Roger W. Soderstrom v. J. Thompson Investments, LLC, et al.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 15-14922
Non-Argument Calendar
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D.C. Docket Nos. 6:15-cv-00187-ACC; 6:11-bkc-16036-KSJ
In re:
ROGER W. SODERSTROM,
TANSEY M. SODERSTROM,
Debtors,
__________________________________________________________________
ROGER W. SODERSTROM,
Plaintiff - Appellant,
versus
J. THOMPSON INVESTMENTS, LLC,
JOAN THOMPSON,
Defendants - Appellees.
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Appeal from the United States District Court
for the Middle District of Florida
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(July 6, 2016)
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Before WILSON, ROSENBAUM and BLACK, Circuit Judges.
PER CURIAM:
Roger W. Soderstrom appeals the district court’s order affirming the
bankruptcy court’s judgment in favor of J. Thompson Investments, LLC and Joan
Thompson for $811,000 and the bankruptcy court’s holding that the judgment is
not dischargeable pursuant to the fraud exception, 11 U.S.C. § 523(a)(2)(A).
Soderstrom contends the bankruptcy court erred by finding justifiable reliance
notwithstanding allegedly contradictory information, by finding causation despite
insufficient evidence, and by making an erroneous finding of fact regarding
whether Soderstrom actually made the allegedly fraudulent representation. After
review,1 we affirm.
As the bankruptcy court noted, the underlying fraud claim presents “a true
‘he-said-she-said’ factual dispute.” Thompson insists Soderstrom misrepresented
that her investment was needed to complete construction and build-out of the
office space. Soderstrom denies making this statement. After hearing live
testimony from the parties and considering the parties’ extensive evidentiary
submissions the bankruptcy court found Thompson to be more credible than
Soderstrom. Accordingly, the bankruptcy court found that Soderstrom in fact
1 When reviewing a district court’s affirmance of a bankruptcy court order, we review for
clear error the bankruptcy court’s findings of fact, and we review de novo the legal conclusions
of both the bankruptcy court and the district court. In re Fisher Island Invs., Inc., 778 F.3d 1172,
1189 (11th Cir. 2015).
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made the alleged misrepresentation. We defer to the bankruptcy court’s credibility
determination and find no clear error. See Anderson v. City of Bessemer City, 470
U.S. 564, 574 (1985) (“Where there are two permissible views of the evidence, the
factfinder’s choice between them cannot be clearly erroneous.”); In re T & B Gen.
Contracting, Inc., 833 F.2d 1455, 1458 (11th Cir. 1987) (“[D]ue regard shall be
given to the opportunity of the bankruptcy court to judge the credibility of
witnesses.”). The testimony of Scott Buono on which Soderstrom relies is
equivocal and fails to directly contradict Thompson’s testimony. See Dist. Ct.
Doc. 15-6 at 35 (“Q. Do you know if Roger Soderstrom made any representations?
A. Not that I’m aware of. Not other than I think what’s in -- in the operating
agreement and the subscription agreement.” (emphasis added)). Even if Buono’s
testimony contradicted Thompson’s, because the bankruptcy court’s finding of fact
remains a permissible view of the evidence, it would not be clear error. See
Anderson, 470 U.S. at 574.
We likewise find no error in the bankruptcy court’s determination that
Thompson justifiably relied upon Soderstrom’s misrepresentation. While the
parties’ subscription agreement and operating agreement together created a
mechanism for Soderstrom to repay himself with invested funds, the bankruptcy
court correctly observed that the parties’ subscription agreement permitted
repayment only to the extent the money was not needed for build-out. Because
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Soderstrom represented to Thompson that he needed to and would use the
investment to pay for construction and build-out of the office space, the contract
provisions did not contradict Soderstrom’s misrepresentation. Although it would
have been more prudent for Thompson to inquire further before making the
investment, she was justified in relying upon Soderstrom’s misrepresentation. See
In re Vann, 67 F.3d 277, 283 (11th Cir. 1995) (“To constitute justifiable reliance,
the plaintiff’s conduct must not be so utterly unreasonable, in the light of the
information apparent to him, that the law may properly say that his loss is his own
responsibility. This conclusion, however, does not mean that the reliance must be
objectively reasonable.” (internal citation and quotation marks omitted)).
Finally, the bankruptcy court did not err in finding that Thompson’s
justifiable reliance on Soderstrom’s misrepresentation proximately caused her loss.
The finding that Thompson lost $811,000 is not challenged on appeal. The only
causation dispute is whether Thompson would not have made the investment but
for Soderstrom’s misrepresentation. Thompson testified that had she known build-
out was nearly complete and Soderstrom intended to pay himself, she would have
perceived the investment to be a sinking ship and would have not invested. The
bankruptcy court did not clearly err in crediting this testimony.2 See Anderson,
2 Soderstrom’s contention that other testimony refutes causation lacks merit. The fact that
Thompson conducted additional due diligence before investing and had other sources of
information does not alter the causative effect Soderstrom’s misrepresentation had on
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470 U.S. at 574. The fact that Soderstrom did not completely cash out of the
business does not undermine the bankruptcy court’s causation finding. Soderstrom
invested approximately $1,050,000 between his two tiers of membership in the
business and ultimately withdrew over $900,000, much of it from money that
Thompson invested. Thompson’s testimony does not suggest that she was any
more likely to make the investment had Soderstrom told her he would use her
investment to recoup most but not all of his investment, and the bankruptcy court
could properly consider Soderstrom’s paying himself with Thompson’s investment
to be the very thing she wished to avoid.
AFFIRMED.
Thompson’s decision to invest. See Sosa v. Alvarez-Machain, 542 U.S. 692, 704 (2004) (“[A]
given proximate cause need not be, and frequently is not, the exclusive proximate cause of
harm.”). The information to which Soderstrom refers would be probative of the justifiable
reliance element but does not refute the bankruptcy court’s causation finding. As discussed
above, this information does not render Thompson’s conduct “so utterly unreasonable . . . that
the law may properly say that [her] loss is [her] own responsibility.” In re Vann, 67 F.3d at 283.
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