     Case: 12-40070        Document: 00511972497              Page: 1      Date Filed: 08/31/2012




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                                    FILED
                                                                                  August 31, 2012
                                          No. 12-40070
                                        Summary Calendar                           Lyle W. Cayce
                                                                                        Clerk

In the Matter of: DONALD LEE CARDWELL,

                                                          Debtor

------------------------------------------------------------------------

DONALD LEE CARDWELL,

                                                          Appellant

v.

BILL GURLEY,

                                                          Appellee


                      Appeal from the United States District Court
                           for the Eastern District of Texas
                                USDC No. 4:10-CV-706


Before REAVLEY, JOLLY, and DAVIS, Circuit Judges.
PER CURIAM:*
        Donald Lee Cardwell challenges the district court’s summary judgment
affirming the bankruptcy court’s determination that his debt to Bill
Gurley–arising out of a state-court judgment–was non-dischargeable under 11

        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                 No. 12-40070

U.S.C. §§ 523(a)(2)(A) and 523(a)(4). Cardwell contends the district court erred
because: he did not waive his arguments regarding collateral estoppel; and, the
state court’s findings of fact and conclusions of law (FOFCOL) did not support
the non-dischargeability of the debt.
      Cardwell and Gurley were business partners and co-owners of 121
Ventures, LLC, which was involved in, inter alia, real-estate development.
Cardwell was the managing member and was trusted by Gurley to handle all of
the LLC’s day-to-day business. Cardwell made misrepresentations to Gurley in
order to induce him to consent to various transactions that ultimately injured
Gurley to the benefit of Cardwell. Gurley filed an action in state court and
received a judgment for approximately $370,830. Cardwell subsequently filed
for bankruptcy and Gurley filed this action seeking to exempt the judgment debt
from discharge. Giving preclusive effect to the FOFCOL of the state court, the
bankruptcy court concluded the debt was non-dischargeable. The district court
affirmed the bankruptcy court and this appeal followed.
      Gurley contends Cardwell waived his arguments, in part, because he failed
to submit the pleadings in the bankruptcy court as part of the appellate record.
Cardwell maintains that this was due to a mistake in the clerk’s office. But, our
court need not resolve the waiver issue because the bankruptcy court correctly
concluded the state-court FOFCOL establish the debt is non-dischargeable.
      The parties concede that collateral estoppel should apply to prevent the
re-litigation of the FOFCOL of the state court; they only disagree as to whether
those findings support the discharge or the non-dischargeability of the debt. Our
court reviews a grant of summary judgment de novo. In re National Gypsum,
208 F.3d 498, 504 (5th Cir. 2000).
      Under § 523(a)(2)(A), a debtor is not discharged from “any debt . . . for
money, property, services, or an extension, renewal, or refinancing of credit, to
the extent obtained by false-pretenses, a false representation, or actual fraud,
other than a statement respecting the debtor’s or an insider’s financial

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                                   No. 12-40070

condition.” Though our court’s precedent has previously distinguished between
“false pretenses,” “false representations,” and “actual fraud,” Cardwell contends
our court in In re Acosta, 406 F.3d 367 (5th Cir. 2005), set out a five-element
“actual fraud” test applicable to any claims under § 523(a)(2)(A). Id. at 372. Our
court has not determined whether the five-element test applies to all actions
under § 523(a)(2)(A), and it need not do so here because the debt at issue is not
dischargeable even under the more stringent Acosta test.
      For a debt to be non-dischargeable under this standard, a creditor must
show: “(1) that the debtor made a representation; (2) that the debtor knew the
representation was false; (3) that the representation was made with the intent
to deceive the creditor; (4) that the creditor actually and justifiably relied on the
representation; and (5) that the creditor sustained a loss as a proximate result
of its reliance.” Id. Cardwell contends the FOFCOL lack specific language
stating the court found “fraud” and an “intent to deceive,” but these contentions
are unavailing.
      The state court found, inter alia, the following: Cardwell persuaded
Gurley to consent to the transaction by stating he would “manage [a new]
development to fruition” using the land acquired in the transaction; Cardwell
“had no intention” (emphasis added) of developing this new property; but, Gurley
believed him and agreed to the proposal; Gurley had been doing business with
Cardwell over ten years and had developed “the utmost trust and confidence” in
him; Gurley would not have agreed to the transaction had Cardwell not made
“materially false and misleading” statements and promises; Cardwell
subsequently sold the new property far below market value without informing
or receiving consent from Gurley; and, Cardwell’s behavior caused damage to
Gurley in excess of $300,000.
      Even ignoring the myriad of other misrepresentations and breaches by
Cardwell, these findings are sufficient to meet the elements of the Acosta test for
non-dischargeability.     Specifically, the finding that Cardwell made a

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promise–with no intention of following through on that promise–in order to
persuade Gurley to consent to the transaction satisfies elements two and three
of the Acosta test, which are the primary elements in contention. As a result,
the debt is not dischargeable under § 523(a)(2)(A).
      Because we affirm under § 523(a)(2)(A), it is unnecessary to reach the
contentions pertaining to other provisions of §523 relied upon as separate
grounds for non-dischargeability.
                                                                   AFFIRMED.




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