Cleary v. Limberger et al

Filing 8

MEMORANDUM. Signed by Judge William M Nickerson on 12/18/2013. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

In Re: MICHAEL T. CLEARY

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TIMOTHY LIMBERGER et al.
v.
MICHAEL T. CLEARY
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Civil Action No. WMN-13-1047
Bankruptcy No. RAG-08-10319
Adversary Case No. 08-00264

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MEMORANDUM
This matter is before this Court on Appellant Michael T.
Cleary’s appeal from a February 28, 2013, Order of the United
States Bankruptcy Court for the District of Maryland concluding
that a portion of his debt to Appellees Timothy and Lisa
Limberger was non-dischargeable under 11 U.S.C. § 523(a)(2)(A).
For the reasons that follow, the decision of the Bankruptcy
Court will be affirmed.
I. FACTUAL AND PROCEDURAL BACKGROUND
Debtor Michael T. Cleary partially owned, but fully
operated and controlled, a residential construction company,
Trinity Home Builders, L.L.C. (Trinity).

The underlying

adversary action from which this appeal arises relates to a
contract between Trinity and the Limbergers for the construction
of the Limbergers’ custom home.

The parties entered into the

contract in May of 2006, for a total contract price of
$1,252,278.

The contract required a deposit of $62,613.90,

leaving a balance of $1,189,664.10 to be financed.
To fund the acquisition of the building lot and the
construction of their home, the Limbergers entered into a loan
agreement with SunTrust Mortgage (SunTrust) to borrow
$1,421,900.00.

Under the terms of the loan documents, the

transfer of funds from SunTrust to Trinity was to be made for
completed work only, and a draw schedule was incorporated into
the loan documents to guide the disbursal of funds.

Under that

draw schedule, each category of work to be done on the home was
assigned a percentage of the total loan.

For example, the roof

framing and sheathing was assigned a total of 5% of the loan.
The established procedure for disbursal of the loan funds
involved Cleary contacting SunTrust to request a draw; SunTrust
sending an inspector to verify the work in place; and, after
verification, SunTrust wiring the appropriate percentage of the
loan to Trinity.
There came a point in time that the Limbergers were
dissatisfied with Trinity’s progress on their home and ordered
Trinity off the job as of June 19, 2007.

By that date, 71% of

the draws, or a total of $844,661.51, had been disbursed by
SunTrust to Trinity.

In addition to the deposit and the draws,

the Limbergers had also paid $88,858.10 in change orders to
2

Trinity.

After ordering Trinity off the job, the Limbergers

hired a new contractor, Gast Construction, to complete the work
on the home.

As discussed below, there is a dispute as to what

percentage of the work Trinity had performed on its contract
and, thus, how much work remained to be completed on the home by
the new builder.

The Limbergers also obtained a new

construction loan from a different bank, Branch Banking and
Trust Company (BB&T).
After removing Trinity from the job, the Limbergers filed
suit against Cleary in the Circuit Court for Baltimore County in
August of 2007.

In response, Cleary filed for personal

bankruptcy in January 2008, at least in part to stay the
Limbergers’ state court action against him.

The Limbergers

filed a Proof of Claim in the main bankruptcy case for
$1,000,000 which was never objected to and, thus, is deemed
allowed.

See 11 U.S.C. § 502(a).

They also filed the adversary

action giving rise to this appeal, in which they prayed that
claims related to certain draws from SunTrust to Trinity be
excluded from Cleary’s bankruptcy discharge.

Prior to trial,

the Limbergers limited their claims of non-dischargeability to
claims relating to three draws: (1) a $23,793.28 draw for the
completion of the water well, (2) a $47,586.57 draw which Cleary
represented he was requesting to cover a deposit for windows and
trusses, and (3) a $47,586.57 draw which Cleary represented he
3

was requesting to cover a deposit for cabinetry.

The Limbergers

argued that their claims arising from these draws were exempt
from discharge in bankruptcy pursuant to 11 U.S.C. §§
523(a)(2)(A), 523(a)(4), and 523(a)(6).
The adversary action proceeded to trial.

