In Re Daniel J. McQuaid Debtor. Daniel J. McQuaid v. First Interstate Bank of California, 65 F.3d 175, 1st Cir. (1995)
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Scribd Government DocsIn Re Daniel J. McQuaid Debtor. Daniel J. McQuaid v. First Interstate Bank of California, 65 F.3d 175, 1st Cir. (1995)
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Scribd Government Docs65 F.
3d 175
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions
other than opinions or orders designated for publication are
not precedential and should not be cited except when relevant
under the doctrines of law of the case, res judicata, or collateral
estoppel.
In re Daniel J. McQUAID, Debtor.
Daniel J. McQUAID, Appellant,
v.
FIRST INTERSTATE BANK OF CALIFORNIA, Appellee.
No. 94-15617.
United States Court of Appeals, Ninth Circuit.
Submitted Aug. 16, 1995.*
Decided Aug. 25, 1995.
1
Before: D.W. NELSON and T.G. NELSON, Circuit Judges, and KING,**
District Judge.
2MEMORANDUM***
3
Daniel J. McQuaid appeals from a decision of the Bankruptcy Appellate Panel
affirming the bankruptcy court's judgment of nondischargeability of debt in
favor of First Interstate Bank of California (the Bank). We have jurisdiction
pursuant to 28 U.S.C. Secs. 158(d) and 1291, and affirm.
DISCUSSION
4
Under 11 U.S.C. Sec. 523(a)(2)(B), a creditor must prove several elements to
preclude a debtor's discharge:
5(1) a statement is materially false;
6(2) respecting the debtor's ... financial condition;
7(3) on which the creditor ... reasonably relied; and
(4) the debtor caused the statement to be made or published with intent to deceive.,
8
8
9
In re Kirsh, 973 F.2d 1454, 1457 (9th Cir.1992). The issue on appeal deals with
elements one and three. We must decide whether the bankruptcy court erred in
concluding that the Bank reasonably relied on McQuaid's false representations
in his financial statements, and whether the representations were material.
10
"The court of appeals reviews the BAP's decision de novo. The bankruptcy
court's conclusions of law are reviewed de novo, and its findings of fact are
reviewed for clear error." In re Siriani, 967 F.2d 302, 303-04 (9th Cir.1992).
"The determination of justifiable reliance is a question of fact subject to the
clearly erroneous standard of review." Kirsh, 973 F.2d at 1456.
11
McQuaid falsely represented in financial statements that he had an ownership
interest in McQuaid Ranches, Inc. (the Farm). McQuaid argues that the
ownership of the Farm was not a material factor in the Bank's crop loans to
McQuaid. He also argues that the Bank's failure to investigate into the
representation of his ownership constituted a lack of justifiable reliance.
12
The bankruptcy court was not clearly erroneous in determining that ownership
of the Farm was material. Over one-half of McQuaid's net worth was attributed
in the financial statements to his ownership interest in the Farm. The Bank's
loan officer testified that he followed industry standards in reviewing the loan
applications. The loan officer's analysis considered the representations in the
financing statements. A Bank vice-president testified that the net worth of a
crop-loan applicant is a material consideration in determining whether to grant
a loan. Further, the Bank requested additional information regarding the assets
of the Farm.
13
Similarly, the bankruptcy court did not err in determining that the Bank's
reliance was reasonable and justifiable. "[We] must look to all of the
circumstances surrounding the particular transaction, and must particularly
consider the subjective effect of those circumstances upon the creditor." Kirsh,
973 F.2d at 1460. The court found that the industry standard and practice in the
rural farming community did not include title searches into farms. Notably,
McQuaid's debt was not secured by the Farm. It also appears that a title report
would not have revealed the fraudulent representation.
14
Substantial evidence supports the bankruptcy court's findings. The
determination that the debt was nondischargeable was not clearly erroneous.
15
AFFIRMED.
The panel unanimously finds this case suitable for decision without oral
argument. Red.R.App.P. 34(a); 9th Cir.R. 34-4
**
Honorable Samuel P. King, Senior United States District Judge for the District
of Hawaii, sitting by designation
*** This disposition is not appropriate for publication and may not be cited to or by
the courts of this circuit except as provided by Ninth Circuit Rule 36-3
