                                                             FILED
                                                              JUN 07 2013
 1
                                                          SUSAN M SPRAUL, CLERK
                                                            U.S. BKCY. APP. PANEL
 2                                                          OF THE NINTH CIRCUIT
                    UNITED STATES BANKRUPTCY APPELLATE PANEL
 3
                              OF THE NINTH CIRCUIT
 4
 5   In re:                         )       BAP No.    CC-12-1287-MkTaPa
                                    )
 6   MEHRAN SHAHVERDI,              )       Bk. No.    08-20205-MT
                                    )
 7                  Debtor.         )       Adv. No.   09-0119-MT
     ______________________________ )
 8                                  )
     MEHRAN SHAHVERDI,              )
 9                                  )
                    Appellant,      )
10                                  )
     v.                             )       MEMORANDUM*
11                                  )
     WILLIAM HABLINSKI ARCHITECTURE,)
12   a California Partnership,      )
                                    )
13                  Appellee.       )
     _______________________________)
14
                      Argued and Submitted on May 16, 2013
15                           at Pasadena, California
16                            Filed – June 7, 2013
17               Appeal from the United States Bankruptcy Court
                     for the Central District of California
18
              Honorable Maureen Tighe, Bankruptcy Judge, Presiding
19
20   Appearances:     Barry R. Wegman of the Law Offices of David A.
                      Tilem argued for Appellant Mehran Shahverdi; John
21                    D. Faucher of Faucher & Associates argued for
                      Appellee William Hablinski Architecture, a
22                    California partnership.
23
     Before:    MARKELL, TAYLOR, and PAPPAS, Bankruptcy Judges.
24
25
26        *
           This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8013-1.
                                        1
 1                               INTRODUCTION1
 2        This case involves an individual Chapter 13 debtor and his
 3   former employer. The bankruptcy court rendered summary judgment
 4   in favor of the debtor’s former employer under Sections
 5   523(a)(2)(A) and 523(a)(4) on the basis of the issue preclusive
 6   effect of an arbitral award.   We vacate the bankruptcy court’s
 7   judgment and remand.
 8                            STATEMENT OF FACTS
 9   A.   The Pre-bankruptcy Proceedings
10        1.     Debtor’s Employment at William Hablinski Architecture
                 (“WHA”).
11
12        Mehran Shahverdi, the debtor/Appellant (“Debtor”) came to
13   the United States from Iran on a student visa in 1984.    As early
14   as 1988, Debtor had done architectural design work for Daniel
15   Elihu.    The Elihu family owned a construction company, Amir
16   Construction.   Debtor testified2 that he had never worked for
17   Amir Construction, even though he included the company on his
18   resume.
19        In 1997, Debtor received his Bachelor of Architecture from
20   the University of Southern California, and became an American
21   citizen.
22
          1
23         Unless specified otherwise, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
24   all Rule references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037. All Civil Rule references are to the
25   Federal Rules of Civil Procedure and are abbreviated as “FRCP”.
26        2
           All references to any party’s testimony are drawn from the
27   arbitration: William Hablinski Architecture v. Shahverdi, Case
     No.: 03-4412-RWT (Sept. 7, 2010) [hereinafter “Arbitration
28   Award”].
                                       2
 1        Appellee WHA is an architecture firm that designs and
 2   supervises the construction of high-end custom homes.   In
 3   approximately May 2000, WHA hired the Debtor as a “Job Captain.”
 4   Debtor’s job involved production and low level management
 5   activities.   When WHA hired Debtor, the firm required him to sign
 6   the firm’s Employee Handbook.   The Employee Handbook contained
 7   articles that addressed the following: (1) conflicts of interest,
 8   secondary employment,3 and confidentiality.   Under WHA’s Employee
 9   Handbook’s provisions, personal use of the office computers was
10   expressly prohibited.
11        The Job Captain position required that Debtor work under a
12   Project Manager’s supervision while assisting in the production
13   of construction drawings, coordinating with consultants, and
14   developing the project’s ultimate details.    In order to
15   facilitate this process, WHA employs a computer system that
16   allows its employees to develop a full set of documents for use
17   by all parties to a project, including consultants.   Thus,
18   employees such as Debtor would use the computer system to
19   generate and then transmit parts of designs and drawings to
20   various consultants.    In order to send work documents to third
21   parties, a Job Captain needed a supervisor’s prior authorization.
22
23
          3
24         Richard Manion (“Manion”), a partner at WHA, testified that
     under Article 31, an employee could not work on non-firm projects
25   in the office or use office resources. While there was no policy
     prohibiting moonlighting, any secondary employment could not be
26
     detrimental to an employee’s performance or conflict with any
27   other company policy. To the extent that an employee engaged in
     secondary work, the employee was prohibited from doing it at the
28   Hablinski office.
                                       3
 1           WHA gave Debtor access to the firm’s project design
 2   software, AutoCADD, and WHA’s servers.     Because Debtor had access
 3   to WHA’s servers, Debtor also had access to WHA’s company files,
 4   including its computer design library files (“Design Library”).
 5   The Design Library provided its users with a resource that:
 6   (1) could help identify for clients a variety of certain design
 7   styles and characteristics, (2) had books on a variety of styles
 8   of architecture, and (3) contained AutoCADD proprietary files,
 9   drawings, hard copy drawings, and designs from WHA’s previous
10   projects.     WHA considers the Design Library to be an internal
11   document that is not available to anyone outside the firm.
12   Indeed, William Hablinski testified that the Design Library was a
13   trade secret because its contents were not known to competitors,
14   and would be of economic value to WHA’s competitors were they
15   known.
16           Among other projects,4 Debtor was assigned to the Unity
17   Family Trust project for the Sands family.     The client was fairly
18   demanding, required a lot of attention, and was responsible for
19   making changes requiring the Unity Family Trust project to grow
20   from what was a 14,000 square foot house to the 20,000 square
21   foot house it came to be.     Under WHA’s project identification
22   system, WHA denominated the Unity Family Trust project as project
23   number 9930.     This meant that it was the 30th project of the year
24   1999.
25
             4
           Debtor testified that in addition to the Unity Family trust
26
     Project he worked on the 77 Beverly Park project, “Lot 58 Beverly
27   Park project, the Sycamore project, 0031 Cabana, a copy of the
     Westbury House, [and] two projects in San Marino along with other
28   smaller projects.” Arbitration Award (Sept. 7, 2010) at 25.
                                        4
 1        2.    Marilyn Drive House.
 2         One month after WHA hired Debtor in May 2000, Debtor
 3   contacted the Elihus seeking a profit sharing arrangement on any
 4   design projects the Elihus might send him.    On January 1, 2001,
 5   one of the Elihus asked Debtor to submit a proposal to build the
 6   Marilyn Drive house.   On March 1, 2001, Debtor submitted a
 7   proposal and was selected to do the design.   In a letter to the
 8   Elihus, Debtor wrote, “I see this project as a 12,500 square foot
 9   high-end Tuscany Villa in Beverly Hills.”    Arbitration Award
10   (Sept. 7, 2010) at 38.   Over seven to eight months, Debtor spent
11   approximately 850 hours on the Marilyn Drive house.   Debtor
12   testified that without access to the WHA library, he would have
13   spent an additional 50 to 100 hours.