After receiving

three days of evidence on October 26, October 27, and November
12, 2010, the court reconvened on January 24, 2011, to hear
closing arguments.

During closing arguments, the Bankruptcy

Judge questioned the Limbergers’ attorney as to whether there
was any evidence in the record that the Limbergers were
obligated to repay SunTrust for the funds disbursed to Trinity
in these three particular draws or whether they ultimately did
repay those funds.

ECF No. 1-34 at 7.

Counsel responded that

he believed there was such evidence in the record and the judge
instructed counsel to file a memorandum pointing out what that
evidence might be.

Id. at 8.

Reviewing the record, it appears that the reason for the
Bankruptcy Judge raising the issue of repayment of the SunTrust
loan was his awareness of a dispute between the Limbergers and
SunTrust.

In addition to their dissatisfaction with Trinity,

the Limbergers also took issue with the manner in which SunTrust
disbursed loan funds to Trinity and, to resolve that dispute,
the Limbergers filed suit against SunTrust in the Circuit Court
for Harford County.

That case was settled during the pendency
4

of the adversary action before the Bankruptcy Court.

While the

Bankruptcy Court was aware of this action and the settlement,
the parties entered into the settlement pursuant to a
confidentiality agreement and the terms of the settlement were
not revealed to Cleary or to the Bankruptcy Court.

See ECF No.

1-40 at 3 n.6.
In response to the Bankruptcy Judge’s questions at oral
argument, the Limbergers filed on February 23, 2011, a
“Supplemental Post-Trial Memorandum,” ECF No. 1-27, and also a
Motion to Reopen to Receive Undisputed Evidence.

ECF No. 1-30.

The Limbergers stated that the motion to reopen was being
submitted “in an abundance of caution” to “clarify [] the injury
and damages caused by [Cleary’s] improper conduct.”

Id. at 1.

Submitted with the motion were three exhibits: (1) a settlement
statement for a $1,575,200 loan from BB&T to the Limbergers, (2)
the loan agreement for that loan, and (3) an affidavit of Lisa
Limberger in which she states that she refinanced the SunTrust
loan through the new loan with BB&T.

ECF Nos. 1-31, 1-32, 1-33.

She states further that “SunTrust never returned nor repaid
[her] for any of the money that is the subject of the claims in
this adversary case against [Cleary].”

ECF No. 1-33.

On March

8, 2011, Cleary filed an opposition to the motion to reopen.1

1

Although not designated as part of the appellate record, on
December 6, 2012, counsel for the Limbergers filed a request for
5

On February 28, 2013, the Bankruptcy Court entered a
memorandum opinion and order holding that the claims related to
the draw for the deposit for window and trusses and the draw for
the deposit for cabinetry were non-dischargeable under 11 U.S.C.
§ 523(a)(2)(A), in that Cleary made fraudulent
misrepresentations to SunTrust in order to induce it to disperse
those funds.

The Court, however, found that the claim related

to the draw for the water well was dischargeable.

As to that

claim, the Court opined that, while Cleary may have been just as
dishonest in seeking payment for work related to a well that
Trinity did not dig, SunTrust could not have justifiably relied
on Cleary’s representation in that SunTrust, in the course of
financing the purchase of the lot, knew that the well was
already presented when the lot was purchased by the Limbergers.
As to the motion to reopen, the Bankruptcy Judge stated in
a footnote that it would be granted because “it submits
specific, undisputed information that the Court requested during
oral argument.”

ECF No. 1-40 at 15 n.22.

Specifically, noted

the Bankruptcy Judge, the motion to reopen explained that “[t]he
Limbergers had to pay the SunTrust loan in full [through] a

a status conference to inquire whether the court required
additional briefs or updates on events in the case. Adv. No.
08-264, ECF No. 109. Counsel for Cleary responded that a status
conference was unnecessary and that he was “confident that [the
Bankruptcy Court] has all the evidence and argument necessary to
make a decision in this case.” Id., ECF No. 110.
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refinancing loan from [BB&T].”

