i'll let you come forward and introduce himself morning my name's mike fuller and attorney for the appellant antoinette maxwell is my first appellate argument i'm very excited to be here i'll reserve five minutes of my time for a bottle you're doing well so far so thank you proceed i'll get right to it the record has no evidence of reasonable reliance in this case i won't explain five twenty three a to b to you you know that it was amended to include the requirement that creditors provide an explanation of reasonable reliance to prevail in this case when you review the trial transcript the state simply presented no evidence of any one state of mind or of anyone's actual reliance on the applications at issue there was one witness from the state in this case other than mr maxwell let me ask you about the actual reliance point courts can draw inferences from facts in the record right couldn't you infer from the fact that the state asked for all this information that they were going to actually rely on that information you could infer that if you did you did this or at the reasonable this requirement because you're always going to have a case where there's information provided and a benefit received based on the information try to get it to use that if you challenge both actual reliance and reasonable reliance on my first question has to do with actually couldn't do it for actual reliance from the fact that the state asked for all this information they didn't ask for it just for the heck of it right that's correct i mean yeah there was actual answer was a justifiable or reasonable that's our argument i mean i guess you're always going to have reliance as long as the benefit matches up with the application so you're right your hon in this case we're focusing more on the reasonable ness element what actually took place what what explanation was offered as to what investigation was done or not done the reasonableness of the reliance on the information the sole witness from the state in this case admitted on the stand that she just had no knowledge about reliance at all and that's fine because she came along after the fact this case is different than almost every other baptise i found on point where there is no evidence and there is no witness in this case that actually had any knowledge of what happened during the processing of the applications at issue and i think that's important to let me ask you one thing that struck me is this a case of affirmative misrepresentation or omission the court decided it was of her motive misrepresentation it was a mission by definition there can be no reliance and i mean it isn't that pretty well so by now if this is really a mission case then that's presume that there is reliance because it wasn't disclosed that could be correct we don't feel that it would then fall under me it's respecting a financial condition of the debtor and so we feel that has to be a statement in order to be non will you believe that the statement was the representation of the income as stated not the undisclosed amounts that were made it that's the state's theory and that's what the judge decided and that makes sense to me you know so your point is that it was unreasonable for the state to rely upon your client's representation as to what her income was no i don't need to prove it was unreasonable my argument is that at trial there was just no evidence whatsoever as to the reasonable of this requirement and i don't bear the burden now it's not of much of a burden it's a preponderance but there was just no evidence and we argued that it was intentional because the state was going to proceed under subsection a and that the court didn't adopt that theory and so it was left with subsection b no one a trial knew how these applications were processed the state provided her the very income it later said that was complained was missing well some of it right right some of it and we would have asked about that if there was any witness that knew anything about the reliance there just wasn't so we couldn't even do a cross because there was just no evidence about who were lied when they were lied how they were lied and then i think in oral argument the state seemed to make clear the state does just automatically rely on these because the conflicts states that i asked to well that's just not acceptable when you read five twenty three a to b and you read the reason it was a requirement of congress why is that the case why so there always has to be some kind of investigation not investigation but there has to be evidence or an explanation of reasonableness in the record and when you look through five twenty three you see that congress chose you know certain types of debts get certain treatment whether it's you know domestic support benefits credit cards used to buy luxury items taxes five twenty three a to b congress did not categorize the types of benefits or the types of debts that issue it required every creditor to prove reasonable reliance understand and have the burden of trial but what's unreasonable about this they simply taking these applications that are apparently a perjury looking at them and relying on while some people criticize the state because they feel the state has incentives to dole out benefits even when they're not the person's not entitled to him that evidence isn't in the record so i won't speculate there's also no evidence in the record of any reasonable reliance whatsoever this is a case where the state intentionally chose not to bring anyone who could even speak to the reliance issue if this is your position that there is were essentially an affirmative requirement to bring a witness to say the words no but it's hard to get evidence of reasonable reliance without a witness i suppose you could do it you know when you look at the case the baptism thousand nine hundred nine cases on five twenty three a two it found reasonable reliance based on a declaration of a person with personal knowledge of the application at issue who explained how that application was handled and so you know it can be done in a variety of ways in this case the best thing you could argue is that you've got exhibits then all they do is show how the benefits were calculated but we're not here disputing whether the calculation was correct we're here disputing whether there was reasonable reliance and the state raises for the first time  on appeal that while the penalty of perjury you know was a factor well it could have been or it could not have been we don't know because that's not in the record there is no evidence that the state placed next reliance on this document being signed or penalty  perjury or not is the question i mean the