Court Opinion

ID: 9373918
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:10:30.362169+00
Date Added: 2024-06-11T17:16:43.873827
License: Public Domain

FILED
                                                                                  NOV 4 2022
                          NOT FOR PUBLICATION                                SUSAN M. SPRAUL, CLERK
                                                                                U.S. BKCY. APP. PANEL
                                                                                OF THE NINTH CIRCUIT

          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                               BAP No. CC-22-1074-LSG
VANCE ZACHARY JOHNSON,
           Debtor.                                   Bk. No. 6:18-bk-10939-MH

VANCE ZACHARY JOHNSON,                               Adv. No. 6:18-ap-01106-MH
            Appellant,
v.                                                   MEMORANDUM∗
BANKERS HEALTHCARE GROUP, LLC,
            Appellee.

               Appeal from the United States Bankruptcy Court
                    for the Central District of California
                Mark D. Houle, Bankruptcy Judge, Presiding

Before: LAFFERTY, SPRAKER, and GAN, Bankruptcy Judges.

                                 INTRODUCTION

      Debtor Vance Johnson appeals the bankruptcy court’s judgment

declaring his $514,245 debt owed to Bankers Healthcare Group, LLC

(“BHG”) nondischargeable under § 523(a)(2)(A) and (B). 1

      ∗  This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
       1 Unless specified otherwise, all chapter and section references are to the

Bankruptcy Code, 11 U.S.C. §§ 101–1532. “Rule” referenced are to the Federal Rules of
Bankruptcy Procedure, and “Civil Rule” references are to the Federal Rules of Civil
Procedure.
                                            1
      We AFFIRM.

                                   FACTS

A.    Pre-Bankruptcy Events

      Dr. Johnson is a physician and 100% owner of Temecula Valley Pain

Medical Group, Inc. (“TVPMG”). In 2017, Dr. Johnson obtained on behalf

of TVPMG a $514,245 loan from BHG, which he personally guaranteed.

      As part of the loan approval process, Dr. Johnson submitted a loan

application to BHG, which included a signed “Statement of Intended

Primary Purpose of the Loan” (“Purpose Statement”) indicating that the

“specific business reason” for the loan was “Practice Expansion.” The

Purpose Statement also included an acknowledgment that Dr. Johnson

understood that the loan was a commercial loan to be used “primarily for

other than personal, family, or household purposes” and that “BHG has

reasonably and justifiably relied on this Statement of Intended Purpose in

connection with reviewing and considering my loan application for

approval and funding.”

      Dr. Johnson also provided a signed personal financial statement

(“PFS”), a company financial statement for TVPMG (“CFS”), and a

personal guaranty. The PFS showed total annual income of $250,000, assets

of $2,010,000, and liabilities of $468,614, consisting of a $463,594 mortgage

and $5,020 in credit card debt. The PFS also indicated that Dr. Johnson did

not pay alimony or child support. The CFS indicated TVPMG had assets of

$655,966.21 and no liabilities.

                                      2
      During the application process, BHG discovered that Dr. Johnson

owed the IRS $151,891 and directed payment of that liability from the loan

proceeds. It also apparently discovered that Dr. Johnson had a monthly

domestic support obligation of $18,000. 2

      BHG disbursed the loan proceeds to Dr. Johnson’s newly opened

personal bank account in July 2017. From those proceeds, Dr. Johnson paid

$151,229.08 to the IRS, $72,468 for back child support, and $9,935 for

jewelry. The record contains no evidence of how the remaining funds were

spent.

      Approximately five weeks after the disbursement, TVPMG ceased

operations. TVPMG made five loan payments to BHG, the last on

December 25, 2017.

B.    Bankruptcy Events

      Dr. Johnson filed a chapter 11 petition in February 2018. He listed on

his schedules the unsecured debt owed to BHG on his personal guaranty.

He also included on his schedules a secured debt to the IRS of $142,337,

priority debts to the California Franchise Tax Board (“FTB”) of $62,888 for

2015 and $14,563 for 2016, and a nonpriority unsecured debt to Pacific

Premier Bank (“PPB”) of $218,060 incurred in 2016-2017. Proofs of claim

were filed reflecting debts incurred before July 2017 that had not been

      Although no domestic support obligation appears on the PFS, it is listed in
      2

documents prepared by BHG.
                                          3
included on Dr. Johnson’s PFS. 3 For example, the IRS filed a proof of claim

in the total amount of $168,237.65 (later amended to $178,586.04),

pertaining to tax debt incurred for 2012-2018, and Dr. Johnson’s ex-wife

filed a proof of claim that included past due support dating back to 2012.

