United States Court of Appeals

For the First Circuit

No. 11-9004

IN RE PETER J. GOGUEN,

Debtor.

DAVID M. SHARFARZ,

Appellant,

v.

PETER J. GOGUEN,

Appellee.

ON APPEAL FROM THE BANKRUPTCY APPELLATE PANEL

FOR THE FIRST CIRCUIT

Before

Boudin, Circuit Judge,

Souter, Associate Justice,*

and Thompson, Circuit Judge.

Ashley S. Whyman, with whom Stephen F. Gordon, Todd B. Gordon,

and The Gordon Law Firm LLP were on brief, for appellant.

Paul R. Chomko, with whom Alford & Bertrand, LLC was on brief,

for appellee.

August 15, 2012

The Hon. David H. Souter, Associate Justice (Ret.) of the *

Supreme Court of the United States, sitting by designation.
THOMPSON, Circuit Judge. 

LAYING THE GROUNDWORK

What happened in this bankruptcy case is probably every

homeowner's worst nightmare. We start, naturally, with the facts,

which are either undisputed or based on the bankruptcy judge's notclearly-erroneous findings.

 Having just moved with his 14-year-old son from

Anchorage, Alaska to Acton, Massachusetts, David Sharfarz started

talking to contractors in the summer of 2006 about building an

addition to his new home. Sharfarz ended up hiring Peter Goguen,

who drafted up a contract. Stripped to its essentials, the

contract specified different construction phases, requiring Goguen

to pour the foundation by October 15, 2006, for example. It

required Goguen to obtain the necessary town permits too. It also

required Sharfarz to make progress payments to Goguen totaling

roughly $171,000. And it set a completion date of March 15, 2007.

Sharfarz made no secret of the fact that he needed Goguen

to start the project right away, for these reasons: first, he

wanted his son to settle into his new life as quickly as possible,

and second, he wanted the foundation poured before winter because

he feared that a cold-weather concrete pouring could cause the

foundation to crack. Sitting in Sharfarz's living room, the two

signed the contract and Sharfarz handed Goguen a $25,693 check as

-2-
the first installment payment. And Sharfarz again stressed why

sticking to the schedule was so important to him.

A week or so later Goguen emailed Sharfarz that he had

"filed" a building-permit application with the town and was "in

wait mode." But that was not true, and Goguen did his best to keep

Sharfarz from finding that out. Over the next couple of months,

for example, every time a worried Sharfarz asked him for a permit

update, Goguen blamed the delay on foot-dragging town bureaucrats. 

And when Sharfarz offered to talk to the town manager or a member

of the board of selectmen, a nervous Goguen called it "the worst

thing we could do." No need to "aggravate" the building inspector

by going over the inspector's head, Goguen said. We just have sit

tight until the town acts, he added. 

That did little to calm Sharfarz, who had a gnawing

belief that project delays would expose him to the risk of concrete

damage due to the onset of winter. One of Sharfarz's November 2006

emails to Goguen made this perfectly plain: "I would . . . like a

better understanding as to how we will keep the foundation warm" to

help the concrete strengthen and harden after a cold-weather

pouring, he wrote. "I know there are ways to do it, but I assume

that they all cost money." "This," he wrote, "is pretty much the

only aspect of a wintertime start-up that is concerning me." 

Goguen replied that "weather protection [won't be] an issue until

night time temperatures" dip below freezing.

-3-
With the cold season fast approaching, Goguen did little

to advance the project. Misled into thinking that the town was at

fault for the permit holdup and still convinced that they would be

inviting trouble if they poured concrete in the cold, Sharfarz

proposed the following solution: They would shut down the project

for now. Goguen would keep $5,000 of the $25,693 payment for his

"troubles" and refund the remaining money to Sharfarz. When the

warm weather returned, they would restart the project, and Goguen

would get back the rest of the initial payment. This made good

"sense," Sharfarz said. But not to Goguen. He assured Sharfarz

that the foundation would not crack from a cold-weather pouring,

explaining that "New England is a lot warmer than Alaska" and that

"we put additives" in the concrete to prevent cracking. Coldweather pourings are done "routinely" throughout New England all

winter long – it's no big deal, Goguen said (or words to that

effect). And rather than give Sharfarz any money back, Goguen

instead offered a 5-year warranty against "structural defect[s]" in

the "new footing and concrete foundation." All of this persuaded

Sharfarz to continue with the contract. Goguen "was the expert,"

Sharfarz later explained, "and I just relented."