word reasonable this to me he sounds like an object of requirement so why is what the state did necessarily implicate well you're right judge it is object of and so you need to have evidence that a prudent ordinary person under the circumstances who is cautious would have behaved the same way and we just don't have any evidence of it i can hardly prove that it wasn't reasonable when i'm here defending a case and you know and we didn't do any discovery we retained the day before trial and i showed up and there was just nobody who knew anything about reliance so you know it is a prudent person standard there's just a complete lack of evidence and the court did try to draw it to inferences to satisfy that burden and respectfully when you look back over the record those two rationales just aren't aren't supported one rationale being that well these are these are very important benefits and no doubt they are but again congress did not create a per se rule it easily could have been a dozen other areas it just didn't so our argument is that just the nature of the benefits alone does not satisfy reasonable ness in the court was also persuaded it cited you know the design of the system in policies and we made that pretty clear in our brief that when you do look back over the record there's just no testimony or evidence about that it was the argument that's fair it may well be true but it's not in the record it's not it and i had no opportunity to cross examine it and  brief however a couple of important things to point out one is obviously with respect to the prudent person standard and reasonable reliance looking at the degree or objective lee at what the creditor did how they acted how they behaved within the business or transaction that they were conducting is a key factor and it's this circumstantial aspect that is unique in this case in that this isn't a commercial lending case the state's not looking to lend its maxwell any money and it's maxwell wasn't filling out an application for credit she's filling out an application oftentimes these benefits are necessary for the very survival of herself and her family and are often in emergent circumstances and necessary for media responses by the state and that doesn't lend itself well to a long protracted review of credit histories credit reports etc moreover there's a lot of reliance by ms maxwell on cases that deal with commercial lending as sort of the standard by which reasonable reliance should that relates to this issue to the issue of reasonable reliance and i understand that the state had a witness the witness was someone who is sort of determines how the benefits will be  calculated and how much is and this this person what testified that based upon the application they took it at face value and then they just calculated what the benefits were and i gather counsel's argument is that that doesn't u for benefits and one of the things ms carter who is an overpayment specialist indicated was that the the applications are signed for under the penalty of perjury which is from the department perspective her testimony is sort of cation of the truth and accuracy of the information isn't there in the application and she also testified that there is there are penalties which are in the application that talk about the various risks that somebody faces for not accurately simply the applications for not you know omitting information that's necessary so you know a false bank loan application is perjury bank fraud there's a number of criminal penalties a go with that right so why is this different why does the record show this is defo well i don't know that it is any other it is different per se i think that it is unique because the type of situation that we're dealing with not dealing with a bank loan pursue a we're dealing with generation of benefits for individuals so i think there is you know in terms of just looking at the overall circumstances as the rule requires us to do you know they aren't the same as a commercial and exert them stance so there is some difference there  i think that as as counsel referred to with the gurche opinion i think that there's a fairly low standard for the state to demonstrate reasonable reliance anyway because of the false statements that were made on the application miss macks was not arguing that that wasn't the case she's arguing that we should be held responsible for the fact that we didn't do enough to find her omissions and misstatements of fact and in regular it says when there is evidence of materially fraudulent statements little investigation is required for a creditor to have reasonably relied on those representations but what about i want to change topics a little bit what about the fact that the child support payments were in the state's database what what's your response when i think that there's some a couple of points number one is whether or not that is the case i don't know that that excuses newsmax well from failing to report that information it's clearly requested on their all these applications over a four year period of time secondly ms carter  her testimony did have the luxury of looking back over time and being able to collect information that may or may not have been available to the caseworker at the time in real time the child support information is held by the department justice as miss carter testified to and it's it's fairly difficult to get the information because of the sensitive nature of the information that there is available and so they're only entitled to get what's referred to a screen shots and so as part of the evidence that was presented by the state we did provide some of the screen shots of ms carter was available to was able to get in doing her analysis but that doesn't necessarily mean that that information was widely available to cases   line workers at the time that these applications were submitted was there evidence that wasn't available to the line workers at the applications readers miss carter testified that as an investigator and part of her investigatory role she is able to access this information in stating that i don't believe that she said that perceval everybody else isn't entitled to get the information i do want to go point out that i think that the applications themselves are pretty good evidence of reasonable reliance in that they are substantial they are at least fifteen pages long they require a lot of from an individual this is not a one page thing where somebody can come in and get application or get benefits by submitting a simple application thought needs to go into this and that's a reason for the state to regard the information that's in these pages as as being reliable there were