568 B.R. 851
Bankr. M.D. Fla.2017Background
- Plaintiff Frances Bernacchi (retired realtor, received life-insurance proceeds) and Debtor Thomas Cascio cohabited 2012–2014 and agreed verbally to buy and share a newly built home 50/50.
- Bernacchi paid substantial construction-related sums (she alleges ~$190,000 total: deposits and Design Center upgrades) and acted as Cascio’s realtor, but the deed at closing (Aug. 16, 2013) was in Cascio’s name alone.
- Cascio obtained a VA mortgage as sole borrower; both lived in the completed house; Cascio made the mortgage payments for a time.
- Cascio moved out Oct. 1, 2014; later married Linda Steigman; filed Chapter 7 with wife in Jan. 2016. Plaintiff filed adversary seeking nondischargeability under 11 U.S.C. § 523(a)(2)(A).
- At trial Plaintiff asserted she relied on Cascio’s promises (including a promise to quitclaim a one-half interest and a promise of marriage); she also testified Cascio signed a promissory note (not introduced at trial).
- Court found record insufficient to prove common-law fraud by a preponderance: no actionable misrepresentation of present fact, no established intent to defraud at the time of promises, and no justifiable reliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether debt for Plaintiff’s contributions is nondischargeable under § 523(a)(2)(A) (fraud) | Bernacchi: Cascio promised to share cost/ownership and to add her to title/repay; she relied and suffered loss (~$190,000). | Cascio: parties had a joint plan; he obtained financing, acted consistently with the agreement, and had no fraudulent intent; any promises were about future acts. | Denied. Court ruled Plaintiff failed to prove fraud elements by preponderance. |
| Whether statements were false representations of present or past fact | Bernacchi: promises to add her and repay were representations inducing payment. | Cascio: promises concerned future actions; no misstatement of present fact was shown. | Held: Statements were largely promises of future conduct, not present/factual misrepresentations, so not actionable under § 523(a)(2)(A). |
| Whether Cascio had fraudulent intent when making promises | Bernacchi: signing a promissory note and conduct show intent not to perform. | Cascio: actions (down payment, seeking mortgage, making payments) show intent to perform; no evidence of preexisting scheme. | Held: Plaintiff did not show Cascio lacked intent to perform when promises made. |
| Whether Plaintiff justifiably relied on the alleged promises | Bernacchi: as a real estate professional she relied on his assurances, including promise to marry and quitclaim. | Cascio: reliance on promises of marriage or unwritten land-transfer promise is not justifiable; statute of frauds bars reliance to enforce transfer of land. | Held: Reliance was not justifiable (promises of marriage and unwritten land transfer insufficient under law). |
Key Cases Cited
- Ojeda v. Goldberg, 599 F.3d 712 (7th Cir.) (false-representation element requires misstatement of present or past fact)
- In re Owens, 549 B.R. 337 (Bankr. D. Md.) (plaintiff bears preponderance burden in § 523(a)(2)(A) proceedings)
- In re Casali, 517 B.R. 835 (Bankr. N.D. Ill.) (misrepresentation must relate to present or past fact)
- In re Vega, 503 B.R. 144 (Bankr. M.D. Fla.) (statements of future intent not actionable absent proof debtor lacked intent when made)
- In re Jackson, 348 B.R. 595 (Bankr. M.D. Ga.) (failure to perform a mere promise is insufficient for nondischargeability)
- India Am. Trading Co., Inc. v. White, 896 So.2d 859 (Fla. 3d DCA) (Florida statute of frauds bars enforcement of unwritten land-sale agreements and prevents circumventing by alleging a fraudulent promise)