               United States Court of Appeals
                           For the Eighth Circuit
                       ___________________________

                               No. 16-3111
                       ___________________________

                         In re: Michael John Hernandez

                              lllllllllllllllllllllDebtor

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

                            Michael John Hernandez

                            lllllllllllllllllllllAppellant

                                          v.

                       General Mills Federal Credit Union

                             lllllllllllllllllllllAppellee
                                   ____________

                  Appeal from United States District Court
                 for the District of Minnesota - Minneapolis
                                ____________

                           Submitted: March 7, 2017
                             Filed: June 14, 2017
                               ____________

Before BENTON, BEAM, and MURPHY, Circuit Judges.
                          ____________

BEAM, Circuit Judge.
       General Mills Federal Credit Union1 filed an adversary proceeding to determine
the dischargeability of a debt in Michael Hernandez's Chapter 7 bankruptcy. The
bankruptcy court2 found the debt excepted from discharge, the district court3 affirmed,
and we now affirm as well.

I.    BACKGROUND

       Hernandez's grandparents, Joseph and Stella Hernandez (whom we will refer
to as Joseph and Stella), owned a home in St. Paul, Minnesota. In June 2003, Joseph
and Stella executed a quitclaim deed transferring title to Hernandez with a reserved
life estate. At that time the home was encumbered with a $144,000 mortgage. In
October 2003, Hernandez, Joseph, and Stella executed a mortgage for $185,000,
obtained from General Mills, which was used to pay off the earlier mortgage and some
of Hernandez's personal debt. In April 2004, Hernandez obtained a home equity loan
in his own name from General Mills for $30,000, which he used to consolidate his
debt. In May 2004, the three took out another mortgage on the home for $222,300,
again for consolidating debt. At closing, Hernandez signed the mortgage agreement
both in his own name and as the attorney-in-fact for Joseph and Stella under powers
of attorney (the 2004 POAs). The 2004 POAs were notarized by an Edward J.
Thompson.

      In March 2005, the three took out a home equity line of credit (the Loan),
secured by a second mortgage subordinate to the May 2004 loan. The bank provided
Hernandez new POA forms for Joseph and Stella which were completed and included

      1
       General Mills Federal Credit Union is now Mill City Credit Union.
      2
        The Honorable Michael E. Ridgway, United States Bankruptcy Judge for the
District of Minnesota.
      3
        The Honorable Susan Richard Nelson, United States District Judge for the
District of Minnesota.

                                         -2-
in the loan documents (the 2005 POAs). The 2005 POAs provided a space for a
"specimen" signature of the attorney-in-fact, and these were left blank. The 2005
POAs were notarized by a Cheryl L. Engh. At closing, Hernandez, as he did with the
2004 loan, signed for himself and for his grandparents as their attorney. He also
signed an affidavit stating he "is the Attorney-in-Fact (or agent) named in that certain
Power of Attorney dated March 8, 2005." "March 8, 2005" was typed into a blank
space. Within a short time and over several transactions, Hernandez drew on the line
of credit nearly to its limit of $100,000.

       In 2007, Joseph and Stella sought the assistance of their niece, Vicki Giller, in
dealing with foreclosure notices they received due to defaulted payments on the
$30,000 loan. In the course of researching loan documents Giller discovered what she
believed to be forged signatures. She testified that the principal signatures on the
2005 POAs were not those of Joseph and Stella, which signatures she was familiar
with from having helped her aunt and uncle with bills and other matters. Giller also
gave hearsay testimony that Joseph and Stella told her in 2007 that they had not
signed either the 2004 or 2005 POAs. Further, she testified that her aunt and uncle
no longer drive and that their practice was to walk across the street from their home
in Ramsay County to the Cathedral of St. Paul when they needed a notary. The 2004
and 2005 POAs, however, were notarized in Anoka and Hennepin Counties,
respectively. Suspecting Hernandez had taken advantage of Joseph and Stella by
committing fraud, Giller filed a police report and sought the assistance of Adult
Protective Services. In August 2008, Stella signed an affidavit revoking "any and all
Power(s) of Attorney Never given to Michael Hernadez, specifically the documents
on 5/24/2004 & 3/8/2005."

