United States Court of Appeals

For the Eighth Circuit

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No. 12-1138

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In re: Jeffrey Scott Unterreiner; Lisa Marie Unterreiner

lllllllllllllllllllllDebtors

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The Samuel J. Temperato Revocable Trust

lllllllllllllllllllllAppellant

v.

Jeffrey Scott Unterreiner; Lisa Marie Unterreiner

lllllllllllllllllllllAppellees

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Appeal from the United States Bankruptcy

 Appellate Panel for the Eighth Circuit

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 Submitted: September 19, 2012

 Filed: November 8, 2012

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Before MELLOY and BENTON, Circuit Judges, and BAKER, District Judge. 1

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The Honorable Kristine G. Baker, United States DistrictJudge for the Eastern 1

District of Arkansas, sitting by designation. 
MELLOY, Circuit Judge. 

Jeffrey and Lisa Unterreiner (together, "the Unterreiners") filed for bankruptcy

on October 30, 2006. The Samuel J. Temperato Revocable Trust ("the Trust") filed

an Adversary Complaint against the Unterreiners, claiming the Unterreiners owed a

nondischargeable debt to the Trust under 11 U.S.C. § 523. The Bankruptcy Court

granted summary judgment to the Trust. The Bankruptcy Appellate Panel ("BAP")

reversed, holding that the Trust was not entitled to judgment as a matter of law

because the Trust could not meet the statutory requirements of 11 U.S.C. § 523. The

Trust appealed. We affirm. 

I.

Mr. Unterreiner and Ed Radetic were sole shareholders of King William 2

Management Company ("King William"). King Williamoperated three Dairy Queen

stores in Missouri. Dairy Queen of Greater St. Louis ("DQSTL") was the franchisor

of King William's stores. The Trust owns DQSTL. Crest Oelke ("Oelke") was a

trustee of the Trust. Oelke was also affiliated with DQSTL. 

In December 2005, King Williamwasin such poor financialshape that it could

not continue to operate without a loan. Oelke arranged for Cass Bank ("Cass") to

make a loan of $235,000 ("the loan") to King William. To secure the loan, the

Unterreinerssigned personal guarantees as well as a Commercial SecurityAgreement

("Security Agreement"). DQSTL also guaranteed the loan. The Unterreiners did not

speak with Oelke, with anyone from the Trust, with anyone from Cass, or with

anyone fromDQSTL before signing the loan documents. Indeed, until the Trust filed

its Complaint, the Unterreiners did not know the Trust owned DQSTL and did not

even know the Trust existed. 

Neither Ed Radetic nor his wife is a party to this action. 2

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The Security Agreement listed King William as borrower. The Security

Agreement listed the Unterreiners and Ed Radetic and his wife as the guarantors. 

Finally, the Security Agreement listed "all business assets located at 1036 N. Sprigg

Street, Cape Girardeau, MO 63701 and 31 S. Kingshighway, Cape Girardeau, MO

63703" as collateral. Some four years before Cass made the loan to King William,

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the Trust had signed a separate agreement with Cass under which the Trust

guaranteed all of DQSTL's obligations to Cass. However, the Trust was not

mentioned in the Security Agreement and was not a guarantor of the King William

loan, except in its capacity as a blanket guarantor of DQSTL. 

Cass distributed the loan directly to DQSTL. DQSTL retained a portion of the

loan as partial repayment of King William's outstanding debt to DQSTL under the

franchise agreement and distributed the remainder of the loan to King William. 

Approximately a year after Cass distributed the loan, Mr. Unterreiner informed Cass

that, contrary to statementsin the Security Agreement, King William did not actually

own most of the collateral. Thus, the Security Agreement contained a

misrepresentation. The Unterreiners claimed they did not read the loan documents,

including the Security Agreement, before signing. 

King William defaulted on the loan in December 2007, and Cass pursued the

Unterreiners on their guaranty. On June 20, 2008, Cass released the Unterreiners

from any further liability on the loan in exchange for a payment of $20,000. Cass

then made a demand on the Trust for payment of the outstanding balance of the loan. 

On October 31, 2008, the Trust filed an Adversary Complaint against the

Unterreiners. The Trust claimed the Unterreiners, as co-guarantors of the loan, owed

1036 N. Sprigg Street and 31 S. Kingshighway were evidently the locations 3

of two of King William's Dairy Queen stores.

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a debt to the Trust that was nondischargeable under 11 U.S.C. § 523. The Trust

4

claimed it had reasonably relied on the misrepresentation in the Security Agreement

when it guaranteed DQSTL's obligations and when it allowed DQSTL to guaranty the

loan. The Trust also alleged the Unterreiners knew the SecurityAgreement contained

a misrepresentation at the time the Unterreiners signed the Security Agreement. 

The Trust moved for summary judgment. The Bankruptcy Court found that

DQSTL had reasonably relied on the Unterreiners' misrepresentation when DQSTL

guaranteed the loan. The Bankruptcy Court held that the Unterreiners' obligation to

the Trust was nondischargeable and granted summary judgment to the Trust. 

The Unterreiners appealed, and the BAP reversed. TheBAP held that the Trust

could not fulfill the statutory requirements under § 523(a)(2)(B) to render a debt

nondischargeable. The BAP concluded (1) the Unterreiners did not receive anything

from the Trust when the Unterreiners made the misrepresentation; (2) the Trust could

not have relied on the Security Agreement when it guaranteed DQSTL's obligations,

because the Trust agreed to guaranty DQSTL's obligations years before Cass made

the loan; and (3) any representations in the Security Agreement were made to Cass,

not to the Trust. Finally, the BAP questioned, but did not decide, whether the

Security Agreement qualified as a "writing respecting the debtor's financial

condition."