Goguen finally applied for the building permit on

November 29, 2006 – two months after he said he had – and he asked

the town to "expedite[]" things so that he could "move forward on

the foundation before the cold of winter sets in." He knew that it

-4-
gets "tougher and tougher" to pour concrete with each passing

winter day, you see. The town issued the permit 12 days later, on

December 11. Critically, had Goguen not duped Sharfarz into

thinking that he had filed the application way back in September

2006, Sharfarz would have confronted Goguen and (depending on how

that went) either canceled the contract or put the project off to

the spring. But not knowing the truth, Sharfarz let Goguen pour

the concrete around Christmas 2006, despite the "very cold

weather." Unfortunately, the foundation would eventually crack –

just as Sharfarz feared it would. And Sharfarz did and does blame

Goguen and his cold-weather concrete pouring for this.

In any event, Sharfarz continued making progress

payments, even though Goguen made little progress: Goguen would

start a new phase of the project, ask for and receive money without

finishing the work, and then do the same thing over and over again

– all the while trying to keep Sharfarz in the dark. At one point

Goguen asked Sharfarz for more money so that he could hire another

worker to get the project back on track. Sharfarz ponied up the

extra money, but Goguen never hired extra help. Goguen also

recommended that Sharfarz upgrade the home's electrical service. 

Sharfarz came up with the additional cash for the upgrade, but

Goguen never did the work. 

Things went from bad to worse for Sharfarz. By November

2007 he had paid Goguen the full contract price, and then some. 

-5-
Yet Goguen threatened not to finish the project unless he got more

money. Sharfarz said no. Goguen walked. And Sharfarz had to pay

other contractors $88,000 to finish the job.

Sharfarz sued Goguen in Massachusetts state court,

relying on certain consumer-protection laws. See Mass. Gen. Laws

ch. 93A; Mass. Gen. Laws ch. 142A. Goguen did not appear. After

entering a default judgment against him, a state judge held an

evidentiary hearing to assess damages. Sharfarz testified there. 

But Goguen was a no-show, despite being notified about the

proceeding.

As part of his findings of fact and conclusions of law (a

document admitted as an exhibit at the bankruptcy trial), the state

judge wrote that Goguen was "both deceptive and unfair, almost from

the beginning and to the end," and that his "violations" had been

"willful and knowing." Turning to the concrete issue, the state

judge found that

[t]he concrete foundation walls for the

basement and the garage . . . were poured

Christmas week, in very cold weather, and

subsequently cracked. They admitted a

substantial amount of water, which – because

Goguen had not poured the concrete floors –

drained into the gravel subfloors.

"There is a particularly aggravated character to several of

Goguen's violations," the state judge said, pointing to (among

other things) Goguen's "[d]elaying the building permit application

for nearly three months and lying about it, thereby delaying the

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start date till the onset of winter . . . ." The state judge also

found that Sharfarz had spent close to $63,000 "on contractors and

suppliers" to complete most of the work that Goguen had "left

undone." And, the state judge added, Sharfarz would have to spend

another $25,000 to finish the project. So the state judge set

Sharfarz's damages at $88,000, which he trebled to $264,000 as

state law allowed, and set Sharfarz's attorney fees and costs at

$8,745.50. Ultimately, then, the state judge awarded Sharfarz

judgment in the amount of $272,745.50.

At some point Goguen filed for bankruptcy under Chapter

7 of the Bankruptcy Code. Quite predictably, Sharfarz reacted by

petitioning to have his judgment against Goguen declared

nondischargeable, relying on a Bankruptcy Code provision that bars

discharge of "any debt . . . for money . . . to the extent obtained

by . . . false pretenses, a false representation, or actual fraud

. . . ." 11 U.S.C. § 523(a)(2)(A).1

In the interest of completeness, we note that Sharfarz also 1

relied on another provision of section 523, one that excludes from

discharge debts arising from "willful and malicious injury by the

debtor to another entity or to the property of another entity." 

See 11 U.S.C. § 523(a)(6). But the bankruptcy judge found that

Sharfarz did not meet his burden of showing that Goguen's "lies"

were intended to injure him (Sharfarz) or his property. See

Kawaauhau v. Geiger, 523 U.S. 57, 61 (1998) (stressing that

"'willful' in (a)(6) modifies the word 'injury,' indicating that

nondischargeability takes a deliberate or intentional injury, not

merely a deliberate or intentional act that leads to injury"). 

