                                                        FILED
                                                         JUL 22 2016
                                                     SUSAN M. SPRAUL, CLERK
 1                        NOT FOR PUBLICATION          U.S. BKCY. APP. PANEL
                                                       OF THE NINTH CIRCUIT
 2
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )     BAP No.     CC-15-1285-KiKuF
                                   )
 6   HENRY ISAAC BUSHKIN,          )     Bk. No.     2:11-bk-43502-DS
                                   )
 7                  Debtor.        )     Adv. No.    2:13-ap-02172-DS
                                   )
 8                                 )
     HENRY ISAAC BUSHKIN,          )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )     M E M O R A N D U M1
11                                 )
     BRUCE SINGER; SINGER          )
12   FINANCIAL CORPORATION,        )
                                   )
13                  Appellees.     )
     ______________________________)
14
                    Argued and Submitted on June 23, 2016,
15                          at Pasadena, California
16                           Filed - July 22, 2016
17             Appeal from the United States Bankruptcy Court
                   for the Central District of California
18
         Honorable Deborah J. Saltzman, Bankruptcy Judge, Presiding
19
20   Appearances:    Anthony J. Rothman argued for appellant Henry Isaac
                     Bushkin; David I. Brownstein argued for appellees
21                   Bruce Singer and Singer Financial Corporation.
22
23   Before:   KIRSCHER, KURTZ and FARIS, Bankruptcy Judges.
24
25
26
          1
27           This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
28   have, it has no precedential value. See 9th Cir. BAP Rule 8024-1.
 1        Appellant, chapter 72 debtor Henry Isaac Bushkin ("Debtor"),
 2   appeals an order denying his motion for attorney's fees and costs
 3   under § 523(d).   The bankruptcy court determined that the debt to
 4   Bruce Singer and his wholly-owned entity Singer Financial
 5   Corporation ("SFC") (collectively, the "Singer Parties") was not a
 6   consumer debt and, alternatively, that the Singer Parties' claims
 7   under § 523(a)(2) were substantially justified.    We AFFIRM.
 8              I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
 9   A.   Prepetition events
10        Debtor is an attorney licensed in California and New York.
11   In or about 2008, he began writing a book about his relationship
12   with entertainer Johnny Carson, who was his client and friend.    At
13   this point in time, Debtor contends he was suffering financially
14   due to the economic downturn.   In 2008, before the book was
15   completed, Debtor began marketing it to various publishers, film
16   studios and agents.   Some parties expressed great interest in the
17   book and represented to Debtor that it had value.
18        To finish the book, Debtor approached Singer, a long-time
19   friend, for money.    Singer agreed to advance Debtor money —
20   through SFC — in exchange for a share of the proceeds from the
21   book Debtor was writing.    On January 29, 2009, Debtor, Singer and
22   SFC entered into an agreement (the "Agreement"), which provided
23   that SFC would make advances to Debtor, who would "devote full
24   time to the completion" of the manuscript.   From the advanced
25   funds, Debtor could receive living expenses for the months of
26
          2
             Unless specified otherwise, all chapter,   code and rule
27   references are to the Bankruptcy Code, 11 U.S.C.   §§ 101-1532, and
     the Federal Rules of Bankruptcy Procedure, Rules   1001-9037. The
28   Federal Rules of Civil Procedure are referred to   as “Civil Rules.”