Id.

In that same footnote, the

Bankruptcy Judge also opined that Cleary “has had an equal
opportunity to rebut the truth of that information but has not
done so.”

Id.

An order granting the motion to reopen was

entered the next day.
Debtor Cleary raises the following three issues on appeal:
(1) whether the Bankruptcy Court erred in granting the motion to
reopen the case and admitting the three exhibits submitted with
that motion into evidence; (2) whether the Bankruptcy Court
erred in finding that the draw requested for the window and
truss deposit was non-dischargeable; and (3) whether the
Bankruptcy Court erred in finding that the draw requested for
the cabinetry deposit was non-dischargeable.

The arguments

raised as to those last two issues center on whether the
Limbergers were actually damaged by these disbursals.
II. STANDARD OF REVIEW
This Court reviews the Bankruptcy Court's findings of facts
for clear error and conclusions of law de novo.

See Duncan v.

Duncan (In re Duncan), 448 F.3d 725, 728 (4th Cir. 2006).

“A

finding of fact is clearly erroneous when, although there is
evidence to support it, the reviewing court on the entire
evidence is left with the definite and firm conviction that a
mistake has been committed.”

Montgomery County v. Barwood,

Inc., 422 B.R. 40, 44 (Bankr. D. Md. 2009) (citing Anderson v.
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Bessemer City, 470 U.S. 564, 573 (1985)) (internal quotation
marks omitted).

“A reviewing court will not reverse simply

because it is convinced that it would have decided the case
differently.”

Citizens Bank of Md. v. Broyles (In re Broyles),

55 F.3d 980, 983 (4th Cir. 1995) (citing Anderson, 470 U.S. at
573) (internal quotation marks omitted).

As to the decision to

reopen the case and admit additional evidence, the parties agree
that such a decision is entrusted to the discretion of the trial
court and is therefore reviewed under an abuse of discretion
standard.

See Gathright v. St. Louis Teachers’ Credit Union, 97

F.3d 266, 268 (8th Cir. 1996).
III. DISCUSSION
Section 523(a) of the Bankruptcy Code provides, in
pertinent part, that a discharge under section 727 “does not
discharge an individual debtor from any debt . . . (2) for money
. . . to the extent obtained by – (A) false pretenses, a false
representation, or actual fraud. . . .”

To establish that a

claim is non-dischargeable under § 523(a)(2)(A), a creditor must
establish five elements: (1) the debtor made a representation;
(2) the debtor knew at the time the representation was made that
it was false; (3) the debtor made the representation with the
intent and purpose of deceiving the creditor; (4) the creditor
justifiably relied upon the false representation; and (5) the
creditor suffered harm as the proximate result of the
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representation.

See Dubois v. Lindsley (In re Lindsley), 388

B.R. 661, 668 (D. Md. 2008).

In order to protect the purpose of

providing debtors with a fresh start through bankruptcy,
exceptions to discharge such as those provided for in § 523 are
strictly construed against the creditor, and creditors must
prove their allegations by a preponderance of the evidence.

In

re Rountree, 478 F.3d 215, 219 (4th Cir. 2007).
In this appeal, Cleary raises no serious challenge as to
the first four elements, nor could he.

The Bankruptcy Court,

which had the opportunity to observe Cleary’s demeanor in his
testimony both at trial and in videotaped deposition, concluded
in no uncertain terms that Cleary was “evasive, argumentative,
contradictory and calculating.”

ECF No. 1-40 at 11.

In

reviewing findings of fact made by a bankruptcy court, this
Court must give “due regard” to “the opportunity of the
bankruptcy court to judge the credibility of the witnesses.”
Bankr. R. 8013.
As to the draw for the alleged deposit for windows and
trusses, the court simply did not credit Cleary’s testimony
that, when he requested the draws, his suppliers were requiring
deposits but, once he received the transfer of funds, the
suppliers had changed their policies and those deposits were no
longer required.