Because neither side says anything about that here, we will focus

on, and limit our attention to, the § 523(a)(2)(A)-related issues.

-7-
Both Sharfarz and Goguen (who represented himself) took

the stand during the trial before the bankruptcy judge. Sharfarz

testified in line with the facts as we have presented them. Goguen

disagreed with pretty much everything Sharfarz said, and he blamed

the project's failure on his misestimating what it would cost to do

the job. And he owned up to some project mismanagement too. No

one else testified.

Having heard from them and examined the exhibits, the

bankruptcy judge sided with Sharfarz. His reasoning ran this way. 

Accurately stating the law, the bankruptcy judge stressed that a

creditor must establish six things to exclude a debt from discharge

under this provision:

1) the debtor made a knowingly false

representation or one made in reckless

disregard of the truth, 2) the debtor intended

to deceive, 3) the debtor intended to induce

the creditor to rely upon the false statement,

4) the creditor actually relied upon the false

statement, 5) the creditor's reliance was

justifiable, and 6) the reliance upon the

false statement caused damage.

In re Spigel, 260 F.3d 27, 32 (1st Cir. 2001) (footnote omitted)

(explaining that the first two components of this "test describe

conduct and scienter required to show fraudulent conduct generally"

while "the last four embody the requirement that the claim of the

creditor arguing nondischargeability in an adversary proceeding

must arise as a direct result of the debtor's fraud"). Moving on,

the bankruptcy judge found that Sharfarz had made it crystal clear

-8-
to Goguen how important "the timing of construction was . . . to

him." But Goguen still "lied" to Sharfarz about the buildingpermit status to keep Sharfarz from cancelling the contract. Had

Goguen not "lied," the bankruptcy judge added, Sharfarz "would have

canceled" the agreement and "received all or most of his initial

payment." And, according to the bankruptcy judge, Goguen's "false

representations" about the permit – which Sharfarz justifiably

relied on – kept Sharfarz from doing just that. Ultimately,

Sharfarz incurred $88,000 in damages because of "Goguen's breach of

the construction contract, damages which [he] incurred because

. . . Goguen [had] lied to him in September 2006" to keep him from

"cancelling the contract." All of this made the $88,000

nondischargeable, the bankruptcy judge ruled, though he did not say

what part of the $88,000 went to fixing the foundation (Sharfarz

simply testified that the fix cost "thousands of dollars") and what

part went to finishing the project. Also, the judge did not say

why he deemed only $88,000 nondischargeable and not the rest of

Sharfarz's $272,745.50 claim – a number reached (we remind the

reader) after the state judge trebled the $88,000 in damages and

awarded attorney fees and costs. See Cohen v. De La Cruz, 523 U.S.

213, 215, 223 (1998) (holding that "§ 523(a)(2)(A) prevents the

discharge of all liability arising from fraud," stressing that this

provision applies to treble damages and to attorney fees and

costs). More on that a little later.

-9-
Goguen (now represented by counsel) appealed to the

Bankruptcy Appellate Panel ("BAP"), which reversed. The whole case

turned on causation – no one contested the other elements, the BAP

said. And, the BAP correctly observed, causation here has two

components. The first is cause in fact, which means that Goguen's

misrepresentations must have "played a substantial part," and so

were "a substantial factor," in affecting Sharfarz's "course of

conduct that result[ed] in his loss." See Restatement (Second) of

Torts § 546 & cmt. b. The second is legal cause, which means that 2

Sharfarz's "loss" must have been one "reasonably . . . expected to

result from" his "reliance" on Goguen's misrepresentations. See

id. § 548A. Foreseeability is the watchword. See id. § 548A cmt.

a.3

The bankruptcy judge did not differentiate between cause

in fact and legal cause, the BAP noted. Noting that a comment to

the Restatement says that "[i]f the misrepresentation has not in

fact been relied upon by the recipient in entering into a

transaction in which he suffers pecuniary loss, the

misrepresentation is not in fact a cause of the loss under the rule

stated," id. § 546 cmt. a., the BAP held that the cause-in-fact

For convenience, we will sometimes refer to the Restatement 2

(Second) of Torts as the "Restatement."

By the way, the Supreme Court tells judges that it is okay 3

to use the Restatement when dealing with 11 U.S.C. § 523(a)(2)(A). 

