In Re Charles Armstrong, Debtor, Charles Armstrong, Helen Armstrong v. Department of Real Estate, State of California

ALARCON, Circuit Judge:

I

Defendant-Appellant Department of Real Estate, State of California (Department) appeals from the district court’s order granting plaintiff-appellee Charles Armstrong (Armstrong) $20,000 from California’s “Real Estate Recovery Fund” (the Fund). This is an adversarial proceeding in bankruptcy in which the substantive law of California applies. We reverse.

II

Armstrong brought this action for fraud in the district court against Flynn Realty, Inc. (“Flynn”), a debtor in Chapter 11, and several individuals (some of whom were Flynn employees) contending they made…