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    Debenedictis v. Brady-Zell, 1st Cir. (2014)

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    The United States Court of Appeals for the First Circuit affirmed the lower courts' rulings in a bankruptcy case. An attorney represented a debtor in a divorce case and claimed the debtor owed additional fees of $62,000 after an initial $25,000 retainer. The debtor filed for bankruptcy protection. The attorney argued the debt should be exempt from discharge under bankruptcy law as obtained through false pretenses or representations. However, the lower courts found the attorney did not prove the elements to show the debt was nondischargeable. The appeals court agreed the lower courts' factual findings were not clearly erroneous and the attorney failed to carry her burden of proof.

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    Debenedictis v. Brady-Zell, 1st Cir. (2014)

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    55 views7 pages
    The United States Court of Appeals for the First Circuit affirmed the lower courts' rulings in a bankruptcy case. An attorney represented a debtor in a divorce case and claimed the debtor owed additional fees of $62,000 after an initial $25,000 retainer. The debtor filed for bankruptcy protection. The attorney argued the debt should be exempt from discharge under bankruptcy law as obtained through false pretenses or representations. However, the lower courts found the attorney did not prove the elements to show the debt was nondischargeable. The appeals court agreed the lower courts' factual findings were not clearly erroneous and the attorney failed to carry her burden of proof.

    Original Description:

    Filed: 2014-06-25 Precedential Status: Precedential Docket: 13-9014

    Original Title

    deBenedictis v. Brady-Zell, 1st Cir. (2014)

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    The United States Court of Appeals for the First Circuit affirmed the lower courts' rulings in a bankruptcy case. An attorney represented a debtor in a divorce case and claimed the debtor owed additional fees of $62,000 after an initial $25,000 retainer. The debtor filed for bankruptcy protection. The attorney argued the debt should be exempt from discharge under bankruptcy law as obtained through false pretenses or representations. However, the lower courts found the attorney did not prove the elements to show the debt was nondischargeable. The appeals court agreed the lower courts' factual findings were not clearly erroneous and the attorney failed to carry her burden of proof.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
    Download as pdf
    55 views7 pages

    Debenedictis v. Brady-Zell, 1st Cir. (2014)

    Uploaded by

    Scribd Government Docs
    The United States Court of Appeals for the First Circuit affirmed the lower courts' rulings in a bankruptcy case. An attorney represented a debtor in a divorce case and claimed the debtor owed additional fees of $62,000 after an initial $25,000 retainer. The debtor filed for bankruptcy protection. The attorney argued the debt should be exempt from discharge under bankruptcy law as obtained through false pretenses or representations. However, the lower courts found the attorney did not prove the elements to show the debt was nondischargeable. The appeals court agreed the lower courts' factual findings were not clearly erroneous and the attorney failed to carry her burden of proof.

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    United States Court of Appeals

    For the First Circuit


    No. 13-9014
    IN RE KAREN A. BRADY-ZELL,
    Debtor.
    ____________________
    DANIELLE E. deBENEDICTIS,
    Creditor, Appellant,
    v.
    KAREN A. BRADY-ZELL,
    Debtor, Appellee.

    APPEAL FROM THE BANKRUPTCY APPELLATE PANEL


    FOR THE FIRST CIRCUIT

    Before
    Howard, Selya and Thompson,
    Circuit Judges.

    Danielle E. deBenedictis and deBenedictis, Miller & Blum, P.A.


    on brief for appellant.
    Logan A. Weinkauf and Benner & Weinkauf, P.C. on brief for
    appellee.

    June 25, 2014

    SELYA, Circuit Judge.

    Faced with the grim prospect of a

    crumbling marriage, Karen A. Brady-Zell (the debtor) engaged


    Danielle E. deBenedictis (the attorney) to act as her counsel. The
    debtor paid the attorney an up-front retainer of $25,000.

    After

    the representation ended, the attorney billed the debtor for


    additional fees and expenses of roughly $62,000.

    The debtor

    balked, and the attorney filed a state-court collection action.


    The debtor then petitioned for bankruptcy protection,
    effectively staying the pending state-court action.
    362(a).