14        In April 2003, WHA became aware that Debtor was involved in
15   another project.   Apparently, Debtor’s immediate supervisor,
16   David Michael Hogan, along with another WHA employee, discovered
17   the “Marilyn Way house” when they were on their way to showrooms
18   in nearby Hollywood.   Mr. Hogan testified that the Marilyn Way
19   house was strikingly similar to that of the Unity Family Trust
20   project.   After subsequently obtaining a permitted set of
21   drawings from the city of Beverly Hills, Mr. Hogan noted a number
22   of similarities.   Among them were: (1) the copyright statement
23   which was identical to the WHA copyright statement; (2) the
24   project used the same title sheet WHA uses; (3) the Unity Family
25   Trust label which is unique to the Unity Family Trust; and (4) a
26   reference to another WHA project that WHA included on the Sands
27   project designs so builders could see the qualifications detail
28   that WHA required.   The Marilyn Way house featured a number of
                                       5
 1   design elements that were essentially the same as used on the
 2   Sands project, in addition to design elements taken from other
 3   WHA projects.   The Marilyn Way house drawings indicated that
 4   Debtor authored the project.
 5        Following WHA’s discovery of the Marilyn Way house, and the
 6   similarities it shared with the Unity Family Trust Project, WHA
 7   asked all of the employees to bring their personal laptop
 8   computers into work.   WHA told its employees that they wanted to
 9   update their employees’ computers.   Debtor complied, and it was
10   then that WHA searched his hard drive to find, among other
11   things, the following items: (1) the same directory structure
12   that the WHA firm used to organize its library, (2) job numbers
13   that matched the WHA job numbers, (3) twenty to thirty projects
14   that WHA had completed years earlier, and (4) certain design
15   features of the Sands project.   WHA also discovered time sheets
16   on Debtor’s hard drive indicating that Debtor was spending
17   significant amounts of time on the Marilyn Way house along with
18   other non-WHA projects.   Indeed one of WHA’s partners concluded
19   that the “time sheets reflected that [Debtor was either] not
20   sleeping or was superhuman.”
21        Debtor admitted that he downloaded certain software and
22   files to facilitate his working on WHA projects from his home.
23   Apparently, WHA did allow its employees to do work at home with
24   permission, but that would not justify the scope of projects
25   Debtor had on his hard drive – Debtor had no prior association
26   with most of them.   Further, employees were not permitted to keep
27   designs on their computers.
28
                                      6
 1        3.      WHA’s Termination of Debtor.
 2        After concluding that Debtor had violated several of WHA’s
 3   Employee Handbook policies, including those dealing with
 4   conflicts of interest, secondary employment, and confidentiality,
 5   WHA terminated him.    William Hablinski testified that regardless
 6   of the fact that the Employee Handbook allowed an employee to opt
 7   for arbitration over litigation, Mr. Hablinski wanted to file a
 8   lawsuit against Debtor.    Mr. Hablinski further testified that he
 9   wanted to go public with his claims against Debtor.   Apparently,
10   when Debtor’s supervisors at WHA terminated him, one of WHA’s
11   partners reassured him that WHA was “going to keep it private and
12   won’t tell anyone if you want to look for a job.”    Arbitration
13   Award (Sept. 7, 2010) at 28:15-16.
14        Following Debtor’s termination, the police contacted him,
15   though ultimately no criminal complaint was filed; WHA, however,
16   filed a complaint with the California State Architectural Board;
17   and the facts surrounding Debtor’s termination were featured in
18   the press.
19        4.      The State Court Proceedings.
20        On June 18, 2003, WHA filed a lawsuit against Debtor for
21   tortious interference with contract, trespass to chattels,
22   conversion, misappropriation of trade secrets, and negligent
23   misrepresentation, among other claims, in the Los Angeles
24   Superior Court (the “State Court Proceeding”).   All of the
25   participating parties were represented by counsel.    On August 20,
26   2003, Debtor filed a motion to compel arbitration.    On
27   September 20, 2003, the State Court granted the motion,
28   dismissing the State Court Proceeding with prejudice.      On appeal,
                                        7
 1   the California Court of Appeals ruled that notwithstanding the
 2   dismissal with prejudice, the State Court could later confirm any
 3   arbitration award issued from the private contractual
 4   arbitration.
 5                a.   The Arbitration.
 6        The arbitration hearing commenced on December 16, 2008
 7   (stayed later that same day due to Debtor’s filing of bankruptcy)
 8   and continued for several sessions until final submission in late
 9   July 30, 2010.5    The case was heard as a binding arbitration by
10   the Hon. Robert W. Thomas, retired Judge of the Los Angeles
11   Superior Court (the “Arbitrator”).       WHA sought relief for
12   thirteen causes of action which included: conversion, trespass to
13   chattels, unjust enrichment, promissory estoppel,
14   misappropriation of trade secrets, unfair competition, common law
15   unfair competition, breach of confidential relationship, false
16   promise (fraud), and negligent misrepresentation.      On August 23,
17   2010, the Arbitrator issued his fifty-five-page Arbitration Award
18   in favor of the Appellees.     In doing so, the Arbitrator made
19   extensive factual findings and conclusions of law, including the
20   following:
21                ...[Debtor] took computer drawings from the
                  Unity Family Trust (Sands) plans and used them
22                on the Elihu Marilyn Drive house. The nature,
                  amount and legal importance of what was copied
23                and used was disputed. It is found that the
                  Unity Trust files were copied onto [Debtor’s]
24                personal files.
25
          5
           On April 16, 2009, Appellants filed an adversary complaint
26
     against Debtor seeking a judgment of nondischargeability under
27   Sections 523(a)(2) and (a)(4). On May 4, 2009, the bankruptcy
     court granted WHA’s motion for relief from the automatic stay to
28   continue the Arbitration.
                                          8
 1   Arbitration Award(Sept. 7, 2010) at 47:14-17.
 2                          * * * * *
 3             [Debtor] took documents from more than just
               the Sands project. ...[Debtor] also took
 4             aspects of WHA computer files for a number of
               other residential projects as well as portions
 5             of the computer detail library. [Debtor] even
               had plans on his computer for projects that he
 6             did not ever work on...[totaling] over thirty
               WHA projects on [Debtor’s] personal computer.
 7
 8   Id. at 47:19-25.
 9                               * * * * *
10             [Debtor’s] actions constituted a taking of WHA
               property and converting it to his own use.
11             This property consisted of AutoCadd files,
               drawings, design library elements, hard copy
12             drawings and designs.... this conduct was a
               Breach of Fiduciary Duty [Debtor] owed to his
13             employer FHA. ...[Debtor’s] actions were also
               a Breach of Employment Contract between the
14             parties.
15   Id. at 47:27-32.
16                          * * * * *
17             ...[Debtor’s] actions constitute an improper
               download of WHA trade secrets, copyright and
18             other material that clearly belonged to WHA.
               This   material   was  used  for   [Debtor’s]
19             financial benefit. This material was intended
               to be used on WHA projects, not the Marilyn
20             Drive house.     This was in conflict with
               [Debtor’s] obligations to WHA.
21
22   Id. at 47:34-38.
23                               * * * * *
24             ...[Debtor’s] actions constituted fraud. He
               broke his Employee Handbook promise to WHA not
25             to unlawfully take and use trade Secret and/or
               Design Library material for his personal use
26             and benefit. ...[Debtor] engaged in his own
               business activities in conflict with his
27             obligations to WHA.
