Court Opinion

ID: 9483350
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:18:16.94084+00
Date Added: 2024-06-11T17:49:34.879841
License: Public Domain

FERNANDEZ,
concurring in part and dissenting in part:
I heartily agree with everything in the per curiam opinion except Part A(2), which applies reliance law to the facts of this case, and the ultimate conclusion.
In my opinion, the bankruptcy court erred because it believed that the standard was reasonable reliance, whereas the standard is really justifiable reliance. No doubt the court was led into that legal error because courts have often committed the linguistic error of using the phrase reasonable reliance when they actually meant justifiable reliance. Thus, my disagreement with the per curiam opinion is an exceedingly narrow one, although it could have a substantial effect upon the outcome of this case.
I recognize all that is said about Parks, and I must agree that it seems that he behaved in a very foolish manner. But Parks and Kirsh were friends, even extremely close ones. See Ophaug, 827 F.2d at 341; Phillips, 804 F.2d at 931. When Kirsh was in need of money, he lied to his friend in order to obtain it. Parks was a professional, but he was also capable of being taken in by friendship. Attorneys are no more exempt from that sentiment than other beings. Of course, Parks did know that the Kirshes were slow in paying their bills, but there is nothing to show that he had reason to believe that they would lie to him.
It seems to me that the bankruptcy court failed to consider all of the circumstances of this case and focused, instead, on the way in which a reasonable person would behave. To me the bankruptcy court’s thinking is made perspicuous by its statement that “the only reasonable means” of proceeding was the obtaining of a title report, title insurance, and beneficiary statements from the other lenders. That might well delineate a negligence standard. It does not demonstrate that the only justifiable means of proceeding under these circumstances was by obtaining the reports, statements and insurance. In a word, it does not delineate a justifiable reliance standard. Justifiable reliance does not necessarily require the checking of public records or the performance of other investigations when one is dealing with a very close friend. Therefore, were I the trier of fact I would find Parks' reliance justifiable. I am not, and the opinions of my thoughtful colleagues confirm me in my view that I should not even try to be.
Nevertheless, I would reverse the bankruptcy court because I am satisfied that it applied the wrong standard to a mixed question of fact and law. To paraphrase what we said in United States v. McConney, 728 F.2d 1195, 1204 (9th Cir.), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984): because the legal standard for judging whether reliance is justifiable requires us to determine, by reference to the “ ‘data of practical human experience’ ” whether an individual’s reliance was justified, “the trial court’s findings of fact effectively determine our legal conclusion.” Hence, I would reverse and remand for further proceedings in which the trial court would have an opportunity to apply the correct legal standard to the historical facts of this case.
In fine, this case is yet another annotation to Shakespeare’s wise injunction: “Neither a borrower nor a lender be,/ For loan oft loses both itself and friend....” 1
Parks had the Plan lend the Kirshes $40,-000. The Plan lost its money and he his friends when they made misrepresentations about the state of their title to a condominium. I would hold that in allowing the Kirshes to discharge their debts to the Plan, the bankruptcy court applied the wrong standard. In determining whether discharge was precluded by 11 U.S.C. § 523(a)(2)(A) the court should have asked whether the Plan “justifiably relied” upon the Kirshes’ misrepresentations. Instead, *1463it asked whether the Plan “reasonably relied” and in so doing held the Plan to an improper standard.
Therefore, I dissent to Part A(2) of the per curiam opinion and to its conclusion. In all other respects I concur.

. William Shakespeare, Hamlet, Act I, Sc. 3, II. 75-76 in The Complete Plays and Poems of William Shakespeare (W.A. Neilson et al., ed. 1941).