                                      -2-
 1   February and March 2009, not to exceed $25,000 per month.        Singer
 2   was responsible for exploiting the book and film rights, but
 3   Singer and Debtor would have to mutually agree to the sale of any
 4   such rights.
 5        If the manuscript sold, proceeds from the sale would be
 6   divided as follows:   10% would go to an agent; the entire amount
 7   of the advance would be repaid to SFC or Singer; and Singer and
 8   Debtor would split the remaining balance 25/75, respectively.        The
 9   Agreement noted that the parties had agreed "to create a legal
10   entity to own and control the book and film rights to a book
11   written by Bushkin currently entitled 'The Carson Years,'" and
12   that the "ownership of the entity to be created [would] be divided
13   on an equal basis between Bushkin and Singer."       If the manuscript
14   did not sell within six months, Debtor agreed to execute a note to
15   SFC for the entire amount paid to him or advanced on his behalf.
16        The manuscript did not sell within the agreed six months.        On
17   September 1, 2009, Debtor executed a 36-month promissory note,
18   agreeing to pay SFC $159,388.46, the amount advanced to Debtor, at
19   an annual interest rate of 12%.    Debtor defaulted on the note.
20   Singer sent Debtor a notice of default, informing him that he was
21   accelerating the note and would send it to collections if Debtor
22   did not pay by November 15, 2009.       Debtor did not pay.
23   B.   Postpetition events
24        1.   Debtor's bankruptcy filing, Singer Parties' complaint
               and Debtor's pretrial motions
25
26        In his chapter 7 bankruptcy case filed on August 5, 2011,
27   Debtor listed Singer as an unsecured creditor with a claim of
28   $350,000, but did not identify SFC as a creditor.       Debtor

                                       -3-
 1   identified and valued "six chapters of material for a book" at
 2   $0.00.   Singer's residence in California was listed on the
 3   creditors' mailing matrix, but the zip code listed was incorrect.
 4        On August 10, 2011, the Bankruptcy Noticing Center ("BNC")
 5   sent the notice of the chapter 7 filing and deadlines to object to
 6   Debtor's discharge to all creditors on the mailing matrix.    BNC
 7   apparently caught the zip code error for Singer and corrected it
 8   before mailing out the notice.   The deadline for creditors to
 9   challenge the dischargeability of debts was November 21, 2011.      No
10   one filed any complaint for nondischargeability by the deadline.
11   On June 20, 2012, Debtor received a discharge.   BNC mailed the
12   notice of discharge to creditors on June 22, 2012.   Singer claimed
13   he did not receive either of the notices and had no knowledge of
14   Debtor's bankruptcy, despite their frequent contact before and
15   after the filing and the discharge.
16        Meanwhile, Debtor continued writing and eventually published
17   two books.   One book, "Johnny Carson," achieved great success and
18   was on the New York Times Best Seller list for several months.
19   Debtor did not share any of the book proceeds with Singer or SFC
20   and disputed that they owned any share of the book or film rights.
21        After Singer learned from a friend about Debtor's bankruptcy
22   and discharge in October 2013, the Singer Parties filed an
23   adversary complaint against Debtor on December 17, 2013.   In their
24   second amended complaint, the Singer Parties alleged claims under
25   § 523(a)(2)(A), (a)(3)(B) and (a)(4), § 727(d)(2) and claims for
26   declaratory relief and an accounting.   Debtor moved to dismiss.
27   He asserted that not only was Singer presumed to have received the
28   mailed notices (which also provided notice to SFC because Singer

                                      -4-
 1   was SFC's registered agent for service of process at that same
 2   address), he had also actual notice.   Because Debtor had met with
 3   Singer for breakfast to discuss the bankruptcy just days before it
 4   was filed, the Singer Parties had both presumed and actual
 5   knowledge of the bankruptcy so they could have filed a timely
 6   nondischargeability complaint.
 7        The bankruptcy court dismissed the §§ 523(a)(4) and 727(d)(2)
 8   claims, but did not dismiss the § 523(a)(3)(B) claim because the
 9   Singer Parties' knowledge of the bankruptcy filing was a disputed
10   factual issue.   That left four claims:   § 523(a)(2)(A), (a)(3)(B),
11   declaratory relief and accounting.
12        Debtor then moved for summary judgment, contending that the
13   remaining claims were time-barred because the Singer Parties
14   failed to file their dischargeability complaint by the deadline
15   and they had not provided clear and convincing evidence to rebut
16   the presumption of receipt of the bankruptcy notice.   Debtor
17   alternatively argued that the Singer Parties' claims had been
18   discharged; this debt arose from a breached loan/contract.
19        The bankruptcy court denied summary judgment, ruling that
20   disputed issues of fact remained as to whether the Singer Parties
21   had actual notice of the bankruptcy.
22        In opposition to the summary judgment motion, Singer had
23   described his mail practices, stating that he had followed the
24   same practice for the collection of mail at his home for more than
25   seven years.   His mailbox was located at the street in front of
26   his residence.   If he was home, he collected the mail daily at
27   3:00 p.m., took it to his kitchen and reviewed it.   If he was out
28   of town, his housekeeper placed the mail in a basket in Singer's

