UNITED STATES BANKRUPTCY APPELLATE PANEL
FOR THE FIRST CIRCUIT
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BAP No. NH 99-051
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IN RE: ALFRED J. ALMEDER AND SHARON A. ALMEDER,
Debtors.
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ALFRED J. ALMEDER AND SHARON A. ALMEDER,
Defendants/Appellants,
v.
FRANCES J. DUGGAN,
WINIFRED DUGGAN, FRANCES J. DUGGAN, JR.,
AND FRANCIS J. DUGGAN, ASSIGNEE OF LAWRENCE DUGGAN
Plaintiffs/Appellees.
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Appeal from the United States Bankruptcy Court
for the District of New Hampshire
(Hon. Mark W. Vaughn, U.S. Bankruptcy Judge)
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Before
VOTOLATO, HILLMAN, FEENEY, U.S. Bankruptcy Appellate Panel Judges
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Alfred J. Almeder and Sharon A. Almeder, pro se, on brief for Appellants.
Robert D. Loventhal, Esquire, on brief for the Appellees.
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February 6 , 2001
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Per Curiam.
The Debtor, Alfred J. Almeder (“Almeder” or the “Debtor”)
appeals from a judgment of the United States Bankruptcy Court for
the District of New Hampshire (the “Bankruptcy Court”) in which
the Bankruptcy Court determined that debts owed by the Debtor to
the Plaintiffs, Francis J. Duggan, Winifred Duggan and Francis J.
Duggan Jr. (collectively the “Plaintiffs”) in the total sum of
$40,000 were excepted from discharge pursuant to
11 U.S.C. §
523(a)(2)(A). After a trial at which the Plaintiffs, Francis
Duggan Sr. and Francis Duggan Jr., and the Debtor testified, the
Bankruptcy Court issued a memorandum opinion and a final judgment
of nondischargeability.
In its memorandum, the Bankruptcy Court discussed the
elements of a creditor’s claim for an exception to discharge
under Section 523(a)(2)(A). The Bankruptcy Court stated that in
order to prevail on their complaint, the Plaintiffs were required
to show that the Debtor made a false representation, that he knew
or should have known it was false, and that the Plaintiffs
justifiably relied on the representation, resulting in damages to
them. The Bankruptcy Court applied the standard of justifiable
reliance set forth in Field v. Mans,
516 U.S. 59 (1995).
The Bankruptcy Court found that the Plaintiffs had presented
credible evidence that the Debtor had made a number of fraudulent
misrepresentations to them which he knew were false, in
connection with his solicitation of investments and sale of stock
in Dreamworld, Inc. with respect to a proposed theme park known
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as “Dreamworld.” Specifically, the Bankruptcy Court found that
the Debtor misrepresented four matters: 1) that there was
sufficient land under option to complete the project; 2) that a
lender had committed funds for the project, when in fact there
were a number of undisclosed contingencies to the financing,
including substantial payments by Dreamworld, Inc.; 3) that the
stock in Dreamworld, Inc. was “blue skied,” that is, legally
issued; and 4) that the Plaintiffs’ investments were safe because
the project owners had the land and permits for an equestrian
park. The Bankruptcy Court further found that the Plaintiffs
relied on the representations in deciding to invest in Dreamworld
and that their reliance was justifiable based upon all of the
circumstances surrounding the investment, emphasizing that at the
two meetings between the Debtor, the Plaintiffs and other
investors, the Debtor did not point out the risks of investing.
The Bankruptcy Court concluded that the claim of Francis and
Winifred Duggan in the sum of $30,000 and the claim of Francis
Duggan, Jr. in the sum of $10,000 were excepted from discharge
pursuant to
11 U.S.C. § 523(a)(2)(A).
The Bankruptcy Appellate Panel (the “Panel”) has
jurisdiction over this appeal pursuant to
28 U.S.C. § 158. On
appeal, “findings of fact ... shall not be set aside unless
clearly erroneous and due regard shall be given to the
opportunity of the bankruptcy court to judge the credibility of
witnesses.” Fed. R. Bankr. P. 8013; Jeffrey v. Desmond,
70 F.3d
183 (1st Cir. 1995); Aetna Casualty and Surety Co. v. Markarian
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(In re Markarian),
208 B.R. 249 (B.A.P. 1st Cir. 1997).
The Debtor does not challenge the legal standard utilized by
the Bankruptcy Court, and the Panel rules that the Bankruptcy
Court applied the proper legal standard in determining the
exception to discharge under § 523 (a)(2)(A). See Century 21
Balfour Real Estate v. Menna (In re Menna),
16 F.3d 7, 10 (1st
Cir. 1994). The Debtor, however, asserts that the Plaintiffs did
not prove fraud before the Bankruptcy Court, pointing to what he
perceives to be contradictions in the Plaintiffs’ testimony and
maintains that the Bankruptcy Court erred in finding against the
Debtor. The Panel has conducted a full review of the entire
record on appeal, in particular the transcript of the trial in
the Bankruptcy Court and the designated exhibits that were
received into evidence by the Bankruptcy Court. Based upon our
independent review, the Panel concludes that the record amply
supports and justifies the disposition below. Accordingly, the
judgment of the Bankruptcy Court is now AFFIRMED.
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