      In March 2009, Joseph and Stella filed a complaint in Ramsay County District
Court against Hernandez, General Mills, and another party alleging various acts of
fraud. The complaint alleged in part that neither Joseph nor Stella had signed the



                                          -3-
2004 or 2005 POAs, that the signatures appearing on those forms are not those of
Joseph and Stella, and that Hernandez falsely represented that he had the authority to
sign the loan documents for his grandparents. General Mills in its answer stated that
it was "without sufficient knowledge or information to form a belief as to the truth or
falsity" of those allegations and denied them on that basis. Further, General Mills
made a cross-claim against Hernandez for indemnity or contribution should General
Mills be ordered to release or rescind the mortgages or to pay damages. In June 2010,
the court dismissed the case due to Joseph and Stella's failure to engage in mediation,
attend the pretrial conference, and to otherwise comply with the Minnesota Rules of
Civil Procedure. The order dismissed Joseph and Stella's claims with prejudice, but
it also stated, "Nothing herein shall be construed to affect, modify or prevent any of
the Defendants from enforcement of any rights or remedies they may possess with
respect to any liens, interest, mortgage, promissory note or otherwise with respect to
the relationships between them and/or any interest in the property at issue in this
case." An August 2010 stipulation dismissed all claims between the codefendants
without prejudice.

       A summary of these events, along with quotations from Stella and Giller,
appeared in an October 2011 edition of the St. Paul Pioneer Press newspaper. Much
of this account was disputed by testimony from Regina Griffith, Joseph and Stella's
granddaughter and Hernandez's sister. At the time of the adversary proceeding in
2015, Joseph was deceased and Stella was living near Griffith in a nursing home in
Ohio. Griffith's testimony painted Giller as the antagonist. Giller had been given
power of attorney for Stella in 2013. Stella, apparently unhappy with Giller, revoked
her power of attorney and gave it instead to Griffith. Griffith disputed much of the
content of the St. Paul Pioneer Press article, and she stated that Giller had stolen
jewelry from Stella. In addition, Griffith presented hearsay testimony that Stella told
her Hernandez had not forged her and her husband's signatures.




                                         -4-
       Hernandez lost his job in February 2009 and defaulted on the Loan that April.
General Mills charged off the Loan in May 2014. In March 2014, Hernandez filed for
Chapter 7 bankruptcy. General Mills filed an adversary proceeding in May to
determine the dischargeability of the debt from the Loan, arguing it should be
excepted from discharge for fraud under 11 U.S.C. § 523(a)(2)(A). The bankruptcy
court rejected Hernandez's res judicata, statute of limitations, and other defenses. In
determining whether Hernandez's debt was dischargeable for fraud, the bankruptcy
court placed great weight on the testimony of Cheryl Engh, the purported notary on
the 2005 POAs. She testified that she does not generally notarize documents, that the
signature on the 2005 POAs were not hers, and that she did not know the Hernandezes
or recall notarizing the 2005 POAs. The bankruptcy court admitted in evidence the
conflicting hearsay testimony of Giller and Griffith under Federal Rule of Evidence
807's residual hearsay exception, and it admitted the newspaper article over
Hernandez's counsel's hearsay objection. The bankruptcy court also admitted in
evidence Exhibit 2, a copy of the Loan agreement, which had been substituted for
Exhibit BB, an earlier, incomplete version of the Loan agreement. Exhibit 2 was a
complete version of the agreement that contained Hernandez's signature on his own
behalf, his signature on behalf of Joseph and Stella, and his initials. Exhibit BB
contained only Hernandez's signature on his own behalf. When Hernandez attempted
to introduce Exhibit BB at trial, the bankruptcy court sustained General Mills'
objection for lack of foundation, disclosure, and relevance.

      The bankruptcy court found by a preponderance of the evidence that General
Mills had met the elements necessary under § 523(a)(2)(A) to except the Loan from
discharge. Its conclusion was bolstered by the negative inference it drew from
Hernandez's invocation of his right not to incriminate himself under the Fifth
Amendment. This occurred when Hernandez was questioned about the fact that
Edward Thompson, who purportedly notarized the 2004 POAs, was also the name
Hernandez provided as that of a tenant in one of his rental properties in the 2004 loan



                                         -5-
application. When asked whether he had provided false information on the 2004 loan
application, Hernandez invoked the Fifth Amendment. Based on its findings and the
negative inference, the bankruptcy court excepted from discharge the debt from the
Loan, totaling $122,115.25 plus an annual interest rate of four percent. The district
court, with appellate jurisdiction under 28 U.S.C. § 158(a), affirmed, and Hernandez
now appeals.