Id. at 18-19.

The court also noted that it

was undisputed that the invoice submitted by Cleary to SunTrust
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to support his request for the window deposit was actually an
invoice prepared for a different project.

Id. at 7.

The court

concluded that Cleary intentionally misrepresented the need for
these illusory deposits in order to use the requested funds for
his own purposes.

Id. at 19.

As to the draw for the alleged deposit for cabinetry, the
Bankruptcy Court found even clearer evidence of fraud.

The

court concluded that, not only were no deposits required from
Trinity for the cabinetry, but that Cleary used altered invoices
to support his request to SunTrust.

The evidence showed that

Lisa Limberger had herself paid the deposit on the cabinets and
the supplier handwrote “paid in full” on the deposit invoices.
Cleary then took those invoices, whited out “paid in full,” and
submitted those altered invoices to SunTrust.

While Cleary

denied doing this in his testimony at deposition and trial, he
had admitted whiting out the handwritten notation during his
Section 341 meeting of creditors.

Id. at 10.

The Bankruptcy

Court concluded that Cleary was telling the truth at the
creditors meeting, but only changed his story when he realized
his admission would result in continued liability to the
Limbergers.

Id.

Given that the Bankruptcy Court’s findings as to the first
four elements of proof are essentially unassailable on appeal
because they turn on the Bankruptcy Court’s assessment of
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credibility, Cleary devotes his attention to challenging the
Bankruptcy Court’s conclusion that the Limbergers were in any
way harmed by his alleged deceptions.

As to the draw for the

window and truss “deposit,” Cleary notes that the draw schedule
allotted 5% of the loan for “Roof Framing and Sheathing” and 4%
for “Exterior Windows and Doors.”

After requesting and

receiving 2% from each category for the alleged deposits, he
received in a separate draw request the balance from those two
categories, but no more.

He maintains that, since photographs

of the home show that the windows and trusses were installed
before Trinity was thrown off of the job, the Limbergers
suffered no harm from the “deposit” draw.
Cleary’s arguments regarding the draw for the cabinetry
deposit is more problematic in that, not only had Lisa Limberger
already paid the deposit for which he requested a draw, but it
is also undisputed that no cabinets were installed before
Trinity left the job.

To posit an absence of proven damages,

Cleary expands his argument to the scope of the entire SunTrust
loan.

He notes that, before leaving the job, Trinity had

received draws equal to 71% of the loan.

Based on the

proposition that the house was 70% complete at the time, Cleary
suggests that the Limbergers suffered damages of, at most, 1% of
the loan, or $11,896.64.

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As to how much of the work on the house was complete when
Trinity left the job, Cleary represents that “the Bankruptcy
Court found that the house was 70% complete as of that date.”
ECF No. 3 at 26 (quoting ECF No. 1-40 at 20 n.28).

What the

Bankruptcy Court actually said in the footnote cited by Cleary
was that, “[t]he evidence also established that the Limbergers
were forced to hire another company to complete the project with
the work about seventy percent (70%) complete at the time of
Trinity’s dismissal.”

ECF No. 1-40 at 20 n.28 (emphasis added).

The court did not explain what evidence established this
estimated percentage and, more importantly, the figure was not
used by the court for any calculation of damages.
While the Bankruptcy Court gave no indication as to how
this estimated percentage was determined (as there was no reason
for it to do so), Cleary suggests that the draw schedule and
inspection reports support that figure.

As of May 30, 2007, two

weeks before Trinity was ordered off the job, SunTrust had
distributed 71% of the loan to Trinity based upon the inspection
reports that had been submitted to it.

On June 20, 2007,

SunTrust’s inspector authorized the release of an additional 3%
for work completed in additional categories.2

Subtracting the 4%

for cabinetry that clearly was not completed from the 74% that

2

The Limbergers objected to this authorization, so this 3% was
never distributed.
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was authorized, Cleary concludes that 70% of the work was
completed before Trinity was dismissed.
The draw schedule and inspection reports, however, are not
an appropriate proxy for the percentage of work actually
completed on the home.

