General Electric v. Belli ( 1997 )

USCA1 Opinion

                                [NOT FOR PUBLICATION]



                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT

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        No. 97-1510



                   GENERAL ELECTRIC MORTGAGE INSURANCE CORPORATION,



                                      Appellant,



                                          v.



                                   PETER M. BELLI,



                                      Appellee.



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                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
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                                        Before



                           Selya and Boudin, Circuit Judges,
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                          and Dowd,* Senior District Judge.
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            Richard W.  Gannett with whom  Gannett & Associates  was on  brief
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        for appellant.

            Harland L. Smith for appellee.
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                                  December 10, 1997

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        *Of the Northern District of Ohio, sitting by designation.



























                 Per  Curiam.   The General  Electric Mortgage  Insurance
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            Corporation ("GEMIC") appeals from the district court's order



            affirming the refusal of the bankruptcy court to declare non-



            dischargeable  because of fraud a debt owed to it by Peter M.



            Belli.   11 U.S.C.     523(a)(2)(A)-(B).   Unfortunately  for



            GEMIC,  the facts  now relied  upon  to show  fraud were  not



            proved  at trial in  the bankruptcy  court.   Accordingly, we



            affirm.



                 GEMIC  insured  loans   for  the  First  Mark   Mortgage



            Corporation  of Emerald Isle,  North Carolina ("First Mark"),



            which in  1990 lent  Belli $126,800,  secured by  a mortgage.



            Belli defaulted.  GEMIC made good the deficiency, First  Mark



            assigned  its rights to GEMIC, and GEMIC  in turn won a state



            court judgment against Belli on October 20, 1993, for the sum



            of $58,719.08, the principal amount still owed to GEMIC after



            the  foreclosure sale of  the mortgaged property.   Belli did



            not  pay this  sum  but instead  filed  for bankruptcy  under



            Chapter 7 on February 18, 1994.



                 On  May 27,  1994, GEMIC  filed  a complaint  asking the



            bankruptcy court to declare the debt non-dischargeable on the



            ground that Belli had lied on his loan application concerning



            the  terms   of  his  employment   and  the  amount   of  his



            liabilities;  the complaint  did not  assert  that Belli  had



            overstated  his assets.  After  some discovery, a bench trial



            was held  on July  19, 1995, which  consisted largely  of the







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            direct examination  and cross-examination  of Belli,  who was



            the only witness to testify.   The bankruptcy court dismissed



            GEMIC's  complaint and later denied GEMIC's motion for relief



            from final  judgment.   GEMIC appealed  these rulings  to the



            district court, which affirmed.



                 On  appeal, GEMIC tells us that Belli's loan application



            overstated   his  gross   monthly  income,   understated  his



            outstanding  debts,  and--most  important--misrepresented his



            ownership  interest in  certain assets.    Belli had  claimed



            ownership  of two  parcels of  land  valued at  $435,000; but



            GEMIC now tells us that  Belli had previously lost one parcel



            due to foreclosure  and had conveyed most of  his interest in



            the  other, so  that his  equity  in the  two properties  was



            actually approximately $250.



                 Had  GEMIC proved  at trial  the misrepresentations  now



            described,  it would have  gone far  toward proving  that the



            judgment earlier  won  by GEMIC  was non-dischargeable  under



            section 523.   We were surprised  therefore to discover  that



            the  trial  record does  not  contain  proof  of the  alleged



            misrepresentations.   Instead, it shows that the only witness



            called  was Belli  himself  who,  although vigorously  cross-



            examined by  GEMIC counsel, declined  to admit that  his loan



            application was materially false.



                 To explain the absence of  proof, GEMIC says that one of



            its own  witnesses was unexpectedly  unavailable; but  absent







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            extreme  circumstances, refusal  to defer  a scheduled  trial



            where a party fails  to produce its own witness is within the



            sound discretion of  the trial court.   GEMIC also  complains



            that  the district  court refused  to enforce  a subpoena  to



            require  Belli's  former  employer to  appear  at  trial with



            records as to Belli's former  salary; but GEMIC had sought to



            serve the subpoena only the  day before trial and the witness



            was  out  of  state.    GEMIC  had  failed  to  preserve  the



            employer's testimony by deposition.



                 GEMIC next says that Belli did not adequately respond to



            discovery;  specifically,  he  failed  to  produce  prior tax



            returns, saying they had been  lost.  But GEMIC itself waited



            until the last day to submit its discovery requests and, more



            important, did  not complain to  the trial  court until  five



            days before trial  even though it  had had Belli's  responses



            for a month.  Nor did GEMIC move in timely fashion  to compel



            Belli to sign an authorization so that it could itself secure



            the tax documents from the Internal Revenue Service.



                 As  for   the  misrepresentations   concerning  property



            ownership, it appears that GEMIC did not discover these facts



            until a title search was  performed after trial.  The results



            were  the basis  for  GEMIC's motion  for  relief from  final



            judgment.   But  GEMIC  has  never explained  why,  with  due



            diligence,  it could not have discovered the same information



            prior to trial.  In  these circumstances, the trial court was







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            certainly not obliged  to let GEMIC reopen matters  to repair



            the record.



                 This case involved a relatively small sum for GEMIC and,



            even  if   it  had   prevailed  in   making  the   debt  non-



            dischargeable, it  might never have  seen a  penny.   Perhaps



            this  justified it  in  stinting  on  trial  preparation  and



            gambling that Belli  might be forced on  cross-examination to



            admit the  necessary facts.   But having gambled and  lost in



            the trial court, GEMIC cannot expect rescue on appeal.



                 Affirmed.
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