Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-4_07-ap-04193/USCOURTS-canb-4_07-ap-04193-0/pdf.json

Parties Involved:
Florentino Abena
Plaintiff
Leonil Thomas Cabansay
Defendant
Michelle Roble Cabansay
Defendant

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 Unless otherwise indicated, all section and rule references are to the Bankruptcy Code, 11 U.S.C. sections 101-

1330 and the Federal Rules of Bankruptcy Procedure, Rules 1001-9036.

United States Bankruptcy Court 

Northern District of California

 NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

In re Leonil Thomas Cabansay and )

Michelle Roble Cabansay, )

 ) Case No. 07-42805 RN7

Debtor. ) Chapter 7

____________________________________)

)

Florentino Abena, )

 )

Plaintiff, )

v. ) Adv. Pro. 07-4193 AN

)

Leonil Thomas Cabansay and )

Michelle Roble Cabansay, )

)

Defendants. )

____________________________________)

FINDINGS OF FACT, OPINION AND CONCLUSIONS OF LAW

This matter is before the Court following a July 14, 2008 trial of the above-captioned

adversary proceeding filed by the Plaintiff, Florentino Abena (herein “Abena”), to determine the

dischargeability of a debt incurred by Leonil Thomas Cabansay and Michelle Roble Cabansay

(herein collectively “the Debtors”). In accordance with Federal Rule of Civil Procedure 52, as

incorporated by Federal Rule of Bankruptcy Procedure 7052,1

 upon consideration of the record in

this case and the testimony, evidence, and pleadings provided at the trial, the Court hereby submits

the following findings of fact, opinion and conclusions of law.

Signed: August 06, 2008

________________________________________

RANDALL J. NEWSOME

U.S. Bankruptcy Judge

________________________________________

Entered on Docket 

August 07, 2008

GLORIA L. FRANKLIN, CLERK 

U.S BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 07-04193 Doc# 18 Filed: 08/06/08 Entered: 08/07/08 11:02:08 Page 1 of 6 
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FINDINGS OF FACT

1. Debtor Michelle Roble Cabansay (herein “Michelle”) is a registered nurse and operated a

business named Masterpiece Homes that staged furniture in homes offered for sale by real estate

brokers, and later also sold furniture. Michelle staged houses for Diane Madewell, a real estate

agent working at a Century 21 real estate office. (Trial Transcript (“TR”) at 20-22, 75-76, 78;

Abena Ex. 3)

2. Rick Lamela is a licensed real estate agent, and he is friends with and has known Madewell

for about 14 years. Lamela is also a co-worker with Abena for the Mt. Diablo School District, and

is friends with and has known Abena for about 8 years, having formerly dated Abena’s sister. (TR

at 6-8, 10, 15, 21, 38) 

3. At some point in or about mid-2006, Michelle was in need of money to secure the release

of 

certain furniture imported from the Philippines and held by the U.S. Customs Service at the Port of

Oakland. Lamela met Michelle through Madewell and learned of her need for money. Although

Lamela knew Michelle for only about one month, because they are both originally from the

Philippine island of Cebou, he decided to ask his friend Abena, who is also from the Phillippines,

about providing Michelle a loan. (TR at 6-12, 16-19, 38) 

4. Thereafter, Abena and Michelle spoke on the telephone two or three times, with Michelle

explaining why she needed the money. During one of these conversations Abena decided to loan

her the money. On or about July 13, 2006, Abena, Michelle and her husband, Debtor Leonil Thomas

Cabansay (herein “Leonil”), met at Lamela’s office. At this meeting, Abena and Michelle entered

into a transaction whereby Abena loaned Michelle $10,000 at 6% interest. The loan transaction was

memorialized by a Certificate of Receipt (herein the “Receipt”) typed by Lamela’s secretary and

leaving blanks for certain information to be entered. Lamela told Michelle what information to enter

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In addition to not having signed the Receipt, no evidence was presented that Leonil was otherwise obligated

on the loan or that he made a false representation in connection with the loan transaction. Accordingly, on motion by

the Debtors at trial, Leonil was dismissed as a defendant in this adversary proceeding. (TR at 72-73)

3

 Although Lamela testified that the interest rate was 6% per annum, the Receipt provides for payment of 6%

interest on the $10,000 per month. The $600 post-dated checks thereafter provided in repayment of the loan also

evidence that the loan was for 6% interest per month, which would actually be 72% interest per annum. (TR at 12-13)

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on the blanks, she did so and signed the Receipt. Leonil did not sign the Receipt.2 The Receipt

provides for full repayment of the loan in 6 months, by December 13, 2006. (TR at 9-11, 43-44,

80-84; Abena Ex. 4)

5. At the July 13, 2006 meeting, Abena gave Michelle $10,000 in cash, and Michelle gave 

Abena three post-dated checks for repayment of the loan, two for $600 dated August 13, 2006 and

September 13, 2006, and one for $10,600 dated October 13, 2006. The $600 check dated August

13, 2006 was deposited into Abena’s bank account and honored for payment. Thereafter, Michelle

contacted Abena to tell him to hold off on depositing the September 13, 2006 dated check, because

she did not have enough money in her account to cover it. Abena, however, had already deposited

that check, and it was returned for having been drawn on insufficient funds. During this

conversation Michelle and Abena agreed to meet at Madewell’s house, where Michelle would give

Abena additional post-dated checks to replace the checks she initially gave him. (TR at 84-86, 90-

91; Abena Exs. 5, 6 and 12a)

6. At the meeting at Madewell’s house, Michelle gave Abena three additional post-dated 

checks, two for $600 dated October 13, 2006 and November 13, 2006, and one for $10,600 dated

December 13, 2006, the final due-in-full date of the loan. The replacement checks were not honored

in repayment of the loan. (TR at 43-44, 61-63, 92; Abena Ex. 5, 6) 3

7. Thereafter, on or about February 13, 2007, Abena filed a lawsuit against the Debtors in the

Contra Costa County Superior Court (Case No. VCM097390, herein the “Superior Court Action”)

alleging, inter alia, a breach of the loan agreement. On or about April 13, 2007, a Default Judgment

was entered in the Superior Court Action in favor of Abena and against the Debtors, for $10,490.