no over t flags identified i mean ms maxwell completed the applications very consistently over that four year period of time so there's nothing that would have flagged the state council so your argument is that given the circumstances of the case which is that this is an application for welfare benefits that may be essential for the survival and the maiden aunts of of a family and that it was it is sort of per se reasonably for the state just to rely upon they that occasion that they application under those circumstances which is used to calculate the benefits in and of itself is sufficient to satisfy whatever burden you had in this case is that your argument i think given the fact that we have a low burden to begin with and terming reasonable reliance that that is almost correct i don't know that that's the only thing there's evidence of reliance on but it's certainly a big what is what what else would you point to well i would say that the fact that the methods for calculating these documents in the regulatory scheme that was required i think also go into the importance of relying on the a reasonable reliance on the applications and the fact that we are obligated to do extensive background checks or review each representation on and on the application with incredulity requiring different verification standards there i believe that the applications in themselves are are a good basis by which to generate the conclusion of the state acted reasonably and i think that when you consider the fact that it is under penalty of perjury i know that is maxwell sort dismiss that but it's important and it's important to the state and it's a sort of a geisha the accuracy of the record the information that's provided and the state has to be able to rely on that and under the circumstances a creditor de or relationship really didn't exist with this maxwell and tell it was discovered that she had been accurate on her paperwork so to suggest that the state should have taken a debtor creditor stance with her at the beginning of the process when she was simply asking for benefits to make the ends meet i think is a higher standard than what the state should be hel very well let's let's go to the heart of the matter what consul is arguing is that this is not a commercial transaction sometimes in a commercial transaction the bank  doesn't meet its burden because the information is is such that the bank could not have reasonably were lied upon it they knew other things or it just didn't make it just when you put all that all the evidence together and say well it wasn't reasonable for you to rely upon that financial statement but this is an application for for benefits to forward through the family so that they can buy food under  generally emergent she situations and we ought to look at it differently how do you respond to that but why why shouldn't we be more careful when we're talking about limited resources for people in need why shouldn't we be more cut labor and we told all those out is that the bird what i don't hear you actually answering the question what i think what i'd like to focus on what was it specifically within the application that tripped up that should've that is the should have known right you could see that th was actual reliance it wasn't reasonable so what what he did offer that it was not reasonable and further inquiry because you not arguing that everybody has to do this from the beginning are you i am arguing conduct further inquiry just by virtue of the application i don't know because i don't know what they did but you know what the application is i do and i know that just processing an application is never evidence in and of itself of reasonable reliance or challenge the information on the application no they must prove that they reasonably relied it's a burden placed on them it didn't used to be there it is now and it's so it's they have to firm really prove it but what way why can't you rely upon the sworn application presented i think that's and just going to fall i don't mean to hijack it's question and maybe you can in some circumstances you just need to explain why that's reasonable under an objective prudent person standard and it's that explanation that's completely missing and it was missing from the complaint and it was missing from the trial brief and it was missing from trial but inherent in this is you ask me to give you money i ask how much do you make you tell me why isn't that reasonable for me to realize specially when you swear under oath that that's true well then you tell me what's the difference between justifiable reliance and reasonable obviously that is using the roles here as an advocate you're right your honor there's an added step there if we were just dealing with pre amendment five twenty three then maybe i would concede this point wouldn't be here on appeal congress specifically changed it to put a reasonable miss requirement in there as an added step on to not just what that person justifiably did subjective the u s supreme court tells us that it was intended as a heightened standard so we know that that that was the intent of congress was to make it even more difficult when it's a statement respecting financial condition i would just come back to you know the state was asked  and it was asked a trial as well what evidence in the record is there of reasonableness and the only thing that we heard was the application itself the calculation of the regulatory scheme and you know our position is that that is going to be the facts in almost every single case and that we shouldn't be creating a special rule for the state maybe congress should but we shouldn't every creditor regardless of what the type of benefit is or the type of regulation must provide evidence of reasonable reliance and in this case it didn't happen and we might we may not be here if it had because i might have asked some cross examination questions and might have there might have been something in the record that it was reasonable all we have is just somebody who came after the fact who said that based on the information here's how the benefits were calculated there's just no evidence that the actual reliance was reasonable in this you know if you affirm the judgment you going to be you know setting a completely new low bar for what creditors are required to prove i challenge the court to find a bath opinion where there was no testimony and no documents at least talking about the state of mind or the explanation given in this case the only explanation given was by the court with its your rationale which we've explained and then also the state's under penalty of perjury rationale that only came about on appeal thank you