Opinion ID: 572756
Heading Depth: 3
Heading Rank: 1

Heading: Finding of Fraud within the meaning of section 523(a)(2)(A)

Text: Section 523(a)(2)(A) provides: 13 (a) A discharge under section 727, 1141, 1228(a), 1228(b) or 1328(b) of this title does not discharge an individual debtor from any debt-- 14 (2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by-- 15 (A) false pretenses, a false representation, or actual fraud ... 16 11 U.S.C. § 523(a)(2)(A). 17 The Ninth Circuit has employed a five-part test for determining when a debt is nondischargeable under section 523(a)(2)(A). The creditor must show that: 18
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22 (5) that the creditor sustained the alleged loss and damage as the proximate result of the representations having been made. 23 Houtman v. Mann (In re Houtman), 568 F.2d 651, 655 (9th Cir.1978) (emphasis omitted) (quoting Public Fin. Corp. of Redlands v. Taylor (In re Taylor), 514 F.2d 1370, 1373 (9th Cir.1975)). In Houtman, the court was determining dischargeability under the predecessor to section 523(a)(2)(A), section 17(a)(2) of the Bankruptcy Act. 24 The BAP acknowledged there were inconsistencies in Price's testimony and conflicts between the testimony of Price and Britton's version of the events. It nonetheless found that the bankruptcy court's findings with respect to the debtor's fraudulent conduct were not clearly erroneous. 25 On this appeal, Britton focuses on the element of proximate causation. He argues that the injury Price suffered was not the proximate result of his misrepresentation. The clearly erroneous standard of appellate review applies to findings of proximate cause, even though the finding may depend to some extent upon law. Rubin, 875 F.2d at 758. Proximate cause 26 is sometimes said to depend on whether the conduct has been so significant and important a cause that the defendant should be legally responsible. But both significance and importance turn upon conclusions in terms of legal policy, so that they depend on whether the policy of the law will extend the responsibility for the conduct to the consequences which have in fact occurred. 27 W. Page Keeton et al., Prosser and Keeton on The Law of Torts § 42 at 273 (5th ed. 1984). 28 On this issue, the bankruptcy judge's findings were not clearly erroneous. Malpractice can be seen as a foreseeable consequence of any medical procedure, including plastic surgery; Britton employed fraud to convince Price to submit to surgery. Moreover, on these facts, there appears to be no policy argument for limiting the extent of Britton's liability for Price's injuries. Britton cannot escape the consequences of his intentional misconduct by arguing that the injury Price suffered was not the proximate result of the fraud he committed. 29