II.   DISCUSSION

       Hernandez argues the bankruptcy court erred in rejecting his res judicata and
statute of limitations defenses, in making certain evidentiary rulings, and in finding
his debt nondischargeable under 11 U.S.C. § 523(a)(2)(A). As a general matter, we
review the decision of a bankruptcy court to deny discharge with the same standard
of review applied by the district court below, reviewing the bankruptcy court's factual
findings for clear error and its conclusions of law de novo. Waugh v. Eldridge (In re
Waugh), 95 F.3d 706, 710 (8th Cir. 1996). Our review is independent of the district
court's, although we may afford its decision persuasive weight. Id.

      A.     Res Judicata

        Hernandez argues the Ramsay County District Court's dismissal of Joseph and
Stella's fraud claims with prejudice, and the later stipulation dismissing claims
between codefendants without prejudice, precluded relitigation of the fraud issue in
the adversary proceeding. "[W]e review de novo the preclusive effects of a previous
state-court judgment on this federal case." Knutson v. City of Fargo, 600 F.3d 992,
995 (8th Cir. 2010). The bankruptcy court found that the language in the state court's
order reserving the parties' rights and remedies, and the dismissal of cross-claims
without prejudice, prevented the state court judgment from having preclusive effect
in the instant dispute. "The preclusive effect of a state court judgment in a subsequent



                                          -6-
federal lawsuit generally is determined by the full faith and credit statute," which
"directs a federal court to refer to the preclusion law of the State in which judgment
was rendered." Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380
(1985) (citing 28 U.S.C. § 1738). Thus, our preclusion analysis is guided by
Minnesota law.

       Hernandez set forth the defenses of both claim and issue preclusion in his
answer to General Mills' adversary complaint.4 Claim preclusion under Minnesota
law precludes the litigation of a claim "when litigation on a prior claim involved the
same cause of action, there was a judgment on the merits, and the claim involved the
same parties or their privies. In addition, the party against whom res judicata is
applied must have had a full and fair opportunity to litigate the matter in the prior
proceeding." Nelson v. Am. Family Ins. Grp., 651 N.W.2d 499, 511 (Minn. 2002)
(citations omitted). The issue here is whether the cross-claim by General Mills against
Hernandez for indemnity or contribution precluded future litigation on other claims
that could have been raised at that time. We need not parse through each element.
Because all claims between codefendants were dismissed without prejudice by
stipulation, there was no final adjudication on the merits. Minnesota Rule of Civil
Procedure 41.01(a)(2) allows for a plaintiff to voluntarily dismiss claims "by filing a
stipulation of dismissal signed by all parties who have appeared in the action." Rule
41.03 makes this provision applicable to cross-claims, and presumably "all parties"
in that context would refer to all potential cross-claimants. The stipulation filed here
was signed by all defendants and dismissed their interapplicable claims without
prejudice. As to whether a dismissal without prejudice under this rule operates as a
final adjudication on the merits, Rule 41.01(a) states:


      4
       Although the language of the bankruptcy and district courts' memoranda is
ambiguous, we presume they used the term "res judicata" in its broad sense
encompassing both claim and issue preclusion. See generally Migra v. Warren City
Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1 (1984).


                                          -7-
      Unless otherwise stated in the notice of dismissal or stipulation the
      dismissal is without prejudice, except that a notice of dismissal operates
      as an adjudication upon the merits when filed by a plaintiff who has once
      dismissed in any court of the United States or of any state an action
      based on or including the same claim.

The final, clarifying clause specifying when a dismissal by notice operates as a final
adjudication on the merits necessarily implies that, under Minnesota law, a dismissal
without prejudice by stipulation is not a final judgment. Hernandez has not pointed
us to any contrary authority. Therefore we affirm the bankruptcy court's rejection of
Hernandez's claim preclusion defense.

      Issue preclusion operates in Minnesota to preclude relitigation of an issue if

      1) the issue [is] identical to one in a prior adjudication; 2) there was a
      final judgment on the merits; 3) the estopped party was a party or was in
      privity with a party to the prior adjudication; and 4) the estopped party
      was given a full and fair opportunity to be heard on the adjudicated issue.