Cleary’s own counsel acknowledged in his

briefing and in his closing argument before the Bankruptcy Court
that draw schedules are “generic” and do not reflect the costs
for any particular house.

Specifically, when arguing that there

was nothing improper in Cleary requesting 2% of the loan for a
well that Trinity did not dig, he stated, “[t]he percentages of
the draw schedule typically do not reflect the actual cost of
the work because it is a generic draw schedule.”

ECF No. 1-22

(Cleary’s Post-Trial Mem.) at 8 n.1 (citing testimony of Thomas
Redfern, ECF No. 1-17 at 222); see also ECF No. 1-34 (Closing
Arguments) at 59.
Furthermore, there was significant evidence in the record
that less than 70% of the work was completed.

The Bankruptcy

Court found, based in part on the testimony of Cleary’s sister
regarding Trinity’s “historic inability to pay its debts in the
ordinary course of business,” ECF No. 1-40 at 11, that Cleary
took the funds he received from SunTrust and used them to cover
expenses on other projects, including expenses related to the
construction of his sister’s home.

Consistent with that

finding, Cleary testified that, once funds were received by
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Trinity, he believed that they could be used on any project in
which Trinity was involved.

ECF No. 1-19 at 35, 82.

That

Cleary may have later paid for the trusses or windows on the
Limbergers’ home from a subsequent draw from SunTrust obtained
for some other category of work, as he claims he did, does not
eliminate the Limbergers’ injury from the original fraud.

As

Lisa Limberger testified, shifting subsequent draws back to
cover categories that should have been completed using previous
draws created a “domino effect,” still leaving insufficient
funds to finish the house.

ECF No. 1-15 at 121-22.

The Bankruptcy Court clearly embraced that theory of
damages:
What the evidence showed with certainty, and what this
Court finds, is that Mr. Cleary intentionally
misrepresented the need for these deposits in order to
use the Limberger’s construction line of credit as if
it were Trinity’s (or perhaps his own) to do with as
he chose. Whether the supplies were actually paid for
by additional draws against the SunTrust financing at
a later date (and charged again to the Limbergers’
account) is irrelevant. What matters is that this
particular draw was induced by a false representation
and the money was not used for the purpose
represented. The correct outcome cannot be to saddle
the Limbergers with double liability for a single set
of materials or portions thereof. The damages are
found in the illegitimate increase of the Limbergers’
loan balance for money spent on a purpose unrelated to
the [Limbergers’ home.]
ECF No. 1-40 at 19 (emphasis in original).
This Court also notes that there was other evidence in the
record that far less than 70% of the home was completed by
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Trinity.

In the course of Lisa Limberger’s testimony before the

Bankruptcy Court, an affidavit that she had submitted with a
summary judgment motion in the Harford County case against
SunTrust was admitted into evidence by Cleary’s counsel.
No. 1-15 at 81-83.

ECF

One of the attachments to that affidavit was

a chart of damages that indicated that the Limbergers had to pay
Gast Construction $620,407.67 to finish the same work they had
contracted Trinity to perform.

ECF No. 1-28 at 2.

When Trinity

left the project, there was only about $345,000 left
undistributed from the SunTrust loan.

Thus, this Court finds no

error, much less clear error, in the Bankruptcy Court’s finding
that the disbursal of the funds induced by Cleary’s
misrepresentations increased the Limbergers’ liability to
SunTrust.
Cleary raises one additional argument related to damages
that is intertwined with his arguments regarding the Bankruptcy
Court’s reopening of the record.

Cleary now maintains that

there was no evidence admitted during the trial that the
Limbergers actually paid off the SunTrust loan.

While, as the

Bankruptcy Court found, Cleary’s requests for illusory deposits
may have increased the Limbergers’ liability under the SunTrust
loan, if they never paid off that loan, Cleary contends they
were not harmed by his actions.