28   Id. at 47-48.
                                        9
 1                                  * * * * *
 2                ...WHA employees were not to use the [Design
                  Library] for their own purposes. ...The Design
 3                Library itself can qualify as a trade secret.
                  This [Design Library] was found to have been
 4                misappropriated by [Debtor].
 5   Id. at 49:17-20.
 6                                  * * * * *
 7                ...[Debtor]   violated   the   Confidentiality
                  policy in the Employee Handbook by using Unity
 8                Family Trust material on the Elihu project.
                  The Sands project was a confidential WHA
 9                project.
10   Id. at 50:12-14.
11                             * * * * *
12                ...[WHA’s] belief that [Debtor] was in a
                  conspiracy with the Elihu group as his
13                partners was unsubstantiated. The evidence of
                  a joint venture was insufficient. There was
14                no   direct   evidence   presented   at   the
                  Arbitration to support this theory.
15
16   Id. at 50:17-20.
17                             * * * * *
18                [WHA directed] that a Superior Court Complaint
                  be filed, [and that the State Court Case]
19                received publicity. [Doing so] was improper
                  and a violation of [WHA’s] own rules....
20
21   Id. at 53:9-12.
22        Within the Arbitrator’s discussion of damages, he pointed to
23   several possible bases for WHA’s damages.     Those included the
24   following:
25                While the Arbitrator has found that [Debtor]
                  is liable for damages to WHA for his actions,
26                placing a value on them is difficult. There
                  is no precise measurement available.
27
28   Id. at 50:23-25.
                                       10
 1                                  * * * * *
 2                [While] Mr. Hablinski testified that [Debtor]
                  caused him to spend “enormous” amounts of
 3                money on legal fees [valued in the range of
                  $1.6 - $3 million]...[and Debtor’s actions]
 4                caused WHA reputation damage[,] [t]here is no
                  estimation of value put on that statement.
 5                The Arbitrator believes that the situation did
                  cause reputation damage to WHA.
 6
 7   Id. at 50:28-32.
 8                                  * * * * *
 9                WHA states that for Conversion, the measure of
                  recovery is the value of the converted
10                property plus a “fair compensation for time
                  and money properly expended in pursuit of the
11                property.” [WHA said] the value of the
                  converted property was in excess of $600,000.
12
13   Id. at 51.
14                                  * * * * *
15                WHA [claims that it] has incurred costs and
                  expenses in recovering its stolen property in
16                the amount of $410,000 [including $30,000 in
                  forensic expert fees and $380,000 in legal
17                fees].
18   Id. at 51:25-28.
19                                  * * * * *
20                [WHA seeks] between $800,000 and $1.2 million
                  for loss of contracts [because as a result of
21                Debtor’s actions, the Sands stopped referring
                  clients].6
22
23   Id. at 51:30-32.
24        Finally, the Arbitrator awarded damages as follows:
25
          6
           The Arbitrator found that “losing referrals from Fred Sands
26
     has value. It is impossible to state just how much...What is
27   known is that Mr. Sands would not refer anyone to WHA after the
     Elihu Marilyn Drive house was discovered.” Arbitration Award
28   (Sept. 7, 2010) at 63:36-40.
                                       11
 1              [T]he full value of the Claimant WHA [sic]
                claims against [Debtor are] $950,000 which
 2              includes the $50,000 unjust enrichment
                amount.   A total punitive damage award of
 3              $100,000 will also be awarded on Fraud and
                Conversion Causes of Action.7
 4
 5   Id. at 52:24-25.
 6              The recovery to be awarded Claimant WHA under
                all remaining Causes of Action are subsumed
 7              in a single legal theory which encompasses
                Fraud. The same give rise to the finding in
 8              favor of [WHA] and against [Debtor] on all
                theories.
 9
10   Id. at 52:27-29.
11                           * * * * *
12              [$100,000 to Debtor       for   his]   Emotional
                Distress Claim].
13
14   Id. at 54:6-7.
15        The Arbitrator then netted the offsetting awards, granting WHA
16   a total award of $950,000.   Finally, the Arbitrator added that he
17   did “not intend to entertain any request for additional attorney’s
18   fees from either side...the Arbitrator requires submission of
19   authority for the award of any additional fees.”       Id. at 55:4-7.
20              b.    Confirming The Arbitration Award.
21        On November 18, 2010, the California Superior Court granted
22   WHA’s petition to confirm the arbitration award against Debtor, and
23   a Judgment issued in conformity with the arbitration award as
24   follows:
25
26        7
           The Arbitrator earlier explained that the punitive damages
27   award was measured by “$50,000 for the Fraud Cause of Action and
     $50,000 for the Conversion Cause of Action.” Arbitration Award
28   (Sept. 7, 2010) at 63:22-23.
                                         12
 1               JUDGMENT BE ENTERED IN FAVOR OF PETITIONER,
                 William Hablinski Architecture, and against
 2               respondent, Mehren Shahverdi, in the amount of
                 Nine Hundred and Fifty Thousand Dollars
 3               ($950,000.00), plus
 4                    (a)   Pre-judgment interest in the amount
                            of $14,314.85, calculated at a rate
 5                          of 10% per annum (260.27 per day)
                            from August 23, 2010 to October 18,
 6                          2010;
 7                    (b)   Post-judgment interest at a legal
                            rate of 10% per annum from the date
 8                          the judgment is entered until the
                            judgment is paid in full; and
 9
                      (c)   Costs of suit.
10
11   California Superior Court Confirmation of Arbitration Award
12   (Nov. 18, 2010) at 1-2.
13        No appeal was taken, and the time to appeal the state court
14   Judgment against Debtor has passed.
15        5.     Debtor’s Bankruptcy Case.
16        On December 16, 2008, Debtor filed a Chapter 13 bankruptcy
17   petition.    On April 16, 2009, WHA filed an adversary complaint
18   against Debtor seeking a judgment of nondischargeability under
19   Sections 523(a)(2) and (a)(4).    On May 4, 2009, the bankruptcy
20   court granted WHA’s motion for relief from the automatic stay to
21   continue the Arbitration.    Following the conclusion of the
22   Arbitration proceedings, on March 19, 2011, WHA filed its Motion
23   for Summary Judgment against Debtor based on WHA’s
24   Sections 523(a)(2) and (a)(4) claims.
25        On July 6, 2011, the bankruptcy court held a hearing on
26   Appellant’s Motion for Summary Judgment.    During that hearing the
27   bankruptcy court indicated that it was prepared to find that the
28   Arbitration Award was issue preclusive as to Appellee’s
                                       13
 1   Section 523(a)(4) embezzlement claim.       However, the bankruptcy
 2   court also had reservations about finding that the Arbitration
 3   Award was issue preclusive as to both the Appellee’s
 4   Section 523(a)(2) fraud claim and the Arbitral Award of Damages.
 5        The Section 523(a)(2) claim troubled the bankruptcy court
 6   because, as a matter of California law, fraud is a broad concept,
 7   whereas under Section 523(a)(2) fraud “is a very narrow, very
 8   clearly defined cause of action.”       Tr. of Oral Arg. (Nov. 18,
 9   2010) at 8:19-22.    The bankruptcy court emphasized that while
10   fraud under Section 523(a)(2) requires a misrepresentation and
11   then a reliance on that misrepresentation, the Arbitrator’s
12   findings did not appear to anywhere identify that Debtor actually
13   represented to WHA that by signing the Employment Agreement, “I’m
14   not going to take these secret designs but I’m really planning on
15   doing it....”   Id. at 16:12-17.