See Field v. Mans, 516 U.S. 59, 69-70 (1995).

-10-
rule required that Sharfarz show that Goguen's permit

misrepresentations induced him to enter into the construction

contract. True, the timing of the project "was critical to

Sharfarz," and Goguen's lies "might have prevented Sharfarz from

canceling the contract," the BAP wrote. But Goguen's

misrepresentations "post-dated" the contract's signing and "so

. . . could not possibly have induced Sharfarz to enter into the

contract in the first instance." Cause in fact was "absent" then. 

Same for legal cause, the BAP added, since Goguen could not have

"foreseen" that Sharfarz would have to pay an extra $88,000 over

the original contract price because he (Goguen) had "misrepresented

the status of the permit application for a ten-week period" after

the contract's signing – and, as a fallback, it was "foreseeable"

that Goguen could have finished the project "in a timely, workmanlike manner, even after lying about the permit, thereby preventing

Sharfarz's pecuniary" loss. Wrapping up, the BAP explained that

Goguen's "negligence in under-estimating" the project's cost and

the resulting "breach of contract" may have "caused Sharfarz harm,"

but, the BAP said, debts arising from situations like that are not

excepted from discharge under 11 U.S.C. § 523.

Sharfarz now appeals to us.

HIGHLIGHTING SOME LEGAL PRINCIPLES

In cases like this one we zero in on the bankruptcy

judge's ruling, affording clear-error review to any fact-bound

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challenges and de novo review to any legal ones. See, e.g., In re

Bank of New Eng. Corp., 364 F.3d 355, 361 (1st Cir. 2004); In re

Werthen, 329 F.3d 269, 272 (1st Cir. 2003). We give the BAP's

decision no formal deference, but we do draw on its expertise in

bankruptcy matters. See, e.g., In re Bank of New Eng. Corp., 364

F.3d at 361; In re BankVest Capital Corp., 360 F.3d 291, 295 (1st

Cir. 2004). 

The parties' dispute here centers on causation, and we

review a bankruptcy judge's causation finding for clear error –

unless he applied the wrong legal standard, in which case our

review is de novo. See Clement v. United States, 980 F.2d 48, 53

(1st Cir. 1992); see also In re Am. Bridge Prod., Inc., 599 F.3d 1,

8 (1st Cir. 2010). Also, because one of the Bankruptcy Code's

chief aims is to give the deserving debtor a "fresh start," we read

exceptions to dischargeability "narrowly." See, e.g., In re

Spigel, 260 F.3d at 32 (internal quotation marks omitted). That

means that a person in Sharfarz's shoes must show that his claim

fits "squarely" within a specific exception set out in the

Bankruptcy Code. See, e.g., id. (internal quotation marks

omitted). And as the party seeking an exception to discharge,

Sharfarz had the burden of proving nondischargeability by a

preponderance of the evidence. See, e.g., Grogan v. Garner, 498

U.S. 279, 281, 287-88 (1991).

-12-
WORKING THROUGH THE ISSUES

An admittedly confusing concept, see United States v.

Hatfield, 591 F.3d 945, 947 (7th Cir. 2010) (Posner, J.), causation

is composed of cause in fact and legal cause, as we said earlier. 

In the typical case, the causal relation between the defendant's

conduct and the plaintiff's injury need only be probable. See,

e.g., Samos Imex Corp. v. Nextel Commc'ns, Inc., 194 F.3d 301, 303

(1st Cir. 1999) (explaining that tort causation requires that the

"plaintiff . . . show that it is more probable than not that the

injury was caused by the action or event (or a combination of them)

for which the defendant is responsible"). Of course, a

"superseding cause" (something that intervenes between the

defendant's wrongful act and the plaintiff's injury, "snap[ping]

the causal chain" that links the act to the injury) can "wip[e] out

the defendant's liability" – but the burden of proving this "is on

the defendant." BCS Servs., Inc. v. Heartwood 88, LLC, 637 F.3d

750, 757 (7th Cir. 2011) (Posner, J.) (citation and internal

quotation marks omitted); accord Wojciechowicz v. United States,

582 F.3d 57, 67 (1st Cir. 2009) (declaring that "[p]roximate cause

is not proven if the defendant can show the occurrence of an

intervening cause that was foreseeable"); Parker v. Gerrish, 547

F.3d 1, 14 (1st Cir. 2008) (noting that the defendant has the

"burden of showing an independent intervening event").