Care Inst., Inc.-Roseville v. Cty. of Ramsey, 612 N.W.2d 443, 448 (Minn. 2000). The
question here is whether the issue of Hernandez's having committed fraud was
litigated by him vis-à-vis his grandparents, thus precluding its being relitigated
between him and General Mills. Again, there was no final judgment on the merits.
While it is true the fraud claims were dismissed with prejudice for failure to prosecute,
such a dismissal operates as an adjudication upon the merits in Minnesota "[u]nless
the court specifies otherwise in its order." Minn. R. Civ. P. 41.02(c). Here, the state
court's order specifies otherwise, expressly stating that it does not affect the
defendants' rights and remedies "with respect to any liens, interest, mortgage,
promissory note or otherwise with respect to the relationships between them and/or
any interest in the property at issue in this case." Because General Mills' adversary
claim arises from its rights and remedies with respect to Hernandez's execution of a


                                          -8-
promissory note secured by the property at issue–Joseph and Stella's home–we
conclude there was no final adjudication of that issue and affirm the bankruptcy court
as to issue preclusion as well.5

       Hernandez also appears to argue that General Mills should be judicially
estopped from alleging the invalidity of the POAs because in the state court action it
denied the allegation that the signatures on the POAs were not those of Joseph and
Stella. But the doctrine of judicial estoppel, which incidentally has not been adopted
by Minnesota courts, Ryan Contracting Co. v. O'Neill & Murphy, LLP, 883 N.W.2d
236, 248-49 (Minn. 2016), applies where the estopped party has taken contrary
positions, Stallings v. Hussmann Corp., 447 F.3d 1041, 1047 (8th Cir. 2006). There
is nothing inconsistent in General Mills first declaring it is without sufficient
knowledge of the truth or falsity of the fraud allegation and denying it on that basis
and then alleging in a later action that it now believes fraud to have been committed.
We therefore reject this argument as well.




      5
        It is no answer to argue, as Hernandez does, that the dismissal with prejudice
of the fraud claims should preclude later litigation because that is the remedy General
Mills sought in its answer in the state action. That remedy was not a final judgment
on the merits.

       Hernandez also points to the stipulation, which stated that after dismissal of the
cross-claims without prejudice, "there are no longer any pending claims in this matter
and the case may be closed." He argues that this language demonstrates that the fraud
claim had been "resolved." If by "resolved" Hernandez means adjudged on the merits,
the stipulation demonstrates no such thing.


                                          -9-
      B.     Statute of Limitations

       Hernandez next argues that General Mills' fraud claims are barred by the statute
of limitations. Minnesota Statutes § 541.05 provides that "the following actions shall
be commenced within six years: . . . (6) for relief on the ground of fraud, in which
case the cause of action shall not be deemed to have accrued until the discovery by the
aggrieved party of the facts constituting the fraud." Although General Mills' 2014
adversary complaint was filed nine years after the alleged 2005 fraud, the bankruptcy
court concluded that General Mills did not discover the cause of action until Joseph
and Stella's lawsuit in 2009. That occurred five years before General Mills filed its
adversary complaint and therefore within § 541.05's six-year limitations period.

       Hernandez first argues that the testimony of a bank employee, Harry Charles
Ross III, did not establish when the bank became aware of the possibility of fraud. He
points to Ross's testimony that Ross only reviewed the 2005 loan documents a short
time before testifying in 2015 and that he was not present at closing. Hernandez
argues this shows a lack of foundation for Ross's testimony that the bank only became
aware of the fraud in 2009. Although this argument might have force if Ross
purported to testify as to the events at closing based on his personal observation, it
does not address Ross's undisputed familiarity with General Mills' practices and
procedures as they relate to record keeping and its reliance upon representations in
making loan agreements. That Ross's testimony that the bank relied on Hernandez's
affidavit was based on his knowledge of General Mills' general practices rather than
his personal observation of the closing may go to the weight the evidence is due, but
it does not render the testimony irrelevant. See Fed. R. Evid. 401 (setting forth test
for relevant evidence). This point also responds to Hernandez's argument that General
Mills failed to meet its burden of showing that it filed its action within the limitations
period. In light of the fact that Hernandez has not pointed to any countervailing
evidence, the bankruptcy court did not clearly err in finding that Ross's testimony



                                          -10-
established that the bank did not investigate the authenticity of the 2005 POAs at the
time of closing and did not have reason to do so until the 2009 lawsuit.