16        In response, Debtor’s counsel sought to distinguish the
17   facts the Arbitrator found with respect to the elements of
18   embezzlement under Section 523(a)(4) from those of fraud under
19   Section 523(a)(2).   He did this on the basis of the Arbitrator’s
20   lack of a finding that Debtor knowingly misrepresented his
21   intentions respecting use of the Design Library when Debtor
22   signed the Employment Agreement.        The problem with the “ongoing
23   misrepresentation” theory, he argued, was that such a theory
24   failed to distinguish between Debtor’s broken promise and
25   Debtor’s false promise:
26             “because any time anybody has made a promise,
               if every time they show up, it’s a restating
27             of that promise and they later develop the
               intent to do what they shouldn’t be doing, its
28             going to be fraud, and there’s...no such thing
                                        14
 1             as just a straight broken promise.     It’s
               always going to be fraud, and we don’t have
 2             that under the law....”
 3   (Id. at 18-19).
 4        The bankruptcy court determined that Debtor had knowingly
 5   engaged in deceptive conduct at the time he signed his employment
 6   agreement based on two facts: (1) at the time he signed his
 7   employment agreement, he had already been in contact with the
 8   Elihus with the hope of getting a contract to build a “high-end
 9   Tuscany villa,”8 and (2) it could easily be inferred that the
10   arbitrator found that Debtor engaged in deceptive conduct when he
11   violated his employment agreement by copying WHA’s files into his
12   personal computer and used them for his benefit.   Ultimately, the
13   bankruptcy court found that the Arbitration Award was issue
14   preclusive as to WHA’s Section 523(a)(2) fraud claim.
15        During the July 6, 2012, hearing on WHA’s Motion for Summary
16   Judgment, the bankruptcy court also indicated that it was having
17
          8
           Of course this does not align with either the testimony or
18   the findings in the Arbitration Award. For example, Debtor
19   testified that while he was hired in May 2000, he contacted the
     Elihus in June 2000, seeking a profit sharing arrangement on any
20   design projects they might send him. Debtor further testified
     that it was not until March 1, 2001, that Debtor submitted a
21   proposal on the Marilyn Drive house and that he stated that he
     saw the project as a “high-end Tuscany villa.” Moreover, the
22
     Arbitrator specifically found that:
23
               [WHA’s] belief that [Debtor] was in a
24             conspiracy with the Elihu group as his
               partners was unsubstantiated. The evidence of
25             a joint venture was insufficient. There was
26             no   direct   evidence   presented   at   the
               Arbitration to support this theory.
27
     Arbitration Award (Sept. 07, 2010) at 62:17-20 (emphasis
28   added).
                                     15
 1   significant trouble finding that the Arbitration Award had issue
 2   preclusive effect as to damages.       The bankruptcy court stated
 3   that “whatever the arbitrator found were the damages, that’s it.
 4   He doesn’t have to explain how he broke it down.”      Tr. of Oral
 5   Arg. (Nov. 18, 2010) at 10:18-20.      Further, the bankruptcy court
 6   emphasized that:
 7             I don’t know if it’s clear or not for issue
               preclusion in that what is this $950,000. We
 8             know that $50,000 of it is unjust enrichment.
               Is the rest the fees he didn’t collect from
 9             Sands or the value of the trade secrets or
               legal fees and expert fees Hablinski spent
10             chasing him down? Where does it come from?
11   Id. at 10:4-9.     Finally, the bankruptcy court added that “what
12   was that amount based on?    How does he get to that number?”     Id.
13   at 6:23-24.
14        In response, WHA stated: “Well, obviously, the...arbitrator
15   wasn’t clear enough.”    Id. at 10:10-11.     However, later in its
16   Supplemental Brief on Damages, WHA argued that the entire damages
17   amount constituted actual damages due to embezzlement based on
18   the fact that:
19             [T]he arbitrator found that the full value of
               the [WHA] claims against [Debtor] to be
20             $950,000 which includes the $50,000 unjust
               enrichment amount.... The recovery awarded
21             [WHA] under all remaining Causes of Action are
               subsumed in a single legal theory which
22             encompasses Fraud. The same facts giving rise
               to the finding in favor of [WHA] and against
23             [Debtor] on all theories.
24   Plaintiff’s Supplemental Brief on Damages (Aug. 17, 2011) at
25   2:9-14 (quotations and citations omitted).      WHA essentially
26   reasoned that the “single theory” was embezzlement which
27   “subsumed” fraud.
28
                                       16
 1        In contrast, Debtor argued that one of the problems with the
 2   causes of action before the Arbitrator was that one of those
 3   causes was for negligent misrepresentation which could also be
 4   construed as fraud.    Later in his Supplemental Brief on Damages,
 5   Debtor emphasized that the Arbitrator failed to specify his
 6   measure of damages allocation based on each of WHA’s causes of
 7   action.    On this basis, Debtor argued that it was therefore
 8   impossible to determine that amount of damages which would fall
 9   within the realm of nondischargeability.
10        Ultimately, the bankruptcy court granted summary judgment in
11   favor of WHA on the basis of the Arbitration Award’s finding of
12   damages.   After briefly reviewing the California Uniform Trade
13   Secrets Act’s damages provisions as a basis for awarding summary
14   judgment in favor of WHA the bankruptcy court stated:
15               While the basis for the arbitration award was
                 detailed, the damages awarded for each cause
16               of action were combined into one award on all
                 causes of action. The arbitrator found “the
17               full value of the Claimant WHA claims...to be
                 $950,000 which includes the $50,000 unjust
18               enrichment amount.” As the amount for unjust
                 enrichment is dischargeable, that amount will
19               be deducted from the total award on the
                 dischargeability action, reducing WHA’s award
20               to $900,000.     The arbitration award also
                 stated, “A total punitive damage award of
21               $100,000 will also be awarded on the Fraud and
                 Conversion Causes of Action.”
22
                 ...The $950,000 award already included WHA’s
23               attorney’s fees, so nothing further will be
                 awarded for fees.
24
     Memorandum of Decision (Apr. 24, 2012) at 12-13.    Thus, the
25
     bankruptcy court found that $900,000 was nondischargeable.
26
     Debtor timely filed his appeal.
27
28
                                       17
 1                               JURISDICTION
 2        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
 3   §§ 1334 and 157(b)(2)(I).   We have jurisdiction under 28 U.S.C.
 4   § 158(a)(1).
 5                                  ISSUES
 6   1.   Did the bankruptcy court commit reversible error when it
 7        found that the $900,000 of the Arbitration Award’s lump sum
 8        damages against Debtor was issue preclusive as to
 9        nondischargeability?
10   2.   Did the bankruptcy court commit reversible error when it
11        found the measure of damages for the misappropriation of a
12        trade secret includes the value of the property
13        misappropriated, where the Plaintiff was never deprived of
14        the use or title of the property?9
15                           STANDARDS OF REVIEW
16        We review de novo the bankruptcy court’s decision to grant
17   summary judgment.   Boyajian v. New Falls Corp. (In re Boyajian),
18   564 F.3d 1088, 1090 (9th Cir. 2009); Lopez v. Emergency Serv.
