon contends that he and Haythorne agreed to split MFH’s profits equally between the two of them. Damon states that in or about 2013, he learned that Haythorne had allegedly instructed his accountant that Damon was the sole member of MFH for tax purposes and that Haythorne had allegedly forged Damon’s signature on a filing with…