                                      -5-
 1   kitchen for him to review when he returned.   Singer recounted that
 2   he was home on August 10, 2011, but was out of town between
 3   August 11 and August 16, 2011.   He stated he received no notices
 4   from the court on August 10 and no notices from the court were in
 5   his mail basket when he returned on August 16.   He admitted that
 6   he was home on June 20, 2012, but stated that he had not received
 7   any notice of Debtor's discharge on that date or anytime
 8   thereafter.
 9        Singer also stated that his wife is the sister of actress
10   Sharon Stone, and both she and Ms. Stone have been the victims of
11   stalkers.   Such victimization included the periodic stealing of
12   mail from Singer's mailbox.   In addition, Singer's neighbor
13   Dr. Jentsch, a UCLA neuroscientist unpopular with animal rights
14   groups, had been the victim of a car bombing in his driveway, and
15   persons thinking that Singer's mailbox was Jentsch's were caught
16   on camera in 2010 taking Singer's mail.   Singer knew of the mail
17   theft because he had hired a private investigator, Paul Barresi,
18   to look into the matter.    He attached a copy of a 2010 article
19   regarding the mail theft.   Singer stated that despite reporting
20   the mail theft to the Los Angeles Police Department, the problem
21   had not been remedied and was still occurring with new stalkers of
22   Ms. Singer, Ms. Stone and Dr. Jentsch.
23        In support of his claims for declaratory relief and
24   accounting, Singer had presented evidence of emails from Debtor
25   dated before and after the parties entered into the Agreement,
26   wherein Debtor referred to the men as "partners," discussed the
27   status of the book and stated that "everything would be split
28   50/50" and that Singer would "always own half of the book."    The

                                      -6-
 1   Singer Parties argued that these communications and conduct
 2   evidenced both an oral and written partnership agreement in which
 3   Singer acquired book and film rights to the Johnny Carson book.
 4        2.     The trial and the bankruptcy court's ruling on the
                 Singer Parties' claims
 5
 6        Trial proceeded on the remaining four claims.    By way of
 7   declaration, Debtor testified that when he spoke to Singer about
 8   writing the book, Singer thought it was a good idea and agreed to
 9   have SFC lend money to Debtor for his personal expenses while he
10   wrote it.    In return, Debtor agreed that he and Singer would be
11   partners in the book Debtor was writing, if it were published
12   within the agreed six months.    Debtor testified that a partnership
13   or other entity was to be formed only if the book sold within the
14   six-month time frame.    After the six months ran, Debtor said the
15   funds advanced became a high interest loan.
16        The bankruptcy court decided to first hear live testimony on
17   the question of whether the Singer Parties received notice of
18   Debtor's bankruptcy filing, because if so, the § 523(a) claims
19   necessarily failed.    On cross-examination, Singer denied ever
20   meeting Debtor for breakfast in California on August 14, 2011, to
21   discuss the bankruptcy filing.    Singer testified that he was in
22   Montana between August 11 and 16, 2011, and had plane tickets and
23   receipts to prove it.    Singer's testimony at trial regarding his
24   mail practices was consistent with what he stated in opposition to
25   Debtor's earlier motion for summary judgment.
26        Following Singer's testimony and the parties' arguments
27   regarding notice, the bankruptcy court announced its finding that
28   Singer and SFC had received notice and awarded judgment on the

