           Case: 12-14069   Date Filed: 02/13/2013   Page: 1 of 4

                                                     [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 12-14069
                        Non-Argument Calendar
                      ________________________

                 D.C. Docket Nos. 3:11-cv-00642-MEF,

                            8:10-08009-DHW



In Re: MALCOM CLIFTON DAVENPORT,

                    Debtor.
_____________________________________

MALCOLM CLIFTON DAVENPORT, V,

                    Plaintiff - Appellant,

versus

FRONTIER BANK,

                    Defendant - Appellee.

                      ________________________

               Appeal from the United States District Court
                   for the Middle District of Alabama
                     ________________________

                            (February 13, 2013)
              Case: 12-14069     Date Filed: 02/13/2013    Page: 2 of 4

Before BARKETT, MARTIN and FAY, Circuit Judges.

PER CURIAM:

      Malcolm Davenport appeals from the district court’s memorandum opinion

and order affirming the bankruptcy court’s decision that Davenport’s debt owed to

Frontier Bank (“Frontier”) was not dischargeable in Davenport’s Chapter 7

bankruptcy under 11 U.S.C. § 523(a)(2)(B). Davenport filed for bankruptcy in

2010 and included among the debts he sought to have discharged the nearly $3

million owed on his loan from Frontier. Frontier objected to the attempted

discharge seeking to prove that the debt was not dischargeable because Davenport

made false statements about his financial situation in order to obtain the loan.

      “A debtor under Chapter 7 of the Bankruptcy Code is generally granted a

discharge from all debts that arose prior to the filing of the bankruptcy petition.”

In re Fretz, 244 F.3d 1323, 1326 (11th Cir. 2001). There are, however, exceptions

to discharge and the one at issue in this case provides as follows:

      A discharge . . . does not discharge an individual debtor from any
      debt— . . . for money, property, services, or an extension, renewal, or
      refinancing of credit, to the extent obtained by . . . use of a statement
      in writing— (i) that is materially false; (ii) respecting the debtor’s or
      an insider’s financial condition; (iii) on which the creditor to whom
      the debtor is liable for such money, property, services, or credit
      reasonably relied; and (iv) that the debtor caused to be made or
      published with intent to deceive.

11 U.S.C. § 523(a)(2)(B). An objecting creditor has the burden to prove each of

these elements by a preponderance of the evidence. In re Griffith, 206 F.3d 1389,

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1396 (11th Cir. 2000) (en banc). Here, Davenport does not dispute the bankruptcy

court’s finding that his financial reports, submitted in order to obtain the $3 million

loan and have it renewed from 1997 until 2009, were materially false because they

did not disclose Davenport’s IRS tax liability and an outstanding debt he owed to

an Austrian bank. Instead, Davenport argues that the bankruptcy court erred in

concluding that Frontier reasonably relied on these financial statements. See 11

U.S.C. § 523(a)(2)(B)(iii). Specially, Davenport argues that had Frontier done

minimal investigation or paid attention to “red flags,” Davenport’s

misrepresentations would have been readily apparent.

      We have previously explained that for purposes of discharge under §

523(a)(2)(B), “[r]easonable reliance connotes the use of the standard of ordinary

and average person.” In re Vann, 67 F.3d 277, 280 (11th Cir. 1995). The

reasonableness of a creditor’s reliance is to be evaluated based on circumstances of

particular case and pertinent questions to consider include:

   • whether there had been previous business dealings with the debtor that gave
     rise to a relationship of trust;
   • whether there were any “red flags” that would have alerted an ordinarily
     prudent lender to the possibility that the representations relied upon were not
     accurate; and
   • whether even minimal investigation would have revealed the inaccuracy of
     the debtor’s representations.

Id. at 280–81.




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       Here the bankruptcy court found that Frontier reasonably relied on

Davenport’s financial statements, both because bank officials testified that they

actually relied on the statements as was customary banking procedure and because

Frontier took into account other factors along with the financial statements when

deciding to renew the loan.1 The bankruptcy court noted that Frontier asked

Davenport questions about the statements before preparing its credit memoranda.

For example, when Frontier asked about the Austrian bank liability when it no

longer appeared on the financial statement, Davenport indicated that it had been

settled. Frontier took into account Davenport’s education, training and experience

as a Certified Public Accountant and attorney as well as his family’s reputation

within the community, which it found enhanced Davenport’s credibility.

Davenport argues that Frontier should have requested copies of his tax returns

from the beginning, however, Frontier reported that it was not its usual practice to

request tax returns at the early stage of the life of a loan.

       Accordingly, we cannot say that the bankruptcy court clearly erred in its

factual findings and, therefore, AFFIRM its conclusion that Davenport’s debt to

Frontier is non-dischargeable under 11 U.S.C. § 523(a)(2(B).

AFFIRMED.


       1
         Sitting as a second court of review, the court of appeals reviews the bankruptcy court’s
conclusions of law de novo and its findings of fact for clear error. See In re Optical
Technologies, Inc., 425 F.3d 1294, 1299–1300 (11th Cir. 2005).
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