(TR at 46, 57; Abena Exs. 1, 2 and 7)

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8. On August 31, 2007, the Debtors filed this Chapter 7 case. Thereafter, on November 30, 

2007, Abena filed the instant adversary proceeding complaint asserting a cause of action pursuant

to §523(a)(2)(A) to determine the dischargeability of the $10,490 owed by the Debtors to Abena

pursuant to the Default Judgment. 

OPINION & CONCLUSIONS OF LAW

 Section 523(a)(2)(A) excepts from discharge any debt for money, property, services or credit

obtained by debtor's “false pretenses, false representation, or actual fraud.” Nahman v. Jacks (In re

Jacks), 266 B.R. 728, 733 (9th Cir. BAP 2001). To prevail on a claim pursuant to section

523(a)(2)(A), a creditor must establish, by a preponderance of the evidence: 1) a misrepresentation,

fraudulent omission or deceptive conduct by the debtor; 2) knowledge by the debtor of the falsity

or deceptiveness of his statement or conduct; 3) an intent to deceive; 4) justifiable reliance by the

creditor on the debtor's statement or conduct; and 5) damage to the creditor proximately caused by

his reliance on the debtor's statement or conduct. Turtle Rock Homeowners Association v. Slyman

(In re Slyman), 234 F.3d 1081, 1085 (9th Cir. 2000); Grogan v. Garner, 498 U.S. 279, 291

(1991);California State Bank v. Lauricella (In re Lauricella), 105 B.R. 536, 539 (9th Cir. BAP 1989)

(burden of proof is on creditor asserting non-dischargeability of debt); Field v. Mans, 516 U.S. 59

(1995) (justifiable reliance the standard under § 523(a)(2)(A)). 

At trial, Abena testified that he made the loan to Michelle, and thought that she could repay

him based upon several factors. She was a registered nurse, good looking and well-dressed. Her

business card identified her as the president of Masterpiece Homes. She allegedly stated that she

would “pay me back within a month.” Most importantly he relied upon his friend Lamela’s

statement that Michelle operated a successful business. (TR 68-70)

Although Abena asserts that Michelle stated she would repay the loan within a month, his

testimony is directly contradicted by that of Michelle, who testified that she told him only that she

would repay him as soon as possible. Additionally, Abena’s testimony in this regard is also

contradicted by the Receipt, which provides for a 6 month repayment period, and by Abena’s

acceptance of the initial post-dated checks which anticipate repayment within 3 months. (TR at 84-

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 Section 523(a)(2)(A), does not apply to a false representation with respect to a debtor’s financial condition.

A determination as to the dischargeability of a debt based upon a materially false and intentionally deceptive

representation concerning a debtor’s financial condition is made solely pursuant to §523(a)(2)(B), which requires that

such a representation be made by a written statement. Field v. Mann, 516 U.S. at 66; Eugene Parks Law Corp. Defined

Pension Plan v. Kirsh (In re Kirsh), 973 F.2d 1454, 1457 (9th Cir. 1992). Here, no evidence was presented that the

Debtors made such a false or deceptive written statement concerning their financial condition. 

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85; Abena Ex. 4) The Receipt and the post-dated checks support Michelle’s testimony. As such,

the Court credits Michelle’s testimony over that of Abena that she did not misrepresent the

repayment term of the loan to be less than one month. Further, the Court considers Abena’s

testimony as generally not credible as to the parties negotiations over this loan transaction. 

Furthermore, none of Abena’s asserted reasons for making the loan were based upon a

misrepresentation, known falsity or an intent to deceive by Michelle, and there is no evidentiary

basis for concluding that Abena relied on anything Michelle said or did, justifiably or otherwise.

Additionally, no credible evidence was presented that Michelle misrepresented her employment

status or financial condition, or that Abena, Lamela or anyone else asked her or Leonil about such

matters before entering into the loan transaction.4

 The evidence shows little more than Abena

having made the loan in reliance upon Lamela, based upon his perceptions of Michelle, and Abena’s

cultural ties to the Phillippines that he shared with Michelle. These perceptions are not sufficient

to find the debt non-dischargeable pursuant to §523(a)(2)(A).

In accordance with the foregoing, the Court finds that the $10,490 Default Judgment award

is not excepted from a discharge entered in the above-captioned Chapter 7 bankruptcy case.

IT IS SO ORDERED. 

** END OF ORDER**

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COURT SERVICE LIST

Kenneth Anthony Avelino

Avelino Law Firm

4993 Golden Foothill Pkwy #9

El Dorado Hills, CA 95762

James A. Pixton

Law Offices of James A. Pixton

1524-A Lincoln Ave.

Alameda, CA 94501

Office of the U.S. Trustee

1301 Clay St. #690N

Oakland, CA 94612

Tevis Thompson

P.O. Box 1110

Martinez, CA 94553 

Case: 07-04193 Doc# 18 Filed: 08/06/08 Entered: 08/07/08 11:02:08 Page 6 of 6