                                      -7-
 1   § 523 claims to Debtor.     For Singer, the court found that while
 2   his additional evidence of stalkers and mail theft rebutted the
 3   presumption of receipt of the bankruptcy notices, it did not rise
 4   to the level of clear and convincing evidence sufficient to
 5   overcome the presumption.     Because notice was proper for Singer,
 6   notice was also proper for SFC; Singer was SFC's only officer and
 7   its agent for service of process, and SFC's service address was
 8   Singer's residence.     As a result, the court found that the
 9   § 523(a)(2) claims were untimely.
10           The bankruptcy court declined to take up the declaratory
11   relief and accounting claims, finding that since the § 523 claims
12   failed, it made no sense to adjudicate these claims, since any
13   debt Debtor owed to Singer and SFC arising out the Agreement had
14   been discharged.     The court noted that even if it had found that a
15   partnership existed and that Singer and SFC had some entitlement
16   to book or film rights, it did not matter; any prepetition claims
17   arising from the Agreement had been discharged.
18           The bankruptcy court entered a judgment in favor of Debtor on
19   all claims on June 18, 2015 (the "Judgment").
20           3.   Singer Parties' motion for reconsideration of the
                  Judgment and appeals
21
22           The Singer Parties moved to alter or amend the Judgment under
23   Civil Rule 59, which the bankruptcy court denied.     The Singer
24   Parties then appealed the Judgment to the district court, which
25   entered its affirmance while this appeal was pending.     The Singer
26   Parties have appealed the district court's decision to the Ninth
27   Circuit Court of Appeals.
28   / / /

                                       -8-
 1        4.      Debtor's motion for attorney's fees and costs
 2        Debtor moved for attorney's fees and costs of nearly $300,000
 3   against the Singer Parties under § 523(d) ("Fee Motion").    Debtor
 4   contended that he met the requirements of § 523(d):     a § 523(a)(2)
 5   judgment was entered in his favor; and the debt at issue was a
 6   consumer debt.     Debtor maintained that his debt to Singer and SFC
 7   was a consumer debt, as he had incurred it for his personal,
 8   family and household living expenses.     Additional evidence also
 9   established that the debt was consumer debt:     (1) Singer told a
10   friend that he lent Debtor money for living expenses; (2) Debtor's
11   attached declaration explained that the advanced funds were used
12   for personal and family expenses; (3) Singer testified in his
13   deposition that the $25,000 per month was an advance to Debtor to
14   live while he wrote the book; and (4) paragraph 8 of the Agreement
15   (that Debtor could receive up to $25,000/month for the months of
16   February and March 2009 for living expenses) established that the
17   advanced funds were for living expenses.     Debtor also claimed that
18   the Singer Parties' § 523(a)(2) claims were not substantially
19   justified.
20        The Singer Parties disputed Debtor's contention that the debt
21   was consumer debt, arguing that the purpose for which the debt was
22   incurred determines whether it is consumer debt and debts incurred
23   with a profit motive are not consumer debts.     In this case, Debtor
24   was provided money as part of a business deal, wherein each of the
25   parties anticipated and stood to gain substantial profit from the
26   eventual sale of the Johnny Carson book.     Those profits were to be
27   divided within a partnership formed between Debtor and the Singer
28   Parties.   The Singer Parties contended that the purpose of the