    See 11 U.S.C.

    She listed the balance due to the attorney among her

    scheduled debts. Left holding what appeared to be an empty bag (or


    nearly so), the attorney instituted an adversary proceeding in the
    bankruptcy court under, inter alia, 11 U.S.C. 523(a)(2)(A).1

    She

    asserted

    and

    that

    the

    debt

    had

    been

    incurred

    through

    false

    fraudulent representations and under false pretenses and was,


    therefore, nondischargeable.
    Following a bench trial, the bankruptcy court wrote a
    thoughtful rescript in which it concluded that the attorney had not
    carried her burden of proving either false pretenses or a false
    representation and proceeded to dismiss the adversary proceeding.
    See deBenedictis v. Brady-Zell (In re Brady-Zell), No. 10-1119,

    With exceptions not relevant here, 11 U.S.C. 523(a)(2)(A)


    provides that a discharge in bankruptcy "does not discharge an
    individual debtor from any debt . . . to the extent obtained by
    . . . false pretenses, a false representation, or actual fraud."
    -2-

    2013 WL 1342479, at *8-9 (Bankr. D. Mass. Apr. 2, 2013).

    On an

    intermediate appeal, the Bankruptcy Appellate Panel (BAP) upheld


    the bankruptcy court's ukase.
    explanation of its ruling.

    It, too, offered a closely reasoned

    See deBenedictis v. Brady-Zell (In re

    Brady-Zell), 500 B.R. 295, 301-05 (B.A.P. 1st Cir. 2013).


    Unwilling to take "no" for an answer, the attorney
    appealed the BAP's decision.

    After careful consideration, we

    affirm.
    We need not tarry.

    Having scrutinized the papers in the

    case and surveyed the applicable law, we discern no principled


    basis for disturbing the findings and conclusions of the lower
    courts.

    With this in mind, we can be brief; after all, we have

    explained before that when lower courts have supportably found the
    facts, applied the appropriate legal standards, articulated their
    reasoning clearly, and reached a correct result, a reviewing court
    ought not to write at length merely to hear its own words resonate.
    See, e.g., Vargas-Ruiz v. Golden Arch Dev., Inc., 368 F.3d 1, 2
    (1st Cir. 2004); Lawton v. State Mut. Life Assur. Co., 101 F.3d
    218, 220 (1st Cir. 1996); Ayala v. Union de Tronquistas, Local 901,
    74 F.3d 344, 345 (1st Cir. 1996); Holders Capital Corp. v. Cal.
    Union Ins. Co. (In re San Juan Dupont Plaza Hotel Fire Litig.), 989
    F.2d 36, 38 (1st Cir. 1993).
    for

    substantially

    the

    Accordingly, we affirm the judgment

    reasons

    previously

    -3-

    elucidated

    by

    the

    bankruptcy

    court

    and

    the

    BAP,

    pausing

    only

    to

    add

    few

    embellishments.
    First: The attorney's principal claim is that, at the
    start

    of

    the

    lawyer-client

    promised to pay her fees.

    relationship,

    the

    debtor

    falsely

    In other words, she alleges that the

    debtor made a commitment to pay whatever fees thereafter might


    accrue without the slightest intention of honoring that commitment.
    To prove that the debt is nondischargeable under 11
    U.S.C. 523(a)(2)(A), the attorney qua creditor had to complete a
    six-step march.

    This march required her to show that the debtor

    (i) made a knowingly false representation, (ii) intending to


    deceive the creditor, and (iii) to induce the creditor to rely upon
    the false promise; with the result that (iv) the creditor relied
    upon the false promise, and (v) justifiably so, so that (vi) damage
    resulted.

    See McCrory v. Spigel (In re Spigel), 260 F.3d 27, 32

    (1st Cir. 2001); Palmacci v. Umpierrez, 121 F.3d 781, 786 (1st Cir.
    1997).
    The burden of proving the elements underlying each of
    these six steps by a preponderance of the evidence rests with the
    party seeking nondischargeability.

    See McCrory, 260 F.3d at 32.