He then argues that it was

improper for the Bankruptcy Court to reopen the record to allow
15

the Limbergers to establish that they had, indeed, paid off the
SunTrust loan in full.
This Court finds this argument somewhat spurious.

There

was considerable evidence in the trial concerning the SunTrust
loan and the SunTrust loan documents were part of the record.
As under any construction loan, the Limbergers would incur
liability under the terms of those documents for any advance on
the loan.

There was also considerable evidence and discussion

concerning the Limbergers’ suit against SunTrust.

Had the

Limbergers not paid off the loan, there would have been no
reason for them to file suit against SunTrust.

Thus, even

without the supplemental evidence submitted with the motion to
reopen, there was sufficient evidence in the record for the
Bankruptcy Court to draw the only possible reasonable inference
from the evidence, i.e., that the Limbergers had paid off the
SunTrust loan.
This Court notes that, neither in the course of the trial
nor in the post-trial, pre-closing argument briefing, did Cleary
focus on this particular argument.

Instead, Cleary seized on it

only after the Bankruptcy Court, on its own, raised the issue in
the course of closing arguments.

The Bankruptcy Court, however,

only raised the issue because of its awareness of the settlement
of the Limbergers’ suit against SunTrust.

Because the SunTrust

suit challenged these same draws, the Bankruptcy Court was
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apparently concerned about the possibility that claims based on
these disbursals may have been compromised as part of the
settlement with SunTrust.
The Bankruptcy Court had questions about the settlement
because, while the fact of settlement was disclosed at trial,
the terms were not.

In the course of cross-examining Lisa

Limberger, Cleary’s counsel had her affirm that the Limbergers
were complaining about the same three disbursements in the
SunTrust suit as they were in this adversary action.
at 89.

ECF 1-15

When he then asked the amount for which the SunTrust

suit was settled, the Limbergers’ counsel objected on the ground
that the settlement was subject to a confidentiality agreement.
Id.

Cleary’s counsel responded that, since the suits complained

about the same things, it was “relevant to know what they
settled the case for to see how they were compensated for their
alleged damages.”

Id. at 90.

The Limbergers’ counsel never

questioned the relevancy but stated that he could not reveal the
actual terms of that settlement unless ordered to do so by the
court.
do so.”

Id.

If ordered to, he indicated he would be “happy to

Id. at 91.

The Bankruptcy Court returned to the issue a few moments
later and squarely put the burden on Cleary’s counsel to
introduce evidence of the settlement if he intended to argue

17

that claims related to these draws were somehow already
compensated for:
THE COURT: Mr. Kotz (Cleary’s counsel), let me
just back up so the record is clear on that. So if
you want to press it, then it’s going to be up to you
to bring that document because that is the best
evidence of the settlement . . . .
If we have to go through a preliminary hurdle
thing to get to the point where we can decide whether
or not we look at the document or not, we’ll tee that
up later. Okay?
MR. KOTZ: He’s in control of the document.
you indicate I had to bring it?

Did

THE COURT: You’re the one that wants to establish
that there was a settlement.
MR. KOTZ: Right. I asked the question and then
Mr. Gann (Limbergers’ counsel) said there’s a
settlement agreement that’s confidential, so obviously
no one would have that except the parties.
THE COURT: Right, and the settlement agreement is
the best evidence of settlement.
MR. KOTZ: Yes.
THE COURT: So you’re going to have to be the one
that wants, desires to put the agreement into
evidence.
MR. KOTZ: Okay. We would have to, I presume,
have a preliminary – we’d have to show it to you
because I don’t want to look at it.
THE COURT: What I’m saying is that the burden
would be on you to put the document into evidence
through this witness. Now, whatever that means in
terms of what’s gone on before in discovery deadlines
and exhibit lists and all of that, I’m not ruling now
but he’s got the right to raise all those issues. If
you call him up after this hearing or talk to him
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during lunch and say, Mr. Gann, I want the document,
then he’s got the right to reserve all those
objections to put it into evidence.
MR. KOTZ: Okay.
THE COURT: Are you with me?
MR. KOTZ: I understand.
Id. at 92-94.
Cleary’s counsel apparently made no effort to obtain the
settlement agreement and made no further argument regarding the
settlement until the issue was raised by the Bankruptcy Court in
closing argument.

