             IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT
                                           _______________

                                             m 99-50704
                                           Summary Calendar
                                           _______________

                In the Matter of:        MARSHA LYNN DEISON,
                                                                     Debtor.
               AT&T UNIVERSAL CARD SERVICES CORPORATION,
                                                                     Appellant,
                                                VERSUS

                                   MARSHA LYNN DEISON,
                                                                     Appellee.
                                    _________________________

                             Appeal from the United States District Court
                                  for the Western District of Texas
                                           (A-99-CV-267)
                                   _________________________

                                            January 18, 2000

Before SMITH, BARKSDALE, and                           Services Corporation (“Universal”) appealed
  PARKER, Circuit Judges.                              to the district court, which affirmed. We
                                                       affirm the decision of the district court.
JERRY E. SMITH, Circuit Judge:*
                                                                            I.
   Marsha Deison accumulated $3,971.05 in
cash-advance credit-card debt only a few days
before declaring bankruptcy.1 The bankruptcy
court found that her testimony rebutted the
statutory presumption that debt acquired in
this manner was accumulated without the
necessary intent to repay it, and it thus found
the debt dischargeable. AT&T Universal Card

   *
      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determined that this opinion should not be
published and is not precedent except under the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.
       1
       We present disputed facts in the light most
favorable to the verdict.
   Deison held a credit card issued by                         If you look at this case on paper, it
Universal, with a credit line of $4,500.00, from          definitely strikes one, and I can
July 26, 1994, until the beginning of 1998.               understand why it would strike Ms.
She made regular use of the card during most              Metz [the witness called by Universal],
of that period. In a four-day period from                 as being a case that should be
December 30, 1997, through January 2, 1998,               investigated and pursued, because within
however, she made four cash-advance                       30 days of bankruptcy you have $3900
withdrawals, totaling $3,903.50.              On          being taken in cash advances when that,
December 30, 1997, she took $400.00 through               one, never happened before and, two, it
two cash-advance transactions of $200.00.                 was out of line with what one would
The following day, she took $3,200.00 in cash             expect in view of the debtor’s income.
through an advance at a bank. On January 2,
1998, she took an additional $300.00 in cash.          Nonetheless, the court entered judgment for
                                                       Deison and dismissed the complaint, finding
                                                       that she intended to pay off the cash-advance
   This spree represented a substantial                withdrawals, thus rebutting the presumption
increase in activity from previous months and          that her withdrawals were fraudulent and
a change in Deison’s buying and spending               defeating Universal’s attempt to prove actual
habits. Although her income had declined in            fraud.
1996 by $7,000 from the prior year, it
remained constant in 1996, 1997, and during                                    III.
the first month of 1998. As of the filing date,           The bankruptcy court’s conclusions of law
her net monthly income was $1,806.78.                  are reviewed de novo. Young v. National
                                                       Union Fire Ins. Co., 995 F.2d 547 (5th Cir.
   From 1996 through January 1998, Deison              1993) (citing Allison v. Roberts, 960 F.2d 481
made $21,423.80 in merchandise purchases               (5th Cir. 1992)). The bankruptcy court’s
and cash advances on her various credit cards          findings of fact are binding on the district court
“to help make ends meet.” As of the filing             and this court unless clearly erroneous. When
date, her monthly expenses were $1,924.46              the bankruptcy court’s determination has been
without regard to her credit card obligations,         approved by the district court, we do not
and her liabilities were $36,668.80.                   disturb it except for the most cogent reasons.
                                                       See Boydston v. Sears, Roebuck & Co. (In re
    Deison testified that she used the cash-           Boydston), 520 F.2d 1098, 1100 (5th Cir.
advance funds primarily to pay off other bills,        1975). Harmless error does not constitute a
bills that she had previously been servicing by        valid basis for reversal. FED. R. CIV. P. 61.
drawing down her savings and a small
inheritance. She claimed never to have
realized the extent of her financial problems
and said she intended, at the time she took the
$3,900 in cash advances, to repay it.

   Deison met with a professional credit
counselor on or about January 17 to discuss
her financial situation, and, on January 19, she
met with her bankruptcy attorney. On January
26, 1998, she filed a petition for relief under
chapter 7.