19   Restoration, Inc. (In re Lopez), 367 B.R. 99, 103 (9th Cir. BAP
20   2007).   Viewing the evidence in the light most favorable to the
21   non-moving party (i.e., Debtor), we determine whether the
22   bankruptcy court correctly found that there are no genuine issues
23   of material fact and that the moving party (i.e., WHA) is
24   entitled to judgment as a matter of law.   Jesinger v. Nev. Fed.
25   Credit Union, 24 F.3d 1127, 1130 (9th Cir. 1994); Gertsch v.
26
27
          9
           Because we resolve this appeal entirely under the first
28   issue, we decline to reach this second issue on appeal.
                                      18
 1   Johnson & Johnson (In re Gertsch), 237 B.R. 160, 165 (9th Cir.
 2   BAP 1999).    We review the bankruptcy court's legal conclusions
 3   de novo and its factual findings for clear error.    Wolfe v.
 4   Jacobson (In re Jacobson), 676 F.3d 1193, 1198 (9th Cir. 2012).
 5        The availability of issue preclusion is a question of law
 6   the BAP reviews de novo.    In re Jacobson, 676 F.3d at 1198(citing
 7   Dias v. Elique, 436 F.3d 1125, 1128 (9th Cir. 2006)).    If issue
 8   preclusion is available, the decision to apply it is reviewed for
 9   abuse of discretion.   Dias v. Elique, 436 F.3d 1125, 1128 (9th
10   Cir. 2006).
11        When state preclusion law controls, such discretion is
12   exercised in accordance with applicable state law.   Gayden v.
13   Nourbakhsh (In re Nourbakhsh), 67 F.3d 798, 800-01 (9th Cir.
14   1995).   A bankruptcy court abuses its discretion when it applies
15   the incorrect legal rule or its application of the correct legal
16   rule is “(1) illogical, (2) implausible, or (3) without support
17   in inferences that may be drawn from the facts in the record.”
18   United States v. Loew, 593 F.3d 1136, 1139 (9th Cir. 2010)
19   (quoting United States v. Hinkson, 585 F.3d 1247, 1261–62 (9th
20   Cir. 2009)(en banc)) (internal quotation marks omitted).
21        To the extent that questions of fact cannot be separated
22   from questions of law, we review these questions as mixed
23   questions of law and fact, applying a de novo standard. Ratanasen
24   v. Cal. Dep't of Health Servs., 11 F.3d 1467, 1469 (9th Cir.
25   1993).   A mixed question of law and fact occurs when the
26   historical facts are established, the rule of law is undisputed,
27   and the issue is whether the facts satisfy the legal rule.
28   Pullman–Standard v. Swint, 456 U.S. 273, 289 n.19 (1982).
                                      19
 1                                DISCUSSION
 2        For the reasons set forth below, we reverse the bankruptcy
 3   court’s entry of summary judgment in favor of the WHA, and remand
 4   with instructions.
 5   A.   The Record.
 6        Our efforts to substantively review this case are hampered
 7   by the failure of both parties to fully comply with the Federal
 8   Rules of Appellate Procedure and the Bankruptcy Appellate Panel
 9   Rules.    Fed. R. App. P. 10(b)(2) provides that,
10               [i]f the appellant intends to urge on appeal
                 that a finding or conclusion is unsupported
11               by the evidence or is contrary to the
                 evidence, the appellant shall include in the
12               record a transcript of all evidence relevant
                 to such finding or conclusion.
13
14   (Emphasis added).
15        Stated simply, an appellant has the burden of ensuring the
16   record provided to the Panel is adequate to support the Panel’s
17   consideration and determination of the issues presented by the
18   appeal.10   Burkhart v. Fed. Deposit Ins. Corp. (In re Burkhart),
19   84 B.R. 658, 660 (9th Cir. BAP 1988) (responsibility to file an
20   adequate record rests with an appellant); Torez v. Torez
21   (In re Torrez), 63 B.R. 751, 753 (9th Cir. BAP 1986), aff'd
22   827 F.2d 1299 (9th Cir. 1987).
23        As a preliminary matter, it is difficult to determine from
24   the record precisely the number of causes of action that WHA
25   brought before the Arbitrator.   In its Memorandum of Decision on
26
          10
27         Appellees likewise must ensure that the evidentiary
     materials essential to supporting the bankruptcy court’s findings
28   upon which they rely are in the record.
                                      20
 1   Summary Judgment, the bankruptcy court indicated that “WHA
 2   pursued thirteen causes of action in the arbitration proceedings:
 3   conversion, trespass to chattels, unjust enrichment, promissory
 4   estoppel, misappropriation of trade secrets, unfair competition
 5   under Business and Professions Code § 17200, common law unfair
 6   competition, breach of confidential relationship, false promise
 7   (fraud), and negligent misrepresentation.”   Memorandum of
 8   Decision (Apr, 24, 2012) at 2:13-16 (emphasis added).    But this
 9   enumeration features only ten of the apparent thirteen causes of
10   action.
11        Debtor’s Opening Brief on appeal is similarly lacking in
12   that while it asserts that “WHA arbitrated claims under
13   13 different causes of action...”, Appellant’s Opening Brief
14   (Aug. 14, 2012) at 4, it cites only to the bankruptcy court’s
15   Memorandum of Decision, which in turn does not cite to the
16   Arbitration Award or any other document in the record.    Moreover,
17   a look further back in the record reveals that in Debtor’s
18   Opposition to Motion for Summary Judgment, Debtor asserted that
19   “...all 17 of the claims for relief were considered during a
20   lengthy arbitration.”   Opposition (June 8, 2011) at 4:20-22
21   (referencing WHA’s Complaint for Determination of
22   Nondischargeability)(emphasis added).
23        On mere cursory inspection of WHA’s Complaint for
24   Determination of Nondischargeability, we note that it lists
25   seventeen causes of action.   However, the last three causes of
26   action are as follows: (15) Exception to Discharge-Fraud
27   [11 U.S.C. Section 523(a)(2)]; (16) Exception to
28   Discharge–Embezzlement [Cal. Penal Code § 508; 11 U.S.C.
                                     21
 1   Section 523(a)(4)]; and (17) Petition to Compel the Continuation
 2   of the Arbitration.     It is difficult to imagine that an
 3   arbitrator would “consider” these causes of action, given the
 4   bankruptcy court’s exclusive jurisdiction to determine
 5   nondischargeability, and the mootness of the cause of action
 6   seeking to compel the very arbitration the Arbitrator was
 7   considering.
 8           WHA sheds very little additional light in that its Reply to
 9   Defendant’s Opposition to Motion for Summary Judgment states
10   that:
11                Once the [Bankruptcy] Court granted [WHA]
                  relief from the automatic stay to pursue
12                arbitration...all [WHA] needed to litigate in
                  the adversary proceeding was the question of
13                how bankruptcy law would apply to the issues
                  WHA expected to resolve in the arbitration.
14                And so WHA agreed to dismiss counts 1 through
                  14, and count 17, in the adversary proceeding
15                - precisely because they would be litigated in
                  the arbitration, not in the Bankruptcy court.
16
17   Opposition (June 8, 2011) at 3-4.      Counts one through fourteen in
18   WHA’s Adversary Complaint track precisely those in WHA’s State
19   Court Proceeding Complaint.
20           Finally, the Arbitration Award does not expressly identify
21   all of the causes of action WHA brought before the Arbitrator.