       A few months after the petition date, the bankruptcy court granted

Dr. Johnson’s motion to convert the case to chapter 7. BHG filed an

adversary proceeding objecting to the discharge of its claim under

§ 523(a)(2)(A) and (B), (a)(4), and (a)(6). The matter proceeded to a one-day

trial. Daniel Johnston, portfolio servicing manager for BHG, testified on

behalf of the plaintiff, and Dr. Johnson testified for the defense.

       After trial, the bankruptcy court issued a memorandum of decision

and a judgment declaring the debt nondischargeable under § 523(a)(2)(A)

and (a)(2)(B).4 The bankruptcy court concluded that BHG had not

established the required elements under § 523(a)(4) or (a)(6). Dr. Johnson

timely appealed.

                                   JURISDICTION

       The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(I). We have jurisdiction under 28 U.S.C. § 158.

       3 The bankruptcy court took judicial notice that the claims were filed, but not for
the truth of the matters asserted therein.
       4 Bankers Healthcare Grp. v. Johnson (In re Johnson), 638 B.R. 782 (Bankr. C.D. Cal.

2022).
                                             4
                                    ISSUES

      Did the bankruptcy court abuse its discretion in admitting into

evidence the § 341(a) hearing transcript?

      Did the bankruptcy court err in finding Dr. Johnson’s debt to BHG

nondischargeable under § 523(a)(2)(A)?

      Did the bankruptcy court err in finding Dr. Johnson’s debt to BHG

nondischargeable under § 523(a)(2)(B)?

                         STANDARDS OF REVIEW

      We review the bankruptcy court’s evidentiary rulings for abuse of

discretion, and we reverse only if any error would have been prejudicial to

the appellant. Van Zandt v. Mbunda (In re Mbunda), 484 B.R. 344, 351–52 (9th

Cir. BAP 2012), aff’d, 604 F. App’x 552 (9th Cir. 2015). To determine whether

the bankruptcy court abused its discretion, we conduct a two-step inquiry:

(1) we review de novo whether the bankruptcy court “identified the correct

legal rule to apply to the relief requested”; and (2) if it did, we consider

whether the bankruptcy court’s application of the legal standard was

illogical, implausible, or without support in inferences that may be drawn

from the facts in the record. United States v. Hinkson, 585 F.3d 1247, 1262

(9th Cir. 2009) (en banc).

      The determination that a claim is excepted from discharge under

§ 523(a)(2) presents mixed issues of law and fact that we review de novo.

Diamond v. Kolcum (In re Diamond), 285 F.3d 822, 826 (9th Cir. 2002). Under

de novo review, “we consider a matter anew, as if no decision had been

                                       5
made previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th

Cir. BAP 2014).

      We review the bankruptcy court’s findings of fact for clear error.

Honkanen v. Hopper (In re Honkanen), 446 B.R. 373, 378 (9th Cir. BAP 2011).

The bankruptcy court’s determinations concerning the debtor’s intent and

the creditor’s justifiable or reasonable reliance are factual matters reviewed

for clear error. Beauchamp v. Hoose (In re Beauchamp), 236 B.R. 727, 729 (9th

Cir. BAP 1999) (intent); Eugene Parks Law Corp. Defined Benefit Pension Plan

v. Kirsh (In re Kirsh), 973 F.2d 1454, 1456 (9th Cir. 1992) (justifiable reliance);

Maxwell v. Oregon (In re Maxwell), 600 B.R. 62, 69 (9th Cir. BAP 2019)

(reasonable reliance).