II.

"Summary judgment is appropriate when, viewing the record in the light most

favorable to the nonmoving party, there are no genuine issues of material fact and the

moving party is entitled to judgment as a matter of law." Henning v. Mainstreet

After the Trust filed its Adversary Complaint, both the Trust and DQSTL 4

settled their obligations on the loan with Cass. 

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Bank, 538 F.3d 975, 978 (8th Cir. 2008). "In an appeal from the BAP, this court

independently reviews the bankruptcy court's decision, applying the same standard

of review as the BAP. Fact findings by the bankruptcy court are reviewed for clear

error; its conclusions of law are reviewed de novo." Terry v. Standard Ins. Co., 687

F.3d 961, 963 (8th Cir. 2012) (citations omitted). 

11 U.S.C. § 523(a)(2)(B) excepts from discharge a debt

(2) for money, property, services, or an extension, renewal, or

refinancing of credit, to the extent obtained by - -

. . . (B) use of a statement in writing - -

(i) that is materially false;

(ii) respecting the debtor's or an insider's financial condition;

(iii) on which the creditor to whom the debtor is liable for such

money, property, services, or credit reasonably relied; and 

(iv) that the debtor caused to be made or published with intent to

deceive . . . .

"To prevail under § 523(a)(2)(B), the Plaintiff has to establish by a preponderance of

the evidence" all elements of the statute. Jacobus v. Binns, 328 B.R. 126, 130 (B.A.P.

8th Cir. 2005). We agree with the BAP that the Trust cannot establish all the

elements. Specifically, the Trust cannot establish that the Unterreiners obtained

money, property, services, or credit from the Trust, nor can the Trust establish that it

relied on the Unterreiners' misrepresentation. 

First, the Unterreiners did not receive "money, property, services, or an

extension, renewal, or refinancing of credit" from the Trust when the Unterreiners

made the misrepresentation. As the BAP stated:

To succeed in having a debt excepted from discharge under § 523(a)(2),

the creditor is required to prove that the debtors obtained money,

property, services or an extension, renewal or refinancing of credit from

it at the time of the misrepresentation. Marcusen v. Glen (In re Glen),

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639 F.3d 530, 533 (8th Cir. 2011) (citing In re Dougherty, 179 B.R. 316,

322 (Bankr. M.D. Fla. 1995) ("In other words, the debtor himself must

have obtained the money or property and he must have received it from

the claimant.")). The representations in the [Security Agreement] were 5

made to [Cass], not to the Trust, and the loan was made by [Cass], not

by the Trust. Simply stated, Mr. and Mrs. Unterreiner did not receive

any money or property from the Trust concurrent with the

representation. 

The Trust suggeststhe Unterreinersreceived the guaranty of DQSTL concurrent with

the misrepresentation, but as the BAP pointed out, DQSTL is not a party to this

action. Whether or not the guaranty of DQSTL falls within § 523(a)(2) is not at issue. 

Second, the Trust cannot show it reasonably relied on the Unterreiners'

misrepresentation when it guaranteed DQSTL's obligations. The Trust's liability for

the loan arose from the Trust's blanket guaranty of DQSTL's obligations to Cass, not

from the loan agreement. The Trust's blanket guaranty predated the loan by some

four years. As the BAP noted, "[s]ince the Trust's guaranty was already in existence,

it could not possibly have relied on the misrepresentations in the [Security

Agreement]." Whether DQSTL relied on the Security Agreement in making its

guaranty of the loan is not at issue because DQSTL is not a party to this action. 

Since the Trust cannot meet at least two of the statutory requirements, we need

not address the remaining requirements. We do not determine whether the Security

Agreement was a statement "respecting the debtor's or an insider's financial

condition." Furthermore, we need not review the additional issues of materialfact the

Unterreinersraise, including whether the Trust is a creditor to whom the Unterreiners

Although Glen involved § 523(a)(2)(A), and not § 523(a)(2)(B), both sections 5

share the requirement under subsection (2) that the debt be for "money, property,

services or an extension, renewal, or refinancing of credit." 

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are liable and whether the Unterreiners made the misrepresentation with intent to

deceive.

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III. 

The Trust is not entitled to judgment as a matter of law because it cannot meet

all the requirements of § 523(a)(2)(B) to except a debt from discharge. The

Unterreiners did not obtain money, property, orservicesfromthe Trust, and the Trust

did not rely on the Unterreiners' misrepresentation when it guaranteed DQSTL's

obligations. We affirm the BAP's ruling, vacate the award of summary judgment to

the Trust, and direct judgment for the Unterreiners.

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We dismiss the Trust's argument that it may recover from the Unterreiners on 6

the basis that "a guarantor who satisfies a judgment which has been rendered against

other coguarantorsjointly and severally, issubrogated to creditor's rights asjudgment

creditor against the other coguarantors." The Trust has not satisfied any judgment

against the Unterreiners. We also dismiss the suggestion that the Trust may recover

from the Unterreiners by standing in the shoes of Cass as a creditor. The Trust

received no assignment from Cass. Moreover, even assuming the Trust could raise

Cass'srights against the Unterreiners, Cass released the Unterreinersfromany further

liability for the loan—Cass has no surviving rights against the Unterreiners, so the

Trust would have no rights to assert.

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