       Hernandez also argues that the discovery rule for fraud in Minnesota, as a
matter of law, contains a requirement that a party exercise reasonable diligence. As
stated by the Minnesota Supreme Court:

      [T]he facts constituting the fraud are deemed to have been discovered
      when, with reasonable diligence, they could and ought to have been
      discovered. The mere fact that the aggrieved party did not actually
      discover the fraud will not extend the statutory limitation, if it appears
      that the failure sooner to discover it was the result of negligence, and
      inconsistent with reasonable diligence.

Bustad v. Bustad, 116 N.W.2d 552, 555 (Minn. 1962) (quoting First Nat'l Bank of
Shakopee v. Strait, 73 N.W. 645, 646 (Minn. 1898)). But these and other cases cited
by Hernandez deal with instances where the plaintiff possessed information putting
him on notice of fraud. Strait concerned a bank note that the plaintiff bank alleged
had been fraudulently marked as paid, even though the note had been listed in the
bank's accounts receivable more than six years before the suit. 73 N.W. at 646.
Bustad concerned a claim that the defendant had fraudulently represented that
payment was forthcoming, but the defendant had more than six years earlier refused
to sign a waiver of the limitations period for a claim on the payment. 116 N.W.2d at
554. In Blegen v. Monarch Life Insurance Co., 365 N.W.2d 356, 357-58 (Minn. Ct.
App. 1985), the plaintiff was informed seven years prior to the action that the terms
of his company's pension plan were other than what an agent for the pension company
had represented to him, and in Buller v. A.O. Smith Harvestore Products, Inc., 518
N.W.2d 537, 542 (Minn. 1994), a farmer observed spoiled feed in a silo more than six
years prior to his claim against the silo dealer for fraudulent representations about the
silo's ability to prevent spoilage. As the court noted in Buller, "A plaintiff must



                                          -11-
exercise reasonable diligence when he or she has notice of a possible cause of action
for fraud." Id. (emphasis added). Here, Hernandez has not identified any evidence
in the record that General Mills should have been on notice that Hernandez was
possibly committing fraud at the time of the 2005 loan. In the absence of such
evidence, the limitations period did not accrue until such notice was presented in the
2009 complaint. We therefore affirm the bankruptcy court's rejection of Hernandez's
statute of limitations defense.

      C.     Evidentiary Rulings

        Hernandez challenges the bankruptcy court's admission into evidence of Giller's
and Griffith's hearsay testimony and the St. Paul Pioneer Press article, and its
exclusion of Exhibit BB. We review evidentiary rulings for an abuse of discretion
that is both clear and prejudicial, affecting a substantial right of the objecting party.
Weems v. Tyson Foods, Inc., 665 F.3d 958, 964 (8th Cir. 2011). The bankruptcy
court admitted the hearsay testimony of Giller–that Joseph and Stella told her that they
did not sign the 2004 or 2005 POAs–and of Griffith–that Stella told her Hernandez
did not forge her and Joseph's signatures–under Federal Rule of Evidence 807's
residual hearsay exception. It also admitted into evidence the St. Paul Pioneer Press
article over Hernandez's counsel's vigorous hearsay objection. The bankruptcy court
excluded Exhibit BB, the incomplete version of the Loan agreement, because Ross
could not confirm its authenticity, because it was not listed on the final exhibit list,
and because it was not relevant.

      While we harbor doubts about the propriety of the bankruptcy court's hearsay
rulings, we fail to see any prejudice Hernandez suffered as a result of them. The
bankruptcy court discredited Giller's testimony to some extent and admitted Griffith's
hearsay testimony contradicting Giller's. More fundamentally, the portion of the
bankruptcy court's ruling in which it set out its findings and the evidence supporting



                                          -12-
those findings makes no mention of the hearsay statements of Joseph and Stella.
Given the other evidence in the case supporting its findings and its absence of mention
of the hearsay statements, we conclude that the bankruptcy court did not rely on that
evidence and so its admission did not prejudice Hernandez. As to the exclusion of
Exhibit BB, we too fail to see the relevance of the evidence and affirm the bankruptcy
court.