      Factual findings are clearly erroneous if they are illogical,

implausible, or without support in the record. Retz v. Samson (In re Retz),

606 F.3d 1189, 1196 (9th Cir. 2010). If two views of the evidence are

possible, the bankruptcy judge’s choice between them cannot be clearly

erroneous. Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985). “The

bankruptcy court’s witness credibility findings are entitled to special

deference, and are also reviewed for clear error.” Oney v. Weinberg (In re

Weinberg), 410 B.R. 19, 28 (9th Cir. BAP 2009) (citing Rule 8013; Anderson,

470 U.S. at 573).

                                         6
                                     DISCUSSION

A.     The bankruptcy court did not abuse its discretion in admitting the
       § 341(a) meeting transcript.
       At trial, the bankruptcy court admitted the transcript of Dr. Johnson’s

§ 341(a) meeting (“341 Transcript”) as a deposition taken in an earlier

action pursuant to Civil Rule 32(a)(8).5 We have found no Ninth Circuit

authority addressing the admissibility of § 341 meeting transcripts, but the

Eleventh Circuit has held that a bankruptcy court erred by not admitting

§ 341 testimony in ruling on a creditor’s objection to exemptions. Key Bank

of Me. v. Jost (In re Jost), 136 F.3d 1455, 1459 (11th Cir. 1998)). See also In re

Hardy, 319 B.R. 5, 6 (Bankr. M.D. Fla. 2004) (noting that § 341 testimony is

admissible as a rebuttal or impeachment tool but questioning its

admissibility as substantive evidence). Although it is not clear to us

whether Civil Rule 32(a)(8) is the applicable authority for admission of the

341 Transcript, as explained below, we find no abuse of discretion in the

bankruptcy court’s decision to consider that evidence.

       Dr. Johnson contended in his opening brief on appeal that the

bankruptcy court abused its discretion in admitting the 341 Transcript

       5
         A deposition may be used against a party at trial if: “(A) the party was present
or represented at the taking of the deposition or had reasonable notice of it; (B) it is used
to the extent it would be admissible under the Federal Rules of Evidence if the deponent
were present and testifying; and (C) the use is allowed by Rule 32(a)(2) through (8).”
Civil Rule 32(a)(1). Subsection (a)(8) of that rule provides that a deposition taken in
“any federal- or state-court action may be used in a later action involving the same
subject matter between the same parties, or their representatives or successors in
interest, to the same extent as if taken in the later action. A deposition previously taken
                                             7
because it was not properly authenticated and is hearsay. At oral

argument, however, Dr. Johnson’s counsel conceded that if the 341

Transcript were properly authenticated, the testimony therein would not

be hearsay.6

         The bankruptcy court did not err in concluding that the 341

Transcript was properly authenticated. Federal Rule of Evidence 901(a)

provides, “[t]o satisfy the requirement of authenticating or identifying an

item of evidence, the proponent must produce evidence sufficient to

support a finding that the item is what the proponent claims it is.” At trial,

Mr. Johnston testified that BHG had requested a copy of the 341 Transcript

and that the exhibit at issue was a true and correct copy of the transcript

received in response. The 341 Transcript contains the certification of the

transcriber that the transcript “is a true and accurate record of the

proceedings.” Dr. Johnson has not explained why this evidence was

insufficient to support a finding that the 341 Transcript is what it purports

to be.

         On appeal, Dr. Johnson raises new objections regarding

authentication, arguing that under Civil Rule 30(f)(1), the deposition officer

“must certify in writing that the witness was duly sworn and that the

deposition accurately records the witness’s testimony” and “must seal the

may also be used as allowed by the Federal Rules of Evidence.”
       6 Admissions by a party-opponent are not hearsay. Fed. R. Evid. 801(d)(2). And

Civil Rule 32(a) permits the use of a deposition against a party so long as it would be
admissible if the deponent were present and testifying.
                                            8
deposition in an envelope or package bearing the title of the action”

marked with the witness’s name. Dr. Johnson asserts that the 341

Transcript does not meet these requirements and thus there is no indicia of

reliability. Dr. Johnson waived this argument by not raising it in the

bankruptcy court. See O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.),

887 F.2d 955, 957 (9th Cir. 1989) (appellate courts in the Ninth Circuit will

not consider arguments that are not properly raised in the trial court).

B.    The bankruptcy court did not err in finding the debt to BHG
      nondischargeable under § 523(a)(2)(A).
      Section 523(a)(2)(A) excepts from discharge debts resulting from

