This is an appeal from the lower courts’ holdings that a debt owed by defendant-appellant Robert J. Young to plaintiff-appel-lee Fowler Brothers is nondischargeable in Mr. Young’s Chapter 7 bankruptcy proceeding. Fowler Brothers filed an adversary proceeding in the U.S. Bankruptcy Court in the District of New Mexico on October 26, 1992 to determine if a state court judgment that it had obtained against Mr. Young 2 was dischargeable in Mr. Young’s Chapter 7 bankruptcy proceeding. The bankruptcy court ruled that the portion of Mr. Young’s debt that was evidenced by a promissory note, $16,892.82 plus interest, was nondis-chargeable. Mr. Young appealed the bankruptcy court’s decision to the U.S. District Court for the District of New Mexico. The district court affirmed, granted Fowler Brothers’ motion to strike Mr. Young’s reply brief, and denied Mr. Young’s request for oral argument. Mr. Young now appeals, claiming that the district court erred in three ways: first, he claims that it erred in affirming the bankruptcy court’s finding that a portion of Mr. Young’s debt was nondis-chargeable; second, he argues that it erred in granting Fowler Brothers’ motion to strike his reply brief; and third, he claims that it erred in denying him oral argument.
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We exercise jurisdiction pursuant to 28 U.S.C. § 158(d). We remand the case for the bankruptcy court to make a factual finding as to whether Mr. Young intended to deceive Fowler Brothers when he made misrepresentations to it. If he so intended, his debt to Fowler Brothers as evidenced by the promissory note would be nondischargeable under 11 U.S.C. § 523(a)(2)(A). We affirm the district court’s grant of Fowler Brothers’ motion to strike Mr. Young’s reply brief because it was untimely under Federal Rule of Appellate Procedure 31. Finally, we affirm the district court’s denial of oral argument for Mr. Young under Bankruptcy Rule 8012 because “the facts and legal arguments [were] adequately presented in the briefs and record and the decisional process would not [have been] significantly aided by oral argument.” Bankr.R. 8012. We review the factual findings of the bankruptcy court for clear error and the legal findings of the bankruptcy court and of the district court de novo.
Yeates v. Yeates (In re Yeates),
I. BACKGROUND
Mr. Young, an attorney in New Mexico, represented Fowler Brothers, a construction partnership, in the 1970s and 1980s. Mr. Young also operated a real estate development business at that time. In the late 1970s, Fowler Brothers began doing construction projects for Mr. Young. Mr. Young paid for Fowler Brothers’ construction work at a reduced rate, and his payments were often deferred. During this period, Mr. Young and Fowler Brothers had an unwritten financial arrangement under which monies they owed one another for construction and legal services would be credited to or deducted from one another’s account. This arrangement existed for over ten years. Mr. Young never advised the partners of Fowler Brothers, Ray and Floyd Fowler, at the time this arrangement was made or at any other time that they should talk to another attorney about this arrangement. Further, Mr. Young never talked to them about conflicts that might arise between him and the Fowlers as a result of the agreement for exchanging services, nor did he advise them to speak to another attorney about such potential conflicts.
In 1981, Mr. Young executed a promissory note in favor of the Fowlers in the amount of $16,892.82, which represented the amount Mr. Young owed them for construction services over and above what they owed him for legal services as of the date of the note. Mr. Young did not suggest to the Fowlers that they consult with another lawyer concerning the note at the time of its making, or in the course of the 1980s when the statute of limitations was running on the note.
In 1989, when Ray Fowler asked Mr. Young for a document showing the amount that Mr. Young owed the Fowlers, Mr. Young would not execute such a document. 3 The Fowlers then filed suit in New Mexico state district court against Mr. Young for the amount of the promissory note and other monies due on the account, totaling over $100,000, plus interest and punitive damages. As a defense, Mr. Young asserted that the statute of limitations barred Fowler Brothers’ claims. The parties settled for $105,000 and reduced the settlement to a judgment. Mr. Young subsequently declared bankruptcy, after which Ray Fowler filed a complaint against Mr. Young with the New Mexico Disciplinary Board. The Disciplinary Board “found insufficient evidence to support any allegations that Mr. Young ha[d] violated the [New Mexico] Rules of Professional Conduct.” Aplt’s App. at 26.
