See, e.g. In re Singh, 16 B.R. 449, 453 (Bkrtcy.N.D.Ohio 1982); In re Wise, 6 B.R. 867, 869, 7 B.C.D. 131, Bankr.L.Rep. (CCH) ¶ 67,778, p. 78,477 (Bkrtcy.M.D.Fla. 1980); In re Schlickmann, 6 B.R. 281, 282 (Bkrtcy.D.Mass. 1980); In re Green, 5 B.R. at 250; In re Zangrilli, 1 B.R. at 718; In re Clark, 1 B.R. 614, 616 (Bkrtcy.M.D.Fla. 1979); In re Huff, 1 B.R. at 355-56; In re Milbank, 1 B.R. 150, 154, 5 B.C.D. 959 (Bkrtcy.S.D.N.Y. 1979); In re Mower, 1 B.C.D. at 380. It has also become "well established" that the standard of proof imposed on the creditor is that of clear and convincing evidence.
It is thus recognized that where there has been a misrepresentation coupled with deceptive conduct, the court under the totality of the circumstances may infer the requisite intent from the "proven facts." In re Lyon, 8 B.R. 152, 154 (Bankr.D.Me. 1981); In re Schlickmann, 6 B.R. 281, 282 (Bankr.D.Mass. 1980) (a "representation coupled with [the debtor's] conduct is sufficient to permit the court to infer the requisite intent"). This brings us to the second element of Code Section 523(a)(2)(A). Plaintiffs ask this court to infer that Gans intended to deceive Marlowe from certain circumstances which they argue are indicative of fraudulent intent.
Debtor's failure to disclose substantial, existing obligations renders the loan application materially false. In re Saunders, supra, p. 9; See also, Century Bank of Pinellas County v. Clark (Matter of Clark), 1 B.R. 614, 617 (Bankr.M.D.Fla. 1979); First Service Corp. v. Schlickmann (In re Schlickmann), 6 B.R. 281, 284 (Bankr.D.Mass. 1980). While Debtor adopted the Application as her own when she signed, and while the incomplete nature of the information rendered the document materially false, the Plaintiff cannot succeed on its first cause of action.
Because the Court cannot "probe into the inner processes of the minds of defendants in order to ascertain their intent", Cicero, 28 B.R. at 484, the Court must determine the presence of a fraudulent intent in light of the "totality of the circumstances." See Id.; Leger, 34 B.R. at 877; In re Schlickmann, 6 B.R. 281, 282 (Bkrtcy.D.Mass. 1980). As Judge Clive W. Bare stated in In re Holcombe, 23 B.R. 590 (Bkrtcy.E.D.Tenn.
In addition to the limitations stated above, this subsection has been construed as requiring a finding of actual fraud consisting of: (1) a false representation by the debtor; (2) which he then knew to be false; (3) made with the intention and purpose of deceiving the creditor; (4) that the creditor relied on such representations; (5) which proximately resulted in the creditor's loss. In re Schlickmann, 6 B.R. 281, 282 (Bkrtcy.D.Mass. 1980) (citing In re Houtman, 568 F.2d 651, 655 (9th Cir. 1978)). Cf. also In re Jones, 3 B.R. at 412 (case law under § 17(a)(2) of the Act has been incorporated into § 523(a)(2) of the Code).
"Intent to deceive may be inferred when the totality of the circumstances presents a picture of deceptive conduct by the debtor, which indicates that he did intend to deceive and cheat the lender." In re Shaheen, 111 B.R. 48, 53 (S.D.N.Y. 1990) (citing In re Schlickmann, 6 B.R. 281, 282 (Bankr. D. Mass.1980)). A creditor's reliance on the false fraudulent misrepresentation must be justifiable.
A creditor must prove the debtor intended to commit the fraud or deceit. "[I]ntent to deceive may be inferred when the totality of the circumstances presents a picture of deceptive conduct by the debtor, which indicates that he did intend to deceive and cheat the lender." Hong Kong Deposit and Guar. Co. v. Shaheen (In re Shaheen), 111 B.R. 48, 53 (S.D.N.Y. 1990) (quoting First Service Corp. v. Schlickmann (In re Schlickmann), 6 B.R. 281, 282 (Bankr. D. Mass. 1980)).
"[I]ntent to deceive may be inferred when the totality of the circumstances presents a picture of deceptive conduct by the debtor, which indicates that he did intend to deceive and cheat the lender." Hong Kong Deposit and Guar. Co. v. Shaheen (In re Shaheen) , 111 B.R. 48, 53 (S.D.N.Y. 1990) (quoting First Service Corp. v. Schlickmann (In re Schlickmann) , 6 B.R. 281, 282 (Bankr. D. Mass. 1980) ). As previously discussed, the uncontroverted evidence in this case indicates the Debtor intentionally mislead the Plaintiff into believing that she had not yet received insurance checks in which the Plaintiff held a legal right as assignee.
Conflicting evidence was also presented on the issue of whether the Debtor knew the amount of commissions that Buchi believed was due under the Severance Agreement. Without resolving these factual disputes, the Court is unable to grant summary judgment as to whether the Debtor's actions constituted (i) fraud or defalcation under Section 523(a)(4), or (ii) willful and malicious injury under Section 523(a)(6). While intent may be inferred from a debtor's conduct, United Leasing Corp. v. Roop, 48 B.R. 310, 312 (E.D. Va. 1985) (citing In re Schlickmann, 6 B.R. 281, 282 (Bankr. D. Mass. 1980)); In re O'Connor, 149 B.R. 802, 808 (Bankr. E.D. Va. 1993), it is particularly difficult to meet the requirements of Rule 56 when it is applied to a cause of action that requires a finding of intent. See Morrison v. Nissan Co., Ltd., 601 F.2d 139, 141 (4th Cir. 1979)("[W]hen the disposition of a case turns on a determination of intent, courts must be especially cautious in granting summary judgment, since the resolution of that issue depends so much on the credibility of the witnesses, which can best be determined by the trier of facts after observation of the demeanor of the witnesses during direct and cross-examination.") (citing Denny v. Seaboard Lacquer, Inc., 487 F.2d 485, 491 (4th Cir. 1973)).
Conflicting evidence was also presented on the issue of whether the Debtor knew the amount of commissions that Buchi believed was due under the Severance Agreement. Without resolving these factual disputes, the Court is unable to grant summary judgment as to whether the Debtor's actions constituted (i) fraud or defalcation under Section 523(a)(4), or (ii) willful and malicious injury under Section 523(a)(6). While intent may be inferred from a debtor's conduct, United Leasing Corp. v. Roop, 48 B.R. 310, 312 (E.D. Va. 1985)(citing In re Schlickmann, 6 B.R. 281, 282 (Bankr. D. Mass. 1980)); In re O'Connor, 149 B.R. 802, 808 (Bankr. E.D. Va. 1993), it is particularly difficult to meet the requirements of Rule 56 when it is applied to a cause of action that requires a finding of intent. See Morrison v. Nissan Co., Ltd., 601 F.2d 139, 141 (4th Cir. 1979)("[W]hen the disposition of a case turns on a determination of intent, courts must be especially cautious in granting summary judgment, since the resolution of that issue depends so much on the credibility of the witnesses, which can best be determined by the trier of facts after observation of the demeanor of the witnesses during direct and cross-examination.")(citing Denny v. Seaboard Lacquer, Inc., 487 F.2d 485, 491 (4th Cir. 1973)).