“false pretenses, a false representation, or actual fraud, other than a

statement respecting the debtor’s or an insider’s financial condition.” A

creditor seeking to except a debt from discharge based on fraud bears the

burden of establishing five elements: (1) misrepresentation, fraudulent

omission or deceptive conduct; (2) knowledge of the falsity or

deceptiveness of such representation(s) or omission(s); (3) an intent to

deceive; (4) justifiable reliance by the creditor on the representations or

conduct; and (5) damage to the creditor proximately caused by its reliance

on such representation(s) or conduct. See Ghomeshi v. Sabban (In re Sabban),

600 F.3d 1219, 1222 (9th Cir. 2010); In re Weinberg, 410 B.R. at 35.

      The bankruptcy court correctly found Dr. Johnson’s representation

that the loan would be used to expand TVPMG’s practice was a false

statement that could be used to support a claim under § 523(a)(2)(A). See

                                        9
Reingold v. Shaffer (In re Reingold), BAP Nos. CC-12-1112-PaDKi, CC-12-

1141-PaDKi, 2013 WL 1136546 (9th Cir. BAP Mar. 19, 2013). In Reingold, the

BAP affirmed the bankruptcy court’s finding that the debtor made a

misrepresentation to the creditor when he stated in the loan agreement that

the funds would be used for the purchase and rehabilitation of a single-

family residence, which did not occur. 2013 WL 1136546, at *6. In reaching

its decision, the Panel relied on Ninth Circuit authority that a false

representation can be established by failure to disclose a material fact when

there is a duty to disclose. Id. (citing Citibank (South Dakota), N.A. v. Eashai

(In re Eashai), 87 F.3d 1082, 1088-89 (9th Cir. 1996)). The Panel also cited

United States v. Gibson, 690 F.2d 697, 701 (9th Cir. 1982), for the rule that the

nature of a scheme to defraud can be shown by accumulated evidence and

subsequent conduct. In re Reingold, 2013 WL 1136546, at *6. Here, Dr.

Johnson failed to disclose that the funds would be used for purposes other

than expanding his practice.

      Next, the bankruptcy court found that Dr. Johnson’s testimony

lacked credibility and that circumstantial evidence established that Dr.

Johnson knew at the time he made it that the representation was false and

that he intended to deceive BHG. “Fraudulent intent may be established by

circumstantial evidence, or by inferences drawn from a course of conduct.”

McCrary v. Barrack (In re Barrack), 217 B.R. 598, 607 (9th Cir. BAP 1998)

(quoting Devers v. Bank of Sheridan (In re Devers), 759 F.2d 751, 753-54 (9th

Cir. 1985)).

                                        10
      At trial, Dr. Johnson testified that the purpose of the loan was to

expand the business by adding “a couple of neurosurgeons,” with the cost

(at least $1.5 million) guaranteed by Loma Linda Hospital. He explained

that the neurosurgeons ultimately did not join the practice because: (1) the

hospital reneged on its agreement to guarantee the cost; (2) at the same

time, certain provisions of the Affordable Care Act “dramatically affected

our reimbursability for our procedures that had the widest margin”; and

(3) changes to workers compensation reimbursement also changed the

business’s projections. On cross-examination, Dr. Johnson testified initially

that he did not know when the hospital reneged but then stated that it was

“around the time of the loan.” But he could not remember any details of

how he found out.

      The bankruptcy court found this testimony to be “completely lacking

in credibility.” We must defer to the bankruptcy court’s credibility finding

because, as the trier of fact, that court could observe variations in the

witness’s demeanor and tone of voice. In re Retz, 606 F.3d at 1196. The court

found that Dr. Johnson’s testimony was “vague and evasive, lacks detail

and support, is contradictory as to what practice expansion meant and

when those efforts ended . . . .” The bankruptcy court also noted that

TVMPG shut down shortly after the loan funded, and that at the § 341(a)

                                       11
meeting, Dr. Johnson had testified that his recruiting efforts had occurred

roughly in the year preceding September 2017. 7

      Additionally, the bankruptcy court found that the circumstantial

evidence supported its finding that Dr. Johnson did not intend to use the

loan proceeds for practice expansion. Specifically, the business closed five

weeks after the loan was funded, and Dr. Johnson immediately used

almost half the loan proceeds to pay personal debts to the IRS, for child

support, and for jewelry, with the disposition of the remaining funds not

explained.8 The bankruptcy court also noted that, at the § 341(a) meeting,

Dr. Johnson “could provide no coherent, detailed explanation whatsoever

as to how and when Plaintiff’s loan proceeds were used to pay expenses for

expansion, other than that they were used ‘mostly to operate TVPMG, I

think.’”

      The bankruptcy court also found that BHG justifiably relied on Dr.