                    II.
   The bankruptcy court stated the following:


                                                   2
                        IV.                              his creditors].’” Rawoot, id. at *4 (brackets in
    Section 523 of the Bankruptcy Code details           original).
the circumstances in which certain debts will
not be discharged in bankruptcy, among them                 A number of bankruptcy courts have dealt
being debt accrued “for money, property,                 with this question. In Orecchio, the court
services, or an extension, renewal or                    analyzed the legislative history of
refinancing of credit, to the extent obtained by         § 523(a)(2)(C) and concluded that it
false pretenses, a false representation, or actual
fraud, other than a statement respecting the                seems to indicate that a debtor needs to
debtor’s or an insider’s financial condition.”              do much more than simply present
11 U.S.C. § 523 (a)(2)(A). With regard to                   evidence which could support a contrary
certain types of credit card debt, the Code                 result.    Rather, the debtor must
makes a special provision:                                  demonstrate non-fraudulent intent in
                                                            connection with that obligation. Such
   [F]or purposes of [11 U.S.C.                             evidence need not be of the same clear
   § 523(a)(2)(A)], consumer debts owed                     and convincing nature as the creditor is
   to a single creditor and aggregating                     required to show to invoke the
   more than [$1,075] for “luxury goods or                  presumption, but the Debtor’s rebuttal
   services” incurred by an individual                      evidence must raise a substantial doubt
   debtor on or within 60 days before the                   in the mind of the trier of fact as to the
   order for relief under this title, or cash               existence of the presumed intent.
   advances aggregating more than
   [$1,075] that are extensions of                       Orecchio, 109 B.R. at 289-90. Similarly, in
   consumer credit under an open end                     J.C. Penney Co. v. Leaird (In re Leaird),
   credit plan obtained by an individual                 106 B.R. 177, 180 (Bankr. W.D. Wis. 1989),
   debtor on or within 60 days before the                the court said, “To rebut a presumption of
   order for relief under this title, are                fraudulent intent under 11 U.S.C.
   presumed to be nondischargeable.                      §523(a)(2)(C), the debtor must directly attack
                                                         the presumed fact with sufficient evidence to
11 U.S.C. § 523(a)(2)(C).                                support a finding that the fraudulent intent did
                                                         not exist.”2
   It is undisputed that the debt Deison
accrued through her cash-advance withdrawals
qualified, under this section, as presumptively
nondischargeable. The bankruptcy court,
however, found that the evidence in the record
overcame the presumption.

   As Universal admits, no published circuit
court opinion has discussed the presumption
created by § 523(a)(2)(C) or the quantum of
proof necessary to rebut it. In an unpublished
opinion, however, in Signet Bank/Va. v.
Rawoot, 1993 U.S. App. LEXIS 32091 (4th
Cir. Dec. 10, 1993) (citing FCC Nat’l Bank
Card v. Orecchio (In re Orecchio), 109 B.R.
285 (Bankr. S.D. Ohio 1989)), the court held               2
                                                            See also Chase Manhattan Bank v. Sparks (In
that “[t]o rebut this presumption, Mr. Rawoot            re Sparks), 154 B.R. 766 (N.D. Ala. 1993);
was required to ‘raise [] a substantial doubt in         Central Fidelity Nat’l Bank v. Powell, 213 B.R.
the mind of the [bankruptcy judge] as to the             306 (Bankr. W.D. Va. 1997); Bank One Lafayette,
existence of the presumed intent [to defraud             N.A. v. Larisey (In re Larisey), 185 B.R. 877, 881
                                                         (Bankr. M.D. Fla. 1995).

                                                     3
   In AT&T Universal Card Servs. v.                           particular case adheres to the rule
Ellingsworth (In re Ellingsworth), 212 B.R.                   doesn’t establish the debtor’s intent . . . .
326 (Bankr. W.D. Mo. 1997), the court used                    It is insufficient for a debtor to simply
language of particular relevance to this case:                state that he always planned to pay the
                                                              money back “somehow” (we have a
   The legislative history of section                         mental image of cash suddenly falling
   523(a)(2)(C), however, indicates that                      from the skies, like manna from heaven).
   Congress intended for a debtor to do                       If the debtor has no idea how the money
   more than simply present evidence that                     will get paid back, or if it will get paid
   could support a contrary result.                           back, then he may hope to repaySShe
   Congress was concerned with what it                        may even want to repaySSbut he
   considered egregious conduct on the                        certainly does not intend to repay.
   part of debtors who incurred debt at a
   point when their insolvency should have                 Melançon, 223 B.R. at 318, 321.
   been obvious. In Orecchio the Court,
   therefore, held that a debtor must offer                   Taken together, these cases suggest that the
   substantial and believable evidence                     bankruptcy court should have looked for
   contrary to the presumed intent in order                “substantial evidence” that the debtor did not
   to demonstrate non-fraudulent intent.                   intend to defraud by her cash-advance
   Otherwise, the usefullness [sic] of the                 withdrawals in the sixty days before filing
   presumption in section 523(a)(2)(C) is                  bankruptcy and that a completely unsupported
   destroyed.                                              assertion of lack of intent will not suffice. We
                                                           then review the bankruptcy court’s finding of
Ellingsworth, 212 B.R. at 340-41 (footnotes                substantial evidence for clear error.
omitted). Courts have also recognized that in
attempting to ascertain a debtor’s subjective                  Deison did aver that she did not intend to
intent, the debtor’s testimony is of no                    fail to pay back the cash advances; the
probative value. “[S]ince a debtor will rarely             bankruptcy court believed her. Facts in the
admit a lack of intention to repay, such intent            record support that belief.
must be inferred from the totality of the
circumstances of the case at hand.” Chevy
Chase Bank FSB v. Kukuk (In re Kukuk), 225
B.R. 778, 786 (B.A.P., 10th Cir. 1998). 3 As
the court said in LA Capitol Fed. Credit Union
v. Melançon (In re Melançon), 223 B.R. 300
(Bankr. M.D. La. 1998),