                                       -9-
 1   transaction was a business transaction to create a profitable
 2   business partnership; no loan was given to Debtor merely to
 3   provide for personal, family or household purposes.
 4        In reply, Debtor argued that in determining whether a debt is
 5   consumer debt for purposes of § 523(d), courts look to the use of
 6   the debt.   Here, argued Debtor, the evidence showed that the
 7   $159,388.46 loan to Debtor was incurred for his personal and
 8   family expenses; the funds were not used for any profit or
 9   business purpose.   Debtor disputed the Singer Parties' position
10   that because their § 523(a)(2) claims survived various procedural
11   motions, this proved they were substantially justified.   In all
12   circumstances, argued Debtor, SFC had no evidence of any fraud
13   claim under § 523(a)(2).   All SFC had established was that it lent
14   money and was a party to a prepetition agreement with Debtor.
15   5.   The bankruptcy court's ruling on the Fee Motion
16        The bankruptcy court denied the Fee Motion at the hearing on
17   August 11, 2015.    It first determined that the advanced funds to
18   Debtor were not consumer debt:
19        THE COURT: Now, while the case ultimately found that the
          debt was a consumer debt, the reasoning of In re Stein
20        [sic] – and that's the BAP case, which was affirmed by
          the Ninth Circuit – leads me to conclude here that the
21        Debtor has not established that this is a consumer debt.
          While funds may have been used for living expenses, it's
22        quite clear that debts incurred by the Debtor with a
          profit motive are not consumer debt. That's the finding
23        of the . . . Stein [sic] case. And my finding here is
          that these parties entered into some sort of commercial
24        agreement. Whether it was a partnership or not is beside
          the point. The agreement was made to write and develop
25        the book.   There was always a profit motive among the
          parties with — in connection with the parties'
26        arrangement, in connection with the note signed by the
          Debtor. This was an arrangement to write and market a
27        book. This was a commercial relationship. This was not
          a consumer debt.
28

                                      -10-
 1   Hr'g Tr. (Aug. 11, 2015) 16:13-17:4.     The court then determined
 2   that the Singer Parties' claims were substantially justified,
 3   finding that they had a reasonable factual and legal basis.
 4        Debtor timely appealed the order denying the Fee Motion.
 5                               II. JURISDICTION
 6        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 7   and 157(b)(2)(I) and (O).    We have jurisdiction under 28 U.S.C.
 8   § 158.
 9                                 III. ISSUES
10   1.   When denying the Fee Motion, did the bankruptcy court err in
11   determining that the advanced funds were not a consumer debt?
12   2.   Did the bankruptcy court abuse its discretion in denying the
13   Fee Motion under § 523(d)?
14                        IV. STANDARDS OF REVIEW
15        A bankruptcy court's denial of attorney's fees and costs
16   under § 523(d) is reviewed for abuse of discretion.    See First
17   Card v. Hunt (In re Hunt), 238 F.3d 1098, 1101 (9th Cir. 2001)
18   (citing First Card v. Carolan (In re Carolan), 204 B.R. 980, 984
19   (9th Cir. BAP 1996)); Stine v. Flynn (In re Stine), 254 B.R. 244,
20   248 (9th Cir. BAP 2000), aff'd, 19 F. App’x 626 (9th Cir. 2001).
21   The court abuses its discretion if it applied the wrong legal
22   standard or its findings were illogical, implausible or without
23   support in the record.   TrafficSchool.com, Inc. v. Edriver Inc.,
24   653 F.3d 820, 832 (9th Cir. 2011).
25        Determining whether a debt is consumer or business is a
26   factual question reviewed for clear error.     See Aspen Skiing Co.
27   v. Cherrett (In re Cherrett), 523 B.R. 660, 667 (9th Cir. BAP
28   2014) (implying that a determination of whether a debt is