Johnson’s representation regarding the purpose of the loan. In considering

whether reliance was justifiable, “the court must look to all of the

circumstances surrounding the particular transaction, and must

      7  At oral argument, Dr. Johnson’s counsel asserted that there was no evidence of
when the business shut down, but the joint pre-trial stipulation (signed by Dr. Johnson’s
counsel) lists as an admitted fact that “TVMPG ceased operations on or about August
31, 2017.”
       8 Dr. Johnson asserts that it was BHG’s burden to show how the rest of the funds

were spent. We disagree. BHG had the burden to show by a preponderance of the
evidence that Dr. Johnson did not intend to use the proceeds for practice expansion. It
met this burden by showing that a significant portion of those proceeds were spent on
personal debts and that TVPMG shut down mere weeks after the loan funded.
                                           12
particularly consider the subjective effect of those circumstances upon the

creditor.” In re Kirsh, 973 F.2d at 1460. A creditor may justifiably rely on a

representation even if the falsity of the representation could have been

ascertained upon investigation. Id. at 1458.

      The bankruptcy court found that BHG’s reliance was justifiable given

that Dr. Johnson never disclosed that expansion efforts had failed or that

TVPMG was experiencing financial hardship. The bankruptcy court also

pointed out that the testimony established that BHG had done its due

diligence and, in approving the loan, it had justifiably relied upon financial

information Dr. Johnson provided as well as his high credit score.

      Finally, the bankruptcy court found that BHG’s damages had been

proximately caused by Dr. Johnson’s misrepresentation. This finding is

supported by Mr. Johnston’s testimony that BHG would not have made the

loan had it known that Dr. Johnson did not intend to use the funds for

practice expansion.

      On appeal, Dr. Johnson argues that the representation that the loan

proceeds were to be used for business expansion is not a basis for a

§ 523(a)(2)(A) claim. He contends that the bankruptcy court’s findings were

inconsistent: the bankruptcy court found that the representation in the

Purpose Statement that the loan proceeds would be used “primarily for

other than personal, family, or household purposes” was not a basis for a

nondischargeability claim under § 523(a)(2)(A) because BHG did not prove

that the proceeds were used primarily for nonbusiness purposes, but it

                                       13
found that the statement of the business purpose of the loan did support

such a claim. Dr. Johnson’s view seems to be that the latter (specific)

statement was subsumed by the former (general) statement.

      We discern no error in the bankruptcy court’s interpretation of the

Purpose Statement as containing two separate representations—one

general and one specific—and in analyzing those separately. Even though

some of the proceeds were used to pay personal debts, there was no

evidence that any of the loan proceeds were used for practice expansion.

Notably, Dr. Johnson testified at trial that “the expansion never occurred.”

      Dr. Johnson also argues that the justifiable reliance element was not

met. As part of this argument, he erroneously assumes that BHG is

asserting that he represented that the loan proceeds would be used

“exclusively” for practice expansion. He contends that BHG could not have

justifiably relied on such a statement when it required Dr. Johnson to use a

significant portion of the loan proceeds to pay personal IRS debt. But Dr.

Johnson represented that the “specific business reason” for the loan was

practice expansion. As noted, there is no evidence that any of the loan

proceeds were used for that purpose, and no expansion occurred.

      Dr. Johnson also assigns error to the bankruptcy court’s reliance on

AT&T Universal Card Servs., Inc. v. Nguyen (In re Nguyen), 235 B.R. 76, 86

(Bankr. N.D. Cal. 1999). The bankruptcy court cited Nguyen for the

proposition that a creditor (in that case, a credit card issuer) justifiably

relies on a representation of intent to repay so long as the account is not in

                                       14
default and any initial investigations into a credit report do not raise red

flags. Dr. Johnson argues that Nguyen is distinguishable because, in the

credit card context, the debtor’s representation to repay is unambiguous,

but in this case, the representation that the loan proceeds would be used

for business expansion was ambiguous. We disagree with this reasoning.

The statement that practice expansion was the primary purpose of the loan

is an implicit promise that at least some of the funds would be spent for

that purpose, and, as a result, TVPMG or Dr. Johnson would be able to pay

back the loan as promised. As discussed, BHG’s reliance on that statement

was justifiable in the circumstances.

      Based on the foregoing, the bankruptcy court’s factual findings on

the elements of the § 523(a)(2)(A) claim were not illogical, implausible, or

without support in the record.