    A creditor arguing for an exception to nondischargeability must


    prove all six elements; if her proof falls short on any element,
    her quest for nondischargeability fails.

    -4-

    See id.

    Here, the bankruptcy court went no further than the first


    two elements.

    It found that the attorney had not proven by

    preponderant evidence that the promise to pay was either knowingly


    false when made or intended to deceive.
    1342479, at *8.

    See deBenedictis, 2013 WL

    The court premised this determination squarely on

    the burden of proof: it painstakingly reviewed the record and


    concluded that the weight of the evidence was "split about even."
    Id.
    Given this fully supportable assessment, we can find no
    fault with the court's determination that the attorney failed to
    carry her burden of proof.

    When the weight of the evidence is in

    equipoise, a party cannot plausibly be said to have carried the


    devoir of persuasion. See Toye v. O'Donnell (In re O'Donnell), 728
    F.3d 41, 45 (1st Cir. 2013).
    Second: The attorney labors to cast the relevant events
    in a light more flattering to her theory of the case.

    Stripped of

    rhetorical flourishes, this amounts to an invitation for us to


    reweigh the evidence and balance the decisional scales differently.
    We decline this invitation.
    At this stage of bankruptcy litigation, the task of an
    appellate court is not to find the facts anew but, rather, to assay
    the bankruptcy court's factfinding for clear error.2

    See Boroff v.

    Our standard of review is not affected by the fact that this


    is a second-tier appeal. Because our review of the BAP's decision
    is de novo, see Smith v. Pritchett (In re Smith), 586 F.3d 69, 73
    -5-

    Tully (In re Tully), 818 F.2d 106, 109 (1st Cir. 1987).

    While the

    evidence as a whole is capable of supporting the inference of


    knowing falsity drawn by the attorney, it likewise is capable of
    supporting

    the

    inference

    bankruptcy court.

    of

    inconclusiveness

    drawn

    by

    the

    That ends this aspect of the matter: it is

    apodictic that where the facts can support two plausible but
    conflicting interpretations of a body of evidence, the factfinder's
    choice between them cannot be clearly erroneous.

    See Gannett v.

    Carp (In re Carp), 340 F.3d 15, 25 (1st Cir. 2003); see also United
    States v. Romain, 393 F.3d 63, 69 (1st Cir. 2004).
    Third: The attorney argues pejoratively that the debtor
    was shown to be a liar and that the debtor's "dishonest and
    untrustworthy"
    factfinding.

    testimony

    undermines

    the

    bankruptcy

    This argument is wide of the mark.

    court's

    The bankruptcy

    court did not rest its decision on any illusions about the debtor's
    veracity.

    To the contrary, the bankruptcy court found much of her

    testimony to be self-serving and not deserving of credence.

    See

    deBenedictis, 2013 WL 1342479, at *2.


    Taking this lack of veracity into account, however, it
    proceeded to find that the attorney's proof was not preponderant.
    See id. at *7-8.

    We are not aware of any rule that mandates a

    finding of nondischargeability against a party simply because her

    (1st Cir. 2009), we look through that decision and directly review
    the bankruptcy court's findings of fact for clear error, see id.;
    see also Fed. R. Bankr. P. 8013.
    -6-

    testimony lacks candor.

    Although we do not countenance untruthful

    testimony, a finding of nondischargeability requires more than a


    showing that the debtor exhibited a serious character flaw.

    The

    attorney, who had the burden of proof, made no such additional


    showing here.
    We need go no further.

    The Bankruptcy Code is designed

    to give debtors a fresh start, and exceptions to this principle


    should be narrowly construed.

    Rutanen v. Baylis (In re Baylis),

    313 F.3d 9, 17 (1st Cir. 2002).


    In this instance, the attorney did not carry her burden
    of proving her entitlement to such an exception.
    explained

    at

    length

    why

    the

    attorney's

    The courts below

    arguments

    (including

    arguments not mentioned above) were unavailing, and it would serve


    no useful purpose to repastinate that well-plowed ground.

    It

    suffices to say that the attorney's appeal, though full of sound


    and fury, is lacking in substance.

    Affirmed.

    -7-

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