   no debtor is going to take the stand and
   testify against himself. Every debtor in
   a Section 523(a)(2)(A) action involving
   cash advances is going to say that he
   intended to repay the money. Given that
   this is an inflexible rule of nature, the
   fact that one particular debtor in one

  3
    See also Citibank (S.D), N.A. v. Eashai (In re
Eashai), 87 F. 3d 1082, 1087 (9th Cir. 1996)
(“Since a debtor will rarely admit to his fraudulent
intentions . . . .”); AT&T Universal Card Servs.
Corp. v. Rembert, 14 F. 3d 277, 282 (6th Cir.
1998).

                                                       4
     Reading the record in the light most             many of the ways in which others have
favorable to the finding, we conclude that            attempted to determine whether fraudulent
Deison, a relatively unsophisticated consumer,        intent exists suggest that Deison has shown
had always paid at least the minimum balance          none. Even with reference to these factors, we
on her credit cards before her bankruptcy,            might, de novo, have come to a different
even as she accrued over $21,000 in debt in a         decision than did the bankruptcy court about
little more than a year. This evidences her           whether Deison’s story created substantial
intention to continue servicing her debt              doubt of intent. That court, however, did not
without fail and suggests that she might have         clearly err.
been totally unaware that she had “run out of
rope.” Too, Deison was employed; she was                                     V.
not entirely bereft of income. Moreover, her              Universal also argues that, even if Deison is
uncontroverted testimony was that she used            found to have rebutted the presumption that
the funds withdrawn to satisfy other                  her cash-advances worked fraud, it made, as a
liabilitiesSSnot to purchase luxury goods or          matter of law, the case for fraud, which would
make other frivolous uses of the funds.               still render the debt undischarged under
Finally, it appears that the transactions had         § 523(a)(2)(A). A showing of fraud requires
been completed for three weeks before Deison          a showing of intentSSthe same intent that the
consulted a consumer-credit specialist, who           bankruptcy court found lacking when it found
apparently alerted her to the precariousness of       that Deison had rebutted the § 523(a)(2)(C)
her position.                                         presumption. For the same reasons, we
                                                      conclude the bankruptcy court did not clearly
    In Anastas v. American Sav. Bank, 94 F.3d         err in finding that Deison lacked the requisite
1280, 1284 n.1 (9th Cir. 1996), one of the            intent necessary to have committed fraud
cases to which Universal points in support of         under § 523(a)(2)(A).
its position, the court notes a list of non-
exclusive factors that might be considered in                              VI.
determining whether there is intent to repay:            Universal contends that the bankruptcy
                                                      court applied the wrong law in determining
   (1) the length of time between the                 whether Deison committed fraud against
   charges made and the filing of                     Universal, and the wrong finding of intent in
   bankruptcy; (2) whether or not an                  analyzing the fraud. To the extent that
   attorney has been consulted concerning             Universal has demonstrated error, however, it
   the filing of bankruptcy before the                has not established harm.
   charges were made; (3) the number of
   charges made; (4) the amount of the                    In the beginning of its review of applicable
   charges; (5) the financial condition of            law, the bankruptcy court stated that "[t]he
   the debtor at the time the charges were            state law definition of fraud generally is a
   made; (6) whether the charges were                 representation knowingly made, knowingly
   above the credit limit of the account; (7)         false, with the intent that the other party rely
   whether the debtor made multiple                   upon it and that they are damaged as a result
   charges on the same day; (8) whether or            of that reliance."        In determining the
   not the debtor was employed; (9) the               nondischargeability of a debt, federal common
   debtor’s prospects for employment; (10)            law, not state law, controls. In Field, the
   the financial sophistication of the debtor;        Court stated that “[w]e construe the terms in
   and (12) whether the purchases were                § 523(a)(2)(A) to incorporate the general
   made for luxuries or necessities.                  common law of torts, the dominant consensus
                                                      of common-law jurisdictions, rather than the
Id. (citing Eashai, 87 F.3d at 1087-88). While        law of any particular State.” Field, 516 U.S.
we have no intention of adopting this twelve-         at 70 n.9. The Court then explained that "the
part test as determinative, we do note that           most widely accepted distillation of the

                                                  5
common law of torts was the Restatement                 This is no legal fiction.
(Second) of Torts (1976) . . . ." Id. at 70.
                                                     Melançon, 223 B.R. at 307-08, 311, 316.
   Universal then points us to Melançon, in          Thus, in conformity with the Restatement, the
which the bankruptcy court reviewed the              use of the credit card, be it for a cash advance
application of the Restatement to                    or a purchase, is conduct that constitutes a
§ 523(a)(2)(A).                                      representation that "I will repay the loan."

