Heide v. Juve (In Re Juve), 761 F.3d 847

Background

Juve ran a used-car business (Imports Plus) and, due to poor credit, received repeated loans from friend and investor Heide from 1998–2008 to purchase inventory; payments were structured as interest plus commissions and proceeds rolled into new purchases.
In 2003–2004 Heide made additional $50,000 disbursements (bringing total outstanding to about $300,000); checks were payable to Imports Plus and Heide was repeatedly told his investment was secure and that he owned the inventory titles (though titles were sometimes kept or encumbered).
Juve concealed encumbrances, never purchased a promised life-insurance policy naming Heide beneficiary, and falsely represented a 2008 Las Vegas vehicle purchase (Heide paid $50,490 for identified cars that were never bought).
Heide discovered the losses, obtained a 2009 signed admission from Juve acknowledging $300,000 borrowed and personal liability, then Heide sued in bankruptcy seeking nondischargeability under 11 U.S.C. § 523(a)(2)(A).
The bankruptcy court found fraud and held the debt nondischargeable (initially $400,000, later $359,490 after trial); the BAP reversed twice on factual grounds; the Eighth Circuit reversed the BAP and reinstated the bankruptcy court judgment.

Issues

Issue	Plaintiff's Argument (Heide)	Defendant's Argument (Juve)	Held
Whether Juve’s reuse of loan proceeds after 2004 constituted an "extension, renewal, or refinancing of credit" under § 523(a)(2)(A)	The arrangement was a revolving account; each reuse was effectively a re-extension of credit that, if obtained by fraud, makes the entire indebtedness nondischargeable	No evidence that each reuse constituted a renewal; lack of explicit testimony that each use was a renewal means continued use did not re-extend credit	Eighth Circuit: bankruptcy court’s finding that the arrangement was a revolving extension of credit was plausible and not clearly erroneous — treated as extension/renewal of credit
Whether Juve made false representations or omissions actionable under § 523(a)(2)(A)	Juve repeatedly represented the investment was safe, that Heide owned the inventory, and that an insurance policy existed; omissions about encumbrances were material misrepresentations	Juve contended he did not make actionable misrepresentations as to security of loans at time of last disbursement; emphasized alleged lack of contemporaneous false statements	Court: Juve’s statements and concealment qualified as false representations/omissions; bankruptcy court’s findings not clearly erroneous
Whether Juve acted with knowledge and intent to deceive	Heide argued Juve knew representations were false (encumbered titles, no insurance) and intended to deceive to continue funding	Juve implied lack of intent or that losses were unintentional and that Heide should have discovered problems	Court: factual findings supported that Juve knew facts and acted to deceive; intent element satisfied
Whether Heide justifiably relied on Juve’s representations	Heide relied on friendship, periodic interest payments, and Juve’s assurances; did not need to conduct further inquiry under justifiable-reliance standard	Juve argued Heide should have done basic investigation or that red flags existed making reliance unjustifiable	Court: reliance was justifiable (lower standard than reasonable); bankruptcy court’s finding upheld

Key Cases Cited

Anderson v. City of Bessemer City, N.C., 470 U.S. 564 (standard for clear-error review of factual findings)
Grogan v. Garner, 498 U.S. 279 (creditor bears burden to prove nondischargeability by preponderance)
Field v. Mans, 516 U.S. 59 (analysis of justifiable reliance standard)
In re Treadwell (Treadwell v. Glenstone Lodge, Inc.), 637 F.3d 855 (elements required under § 523(a)(2)(A))
Matter of Van Horne (Caspers v. Van Horne), 823 F.2d 1285 (silence can be false representation under § 523(a)(2)(A))
In re Freier, 604 F.3d 583 (application of justifiable-reliance standard in this circuit)