Jones v. Dawson (In re Dawson), 507 B.R. 348

Jones sued Dawson under 11 U.S.C. § 523(a)(2)(A) to deny discharge of a debt based on alleged fraudulent representations in Hangar construction at Provo Airport.
CoDa Construction, owned by Dawson, bid $270,700 and supplied invoices reflecting progress and costs for the Hangar project.
The written Estimate listed project components and costs; many terms were supplied by course of dealing and industry norms, not a detailed contract.
Jones paid approximately $230,000 from September 2011 to February 2012, based on Dawson’s invoices and representations about what the funds would support.
Dawson allegedly diverted funds for shareholder distributions and overhead rather than applying them to the Hangar as invoices indicated.
The court concluded the debt to Jones was non-dischargeable under § 523(a)(2)(A) for $85,884.90, based on the proven misapplication of funds and resulting loss.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether invoices/representations qualify as false representations	Jones asserts invoices and statements misrepresented progress and funding use.	Dawson contends invoices are ordinary invoices, not representations of project status.	Invoices/representations found false representations under §523(a)(2)(A).
Whether Dawson acted with the intent to deceive	Dawson knew funds were not applied to the items listed and used funds for other purposes.	Dawson argues there was an intent to complete the project with remaining funds.	Court finds intent to deceive established by misallocation of funds and lack of timely completion.
Whether Jones’s reliance on the invoices was justifiable	Jones justifiably relied on industry custom and Dawson’s representations in invoices.	Jones should have obtained receipts and monitored payments more closely.	Reliance deemed justifiable given Jones’s experience and project circumstances.
Amount of damages attributable to the fraud	Damages equal the difference between actual costs and the bid amount ($149,736.32).	Damages should reflect amounts reasonably tied to fraud, not all project costs.	Damage measure limited to $85,884.90 as the loss attributable to fraud.

Grogan v. Garner, 498 U.S. 279 (1991) (preponderance standard for § 523(a)(2)(A) burden, not clear and convincing)
In re Gerlach, 897 F.2d 1048 (10th Cir. 1990) (measure of damages for fraud under state law; later viewed with caution post-Grogan)
In re Young, 91 F.3d 1367 (10th Cir. 1996) (burden, standard, and considerations under 523(a)(2)(A))
Long v. Stutesman, 269 P.3d 178 (Utah Ct. App. 2011) (damages for fraud: value of property purchased vs. value if representations true)
In re Johnson, 477 B.R. 156 (10th Cir. BAP 2012) (confirms standards for determining nondischargeability and damages)
Field v. Mans, 516 U.S. 59 (U.S. 1995) (justifiable reliance standard under § 523(a)(2)(A))
Diamond v. Vickery (In re Vickery), 488 B.R. 680 (10th Cir. BAP 2013) (discusses evidentiary standards in fraud-related nondischargeability)