C.    The bankruptcy court did not err in finding the debt to BHG
      nondischargeable under § 523(a)(2)(B).
            To prevail on an exception to discharge claim under
      § 523(a)(2)(B), the creditor must show, by a preponderance of
      the evidence, that: (1) it provided debtor with money, property,
      services or credit based on a written representation of fact by
      the debtor as to the debtor’s financial condition; (2) the
      representation was materially false; (3) the debtor knew the
      representation was false when made; (4) the debtor made the
      representation with the intention of deceiving the creditor; (5)
      the creditor relied on the representation; (6) the creditor’s
      reliance was reasonable; and (7) damage proximately resulted
      from the representation.
In re Maxwell, 600 B.R. at 69–70 (citations omitted).
                                        15
        The bankruptcy court found that Dr. Johnson’s failure to disclose all

his debts on the PFS was a material misrepresentation because it painted “a

substantially untruthful picture of [his] financial condition by

misrepresenting information of the type which would normally [affect] the

decision to grant credit.” First Interstate Bank of Nev. v. Greene (In re Greene),

96 B.R. 279, 283 (9th Cir. BAP 1989) (citations omitted). In the PFS, Dr.

Johnson indicated that his total debt was $468,618, comprised of a

mortgage liability and credit card debts. He did not disclose approximately

$77,000 owed to FTB and $218,000 owed to PPB. These debts were incurred

before he applied for the loan. In addition, Dr. Johnson paid out of the loan

proceeds $49,468 for child support. Based on the evidence at trial and Dr.

Johnson’s lack of credibility, the bankruptcy court found that he knew or

should have known of these debts when he signed the PFS. Accordingly,

the bankruptcy court found that Dr. Johnson intended to deceive BHG.

        The bankruptcy court also found that BHG’s reliance on the PFS was

both actual and reasonable based on Mr. Johnston’s testimony that BHG

would not have made the loan had it known of Dr. Johnson’s additional

debts because it would have increased Dr. Johnson’s debt-to-income ratio

to more than 30%. The court also cited the fact that BHG required Dr.

Johnson to pay the IRS debt from the loan proceeds, indicating that Dr.

Johnson’s debts were a material consideration in BHG’s approval of the

loan.

                                        16
     Finally, the bankruptcy court found that BHG suffered damages

proximately caused by Dr. Johnson’s misrepresentation of his personal

debts. This finding was based on Mr. Johnston’s testimony that BHG

would not have made the loan had it known of the additional debts and

that Dr. Johnson’s failure to repay the loan was a reasonably foreseeable

consequence of his misrepresentation.

     On appeal, Dr. Johnson argues that the record contains no evidence

that he made a materially false representation. He points out that the

bankruptcy court found that BHG knew Dr. Johnson had tax and alimony

obligations when it made the loan, which “precludes” a finding that he

made a materially false representation. The record shows that BHG was

aware that he owed money to the IRS and that he had an $18,000 monthly

domestic support obligation, but, importantly, not that he had outstanding

debt to the FTB, PPB, and for past due support. Regarding the PPB debt, he

points to his trial testimony that he did not recall having any loan to PPB

“at that time.” But the bankruptcy court found this testimony not credible.

He also points to Mr. Johnston’s testimony that BHG conducts UCC

searches when processing loan applications, which would have revealed

the PPB debt. But there is no evidence in the record that PPB filed a UCC-1

statement or that BHG was aware of one.

      Dr. Johnson further argues that BHG could not have actually or

reasonably relied on the PFS. He points to the “CMS and Cash Flow

Calculation” prepared by BHG, which reflected personal consumer debt

                                     17
totaling $363,924 (including mortgage debt of $86,928) and a debt-to-

income ratio of 30.09%. He complains that the bankruptcy court did not

consider that document, but it was not admitted into evidence. Mr.

Johnston did testify regarding a “Loan Summary” prepared by BHG that

was admitted at trial and reflected a debt-to-income ratio of 30.09%. He

testified that the calculation of the debt-to-income ratio did not include the

IRS or PPB debts. Accordingly, Dr. Johnson’s argument fails.

      Dr. Johnson has not shown that the bankruptcy court’s findings on

the elements of the § 523(a)(2)(B) claim were illogical, implausible, or

without support in the record.

                               CONCLUSION

      For these reasons, the bankruptcy court did not err in finding Dr.

Johnson’s debt to BHG nondischargeable under § 523(a)(2)(A) and (a)(2)(B).

We AFFIRM.

                                      18