Old Republic National Title v. Levasseur
737 F.3d 814
1st Cir.2013Background
- Levasseur had a Fleet home equity line of credit (HELOC) secured by her Rowley, MA property; after selling that property she paid the HELOC but did not ensure the line was formally closed or notify the bank of the sale.
- Fleet merged into Bank of America; periodic statements (sent to her new address) still showed the HELOC available, and Levasseur knew it was possible the line remained open.
- In June–July 2005 Levasseur obtained certified/cashier’s checks from Bank of America totaling $124,200 (the HELOC limit) by presenting starter checks bearing a closed checking-account number and by writing the HELOC account number on the memo line; she deposited the funds and did not repay them.
- Bank of America suffered loss; Old Republic (title insurer for the new owners) paid to protect the property, sued Levasseur, obtained a state-court default judgment, and then pursued non-dischargeability in bankruptcy under 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(6).
- The bankruptcy court found Levasseur acted with fraudulent intent and in conscious disregard of duties; the district court affirmed. The First Circuit affirmed, awarding costs to Old Republic.
Issues
| Issue | Plaintiff's Argument (Old Republic) | Defendant's Argument (Levasseur) | Held |
|---|---|---|---|
| Whether debt is nondischargeable under §523(a)(2)(A) (false pretenses/fraud) | Levasseur knowingly exploited the bank’s failure to close the HELOC and made false representations to obtain $124,200; bank justifiably relied and suffered loss | She claimed she believed she was drawing on a different/new line of credit, not the HELOC | Affirmed: debtor acted with scienter, induced justifiable reliance, and caused pecuniary loss; debt nondischargeable under §523(a)(2)(A) |
| Whether debt is nondischargeable under §523(a)(6) (willful and malicious injury) | Her conduct was wrongful, without excuse, and she intentionally did acts substantially certain to cause the bank’s loss | Argued conduct did not meet willful/malicious standard | Affirmed: actions were malicious and willful (conscious disregard and intent sufficient) |
| Whether bankruptcy court abused discretion by striking part of Levasseur’s pretrial memorandum and imposing sanctions | Old Republic argued dismissal/striking was justified by repeated deadline failures and noncooperation | Levasseur contended the striking/sanctions were improper | Affirmed: court’s pretrial-order enforcement was within its broad discretion |
Key Cases Cited
- Moses v. Mele, 711 F.3d 213 (1st Cir. 2013) (general appellate practice on concise opinions)
- Palmacci v. Umpierrez, 121 F.3d 781 (1st Cir. 1997) (elements of §523(a)(2)(A) false pretenses and scienter)
- Printy v. Dean Witter Reynolds, Inc., 110 F.3d 853 (1st Cir. 1997) (nondischargeability for taking advantage of a financial institution’s error)
- Gannett v. Carp (In re Carp), 340 F.3d 15 (1st Cir. 2003) (standards of appellate review for bankruptcy decisions)