Toye v. O'Donnell (In re O'Donnell)
- Summarized by Guy Moss ,
- 12 years 1 month ago
- Citation:
- United States Bankruptcy Appellate Panel for the First Circuit, No. EP 12-015, December 5, 2012
- Tag(s):
-
- Ruling:
- The Court affirmed the bankruptcy court's ruling that a debt was non-dischargeable under the false financial statement provisions of Code sec. 523(a)(2)(B). Focusing solely on the standards of sub-section 523(a)(2)(B)(iv), the Court initially determined that a debtor need not personally prepare or sign a financial statement to "make or publish" it, but may be found liable when he adopts or causes a statement that is written by a third party to be used. Here, liability flowed from the Debtor's knowing enlistment, including supplying information, of his "agent" Smith in completing and submitting the paperwork in a process with which he was familiar. Second, the Court determined that the Debtor acted with the requisite "intent" because intent may be proved through both direct or circumstantial evidence, including actions evidencing a reckless indifference to, or disregard of, as here, the accuracy of the financial information submitted to the creditor.
- Procedural context:
- Appeal from the United States Bankruptcy Court for the District of Maine of an judgment determining that a certain debt was non-dischargeable pursuant to 11 U.S.C. sec. 523(a)(2)(B) [false financial statement].
- Facts:
- A chapter 7 Debtor, an experienced real estate developer, used Smith, a commercial loan broker with whom the Debtor had worked before, to arrange financing from Toye. The Debtor provided Smith with certain personal financial information, but testified that he never reviewed, nor signed, the actual personal financial statement that Smith provided to Toye in support of the Debtor's loan guarantee that was executed at the closing. There was no dispute that the financial statement was materially false and that Toye relied on it. The sole issue was whether the Debtor "caused [the statement] to be made or published with intent to deceive." The trial court, finding that Smith was the Debtor's agent and that the requisite intent could be inferred, ruled that the indebtedness on the loan that Toye had made was non-dischargeable under Code sec. 523(a)(2)(B ).
- Judge(s):
- Lamoutte, Feeney, and Caban
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