Sharfarz v. Goguen (In Re Goguen)
691 F.3d 62
| 1st Cir. | 2012Background
- Sharfarz hired Goguen to build an addition; contract specified phases, permits, and progress payments (~$171,000).
- Goguen delayed permits and misrepresented permit status to keep Sharfarz from canceling; Sharfarz feared winter concrete issues.
- Construction proceeded despite cold-weather concerns; foundation later cracked; Goguen offered misinformation and a 5-year warranty instead of refunds.
- Sharfarz paid the full contract price plus extra costs to complete work after Goguen walked away; he incurred ~$88,000 in damages.
- State court awarded $272,745.50 to Sharfarz (trebled to $264,000 plus fees) under Massachusetts law; Goguen later filed Chapter 7 bankruptcy.
- Sharfarz sought nondischargeability under 11 U.S.C. § 523(a)(2)(A); bankruptcy court ruled the $88,000 was nondischargeable; the BAP reversed; the appeal concerns causation and the nondischargeable amount, with remand planned.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Causation under § 523(a)(2)(A) | Sharfarz proved cause in fact and legal causation. | Goguen argued lack of proper causation links. | Causation satisfied; both cause in fact and legal causation shown. |
| Scope of nondischargeable amount | Nondischargeable amount includes damages beyond the $88,000. | Only the $88,000 should be nondischargeable. | Remand to determine exact nondischargeable portion and potential additional recoverable amounts. |
| Remand authority and process | Remand needed to allocate damages and address other alleged costs. | Appeal should resolve discharges; not remand ambiguities. | Remand authorized; case to be remanded to bankruptcy court with guidance. |
Key Cases Cited
- In re Spigel, 260 F.3d 27 (1st Cir. 2001) (test for nondischargeability under § 523(a)(2)(A))
- Cohen v. De La Cruz, 523 U.S. 213 (U.S. 1998) (dischargeability scope includes treble damages and fees)
- Field v. Mans, 516 U.S. 59 (U.S. 1995) (Restatement use in § 523(a)(2)(A) analysis)
- Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (burden of proof for nondischargeability)
- In re Bank of New Eng. Corp., 364 F.3d 355 (1st Cir. 2004) (clarifies standard for reviewing bankruptcy rulings)
- In re Werthen, 329 F.3d 269 (1st Cir. 2003) (bankruptcy appellate standards and deference)