22   Instead, it lists only ten causes of action – the very same ten
23   causes of action the bankruptcy court enumerated in its
24   Memorandum of Decision.     Moreover, the tenth cause of action the
25   Arbitration Award enumerated was the thirteenth cause, Negligent
26   Misrepresentation, in what one may only assume was included in
27   the original complaint before the Arbitrator.
28
                                       22
 1        Because the bankruptcy court appears to have found that the
 2   arbitrator considered only thirteen causes of action, and because
 3   the bankruptcy court enumerated only ten of them, we cannot
 4   adequately determine the precise nature of the causes of action
 5   the Arbitrator considered when he determined that “all remaining
 6   Causes of Action are subsumed in a single legal theory which
 7   encompasses Fraud.”   Arbitration Award (Sept. 7, 2010) at
 8   52:27-28.
 9   B.   Bankruptcy Court’s Use of Issue Preclusion.
10        Appellant argues the bankruptcy court improperly applied
11   issue preclusion concepts below when it gave deference to the
12   Arbitration Award findings related to the damage calculation.
13   For reasons discussed below, we hold that issue preclusion
14   applies as to the finding of non-dischargeability under
15   Sections 523(a)(2) and (a)(4).    We determine, however, that issue
16   preclusion cannot be used to establish the damages allocable to
17   these non-dischargeable claims.
18        The doctrine of issue preclusion applies to dischargeability
19   proceedings under Section 523(a).      Grogan v. Garner, 498 U.S.
20   279, 284-85 (1991).   Issue preclusion, or collateral estoppel,
21   bars a party from relitigating any issue necessarily included in
22   a prior, final judgment.   Malkoskie v. Option One Mortg. Corp.,
23   188 Cal.App.4th 968, 115 Cal.Rptr.3d 821, 825 n.4 (Cal.App. Dist.
24   2010) (citing Rice v. Crow, 81 Cal.App.4th 725, 97 Cal.Rptr.2d
25   110, 116–17 (Cal.App. 2000)).    The burden of establishing the
26   doctrine rests on the party asserting it.     Ferraro v.
27   Camarlinghi, 161 Cal.App.4th 509, 529, 75 Cal.Rptr.3d 19, 36
28   (Cal.App. 2008)(citing Vella v. Hudgins, 20 Cal.3d 251, 257,
                                       23
 1   142 Cal.Rptr. 414, 572 P.2d 28 (1977)). Accord, Lopez v.
 2   Emergency Service Restoration (In re Lopez), 367 B.R. 99, 108
 3   (9th Cir. BAP 2007).
 4        “To meet this burden, the moving party must have pinpointed
 5   the exact issues litigated in the prior action and introduced a
 6   record revealing the controlling facts.     Reasonable doubts about
 7   what was decided in the prior action should be resolved against
 8   the party seeking to assert preclusion.“     Honkanen v. Hopper
 9   (In re Honkanen), 446 B.R. 373, 382 (9th Cir. BAP 2011) (internal
10   citations omitted).
11        When determining the preclusive effect of a state court
12   judgment, we must apply, as a matter of full faith and credit,11
13   that state's issue preclusion principles.     In re Nourbakhsh,
14   67 F.3d at 800.
15        Under California law, issue preclusion applies only if all
16   of the following elements have been satisfied:
17                     (1) The issue sought to be precluded
                       must be identical to that decided in
18                     the former proceeding;
19                     (2) The issue must      have been
                       actually litigated in   the former
20                     proceeding;
21
22        11
           Pursuant to 28 U.S.C. § 1738, “[f]ederal courts must give
23   the same preclusive effect to state court judgments that those
     judgments would be given in that state's own courts.” Duarte v.
24   Bardales, 526 F.3d 563, 577 n.4 (9th Cir.), reh’g denied,
     530 F.3d 1151 (2008) (quoting Clements v. Airport Auth. of Washoe
25   Cnty., 69 F.3d 321, 326 (9th Cir. 1995)); see also Grogan v.
     Garner, 498 U.S. 279, 284 (1991)(“[A] bankruptcy court could
26
     properly give collateral estoppel effect to those elements of the
27   claim that are identical to the elements required for discharge
     and which were actually litigated and determined in the prior
28   action.”).
                                       24
 1                    (3) The issue must have been
                      necessarily decided in the former
 2                    proceeding;
 3                    (4) The decision in the former
                      proceeding must be final and on the
 4                    merits;
 5                    (5) The party against whom issue
                      preclusion is sought must be the
 6                    same as, or in privity with, the
                      party to the former proceeding.
 7
                      (6) Whether imposition of issue
 8                    preclusion in the particular setting
                      would be fair and consistent with
 9                    sound public policy.
10
     Khaligh v. Hadaegh (In re Khaligh), 338 B.R. 817, 824-25 (9th
11
     Cir. BAP 2006), aff’d, 506 F.3d 956 (9th Cir. 2007) (citing
12
     Lucido v. Super. Ct., 51 Cal.3d 335, 341-43, 272 Cal.Rptr. 767,
13
     795 P.2d 1223, 1225-27 (1990)).
14
          Here, four of the elements of issue preclusion are
15
     undisputably satisfied: (1) the issues of fraud and embezzlement
16
     were actually litigated in the Arbitration, (2) the issues of
17
     fraud and embezzlement were necessarily decided in the
18
     Arbitration, (3) the parties in the Arbitration and in the
19
     nondischargeability action are the same, and (4) the bankruptcy
20
     court gave adequate consideration in its finding that the
21
     Arbitration met the adjudicatory standards required in order to
22
     be fair and consistent with sound public policy.
23
          Debtor contends that the damages finding was not on the
24
     merits.   However, this argument is incorrect.   The Ninth Circuit
25
     has expressly provided that “[a] final judgment is an order by
26
     the court and is classically a decision made on the merits of the
27
     case.”    Self v. Gen. Motors Corp., 588 F.2d 655, 660 (9th Cir.
28
                                       25
 1   1978)(emphasis added).     Under California’s statutes, when a
 2   California state court confirms an arbitral award, the judgment
 3   becomes final.     Cal. Civ. Proc. Code § 1287.4; see also Khaligh,
 4   338 B.R. at 824.
 5        In this case, Debtor compelled arbitration in the first
 6   instance, and neither party disputes that the Arbitrator
 7   considered all of the available evidence, the parties’ arguments,
 8   and the law applicable to the parties’ respective claims.     The
 9   Arbitration Award is a fifty-five page decision, conducted in an
10   inherently adjudicatory fashion, and, as discussed above, was
11   confirmed in the California Superior Court.      Therefore, the
12   decision is final and on the merits.
13        The remaining element in dispute is whether the issue sought
14   to be precluded from litigation in the adversarial proceeding is
15   identical to that decided in the Arbitration Award.
16        1.      Identity of issues under Section 523(a)(2)(A)
17        Section 523(a)(2)(A) provides that a discharge does not
18   include any debt for money, property, or services "to the extent
19   obtained by false pretenses, a false representation, or actual
20   fraud...."    11 U.S.C. § 523(a)(2)(A).   In order to establish that
21   the debt had been obtained through fraud and is nondischargeable
22   under Section 523(a)(2)(A), the plaintiff must demonstrate that:
23                (1)   The debtor made false representations;
24                (2)   The debtor knew the representations were
                        false when he made them;
25
                  (3)   The debtor made the representations with
26                      the intent and purpose of deceiving the
                        creditor;
27
                  (4)   The creditor relied on such
28                      representations; and
                                        26
 1
                  (5)    The creditor sustained the alleged loss
 2                       and damage as a proximate result of these
                         representations.
