Court Opinion

ID: 2965037
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:34:27.178405+00
Date Added: 2024-06-11T11:43:04.628804
License: Public Domain

USCA1 Opinion

	

                                [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 97-1510

                   GENERAL ELECTRIC MORTGAGE INSURANCE CORPORATION,

                                      Appellant,

                                          v.

                                   PETER M. BELLI,

                                      Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Nathaniel M. Gorton, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                           Selya and Boudin, Circuit Judges,
                                             ______________

                          and Dowd,* Senior District Judge.
                                     _____________________

                                 ____________________

            Richard W.  Gannett with whom  Gannett & Associates  was on  brief
            ___________________            ____________________
        for appellant.
            Harland L. Smith for appellee.
            ________________

                                 ____________________

                                  December 10, 1997
                                 ____________________

                            
        ____________________

        *Of the Northern District of Ohio, sitting by designation.

                 Per  Curiam.   The General  Electric Mortgage  Insurance
                 ___________

            Corporation ("GEMIC") appeals from the district court's order

            affirming the refusal of the bankruptcy court to declare non-

            dischargeable  because of fraud a debt owed to it by Peter M.

            Belli.   11 U.S.C.     523(a)(2)(A)-(B).   Unfortunately  for

            GEMIC,  the facts  now relied  upon  to show  fraud were  not

            proved  at trial in  the bankruptcy  court.   Accordingly, we

            affirm.

                 GEMIC  insured  loans   for  the  First  Mark   Mortgage

            Corporation  of Emerald Isle,  North Carolina ("First Mark"),

            which in  1990 lent  Belli $126,800,  secured by  a mortgage.

            Belli defaulted.  GEMIC made good the deficiency, First  Mark

            assigned  its rights to GEMIC, and GEMIC  in turn won a state

            court judgment against Belli on October 20, 1993, for the sum

            of $58,719.08, the principal amount still owed to GEMIC after

            the  foreclosure sale of  the mortgaged property.   Belli did

            not  pay this  sum  but instead  filed  for bankruptcy  under

            Chapter 7 on February 18, 1994.

                 On  May 27,  1994, GEMIC  filed  a complaint  asking the

            bankruptcy court to declare the debt non-dischargeable on the

            ground that Belli had lied on his loan application concerning

            the  terms   of  his  employment   and  the  amount   of  his

            liabilities;  the complaint  did not  assert  that Belli  had

            overstated  his assets.  After  some discovery, a bench trial

            was held  on July  19, 1995, which  consisted largely  of the

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            direct examination  and cross-examination  of Belli,  who was

            the only witness to testify.   The bankruptcy court dismissed

            GEMIC's  complaint and later denied GEMIC's motion for relief

            from final  judgment.   GEMIC appealed  these rulings  to the

            district court, which affirmed.

                 On  appeal, GEMIC tells us that Belli's loan application

            overstated   his  gross   monthly  income,   understated  his

            outstanding  debts,  and--most  important--misrepresented his

            ownership  interest in  certain assets.    Belli had  claimed

            ownership  of two  parcels of  land  valued at  $435,000; but

            GEMIC now tells us that  Belli had previously lost one parcel

            due to foreclosure  and had conveyed most of  his interest in

            the  other, so  that his  equity  in the  two properties  was

            actually approximately $250.

                 Had  GEMIC proved  at trial  the misrepresentations  now

            described,  it would have  gone far  toward proving  that the

            judgment earlier  won  by GEMIC  was non-dischargeable  under

            section 523.   We were surprised  therefore to discover  that

            the  trial  record does  not  contain  proof  of the  alleged

            misrepresentations.   Instead, it shows that the only witness

            called  was Belli  himself  who,  although vigorously  cross-

            examined by  GEMIC counsel, declined  to admit that  his loan

            application was materially false.

                 To explain the absence of  proof, GEMIC says that one of

            its own  witnesses was unexpectedly  unavailable; but  absent

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            extreme  circumstances, refusal  to defer  a scheduled  trial

            where a party fails  to produce its own witness is within the

            sound discretion of  the trial court.   GEMIC also  complains

            that  the district  court refused  to enforce  a subpoena  to

            require  Belli's  former  employer to  appear  at  trial with

            records as to Belli's former  salary; but GEMIC had sought to

            serve the subpoena only the  day before trial and the witness

            was  out  of  state.    GEMIC  had  failed  to  preserve  the

            employer's testimony by deposition.

                 GEMIC next says that Belli did not adequately respond to

            discovery;  specifically,  he  failed  to  produce  prior tax

            returns, saying they had been  lost.  But GEMIC itself waited

            until the last day to submit its discovery requests and, more

            important, did  not complain to  the trial  court until  five

            days before trial  even though it  had had Belli's  responses

            for a month.  Nor did GEMIC move in timely fashion  to compel

            Belli to sign an authorization so that it could itself secure

            the tax documents from the Internal Revenue Service.

                 As  for   the  misrepresentations   concerning  property

            ownership, it appears that GEMIC did not discover these facts

            until a title search was  performed after trial.  The results

            were  the basis  for  GEMIC's motion  for  relief from  final

            judgment.   But  GEMIC  has  never explained  why,  with  due

            diligence,  it could not have discovered the same information

            prior to trial.  In  these circumstances, the trial court was

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            certainly not obliged  to let GEMIC reopen matters  to repair

            the record.

                 This case involved a relatively small sum for GEMIC and,

            even  if   it  had   prevailed  in   making  the   debt  non-

            dischargeable, it  might never have  seen a  penny.   Perhaps

            this  justified it  in  stinting  on  trial  preparation  and

            gambling that Belli  might be forced on  cross-examination to

            admit the  necessary facts.   But having gambled and  lost in

            the trial court, GEMIC cannot expect rescue on appeal.

                 Affirmed.
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