If fact, during closing argument, Cleary’s

counsel essentially conceded that the Limbergers paid off the
SunTrust loan.

In discussing the 1% of the loan that, by

Cleary’s counsel’s calculations was the amount of overpayment,
the following exchange occurred:
THE COURT: Is there any dispute about whether or
not they had to pay this money to the bank?
MR. KOTZ: What did you say – there is a dispute?
THE COURT: Is there any dispute – are you
disputing whether they had to pay this $118,000 to the
bank?
MR. KOTZ: Oh, they had to pay back
percent. That was their loan when they
loan, they had to pay that 71 percent –
loan payoff, whoever the bank paid. No
that.
ECF No. 1-34 at 76.

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the full 71
got a new
that was the
dispute on

Looking at the record as a whole, this Court concludes that
the Limbergers had proven their damages without the need to
supplement the record with the three exhibits submitted with the
motion to reopen.

Draws on a construction loan create liability

on the homeowner by operation of the terms of the loan
agreement.

That was never contested at trial.

If Cleary wished

to argue that this liability was reduced by settlement with a
third party or otherwise, it was his duty to introduce evidence
to support that argument and the Bankruptcy Court clearly
explained that duty.
To the extent that the Bankruptcy Court, by granting the
motion to reopen the record, permitted the Limbergers to offer
further support to establish their payment of the SunTrust loan,
this Court finds that the Bankruptcy Court did not abuse its
discretion by doing so.

In determining whether a trial court

abused its discretion in reopening a case, appellate courts
consider whether: “(1) the evidence sought to be introduced is
especially important and probative; (2) the moving party’s
explanation for failing to introduce the evidence earlier is
bona fide; and (3) reopening will cause undue prejudice to the
nonmoving party.”

Levy v. Lexington County, 589 F.3d 708, 714

(4th Cir. 2009).
In this instance, the first consideration is not
determinative.

Because the Court finds that the evidence
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already in the record sufficiently established the fact for
which the supplement evidence was offered, the evidence was not
especially important or probative.

It did, however, serve to

confirm what was readily inferable from other evidence in the
record.

As to the second consideration, the Court finds that

the Limbergers’ explanation for failure to offer this evidence
earlier was bona fide.

The evidence goes to an issue that was

not in dispute until the question was raised by the Bankruptcy
Court in closing arguments.

In their post-closing briefing, ECF

No. 1-27, the Limbergers responded to the court’s question and
pointed to the evidence in the record supporting a finding that
the SunTrust loan was paid off.

Out of an abundance of caution,

they also offered additional evidence on an issue that,
heretofore, had not been in dispute.
Finally, the Court finds that Cleary was not unduly
prejudiced by the admission of this evidence.

As noted above,

this evidence is redundant to evidence already in the record.
Furthermore, while Cleary complains that he was unable to test
the evidence by cross-examination, the Court notes that he never
asked for that opportunity and he easily could have done so.

In

opposing the motion to reopen, he could have asked for the
alternative remedy that, should the court allow the evidence, he
be permitted to further cross examine Lisa Limberger.

The Court

suspects that he did not do so for the same reason he did not
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pursue the admission of the settlement agreement, i.e., he was
well aware that the Limbergers paid off the SunTrust loan as his
counsel acknowledged.
IV. CONCLUSION
For these reasons, the February 28, 2013, decision of the
United States Bankruptcy Court for the District of Maryland
concluding that a portion of Debtor Michael T. Cleary’s debt to
Timothy and Lisa Limberger was non-dischargeable under 11 U.S.C.
§ 523(a)(2)(A) will be affirmed.

A separate order will issue.

_______________/s/________________
William M. Nickerson
Senior United States District Judge

DATED: December 18, 2013

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