                                       -11-
 1   "consumer debt" for purposes of § 707(b)(1) is a factual finding
 2   reviewed for clear error).    But see In re Booth, 858 F.2d 1051,
 3   1053 n.5 (5th Cir. 1988) (whether bankruptcy court correctly
 4   classified a debt as consumer or business for purposes of § 707(b)
 5   is a legal inquiry and subject to de novo review).
 6                                V. DISCUSSION
 7   A.   Section 523(d)
 8        If a creditor prosecutes an action for an exception to
 9   discharge of a debt under § 523(a)(2) and that debt is then
10   ordered discharged by the bankruptcy court, § 523(d) is
11   implicated.   That statute provides:
12        (d)   If  a creditor     requests  a   determination   of
          dischargeability of a consumer debt under subsection
13        (a)(2) of this section, and such debt is discharged, the
          court shall grant judgment in favor of the debtor for the
14        costs of, and a reasonable attorney's fee for, the
          proceeding if the court finds that the position of the
15        creditor was not substantially justified, except that the
          court shall not award such costs and fees if special
16        circumstances would make the award unjust.
17   Section 523(d) was enacted to "curb the abusive practices of
18   consumer finance companies, who often filed bad faith
19   dischargeability actions in the knowledge that the financially
20   straitened debtor would be forced to settle the claim, rather than
21   bearing the expense of a trial on the merits."    All Am. of
22   Ashburn, Inc. v. Fox (In re Fox), 725 F.2d 661, 663 (11th Cir.
23   1984).
24        To recover attorney's fees under § 523(d), a debtor must
25   prove:   (1) the creditor requested a determination of the
26   dischargeability of the debt under § 523(a)(2); (2) the debt is a
27   consumer debt; and (3) the debt was discharged.   In re Stine,
28   254 B.R. at 249; Am. Sav. Bank v. Harvey (In re Harvey), 172 B.R.

                                      -12-
 1   314, 317 (9th Cir. BAP 1994) (citing Chevy Chase, F.S.B. v.
 2   Kullgren (In re Kullgren), 109 B.R. 949, 953 (Bankr. C.D. Cal.
 3   1990)).    Once these three elements are satisfied, the burden
 4   shifts to the creditor to demonstrate that its position was
 5   substantially justified.    In re Stine, 254 B.R. at 249;
 6   In re Harvey, 172 B.R. at 317.    A creditor is "substantially
 7   justified" in bringing a § 523(a)(2) claim if the claim has a
 8   "reasonable basis both in law and in fact."    In re Hunt, 238 F.3d
 9   at 1103.
10   B.   The bankruptcy court did not err in determining that the
          advanced funds were not consumer debt.
11
12        "Consumer debt" is defined in § 101(8) as "debt incurred by
13   an individual primarily for a personal, family or household
14   purpose."   This definition is adapted from the definition used in
15   various consumer protection laws.    In re Stine, 254 B.R. at 249.
16   The term "consumer debt" is used throughout the Code.    See
17   § 524(c)(6)(B) (excepting consumer debts secured by real estate
18   from reaffirmation requirements); § 707(b)(1) (providing for
19   dismissal of chapter 7 cases filed by individual debtors "whose
20   debts are primarily consumer debts" for substantial abuse);
21   § 1301(a) (staying actions against a co-debtor to collect consumer
22   debt).    "[T]here is a natural presumption that identical words
23   used in different parts of the same act are intended to have the
24   same meaning."   Atl. Cleaners & Dyers, Inc. v. United States,
25   286 U.S. 427, 433 (1932).    Thus, in addition to those cases
26   construing the term "consumer debt" under § 523(d), we may
27   consider cases construing other sections of the Code in which the
28   term "consumer debt" is used.    Cypher Chiropractic Ctr. v. Runski

