Zia Credit Union v. Carrejo

IN THE UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re:
LEVI JACKSON CARREJO,
Debtor. 	Case No. 08-10700
ZIA CREDIT UNION,
Plaintiff,
v.
LEVI JACKSON CARREJO
Defendant. 	Adversary No. 08-1136
MEMORANDUM OPINION ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
This motion is before the Court on Plaintiff’s Motion for
Summary Judgment (doc 16), Defendant’s Response (doc 18) and
Plaintiff’s Reply (doc 22). 	Plaintiff appears through its
attorney Aldridge, Grammer, Jeffrey & Hammar, P.A. (Kevin D.
Hammar). 	Defendant appears through his attorney Moore, Berkson &
Gandarilla, P.C. (George M. Moore, Esq.). 	This is a core
proceeding, 28 USC § 157 (b)(2)(I). 	For the reasons set forth
herein, the Court will deny the motion.
Federal Rule of Civil Procedure 56(c) provides, in part,
“the judgment sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”
In determining the facts for summary judgment purposes, the Court
may rely on affidavits made with personal knowledge that set
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forth specific facts otherwise admissible in evidence and sworn
or certified copies of papers attached to the affidavits.
Fed.R.Civ.P. 	56(e). 	The court does not try the case on
competing affidavits or depositions; the court’s function is only
to determine if there is a genuine issue for trial. 	Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). 	Finally the court
examines the factual record and reasonable inferences therefrom
in the light of the nonmovant. 	Thomas v. International Business
Machines, 48 F.3d 478, 484 (10 th Cir. 1995); Cole v. Ruidoso
Municipal Schools, 43 F.3d 1373, 1377 (10 th Cir. 1994).
In order to establish that a debt may not be discharged
based on false pretense, a false representation, or actual fraud,
the plaintiff must establish the following elements: 1) that the
Defendant made a false representation, 2) that the representation
was made with intent to deceive, 3) that the party justifiably
relied on the representation; and 4) that as a result of the
false representation the party was damaged. 	In re Lucas, 386
B.R. 332, 337-38 (Bankr. D. N.M. 2008)(citing Fowler Bros. v.
Young (In re Young), 91 F.3d 1367, 1373 (10 th Cir. 1996) and
Field v. Mans, 516 U.S. 59, 69-76 (1995)).
Plaintiff’s Motion focuses on an alleged misrepresentation
by Defendant regarding the use of proceeds of a loan. 	Plaintiff
claims that Defendant stated the proceeds were to be used for a
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1Recall that the Court must examine the record in a light
most favorable for the nonmovant. 	Thomas, 48 F.3d at 484.
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residential property, and had it known that the proceeds would
not be put to such use it never would have loaned the money.
Plaintiff’s Motion contains ten material facts in support of
its claim that Defendant’s debt should not be discharged. 	Under
N.M. LBR 7056-1, an opponent of a summary judgment motion must
affirmatively respond to each proposed fact and, if a fact is
contradicted the opponent must cite to supporting material in the
record:
A memorandum in opposition to the motion shall contain
a concise statement of the material facts as to which
the party contends a genuine issue does exist. Each
fact in dispute shall be numbered, shall refer with
particularity to those portions of the record upon
which the opposing party relies, and shall state the
number of the movant's fact that is disputed. All
material facts set forth in the statement of the movant
shall be deemed admitted unless specifically
controverted.
N.M. LBR 7056-1. 	Defendant’s response disputes four facts by
stating that a genuine issue exists as to these facts. 	Each of
the disputed facts is properly supported by a reference to the
record. 	The response suggests 1 that Debtor did not intend to
deceive the Plaintiff regarding whether the subject property was
finished or unfinished, or whether the loan was an owner-occupied
residential loan or a commercial loan. 	And, Defendant believed
that the Plaintiff knew that he was not going to occupy the
property. 	The Court therefore finds that there are at least two
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genuine issues of material fact such that summary judgment is not
appropriate in this case.
First, there is a question of intent. 	Questions of fact
concerning a party's intent are difficult to resolve on summary
judgment. 	“[Q]uestions of intent, which involve intangible
factors including witness creditability [sic], are matters for
consideration of the fact finder after a full trial.” 	Prochaska
v. Marcoux, 632 F.2d 848, 851 (10 th Cir. 1980), cert. denied, 451
U.S. 984 (1981)(citing Buell Cabinet Co. v. Sudduth, 608 F.2d 431
(10 th Cir. 1979)). 	The record creates a sufficient question of
fact regarding Defendant’s intent at the time of the loan that
precludes the Court from granting summary judgment in favor of
Zia Credit Union.
Second, there is a question of justifiable reliance. 	In
drawing the distinction between reasonable reliance and
justifiable reliance, the Supreme Court looked to the Restatement
(Second) of Torts (1976) and stated:
The Restatement expounds upon justifiable reliance by
explaining that a person is justified in relying on a
representation of fact “although he might have
ascertained the falsity of the representation had he
made an investigation.” ... “Although the plaintiff's
reliance on the misrepresentation must be justifiable
... this does not mean that his conduct must conform to
the standard of the reasonable man. Justification is a
matter of the qualities and characteristics of the
particular plaintiff, and the circumstances of the
particular case, rather than of the application of a
community standard of conduct to all cases.” ...
Justifiability is not without some limits, however. ...
[A] person is “required to use his senses, and cannot
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recover if he blindly relies upon a misrepresentation
the falsity of which would be patent to him if he had
utilized his opportunity to make a cursory examination
or investigation.
Field v. Mans, 516 U.S. 59, 70-71 (1995)(quoting Restatement
(Second) of Torts, §§ 537, 540, 541 and 545A (1976)). 	The record
creates a sufficient question of fact regarding what Plaintiff
knew or should be deemed to have known at the time of the loan
that indicates that Plaintiff’s reliance may not have been
justifiable. 	This also precludes the Court from granting summary
judgment in favor of Zia Credit Union.
The Court will enter an Order denying the Motion for Summary
Judgment. 	The Court will also, by separate notice, set a final
pretrial conference.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	April 12, 2010
Copies to:
Kevin D Hammar
1212 Pennsylvania St NE
Albuquerque, NM 87110-7410
Arin Elizabeth Berkson
Moore, Berkson & Gandarilla, P.C.
PO Box 7459
Albuquerque, NM 87194
Bonnie Bassan Gandarilla
Moore, Berkson & Gandarilla, P.C.
PO Box 7459
Albuquerque, NM 87194
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George M Moore
Moore, Berkson & Gandarilla, P.C.
PO Box 7459
Albuquerque, NM 87194
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