      D.      Dischargeability Under § 523(a)(2)(A)

       Having dispensed with Hernandez's other arguments, we turn to the central
issue of the dischargeability of his debt. Section 523(a)(2)(A) of the bankruptcy code
excepts from discharge a debt for "an extension, renewal, or refinancing of credit, to
the extent obtained by . . . false pretenses, a false representation, or actual fraud." Id.
For a creditor to prevail under this exception, it must carry its burden of proving, by
a preponderance of the evidence, Grogan v. Garner, 498 U.S. 279 (1991), that a debtor
(1) made a representation, (2) with knowledge of its falsity, (3) deliberately for the
purpose of deceiving the creditor, (4) who justifiably relied on the representation, and
which (5) proximately caused the creditor damage. Heide v. Juve (In re Juve), 761
F.3d 847, 851 (8th Cir. 2014).6 Exceptions to discharge are to be construed narrowly.
Reshetar Sys., Inc. v. Thompson (In re Thompson), 686 F.3d 940, 944 (8th Cir. 2012).
"Whether a requisite element of a claim under § 523(a)(2)(A) has been satisfied is a
factual determination, which we review for clear error. A finding is clearly erroneous
if, after reviewing the entire evidence, we are 'left with the definite and firm

      6
       Because General Mills' adversary complaint alleges a knowing
misrepresentation by Hernandez, and because we affirm the bankruptcy court under
our standard § 523(a)(2)(A) elements, we do not have occasion to visit, and leave
open, the question of whether those elements should be broadened under the Supreme
Court's recent opinion in Husky International Electronics, Inc. v. Ritz, 136 S. Ct. 1581
(2016) (holding "actual fraud" in § 523(a)(2)(A) includes forms of fraud effected
without false representation).


                                           -13-
conviction that a mistake has been committed.'" R & R Ready Mix v. Freier (In re
Freier), 604 F.3d 583, 587 (8th Cir. 2010) (citation omitted) (quoting Anderson v.
Bessemer City, 470 U.S. 564, 573 (1985)). The only elements Hernandez offers
meaningful argumentation on are the second, third, and fourth.

             1.     Knowledge of the Falsity of the Representation

       Hernandez argues that his representation in the 2005 affidavit that he was the
attorney-in-fact for Joseph and Stella was not false. He argues that when he signed
the affidavit, its reference to the POAs signed on "March 8, 2005" was not present and
there was only a blank space. He argues that "March 8, 2005" was filled in later by
General Mills and that it was General Mills' practice to have the borrower sign a blank
form to be filled in later. Furthermore, Hernandez argues, the 2004 POAs were still
valid at that time–they were not revoked until 2008–and so his representation that he
was attorney-in-fact for his grandparents was a true representation.

       The problem with this argument is that Hernandez's factual assertion that the
form was blank, as well as his assertion that General Mills' practice was to have
borrowers sign blank documents, is based entirely on his own, uncorroborated
testimony. The bankruptcy court stated that based on its observation of the witnesses'
demeanor, tenor, and answers, it found Hernandez's testimony "just didn't quite ring
true," in part because it was Hernandez himself that benefitted from the $100,000 in
proceeds from the Loan. The trier's "credibility determinations are virtually
unreviewable on appeal." Story v. Norwood, 659 F.3d 680, 685 (8th Cir. 2011).
Further, there was sufficient evidence to permit the bankruptcy court's finding. In a
2008 written instrument, Stella revoked the authority "Never given" in the 2004 and
2005 POAs; Giller testified based on her personal knowledge that the signatures were
not those of Joseph and Stella and that it was not characteristic of them to travel
outside of their county for a notary; and Engh, a witness with no interest in the



                                         -14-
proceedings, completely discredited the notarization on the 2005 POAs. We think the
bankruptcy court was well within its discretion to find that Hernandez knowingly
made a false representation that under the 2005 POAs he was the attorney-in-fact for
Joseph and Stella.

             2.     Intent to Deceive

       Hernandez next argues that in order to prove intent General Mills must have
proven that Hernandez did not intend to perform his obligation to pay back the Loan.
Hernandez points out that he was current on his payments until he lost his job, and
that this shows he intended to pay the money back. We reject the premise of this
argument. The plain language of § 523(a)(2)(A) makes clear that Hernandez need
only have intended that the representation deceive the creditor, and that by this deceit
he "obtained" credit. 11 U.S.C. § 523(a)(2)(A). A borrower who fraudulently obtains
credit is not taken out of that provision simply because she intends to repay the loan.
See The Merchs. Nat'l Bank of Winona v. Moen (In re Moen), 238 B.R. 785, 791
(B.A.P. 8th Cir. 1999) ("All [the intent element] requires is a showing of an intent to
induce the creditor to rely and act on the misrepresentations in question." (quoting
Moodie-Yannotti v. Swan (In re Swan), 156 B.R. 618, 623 n.6 (Bankr. D. Minn.
1993))). The precedent Hernandez cites shows only that making a promise without
the intent to perform is sufficient to show the intent to engage in fraud, not that it is
necessary. Freier, 604 F.3d at 588. Hernandez used his representation to satisfy
General Mills of his authority and he used that purported authority to sign a loan
agreement. See Caspers v. Van Horne (In re Van Horne), 823 F.2d 1285, 1287 (8th
Cir. 1987) ("[T]he creditor may present evidence of the surrounding circumstances
from which intent may be inferred."), abrogated by Grogan, 498 U.S. 279. Having
found that Hernandez knowingly made the false representation to General Mills that
he was the attorney-in-fact for Joseph and Stella under the 2005 POAs, the bankruptcy