                                      -13-
 1   (In re Runski), 102 F.3d 744, 746-47 (4th Cir. 1996).
 2        "It is settled in this circuit that the purpose for which the
 3   debt was incurred affects whether it falls within the statutory
 4   definition of 'consumer debt' and that debt incurred for business
 5   ventures or other profit-seeking activities does not qualify."
 6   Meyer v. Hill (In re Hill), 268 B.R. 548, 552-53 (9th Cir. BAP
 7   2001) (discussing "consumer debt" in § 1322(b)(1)) (citing Zolg v.
 8   Kelly (In re Kelly), 841 F.2d 908, 913 (9th Cir. 1988) ("Debt
 9   incurred for business ventures or other profit-seeking activities
10   is plainly not consumer debt for purposes of section 707(b).");
11   In re Cherrett, 523 B.R. at 669 ("courts generally ascribe a
12   business purpose, rather than a personal, family or household
13   purpose to debts which are incurred 'with an eye toward profit'
14   and which are 'motivated for ongoing business requirement'")
15   (emphasis in original); In re Stine, 254 B.R. at 249 (a § 523(d)
16   case citing In re Booth, 858 F.2d at 1055, a § 707(b) case, for
17   the proposition that debts incurred by the debtor with a profit
18   motive are not consumer debts).
19        Other circuits apply a similar "profit motive" or "business
20   venture" test for the determination of consumer debt.   See IRS v.
21   Westberry (In re Westberry), 215 F.3d 589, 593 (6th Cir. 2000)
22   (considering "profit motive" test in determining whether income
23   tax debts should be considered consumer debts for purposes of
24   applying the co-debtor stay under § 1301); Citizens Nat'l Bank v.
25   Burns (In re Burns), 894 F.2d 361, 363 (10th Cir. 1990) (§ 523(d)
26   case holding that a credit transaction is not a consumer debt when
27   it is incurred with a profit motive); In re Booth, 858 F.2d at
28   1055 (Fifth Circuit Court of Appeals discussing "consumer debt" in

                                       -14-
 1   § 707(b) and holding that a debt is a business debt, as compared
 2   to a debt acquired for a personal, family, or household purpose,
 3   when it is "incurred with an eye toward profit").
 4           The determination of whether a debt relates to a personal,
 5   family, or household purpose or is motivated by profit-seeking is
 6   made at the time the debt is incurred.     In re Nicolas, 2002 WL
 7   32332461, at *2 (Bankr. D. Haw. Mar. 22, 2002) (citing
 8   In re Bertolami, 235 B.R. 493, 497 (Bankr. S.D. Fla. 1999)
 9   (holding that mortgage debt incurred for personal residence was a
10   consumer debt notwithstanding its later conversion to commercial
11   use)).
12           Debtor contends that the bankruptcy court applied an
13   incorrect standard of law for determining whether the advanced
14   funds were a consumer or business debt.     Debtor contends that the
15   court improperly relied on Stine — which he argues had nothing to
16   do with defining a consumer or business debt and never defined
17   profit motive — to conclude that the advanced funds were incurred
18   by Debtor with a profit motive and therefore were not consumer
19   debt.    While it is true that Stine did not define "profit motive,"
20   it did analyze whether the debts at issue were incurred by the
21   debtor for personal, family or household purposes.     The Panel
22   concluded that because the debtor had borrowed funds for the
23   purpose of improving her home and incurred further debt when the
24   creditor made mortgage, insurance and tax payments for the home on
25   the debtor's behalf, the debts were "consumer debts" as defined by
26   § 101(8).    254 B.R. at 250.
27           In any event, we fail to see the point of Debtor's argument.
28   Regardless of what Debtor claims is a "gratuitous statement of

                                       -15-
 1   law" in Stine, that "debts incurred by the debtor with a profit
 2   motive are not consumer debts," the rule in this circuit is clear:
 3   courts must look to the purpose of the debt in determining whether
 4   it is "consumer debt," and debt incurred for business ventures or
 5   other profit-seeking activities is not consumer debt. In re Kelly,
 6   841 F.2d at 913; In re Cherrett, 523 B.R. at 668-69; In re Hill),
 7   268 B.R. at 552-53.     Thus, the bankruptcy court did not err when
 8   it applied that legal standard.
 9           Nonetheless, despite this circuit's law, Debtor contends that
10   the use of the funds is determinative for characterizing whether a
11   debt is a consumer or business debt.      Because Debtor "used" the
12   advanced funds to pay his personal expenses, he maintains that the
13   debt is consumer debt.     We disagree.
14           In Cherrett, a recent case by this Panel, we examined the
15   distinction between consumer and business debt in the context of
16   incurring housing debt for a business purpose.       The debtor was
17   offered a job by Aspen Skiing Company for high compensation.
18   523 B.R. at 663.    As part of his employment package, he negotiated
19   an interest-free loan of $500,000 from Aspen to purchase a home.
20   In 2007, the debtor borrowed the $500,000 from Aspen to purchase a
21   $1 million home secured by a second trust deed.      Id. at 664.   The
22   debtor hoped the home would appreciate in value so that when it
23   was sold, he would realize a profit, as he did with his previous
24   home.    Id.   Things did not turn out as planned.   The real estate
25   market greatly declined in 2008, and the debtor eventually left
26   Aspen's employ in 2011.     Id.
27           In moving to dismiss his chapter 7 case under § 707(b)(1),
28   Aspen argued that the home loan was "consumer debt" because the