II. DISCUSSION
A The Dischargeability of Mr. Young’s Debt
Neither the bankruptcy court’s order nor the district court’s order specified upon which subsection of 11 U.S.C. § 523(a) those courts relied in finding Mr. Young’s debt to *1371 Fowler Brothers, as evidenced by the promissory note at issue, nondischargeable. Fowler Brothers argues that two subsections, § 528(a)(2)(A) and (a)(4), prevent the discharge of this debt. See Aple’s Br. at 12. We hold that the former, but not the latter, subsection may prevent Mr. Young from discharging his debt represented by his promissory note to Fowler Brothers. 4 However, in the absence of factual findings by the bankruptcy court required for us to determine whether § 523(a)(2)(A), is satisfied in this ease, we must remand the case for further factual findings.
1. 11 U.S.C. § 523(a)(4), Exception to discharge for “fraud or defalcation while acting in a fiduciary capacity”
11 U.S.C. § 523(a)(4) prevents a Chapter 7 discharge from discharging “an individual debtor from any debt ... for fraud or defalcation while acting in a fiduciary capacity.” 11 U.S.C. § 523(a)(4) (emphasis added). Therefore, under § 523(a)(4), Fowler Brothers had to establish the following two elements to prevent the discharge of Mr. Young’s debt: a fiduciary relationship between Fowler Brothers and Mr. Young and fraud or defalcation committed by Mr. Young in the course of that fiduciary relationship. We review de novo whether Fowler Brothers has established these elements. Because we conclude that Fowler Brothers cannot establish the first element, § 523(a)(4) does not prevent Mr. Young from discharging the debt that he owed to Fowler Brothers.
For purposes of § 523(a)(4), Mr. Young and Fowler Brothers did not have a fiduciary relationship. The existence of a fiduciary relationship under § 523(a)(4) is determined under federal law.
See Carlisle Cashway, Inc. v. Johnson (In re Johnson),
In cases where the debtor is an attorney and the creditor is a client, as we have here, the majority of courts that have considered the issue have applied the above principles to require more than an attorney-client relationship alone to establish a fiduciary relationship for purposes of § 523(a)(4).
See In re Kudla,
Apparently concluding that the courts below based their decisions on § 523(a)(4), Mr. Young argues that the district court erred in affirming the bankruptcy court because the bankruptcy court failed to make a factual finding necessary under § 523(a)(4): that Mr. Young owed Fowler Brothers a fiduciary duty. Therefore, he claims, this court must remand the case to the bankruptcy court for further proceedings. Aplt’s Br. at 28. Under Federal Rule of Civil Procedure 52(a), which applies in bankruptcy adversary proceedings, Bankr.R.7052, the bankruptcy court was required to
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“find
the facts
specially,” Fed.R.Civ.P. 52(a) (emphasis added). However, a finding regarding the existence of a fiduciary duty is a legal, rather than a factual, finding. Therefore, regardless of whether the bankruptcy court found that Mr. Young owed Fowler Brothers a fiduciary duty,
5
so long as the bankruptcy court made factual findings that “permit a clear understanding of the basis of [its] decision,”
Featherstone v. Barash,
2. 11 U.S.C. § 523(a)(2)(A), Exception to discharge for “false pretenses, a false representation, or actual fraud”
Although § 523(a)(4) does not prevent Mr. Young from discharging his debt represented by his promissory note to Fowler Brothers, § 523(a)(2)(A) may. 11 U.S.C. § 523(a)(2)(A) provides:
(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s ... financial condition^]
11 U.S.C. § 523(a)(2)(A) (emphasis added). Thus, to establish that a claim is nondis-chargeable under this subsection, the creditor must prove the following elements by a preponderance of the evidence,
see Grogan v. Garner,
Mr. Young argues that Rule 16-108A did not apply to his exchange of services agreement with Fowler Brothers be *1374 cause their exchange of services was a “standard commercial transaction” under an exception to Rule 16-108A This exception states that Rule 16-108A
does not ... apply to standard commercial transactions between the lawyer and the client for products or services that the client generally markets to others, for example, banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities services. In such transactions, the lawyer has no advantage in dealing with the client, and the restrictions in [Rule 16-108A] are unnecessary and impracticable.