  Section 525 of the Restatement                        All of this is true, but all of it illustrates why
  provides: One who fraudulently makes               the bankruptcy court’s application of the
  a misrepresentation of fact, opinion,              wrong law of frauds worked no harm.
  intention, or law for the purpose of               Universal points us to Melançon to
  inducing another to act or to refrain              demonstrate that, had the bankruptcy court
  from action in reliance upon it, is subject        employed the Restatement standard, it would
  to liability to the other in deceit for            have realized that taking a cash advance
  pecuniary loss caused to him by his                implicitly makes the “I will repay”
  justifiable reliance upon the                      representation. Of course, the bankruptcy
  misrepresentation . . . . [T]hat the use           court noted that
  of a credit card to obtain a cash advance
  included with it a promise that the party                  I believe the credit card agreement
  obtaining the cash advance would pay                  makes it clear that the credit card holder
  the money back . . . .                                makes an express . . . statement they will
                                                        in fact repay the debt, and that what
       According to the Restatement                     courts have said is that in order to curb
  (Second) of Contracts, a promise is a                 real abuses . . . there should be layered a
  manifestation of an intention to act or               presumed intention that the party is
  refrain from acting. The Restatement of               acting in good faith, that is, that not only
  Torts states that a promise automatically             do you have an express statement that “I
  includes an assertion that the party                  intend to repay it,” but that on top of
  making the promise intends to fulfill it.             that the facts and circumstances of that
  The credit card agreement, then, can be               particular debtor are such at that time
  viewed as a contract that sets forth                  that that is a reasonable belief. I think
  certain agreed terms for future contracts             that’s pretty much where the law sits.
  that are contemplated by the parties. If
  a credit card holder decides to exercise           Thus, though the bankruptcy court applied the
  his rights under the agreement and                 wrong law of fraud, that error was harmless,
  borrow some money, he can do so                    because the court performed the same
  without waiting for bank approval, and             functional analysis that Universal would have
  without paperwork. He simply goes to               had it apply under the Restatement’s definition
  the nearest ATM, puts in this card,                of fraud.
  pushes a few buttons, and takes his cash
  .....                                                  Universal also argues that the bankruptcy
                                                     court erred in that it mentioned that “I do
       But a loan is still a loan . . . . When       think that . . . . Ms. Deison did not have any
  the card holder inserts the card into an           contemplation of filing a bankruptcy petition
  ATM, he is, in one step, asking for a              until after this transaction took place.”
  loan and promising to repay it if it is            Universal points out that the intent analysis to
  obtained . . . . Inherent in any request           be undertaken is whether the debtor intended
  for a loan, in any making of a loan by             to repay the loan, not whether he intended to
  two parties, is a promise by the                   file bankruptcy. The cases cited above support
  borrower to repay the money borrowed.              this position. The bankruptcy court’s error

                                                 6
was one of locution rather than analysisSSit
simply misspoke.

    This is shown by the court’s statement that
“there should be layered a presumed intention
that the party is acting in good faith, that is,
that . . . you have an express statement that
‘I intend to repay it.’” This passage illustrates
that the court was well aware of the proper
standard when it explicated the relevant legal
analysis.

   Finally, Universal points to the
Restatement, § 530, Comment d, and to
Boydston, which acknowledge that, in the
words of the Restatement, “[f]radulent intent
may, however, be proved by circumstantial
evidence. Thus, an intent not to pay for goods
purchased may be shown by the promisor’s
insolvency.” RESTATEMENT (SECOND) OF
TORTS § 530, cmt. d. (1976); see Boydston,
520 F.2d at 1101. From this, Universal
concludes that “as Ms. Deison could not
afford to repay her debts the trial court should
have, as a matter of law under the Restatement
of Torts, inferred that she did not intend to
repay the debt.”

    We disagree with this logic; that insolvency
may be used to demonstrate intent not to
repay certainly does not require the
conclusion, as a matter of law, that a consumer
debtor who borrows when insolvent has
committed fraud. Such a requirement would
in fact render the § 523(a)(2)(C) presumption
unrebuttable, because almost all consumer
debtors are going to be technically insolvent in
the days before their declaration of
bankruptcy. This is not the law.

   AFFIRMED.




                                                    7