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 1   debtor had obtained the loan to purchase his personal residence.
 2   Id. at 668.   Aspen argued that the home loan did not become a
 3   "business debt" simply because it was part of the debtor's
 4   compensation.   Id. at 670.   In affirming the bankruptcy court's
 5   determination that the home loan was business debt, the Panel
 6   ruled that "the key factor in determining whether a debt is
 7   consumer debt lies in the debtor's purpose in incurring the debt."
 8   Id.   (emphasis in original).   Thus, even though secured debt
 9   incurred to purchase or improve a debtor's personal residence is
10   generally consumer debt, Price v. United States Tr. (In re Price),
11   353 F.3d 1135, 1139 (9th Cir. 2004), the bankruptcy court had
12   properly characterized the home loan as business debt, because the
13   debtor's primary purpose in obtaining the loan was for business as
14   it was an integral part of his employment.   In re Cherrett,
15   523 B.R. at 670-72.
16         Debtor's contention that "use" of the debt is determinative
17   for characterizing whether a debt is consumer or business debt
18   defies our controlling authority.   Even though the debtor in
19   Cherrett obtained the home loan to buy a personal residence, which
20   is generally considered a consumer debt, and he did in fact use
21   those funds to buy it, the purpose of the home loan had a business
22   purpose; it was an integral part of the business arrangement
23   between the parties and clearly had a profit motive for the
24   debtor.   Applying the standard of "use" Debtor suggests is
25   unworkable.   A debtor could convert the character of a debt from
26   business to consumer (and vice versa) by simply using the funds
27   for a purpose different than the original purpose.   Plus, it
28   eliminates the court's consideration of the debtor's motive, which

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 1   must be viewed at the time the debt was incurred.    In re Nicolas,
 2   2002 WL 32332461, at *2; In re Bertolami, 235 B.R. at 497.
 3           Here, although Debtor testified that the advanced funds were
 4   used for his personal expenses and paragraph 8 of the Agreement
 5   provides that Debtor could receive up to $50,000 total for living
 6   expenses for the months of February and March 2009, it is clear
 7   that the purpose of the advances to Debtor was for a business
 8   enterprise with an eye toward profit.    Debtor approached Singer
 9   and obtained the loan from SFC for the sole purpose of funding the
10   writing of his book.    The parties agreed to split the proceeds if
11   the book sold within six months.    SFC advanced funds to Debtor so
12   that he could focus his efforts on writing the book and not have
13   to worry about the pressures of daily finances or about paying
14   others who were involved in its completion (who Debtor did pay
15   with some of the funds).    Obviously, the faster Debtor could write
16   the book, the faster the parties could make money, which clearly
17   was the primary purpose of their arrangement.    The funds here, not
18   unlike those in Cherrett, functioned as Debtor's compensation
19   during that six-month period.
20           Therefore, because the debt was incurred with a profit
21   motive, it is not consumer debt.    Accordingly, the bankruptcy
22   court did not err in determining that Debtor failed to meet his
23   burden in establishing that the advanced funds were consumer debt.
24   As a result, Debtor was not entitled to attorney's fees and costs
25   under § 523(d).    Given this conclusion, we need not decide whether
26   the bankruptcy court correctly concluded that the Singer Parties'
27   § 523(a)(2) claims were substantially justified.
28   / / /

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 1                        VI. CONCLUSION
 2   For the foregoing reasons, we AFFIRM.
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