New Mexico Rules of Professional Conduct Rule 16-108A ABA cmt. (emphasis added). He cites the New Mexico Disciplinary Board’s decision that he had not violated Rule 1&-108A in support of his argument. The Disciplinary Board based its decision on it finding that the parties’ relationship was a “standard commercial transaction.” However, the Disciplinary Board’s decision has no preclusive effect upon the determination of this question in Fowler Brothers’ adversary proceeding. We must give the Disciplinary Board’s decision the same preclusive effect to which it would be entitled in New Mexico state courts.
See Marrese v. American Academy of Orthopaedic Surgeons,
Contrary to Mr. Young’s argument, the courts below were correct in holding that Mr. Young’s exchange of services with Fowler Brothers was not a “standard commercial transaction” under the exception to Rule 16-108A. Unlike other clients of Fowler Brothers, Mr. Young received Fowler Brothers’ construction work at a reduced rate,
see
Aplt’s App. at 164-65, and his payments were often deferred,
id.
at 97,164.
7
Because Rule 16-108A applies, creating a duty for Mr. Young to disclose certain information to Fowler Brothers, his failure to disclose such information constitutes a “false representation” or “false pretenses” under § 523(a)(2)(A).
Cf. Itaparica, Ltd. v. Hargrove (In re Hargrove),
The second “false representation” that Mr. Young made to the Fowlers was his failure to disclose to the Fowlers the potential conflicts of interest involved in their exchange of services agreement. Mr. Young had a duty to disclose such potential conflicts that developed throughout the parties’ agreement.
Cf. In re D’Angelo,
The second element of § 523(a)(2)(A), the debtor’s intent to deceive the creditor in making false representations to the creditor, “may be inferred from the ‘totality of the circumstances,’ ”
In re Gans,
Although we must remand the case on the second element of § 523(a)(2)(A), we conclude that the third and fourth elements of § 523(a)(2)(A) are satisfied here because Fowler Brothers reasonably relied on Mr. Young’s failure to disclose the terms of the services exchange agreement in writing before entering into the agreement and on his failure to disclose the potential conflicts of interest involved in their agreement. See Aplt’s App. at 99 (Mr. Ray Fowler’s testimony that he never consulted another lawyer about his dealings with Mr. Young). This is one of those fabled incidents where silence speaks louder than words. Fowler Brothers’ reliance was reasonable based on the fact that the Fowlers knew that Mr. Young was an attorney — in fact their attorney — and that for this reason, as Mr. Ray Fowler testified, see Aplt’s App. at 90, they trusted him. As a result of Mr. Young’s misrepresentations, Fowler Brothers sustained a loss, which satisfies the final element under § 523(a)(2)(A); it never received payment on Mr. Young’s promissory note.
3. The Divisibility of Mr. Young’s Debt
Mr. Young’s third basis for arguing that the district court erred in affirming the bankruptcy court’s holding that his debt was non-dischargeable is his claim that it was error for the district court to find only a portion of his debt, specifically $16,892.82 plus interest, nondischargeable for two reasons. First, *1376 Mr. Young claims that the doctrine of merger prevents dividing the state court judgment against him for purposes of dischargeability. He reasons that once his settlement with Fowler Brothers was reduced to a judgment for $105,000, all of Fowler Brothers’ claims against him for money he owed it merged into this judgment, leaving one indivisible debt in the amount of $105,000. We need not consider the merits of this argument because, as Mr. Young admitted at oral argument, he did not raise this argument before the bankruptcy court and therefore did not preserve it for appeal.
Mr. Young bases his second argument that the district court erred in finding only a portion of his debt nondisehargeable on
Daghighfekr v. Mekhail (In re Daghighfekr),
Contrary to Mr. Young’s assertion,
Da-ghighfekr
and its somewhat questionable rule do not apply here. In that case, the state court below entered a default judgment against the defendant in a civil suit for assault. After the state court awarded the plaintiff over $600,000, making him a judgment creditor, the defendant, a judgment debtor, filed a bankruptcy petition. The plaintiff-creditor commenced an adversary proceeding to have his state court default judgment determined nondisehargeable under 11 U.S.C. § 523(a)(6), which creates an exception to discharge “for willful and malicious injury by the debtor to another.” The bankruptcy court, determining on its own that the assault was a willful and malicious injury, then found the entire amount of the judgment nondisehargeable, which the Ninth Circuit Bankruptcy Appellate Panel affirmed. The appellate panel held that although a default judgment has no preclusive effect on a bankruptcy court as to the nature of the act causing injury, it does have a preclusive effect as to the amount of damages awarded once the bankruptcy court determines the nature of the act causing injury.