 3
     Ghomeshi v. Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir.
 4
     2010).
 5
          The elements of fraud under Section 523(a)(2)(A) “‘mirror
 6
     the elements of common law fraud’ and match those for actual
 7
     fraud under California law, which requires that the plaintiff
 8
     show: (1) misrepresentation; (2) knowledge of the falsity of the
 9
     representation; (3) intent to induce reliance; (4) justifiable
10
     reliance; and (5) damages.”       Tobin v. Sans Souci Ltd. P'ship
11
     (In re Tobin), 258 B.R. 199, 203 (9th Cir. BAP 2001)(quoting
12
     Younie v. Gonya (In re Younie), 211 B.R. 367, 373–74 (9th Cir.
13
     BAP 1997), aff'd, 163 F.3d 609 (9th Cir. 1998)(table decision)).
14
          “The ‘identical issue’ requirement addresses whether
15
     ‘identical factual allegations’ are at stake in the two
16
     proceedings, not whether the ultimate issues or dispositions are
17
     the same.”    Lucido, 51 Cal.3d at 342, 795 P.2d at 1225 (citing
18
     People v. Sims, 32 Cal.3d 468, 485, 186 Cal.Rptr. 77, 651 P.2d
19
     321 (1982)).       To determine whether issues in prior and subsequent
20
     proceedings are identical, for purposes of applying issue
21
     preclusion, a court examines whether the requirements of proving
22
     the issue at stake in the subsequent proceeding “closely mirror”
23
     requirements of proving issues presented in the prior action.
24
     In re Nourbakhsh, 162 B.R. at 844; Stevens v. Briles
25
     (In re Briles), 228 B.R. 462, 466 (Bankr. S.D. Cal. 1998), aff’d,
26
     16 Fed.Appx. 698 (9th Cir. 2001)(unpublished).
27
28
                                         27
 1        Here, the bankruptcy court found that WHA sustained damage
 2   resulting from its reliance that Debtor would follow the
 3   provisions in the Employee Handbook.   However, the amount of
 4   damages the bankruptcy court found was limited only to the
 5   Arbitration Award of “punitive damages for fraud because [the
 6   Arbitrator] found that [Debtor’s] actions damaged [WHA’s]
 7   reputation.”   Memorandum of Decision (Apr. 24, 2012) at 7:20-21.
 8   The bankruptcy court did not make any additional findings of fact
 9   suggesting the amount of damages, if any, the Arbitration Award
10   allocated to fraud.
11        As discussed above, the Arbitration Award of punitive
12   damages for fraud was limited to $50,000.   This suggests that the
13   remaining $850,000 in damages would have to flow from
14   nondischargeability under Subsection 523(a)(4) for embezzlement.
15        2.    Identity of Issues under 523(a)(4)
16        As the bankruptcy court noted, federal law and not state law
17   controls the definition of embezzlement for purposes of
18   Section 523(a)(4).    In re Wada, 210 B.R. 572, 576 (9th Cir. BAP
19   1997); see also Fraternal Order of Eagles, Aerie 1490 v. Mercer
20   (In re Mercer), 169 B.R. 694, 697 (Bankr. W.D. Wash. 1994);
21   In re Schultz, 46 B.R. 880, 890 (Bankr. D.Nev. 1985).     Thus,
22   under Section 523(a)(4), embezzlement requires three elements:
23   “(1) property rightfully in the possession of a nonowner; (2) a
24   nonowner's appropriation of the property to a use other than
25   which [it] was entrusted; and (3) circumstances indicating
26   fraud.”   In re Littleton, 942 F.2d 551, 555 (9th Cir. 1991).
27        The bankruptcy court found that the Arbitration Award met
28   all of the facts establishing the elements of embezzlement under
                                      28
 1   Section 523(a)(4).   Specifically, the bankruptcy court found that
 2   “[t]he facts establishing elements of conversion and embezzlement
 3   were raised as the second and seventeenth causes of action in the
 4   adversary complaint.”    Memorandum of Decision (Apr. 24, 2012) at
 5   11:20-21.   As discussed above, the seventeenth cause of action in
 6   the Adversary Complaint was a “Petition To Compel The
 7   Continuation Of The Arbitration” (“Seventeenth Cause of Action”).
 8   Adversary Complaint (Apr. 16, 2009) at 38.   Contrary to the
 9   bankruptcy court’s finding, we can find no facts in the
10   Seventeenth Cause of Action establishing any of the elements of
11   embezzlement.
12        The second cause of action was for “Conversion.”     Id. at 22.
13   However, “conversion” does not by itself require any particular
14   mens rea, rather it is merely a wrongful taking.12   While in the
15   instant case, the taking was a breach of the duty that Debtor
16   owed to his employer, conversion by itself does not provide an
17   adequate basis for finding the mens rea necessary to support
18   embezzlement under Section 523(a)(4).   Upon a careful review of
19   the Arbitration Award, we cannot locate the Arbitrator’s use of
20   the term embezzlement.   While the Arbitration Award’s findings of
21
22        12
           See Oakdale Vill. Grp. v. Fong, 43 Cal. App. 4th 539,
23   543-44, 50 Cal. Rptr. 2d 810, 812 (1996)(stating “Conversion is
     the wrongful exercise of dominion over the property of another.
24   The elements of a conversion are the plaintiff's ownership or
     right to possession of the property at the time of the
25   conversion; the defendant's conversion by a wrongful act or
     disposition of property rights; and damages. It is not necessary
26
     that there be a manual taking of the property; it is only
27   necessary to show an assumption of control or ownership over the
     property, or that the alleged converter has applied the property
28   to his own use.”).
                                      29
 1   punitive damages and fraud might be sufficient to support a
 2   finding of embezzlement under Section 523(a)(4), the bankruptcy
 3   court’s basis for finding embezzlement requires further findings
 4   tying the necessary mens rea to the elements of conversion.
 5        Moreover, as a measure of the damages of the property Debtor
 6   embezzled, the bankruptcy court found only that the
 7   “...arbitrator awarded punitive damages based on these causes of
 8   actions.”   Memorandum of Decision (Apr. 24, 2012) at 11:27-28
 9   (emphasis added).13   Thus, the only specific finding the
10   bankruptcy court made with respect to damages under
11   Section 523(a)(4) flowed from the punitive damages award.   As
12   discussed previously, the punitive damages award featured $50,000
13   for fraud and $50,000 for conversion.
14        Thus, the bankruptcy court specifically allocated $100,000
15   in punitive damages as between its finding of non-
16   dischargeability under Sections 523(a)(2) and (a)(4).   However,
17   $800,000 of the damages the bankruptcy court found
18   nondischargeable still remains without any identifiable
19
20
          13
21         Determining what “these causes of actions” were is
     difficult, if not impossible. This is because earlier in the
22   same paragraph the bankruptcy court states that: “The facts
     establishing elements of conversion and embezzlement were raised
23   as the second and seventeenth causes of action in the adversary
24   proceeding complaint.” Id. at 11:20-22. However, reference back
     to the Adversary Complaint shows that while the second cause of
25   action was for conversion, the seventeenth cause of action was a
     “Petition to Compel the Continuation of the Arbitration.” Id. at
26   38. Thus, the bankruptcy court’s reference to “these causes of
     action” refers to at least one cause of action having nothing to
27   do with embezzlement.