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The bankruptcy judge in his opinion did not home in on

the differences between cause in fact and legal cause. Neither

does Sharfarz in his brief. But our de novo review leads us to

conclude that Sharfarz satisfied his causation burden.

Cause in Fact

The cause-in-fact issue is fairly easy, given the

bankruptcy judge's factual finding: had Goguen not lied to

Sharfarz about the building-permit status, the judge stressed after

canvassing the evidence, Sharfarz "would have canceled the

construction contract" and gotten back "all or most" of the initial

$25,693 payment. Of course, we must accept this finding unless

clearly erroneous – a formidable standard, requiring a "strong,

unyielding belief" that the bankruptcy judge made a mistake. See

Cumpiano v. Banco Santander P.R., 902 F.2d 148, 152 (1st Cir.

1990). Viewing the record as a whole, as we must, see, e.g., id.,

we see nothing resembling clear error here. And given this

finding, we have no trouble concluding that Goguen's deliberatelydeceitful conduct played a "substantial" role, and thus was "a

substantial factor," in shaping "the course of conduct that

result[ed]" in Sharfarz's "loss" – meaning that we can put a check

mark next to cause in fact on the causation list. See Restatement

(Second) of Torts § 546 & cmt. b.

Wait a minute, says Goguen. Echoing the very the

Restatement comment that the BAP had quoted – that if a party "has

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not in fact" relied on the "misrepresentation . . . in entering

into a transaction in which he suffers pecuniary loss," then "the

misrepresentation is not in fact a cause of the loss," id. § 546

cmt. a (emphases added) – Goguen implies that the construction

contract here is an example of what the comment refers to as a

transaction. And, arguing in crescendo, he notes that the

complained-of misrepresentations occurred after the parties had

signed that document, which, he says, undercuts any cause-in-fact

ruling. We think not, for a simple reason. "Transaction . . . is

a broader term than 'contract.'" Black's Law Dictionary 1496 (6th

ed. 1990). It includes not only an "agreement" – like the initial

contract between Sharfarz and Goguen – but also "an act" or

"several acts or agreements between or among parties whereby a

cause of action or alteration of legal rights occur." Id. 

Numerous cases bear out this view. Understood this way (and, 4

critically, Goguen gives us no reason to doubt this wellestablished understanding), the "transaction" here is Sharfarz's

See, e.g., U.S. Hoffman Mach. Corp. v. Ebenstein, 96 P.2d 4

661, 663 (Kan. 1939) (explaining that "a transaction, while it may

embrace a contract, may also relate to matters entirely in tort");

Bozied v. Edgerton, 58 N.W.2d 313, 316 (Minn. 1953) (stressing that

"[a] contract is a transaction but a transaction is not necessarily

a contract"); Artophone Corp. v. Coale, 133 S.W.2d 343, 348 (Mo.

1939) (noting that "[t]he word 'transaction' may and often does

have a broader meaning than 'contract'"); cf. Moore v. N.Y. Cotton

Exch., 270 U.S. 593, 610 (1926) (emphasizing that "'[t]ransaction'

is a word of flexible meaning," adding that "[i]t may comprehend a

series of many occurrences, depending not so much upon the

immediateness of their connection as upon their logical

relationship").

-15-
staying the course, allowing Goguen to proceed with the concrete

pouring and continuing to pay Goguen even after Goguen repeatedly

lied to him. Consequently, Goguen's pouncing on the fact that the

lies came after the contract's formation gains him nothing. See

generally Field v. Mans, 157 F.3d 35, 39, 42-46 (1st Cir. 1998)

(indicating in a post-contract-formation case that fraud that

induces the creditor not to exercise a right arising from the

contract may make the debtor's debt nondischargeable).

Legal Cause

Having dealt with cause in fact, we now turn to legal

cause, which is a trickier matter. As we explained earlier, legal

cause is largely a question of foreseeability – a concept that

"shape[s] and delimit[s] a rational remedy: otherwise the chain of

causation could be endless." Sys. Mgmt., Inc. v. Loiselle, 303

F.3d 100, 104 (1st Cir. 2002). Hindsight is always 20/20. And

when events have run their course, it is easy to label

"'foreseeable'" everything "that has in fact occurred" – but this

we cannot do. See In re Kinsman Transit Co., 338 F.2d 708, 723 (2d

Cir. 1964) (Friendly, J.). Instead, taking our cue from the

Restatement, we must see whether Sharfarz showed that Goguen's lies

led to a "loss" that "might reasonably" have been "expected to

result from the reliance." See Restatement (Second) of Torts

§ 548A. We conclude that he has.

