Court Opinion

ID: 9488300
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:41:43.723623+00
Date Added: 2024-06-11T17:52:48.936218
License: Public Domain

*241MERRITT, C.J., delivered the opinion of the court, in which BERTELSMAN, D.J., joined. BATCHELDER, J. (pp. 242-244), delivered a separate dissenting opinion.
MERRITT, Chief Judge.
The defendant pled guilty to three instances of “mak[ing] a false statement or report” in order to obtain three bank loans in violation of 18 U.S.C. § 1014 (punishable by a maximum fine of $1 million and 30 years imprisonment), and he now appeals his sentence of 16 months imprisonment assessed under § 2F1.1 of the Guidelines governing bank fraud. (This sentence was calculated by beginning with a “base level” of 6 and adding 7 levels for causing a “loss” of $59,750 for one loan, $13,000 for a second and $100,-000 for a third, plus two levels for “more than minimal planning,” plus two more levels under § 3B1.3 for using “special skills” as a “lawyer,” minus three levels for acceptance of responsibility, equaling level 14 which carries a sentencing range of 15 to 21 months for a first offender with a clean record). He appeals on the ground that the Guideline section and its Commentary for the offenses in question were not followed by the district judge in sentencing. He contends that the concept to be followed in sentencing for bank fraud is the amount of “intended loss” or “actual loss” and that this principle was not properly applied because there was no loss in fact, none intended, and none likely to occur.
The real problem in this appeal, as in so many sentencing appeals, is the Commentary and the effort to create in the Commentary a legal rule designed to remove the district judge’s discretion. Paragraph seven of the Commentary, having expressly established “actual loss,” “intended loss” and “expected loss” (whichever is greater) as the governing legal rule for fraud cases, then — in a so-called “example” — immediately changes the concept from “actual loss” to another legal rule much more difficult to understand and apply because based on the legal concept of a “pledge” of assets. It states:
In fraudulent loan application cases and contract procurement cases, the loss is the actual loss to the victim (or if the loss has not yet come about, the expected loss). For example, if a defendant fraudulently obtains a loan by misrepresenting the value of his assets, the loss is the amount of the loan not repaid at the time the offense is discovered, reduced by the amount the lending institution has recovered (or can expect to recover) from any assets pledged to secure the loan.
Guidelines § 2F1.1, Commentary ¶ 7(b).
In this ease the example does not fit the facts. There was no “pledge” on any of the loans in the ordinary legal sense of the word “pledge.” The drafters of the Guidelines are lawyers and judges, and they presumably know that the word “pledge” or “pledged” has a distinct and determinative legal meaning.1 On the first loan, the bank had the right in case of default to foreclose under a mortgage on a piece of real estate and the right to set off cash funds in other accounts — both of which the bank exercised resulting in no loss on the loan. On the third loan there was no loss because the defendant, Wright, was not the debtor on the loan but made a false statement about a deed of trust, and the debtor then collateralized the note to the bank’s satisfaction when the bank raised the issue with the defendant.
The example in the Commentary is faulty, but the general words “actual loss,” “intended loss” and “expected loss” are clear enough. These are the words that should be applied instead of the faulty example which changes the principle established in the rest of the Commentary. Because the District Court did not apply the words “actual loss,” “intended loss” or “expected loss” (whichever is greater) but instead tried to apply an example that is far afield from the facts of this case, we remand the case to the District Court for resentencing.
In Stinson v. United States, — U.S. -, -, 113 S.Ct. 1913, 1918, 123 L.Ed.2d 598 *242(1993), the Supreme Court has advised us how to handle the situation:
If, for example, commentary and the guideline it interprets are inconsistent in that following one will result in violating the dictates of the other, the Sentencing Reform Act itself commands compliance with the Guidelines. See 18 U.S.C. §§ 3553(a)(4), (b).
The Guideline itself, § 2F1.1 labeled “Fraud and deceit” says that “if the loss exceeded $2,000, increase the offense level as follows.” The Guideline then gives a table with a column labeled “Loss (apply the greatest)” followed by a parallel column of numbers for increasing the offense level. Thus the Guideline itself requires “loss.”
Obviously, the word “loss” means and includes the money a court may require as restitution and it means money which others may pay, but are not obligated to pay, on behalf of the defendant. “Loss” should not include amounts that a bank can and does easily recover by foreclosure, setoff, attachment, simple demand for payment, immediate recovery from the actual debtor and other similar legal remedies, including the sale of a “pledged” asset covered by the example. Our decision is consistent with previous decisions of this Circuit. In United States v. Buckner, 9 F.3d 452 (6th Cir.1993), we held that loan repayments had to be used to reduce “loss” because the amounts had already been recovered by the bank. 9 F.3d at 453-54. Also, in United States v. Lavoie, 19 F.3d 1102 (6th Cir.1994), we again held that “loss” should not include amounts the bank could recover from other assets. 19 F.3d at 1105.
Accordingly, the judgment of the District Court is reversed and the ease remanded for resentencing.

. Black’s Law Dictionary p. 1312 (4th Ed. 1951) defines "pledge” as a "bailment of goods to a creditor as security for some debt or engagement. A bailment or delivery of goods by a debtor to his creditor to be kept till the debt is discharged” [citing numerous cases and commentators].