28
                                      30
 1   allocation to specific factual issues giving rise to nondischargeability.
 2        3.     The bankruptcy court committed reversible error when it
                 found that the $900,000 of the Arbitration Award’s lump
 3               sum damages against Debtor was issue preclusive as to
                 nondischargeability.
 4
 5        The sufficiency of a court’s factual findings are assessed
 6   under Rule 52(a).    Icicle Seafoods, Inc. v. Worthington, 475 U.S.
 7   709, 713 (1986).    The ultimate test of the adequacy of a trial
 8   judge’s findings of fact under FRCP 52(a) is whether they are
 9   explicit enough to give the appellate court a clear understanding
10   of the basis of the trial court's decision, and to enable it to
11   determine the ground on which the trial court reached its
12   decision.   Alpha Distrib. Co. of Cal., Inc. v. Jack Daniel
13   Distillery, 454 F.2d 442, 453 (9th Cir. 1972).     Even when a
14   bankruptcy court does not make formal findings, however, the BAP
15   may conduct appellate review “if a complete understanding of the
16   issues may be obtained from the record as a whole or if there can
17   be no genuine dispute about omitted findings.”    Veal v. Am. Home
18   Mortg. Serv., Inc. (In re Veal), 450 B.R. 897, 919-20 (9th Cir.
19   BAP 2011) (quoting Gardenhire v. Internal Revenue Serv.
20   (In re Gardenhire), 220 B.R. 376, 380 (9th Cir. BAP 1998), rev'd
21   on other grounds, 209 F.3d 1145 (9th Cir.2000)).     However, if
22   after such a review the record lacks a clear basis for the
23   court’s ruling, we must vacate the court’s order and remand for
24   further proceedings.    Veal, 450 B.R. at 920 (citing Alpha
25   Distributing, 454 F.2d at 452-53).
26        In Alpha Distributing, the plaintiff alleged that the
27   defendants engaged in efforts to hamper a competitor distributor.
28   Id. at 452-53.     However, the district court’s findings of fact
                                       31
 1   focused almost entirely on the plaintiff’s breach of contract
 2   claim to the virtual exclusion of all but the most peripheral
 3   references to the factual issues presented on the antitrust
 4   claims.   Id. at 453.   The district court’s conclusion of law on
 5   the antitrust claims found only that the defendants were entitled
 6   to judgment on those claims.   Id.    In reversing the district
 7   court, the Court of Appeals reasoned that on the basis of the
 8   lack of findings on the antitrust claims, there was “no way of
 9   knowing whether the district court’s decision in favor of
10   defendants on those claims was based on resolution of the
11   determinative facts in their favor.”    Id.
12        We have reviewed the record and nothing there establishes
13   that the bankruptcy court’s finding that $900,000 in damages
14   necessarily flows from factual issues giving rise to
15   nondischargeability.    Like the court in Alpha Distributing, the
16   bankruptcy court’s findings focused almost entirely on the fraud
17   and conversion causes of action determined in the Arbitration
18   Award.    However, as presented, there were at least two causes of
19   action the Arbitrator identified that are dischargeable: trespass
20   to chattels, and negligent misrepresentation.
21        Illustrative of the bankruptcy court’s error is its
22   dismissal of Jamgotchian v. Slender, 170 Cal. App. 4th 1384, 1400
23   (2009), a case Debtor relied on to distinguish trespass to
24   chattels from conversion.   The bankruptcy court chided Debtor for
25   his reliance on the case because it discussed trespass to
26   chattels.   Indeed, the bankruptcy court stated that “[a]lthough
27   the case distinguishes trespass to chattels with conversion, a
28   piece of chattel property is not the same as the intellectual
                                      32
 1   property (trade secrets) in this case.”    Memorandum of Decision
 2   (Apr. 24, 2012) at 10:19-23.
 3        Thus, the bankruptcy court in its own terms identified a
 4   cause of action at issue in the Arbitration, while failing to
 5   recognize its significance in identifying the amount of damages
 6   allocable to dischargeable debt.     The record is consistent with
 7   the bankruptcy court’s holding that the Arbitrator combined the
 8   trespass to chattel cause with the other causes of action at
 9   issue, including fraud and conversion, and then awarded lump sum
10   “damages [] for each cause of action....”    Id. at 12:26-27.
11   However, this holding is not adequate to support the entire
12   $900,000 as nondischargeable damages because it fails to
13   disaggregate and distinguish the factual findings which lead to
14   nondischargeable debt from those Arbitrator’s factual findings
15   which lead to dischargeable debt.
16   C.   The Bankruptcy Court Abused its Discretion When It Found
          Nondischargeability Under the California Uniform Trade
17        Secrets Act.
18        For reasons that are not entirely clear, the bankruptcy
19   court’s damages discussion begins with a reference to the
20   California Uniform Trade Secrets Act (“CUTSA”) Cal. Civ. Code
21   § 3426.3 (West) as an apparently independent cause of action
22   giving rise to nondischargeability.    Memorandum of Decision
23   (Apr. 24, 2012) at 12:16-17.   This is the first time the CUTSA
24   was mentioned by the bankruptcy court. After giving a brief
25   recitation of the elements of CUTSA, the bankruptcy court
26   concluded the following:
27             While the basis for the arbitration award
               was detailed, the damages awarded for each
28             cause of action were combined into one award

                                     33
 1              on all causes of action. The arbitrator
                found “the full value of the Claimant WHA
 2              claims...to be $950,000 which includes the
                $50,000 unjust enrichment amount.” As the
 3              amount for unjust enrichment is
                dischargeable, that amount will be deducted
 4              from the total award on the dischargeability
                action, reducing WHA’s award to $900,000.
 5              The arbitration award also stated, “A total
                punitive damage award of $100,000 will also
 6              be awarded on the Fraud and Conversion
                Causes of Action.”
 7
                ...The $950,000 award already included WHA’s
 8              attorney’s fees, so nothing further will be
                awarded for fees.
 9
10   Id. at 12-13.   Thus, it appears that the bankruptcy court found
11   that $900,000 was nondischargeable, although there was no effort
12   made to connect this amount with the nondischargeable claims for
13   relief.   In addition, notably absent from this discussion is any
14   reference of CUTSA, the apparent starting point of the damages
15   discussion.
16        Even if the CUTSA references are ignored, however, the
17   bankruptcy court’s analysis provided no connection between its
18   summary judgment analysis and its conclusions of
19   nondischargeability under Sections 523(a)(2) and (a)(4).
20   Moreover, this analysis provide no guidance as to whether the
21   inclusion of attorney’s fees in the damages award flowed only
22   from the arbitrator’s factual findings giving rise to
23   nondischargeable debt.   In short, as a reviewing court, we cannot
24   connect the many types of damages discussed (unjust enrichment,
25   conversion, attorney’s fees and the like) to the nondischargeable
26   claims for relief alleged.   This requires reversal.
27
28

                                     34
 1                               CONCLUSION
 2        The bankruptcy court’S findings did not adequately support
 3   its decision to allocate the damages awarded to WHA to the debts
 4   excepted from discharge.   We therefore must VACATE the bankruptcy
 5   court’s judgment and REMAND this matter with instructions that
 6   the bankruptcy court determine the proper allocation of the
 7   Arbitrator’s damage award between dischargeable and
 8   nondischargeable claims.
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

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