-16-
At oral argument we pressed Sharfarz's lawyer hard to

explain how her client had met the legal-cause requirement, and she

said this: As he strung Sharfarz along with lies about the permit

application, Goguen could have reasonably foreseen that his deceit

would delay the project, which would lead to his pouring the

concrete in cold weather, which in turn would lead to the

foundation's cracking. And there is something to that, given: 

(a) From September 2006 through November 2006, Goguen conned

Sharfarz into thinking that he (Goguen) had applied for a building

permit when in reality he had not. (b) During this 10-week

stretch, Sharfarz worried almost to the point of obsession that

project delays would result in Goguen's pouring the concrete in the

cold, which, he feared, would result in the foundation's cracking

if proper precautions were not taken. (c) Goguen also surely knew

the risks related to pouring concrete in cold weather – a point

plainly inferable both from his saying that contractors had to take

prophylactic measures to prevent cracking in situations like the

one here (recall that he talked about how one could add chemicals

to the concrete mix) and from his asking the town to speed up its

plan review so that he could deal with the foundation before

winter's cold arrived. (d) Common sense (not to mention judicial

notice, if that were needed) confirms the danger of pouring

concrete in cold weather – a danger recognized by courts and those

-17-
in the field with some regularity and for years. (e) Goguen 5

actually poured the concrete in "very cold weather," as the state

judge found in a comprehensive rescript, which was an exhibit at

the bankruptcy trial. And (f) the foundation in fact later 6

See generally Hiddleson v. Grand Island, 212 N.W. 619, 621 5

(Neb. 1927) (noting that "[i]t is a matter of common

knowledge . . . that the pouring of concrete in severely cold

weather is undesirable, because it may freeze and be rendered

worthless," adding that "[i]t is likewise common knowledge, of

which this court will take judicial notice, that freezing and subzero weather frequently occurs in the winter season in this

latitude"); Am. Concrete Inst., Cold Weather Concreting, ACI 306R88, at 3, http://www.ccagc.org/pdfs/ACI_306R88_Cold_Weather_Concreting.pdf (emphasizing that "[n]eglect of

protection against early freezing can cause immediate destruction

or permanently weakened concrete," adding that "if cold weather

concreting is performed, adequate protection from low temperatures

and proper curing is essential"); see also generally Ohio Bell Tel.

Co. v. Pub. Util. Comm'n of Ohio, 301 U.S. 292, 301 (1937)

(stressing that "[c]ourts take judicial notice of matters of common

knowledge" – e.g., that there "has been a depression, and that a

decline of market values is one of its concomitants," though "[h]ow

great the decline has been for this industry or that, for one

material or another, in this year or the next, can be known only to

the experts, who may even differ among themselves"); United Steel

Workers of Am., AFL-CIO v. Textron, Inc., 836 F.2d 6, 8 (1st Cir.

1987) (repeating that courts can "take as true . . . generally

believed facts" – e.g., that "most retired union members are not

rich" – and adding that "[c]ommon sense suggests that generally

believed facts (or something like them) are true"); Grinnell Corp.

v. Hackett, 475 F.2d 449, 460 (1st Cir. 1973) (explaining that

courts can take into account what is "common knowledge" – e.g.,

that "consumer payment obligations in our increasingly creditdependent society are monthly").

A quick word about "cold weather." The industry seems to 6

define that term as "a period when, for more than 3 consecutive

days . . . the average daily air temperature is less than 40

F . . . and the air temperature is not greater than 50 F . . . for

more than one-half of any 24-hour period," with "the average daily

temperature" being "the average of the highest and the lowest

temperatures occurring during the period from midnight to

midnight." Am. Concrete Inst., Cold Weather Concreting, in Manual

-18-
cracked – all because of Goguen's cold-weather concrete pouring,

which is the gist of Sharfarz's testimony below (testimony that

Goguen did not – and does not – challenge as improperly received by

the bankruptcy judge).

