Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-03005/USCOURTS-ca10-91-03005-0/pdf.json

Parties Involved:
Dale Luthi
Appellant
Marcia Luthi
Not Party
Westway Partners
Appellee

Document Text:

•'" 

FILED 

UNITED STATES COURT OF APPEALS Uniood States Court of Appeals Tenth Circuit 

FOR THE TENTH CIRCUIT 

IN RE: DALE LUTHI and MARCIA LUTHI, 

Debtors, 

WESTWAY PARTNERS, 

Plaintiff-Appellee, 

v. 

DALE LUTHI, 

Defendant-Appellant. 

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ORDER AND JUDGMENT* 

SEP 2 G 1991 

ROBERT L. HOECKER 

Clerk . 

No. 91-3005 

(D.C. No. 88-4100) 

(D. Kan.) 

Before ANDERSON, BARRETT, and TACHA, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9 . 

submitted without oral argument. 

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The case is therefore ordered 

This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 91-3005 Document: 010110090686 Date Filed: 09/26/1991 Page: 1 
Defendant appeals from the district court's decision 

affirming the bankruptcy court's determination, following trial to 

that court, that a debt owed by defendant to plaintiff was 

nondischargeable under 11 U.S.C. § 523(a)(2)(A). The issue 

presented on appeal is whether plaintiff established that 

defendant obtained the money underlying this debt under false 

pretenses. Reviewing the bankruptcy court's legal determinations 

de novo and the bankruptcy court's factual findings under a 

clearly erroneous standard, see Branding Iron Motel, Inc. v. 

Sandlian Equity, Inc. (In re Branding Iron Motel, Inc.), 798 F.2d 

396, 399-400 (10th Cir. 1986), we affirm. 

Defendant entered into 

cattle during the summer 

a contract to pasture plaintiff's 

of 1986. Under the terms of this 

contract, defendant bore the full responsibility for pasturing and 

caring for approximately 2,500 head of plaintiff's cattle. The 

contract prohibited defendant from encumbering "or otherwise 

[allowing] any lien to be placed on the cattle." In order to 

fulfill his obligations under the contract, defendant leased 

pastures under several lease agreements, obligating defendant to 

pay approximately $70,000 in rent. 

Plaintiff agreed to compensate defendant according to the 

weight gained by the cattle during the summer months. Pursuant to 

the parties' pasture agreement, however, plaintiff advanced 

defendant the sum of $42,806 in May, after plaintiff completed 

delivery of the cattle to defendant's pastures. Defendant applied 

almost the full amount of this advance toward payments due under 

two farm loans and several other debts. 

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Appellate Case: 91-3005 Document: 010110090686 Date Filed: 09/26/1991 Page: 2 
Defendant failed to pay any of the pasture rent due under 

the pasture lease agreements. In September, plaintiff had to pay 

in full defendant's rent obligations under these pasture lease 

agreements in order to release the lessors' liens on plaintiff's 

cattle. 

Plaintiff filed an objection to the discharge in bankruptcy 

of defendant's debt owed to plaintiff as a result of defendant's 

breach of the cattle pasture contract, asserting that this debt 

was nondischargeable because it was obtained under false pretenses 

or false representations. 11 u.s.c. § 523(a)(2)(A). 1 The 

bankruptcy court determined that defendant had obtained the 

$42,806 advance under false pretenses. The bankruptcy court found 

that defendant signed the cattle pasture contract and, thus, 

asserted his intention of fulfilling his obligations under the 

contract, without any reasonable hope of being able to do so, 

making defendant's debt in the amount of $42,806 nondischargeable 

under section 523(a)(2)(A). The district court affirmed the 

bankruptcy court's determination. Defendant appeals. 

On appeal, defendant argues that the bankruptcy court erred 

in determining that plaintiff had met its burden of establishing 

the nondischargeablity of the debt. See Driggs v. Black (In re 

Black), 787 F.2d 503, 505 (10th Cir. 1986). In order to 

establish that defendant obtained the money underlying this debt 

1 Plaintiff also sought to exempt this debt from discharge 

under 11 u.s.c. § 523(a)(6) as a debt for the willful and 

malicious injury by debtor to another entity. The bankruptcy 

court rejected this second ground for nondischargeability. 

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Appellate Case: 91-3005 Document: 010110090686 Date Filed: 09/26/1991 Page: 3 
....... 

under false pretenses, plaintiff had to establish that defendant 

made a false representation, knowing at the time that he made the 

representation that it was false, with the intent to deceive 

plaintiff, and that plaintiff relied upon the misrepresentation to 

its detriment. See Federal Deposit Ins. Corp. v. Maranzino (In re 

Maranzino, 67 Bankr. 394, 397 (Bankr. D. Kan. 1986). 

Although the bankruptcy court required plaintiff to establish 

its objection to dischargeability by clear and convincing 

evidence, the Supreme Court has since determined that a plaintiff 

objecting to discharge of a debt in bankruptcy need establish its 

claim only by a preponderance of the evidence. Grogan v. Garner, 

111 S. Ct. 654, 660-61 (1991). Because we determine that 

plaintiff met its burden under either of these standards, Grogan 

does not affect the resolution of this appeal. 

After careful review of the record, we determine that the 

bankruptcy court's decision was not clearly erroneous. For 

substantially the reasons stated in the district court's 

memorandum and order entered November 28, 1990, we AFFIRM the 

district court's affirmance of the bankruptcy court's 

determination that the debt was nondischargeable under 11 u.s.c. 

§ 523(a)(2)(A). 

Entered for the Court 

James E. Barrett 

Senior Circuit Judge 

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Appellate Case: 91-3005 Document: 010110090686 Date Filed: 09/26/1991 Page: 4