In re Daghighfekr,
Here, unlike the state court default judgment at issue in
Daghighfekr,
Fowler Brothers’ state court judgment was a settlement or consent judgment. Although we look to the law of New Mexico to determine the preclusive effect in a bankruptcy proceeding of a consent judgment entered by a New Mexico state court,
see Marrese,
In the state court consent judgment between Fowler Brothers and Mr. Young, the parties did not express an intent that the judgment preclude the litigation of any issues in Mr. Young’s bankruptcy proceeding.
See
Aplt’s App. at 24. Nor does the record on appeal contain an accompanying consent agreement, in which the parties could have expressed such an intent.
See Olson,
B. Other Issues
Because Mr. Young has not shown that the district court’s grant of Fowler Brothers’ motion to strike Mr. Young’s reply brief prejudiced him in any way, we find that the district court did not abuse its discretion in granting Fowler Brothers’ motion.
See Walter v. Morton,
We further find that the district court did not abuse its discretion in denying Mr. Young oral argument because Mr. Young has not shown that this denial prejudiced him.
See Bratt v. International Business Machs. Corp.,
III. CONCLUSION
We REMAND the case to the bankruptcy court for further factual findings in accord with this opinion regarding the dischargeability of Mr. Young’s debt under § 523(a)(2)(A). We AFFIRM the district court’s grant of Fowler Brothers’ motion to strike Mr. Young’s reply brief. We also AFFIRM the district court’s denial of oral argument for Mr. Young.
Notes
. The bankruptcy court dismissed with prejudice Fowler Brothers’ claims against Donna M. Young. Aplt’s App. at 191. Fowler Brothers does not appeal this dismissal.
. Ray Fowler claims that in response to this request, Mr. Young indicated that he owed Fowler Brothers nothing. Aplt's App. at 61. However, Mr. Young claims that he acknowledged “at all times” that he owed Fowler Brothers a debt, id. at 134, and that he would not sign a promissory note at Ray Fowler's request because they "had not agreed on an amount owed,” id. at 141. The district court made no findings regarding this dispute.
. Fowler Brothers’ complaint asked the bankruptcy court to “deny [the] discharge of any portion of their [sic] [$105,000] judgment” against Mr. Young. See Aplt’s App. at 29. However, the bankruptcy court held that only the portion of the debt evidenced by the promissory note, $16,892.82 plus interest, was nondischargeable, id. at 190, and the district court affirmed this holding, id. at 201. Fowler Brothers does not appeal the holding below that the remaining portion of Mr. Young’s debt to it, which is the amount of the state court judgment less $16,-892.82 plus interest, is dischargeable. See Aple’s Br. at iv, 11.
. The parties disagree as to whether or not the bankruptcy court found that Mr. Young owed Fowler Brothers a fiduciary duty. Fowler Brothers claims that during the bankruptcy judge’s telephone hearing, the judge found that Mr. Young owed Fowler Brothers a fiduciary duty. See Aplee’s Br. at 21. Mr. Young, however, maintains that because the bankruptcy judge's final order stated that the court’s holding was based on the judge’s "findings of fact and conclusions of law announced in open court," Aplt's App. at 190 (emphasis added), and because the bankruptcy judge indicated at the bankruptcy hearing in open court that he would take under advisement the question of whether the lawyer-client relationship was enough to impose a fiduciary duty, see Aplt’s App. at 177, thus refraining from making a finding in open court, his final order did not include findings as to whether Mr. Young breached a fiduciary duty.
. Rule 16-108A states:
A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and
(3) the client consents in writing thereto.
New Mexico Rules of Professional Conduct Rule 16-108A (emphasis added).
. We hold that these factors make the parties’ business transactions "nonstandard.” However, we conclude this for a different reason than did the bankruptcy court. The bankruptcy court reasoned that the promissory note "took the relationship between the parties outside the scope of an ordinary course of business transaction." See Aple’s Supp.App. at 3. It was not the making of the note that made these transactions nonstandard, but instead the manner in which Fowler Brothers treated Mr. Young more favorably than its other clients.