                                          -15-
court did not clearly err in further finding that by this representation Hernandez
intended to deceive General Mills so as to obtain credit.

             3.     Justifiable Reliance

        Finally, Hernandez argues that General Mills did not, in fact, rely on the 2005
POAs in deciding to extend credit to him, and that even if it did such reliance was not
justifiable. First, he points to testimony by Ross that General Mills' practice is to
require a borrower to sign documents upon which it relies, and he highlights the
absence of his specimen signature on the 2005 POAs. Although Hernandez
acknowledges that Minnesota law did not require the signature of an attorney-in-fact
on a POA form in 2005, he emphasizes that General Mills' policy, and general
business practice, is to require a signature. Hernandez also observes that he was not
required to provide a POA for the $30,000 loan. He reasons that both the $30,000
loan and the 2005 Loan were second mortgages and concludes that General Mills did
not generally require POAs for second mortgages. Therefore, he argues, General
Mills did not even require a POA to be executed, and if it did the absence of
Hernandez's signature was a "red flag" rendering its reliance unjustifiable.

       Importantly, justifiable reliance is a different standard than reasonable reliance.
Field v. Mans, 516 U.S. 59 (1995). "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." Id. at
71 (quoting Restatement (Second) of Torts § 545A cmt.B). Thus, a victim of fraud
is not justified in relying on a representation, and a duty to investigate arises, where
"the facts should be apparent to one of his knowledge and intelligence from a cursory
glance, or he has discovered something which should serve as a warning that he is
being deceived." Id. (quoting William Prosser, Law of Torts § 108 (4th ed. 1971)).




                                          -16-
       We conclude that the bankruptcy court did not clearly err in finding that
General Mills' reliance on Hernandez's representation was justifiable. Although
General Mills may have, as a general practice, sought a borrower's signature on loan
documents upon which it relied, the absence of signatures on the 2005 POAs was
mitigated by Hernandez's signed affidavit. We see nothing apparent in the documents
at issue or in any other record evidence indicating that a cursory glance would have
put General Mills on notice of fraud, triggering a duty on their part to investigate.
Further, the fact that a POA was not required for the $30,000 loan is not surprising as
that loan was taken out in Hernandez's name alone, whereas the bank required the
2005 Loan to be taken out in the names of Hernandez and his grandparents.

             4.     Whether the Debt was Dischargeable

       In sum, upon our review of the record as a whole, we see no clear error in the
finding that the debt was excepted from discharge under § 523(a)(2)(A). As indicated
above we find no error raised by Hernandez in the bankruptcy court's finding that the
elements of § 523(a)(2)(A) were met, and Hernandez has not challenged the
bankruptcy court's drawing of a negative inference from his invocation of the Fifth
Amendment right against self-incrimination. See Baxter v. Palmigiano, 425 U.S. 308,
317-18 (1976) (permitting silence to be used against inmate in noncriminal
disciplinary hearing, but not as sole basis for determination of guilt); Rosebud Sioux
Tribe v. A & P Steel, Inc., 733 F.2d 509, 521 (8th Cir. 1984) ("[T]he Supreme Court
has held that the Fifth Amendment does not preclude an adverse inference when the
privilege is claimed by a party to a civil case."). We therefore affirm the bankruptcy
court's finding that Hernandez's debt was not dischargeable.7



      7
       We do not rely on the portions of the district court's order contested by
Hernandez, particularly its finding that the 2004 POAs were also forgeries, and so do
not address Hernandez's argument on that issue.


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III.   CONCLUSION

       For the foregoing reasons, we affirm.
                       ______________________________




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