The net result of this is that Sharfarz made a prima

facie case for legal cause: again (and at the risk of trying the

reader's patience), we stress that Sharfarz foresaw that, without

adequate precautions, pouring concrete in cold weather could lead

to cracking, and the record, fairly read, shows that Goguen did

too; common knowledge and common sense (not contradicted by the

evidence) suggest that Sharfarz's fear was reasonable; and his fear

(according to his testimony, received without objection) ultimately

became a reality. So, to put the point in Restatement terms,

Sharfarz's reliance on Goguen's misrepresentations resulted in a

"loss" that could "reasonably" have been "expected" to occur "from

of Concrete Practice 306R-1, 30bR-2(reapproved 2002), available at

http://www.ccagc.org/pdfs/ACI_306R-88_Cold_Weather_Concreting.pdf. 

Goguen claims that he finished the concrete pouring on December 12,

2006, though that seems unlikely since the permit was not even

issued until December 11. The state judge, on the other hand,

found that Goguen poured the concrete around Christmas time of that

year. But it really does not matter which timeline we use: 

publicly-available weather records for the area show that

temperatures during either period were either in or very close to

the range deemed "cold weather" by the American Concrete Institute. 

See Weather Underground, Inc., History for Bedford, MA: Month of

D e c e m b e r , 2 0 0 6 ,

http://www.wunderground.com/history/airport/KBED/2006/12/1/Monthl

yHistory.html (last visited August 7, 2012). And, tellingly,

Goguen never said that the temperatures did not require his taking

appropriate precautions.

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the reliance" – indeed the loss here was expected, at least absent

any chemical additive or other precautionary measure. See

Restatement (Second) of Torts § 548A.

Of course, Goguen's vague comment below that one could

add chemicals to concrete mix to forestall cracking cannot carry

the day for him. After all, he has never said that he did that

here. Nor has he ever said that he took any other preventative

steps. And if he wanted to argue that he had or that the obvious

cause was not the actual cause, he had to contribute something more

than nothing. See Wojciechowicz, 582 F.3d at 67; Parker, 547 F.3d

at 14; see also generally BCS Servs., Inc., 637 F.3d at 757

(stressing that a "plaintiff doesn't have to prove a series of

negatives," adding that "he doesn't have to offer evidence which

positively excludes every other possible cause") (alterations,

citations, and internal quotation marks omitted).

Which brings us full circle. Sharfarz wins because he

adequately proved causation and Goguen did not bear his burden of

showing an intervening or superseding cause. Consequently, we

reverse the BAP's decision reversing the bankruptcy judge's order. 

That leaves one loose end, however – and a serious one to boot. 

The Nondischargeable Amount

At least some portion of Sharfarz's $88,000 in actual

damages is attributable to the foundation's cracking. But we do

not know what that number is, because (the reader will remember)

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the bankruptcy judge made no findings on that score, which is not

surprising given that Sharfarz simply offered a ballpark estimate

for the foundation-repair costs ("thousands of dollars," he said),

providing no precise figures. On this issue a remand is necessary. 

But for a variety of reasons we do not think that Sharfarz's

recovery should be capped at that amount, whatever it is. 

For starters, Sharfarz claimed that he paid Goguen extra

money for an additional worker who was never hired; that he made

progress payments to Goguen for work that Goguen said he had done

but that was in fact not done; and that he paid Goguen for an

electrical upgrade that was never performed. The bankruptcy judge

made no findings regarding these allegations. But Sharfarz has not

waived them (indeed, he explicitly raises them here), and the

bankruptcy judge could well decide on remand that some part of

Sharfarz's damages is traceable not to the foundation's cracking

but to other reasonably-foreseeable consequences of Goguen's lies.

Also, and importantly, the bankruptcy judge may have

erred when he discharged the amount of Goguen's debt attributable

to the state judge's trebling of damages and awarding of attorney

fees and costs. See Cohen, 523 U.S. at 215, 223. True, Sharfarz

has not appealed on this point. But given that Goguen will be free

on remand to show that the nondischargeable amount is really less

than $88,000, we see no reason why Sharfarz should not be allowed

to show that the nondischargeable number is really more.

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 Moreover, we have a fair amount of elbow room "to shape

a remand in the interests of justice." See, e.g., United States v.

Merric, 166 F.3d 406, 412 (1st Cir. 1999) (citing 28 U.S.C.

§ 2106). And exercising this authority, we explicitly give the

bankruptcy judge the go-ahead to take these matters up on remand.

FINISHING UP

Our work complete, we vacate the BAP's judgment and

remand to that tribunal with directions that it, in turn, remand

the case to the bankruptcy court for further proceedings consistent

with this opinion.

Vacated and remanded with instructions. No costs.

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