UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: STEPHEN MICHAEL CULLEN,
Debtor.

DYNAMIC CERAMIC TILE,
INCORPORATED,
Plaintiff-Appellant,
                                                               No. 97-1031

v.

STEPHEN MICHAEL CULLEN, a/k/a
Steve Cullen, a/k/a S. M. Cullen
and Associates,
Defendant-Appellee.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CA-96-2786-AW, BK-95-13317-PM, AP-95-1A381)

Argued: June 3, 1997

Decided: November 21, 1997

Before RUSSELL, MURNAGHAN, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

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COUNSEL

Keith R. Havens, ROLLE & HAVENS, Cabin John, Maryland, for
Appellant. Michael G. Wolff, GOREN, HOFBERG & WOLFF,
Rockville, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Dynamic Ceramic Tile, Inc. (Dynamic), a creditor in a bankruptcy
proceeding, appeals the district court's judgment affirming a bank-
ruptcy court's order dismissing Dynamic's complaint to have a debt
declared nondischargable under 11 U.S.C. § 523(a)(2) (1994).
Dynamic contended that the debt owed by the debtor, Stephen Cullen,
should not be discharged because of a fraudulent representation by
Mr. Cullen. Finding no reversible error, we affirm.

The president of Dynamic, Timothy Hughes, dated Stephen and
Deborah Cullen's daughter from 1990-1994. During this period of
time, Hughes arranged for Dynamic to loan Mr. Cullen, without a
promissory note or interest, approximately $37,000 for various busi-
ness ventures and personal expenses. The checks from Dynamic were
deposited into Mr. Cullen's business checking account; however, at
least one check was deposited into the Cullens' joint checking
account.

Even though Hughes stopped dating the Cullens' daughter in 1994,
Hughes maintained a cordial relationship with Mr. Cullen. Because
Mr. Cullen failed at his business ventures and discussed the possibil-
ity of filing bankruptcy, Hughes decided to sue both Stephen and
Deborah Cullen in an effort to collect the $37,000 owed to Dynamic.
Eventually, Dynamic agreed to release Mrs. Cullen from the lawsuit
if Mr. Cullen signed a promissory note for $40,500. Additionally, Mr.
Cullen gave assurances through his attorney that he had no intention
of filing bankruptcy. After Mr. Cullen signed the promissory note, the
suit was dismissed with prejudice.

Approximately six weeks later, Mr. Cullen filed for bankruptcy
under Chapter 7 of the bankruptcy code after making only one pay-
ment on the promissory note. Dynamic filed a complaint to determine

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the dischargability of the debt. Dynamic argued that the debt should
not be discharged because Cullen fraudulently entered into the prom-
issory note. Cullen contended that he had intended to pay the full
amount of the note, but he lost his job after signing the note and that
period of unemployment forced him into bankruptcy. The bankruptcy
court found that Dynamic failed to establish its claim of fraud or mis-
representation by a preponderance of evidence and granted judgment
in favor of Cullen. On appeal, the district court affirmed the judgment
of the bankruptcy court. Dynamic now appeals the district court's
decision to this court.

On appeal of a bankruptcy matter from the district court, we evalu-
ate the bankruptcy court decision directly, without being bound by the
district court's determinations.1 The bankruptcy court's findings of
fact are reviewed for clear error,2 and findings of fact are clearly erro-
neous "when, although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and firm convic-
tion that a mistake has been committed."3 Additionally, we review the
bankruptcy court's conclusions of law de novo.4

A debt will be excepted from discharge if a creditor establishes by
a preponderance of the evidence that he reasonably relied on a false
representation or actual fraud by a debtor.5 To satisfy this burden,
Dynamic must establish: (1) that Cullen made a representation; (2)
that Cullen knew at the time that the representation was false; (3) that
Cullen made the representation with the intent to deceive Dynamic;
(4) that Dynamic relied upon the representation; and, (5) that
Dynamic suffered damages as a proximate result of the representation.6
While the district court assumed that Dynamic met the first four of
_________________________________________________________________
1 See In re Charfoos, 979 F.2d 390 (6th Cir. 1992); In re Weiss, 111
F.3d 1159 (4th Cir. 1997), petition for cert. filed, ___ U.S. ___, 66
U.S.L.W. 3171 (U.S. Aug. 18, 1997) (No. 97-366).
2 See In re Varat Enters., Inc. , 81 F.3d 1310, 1314 (4th Cir. 1996).
3 See In re Green, 934 F.2d 568, 570 (4th Cir. 1991).
4 See In re Bryson Properties, XVIII, 961 F.2d 496, 499 (4th Cir. 1992).
5 See 11 U.S.C. § 523(a)(2)(A) (1994).
6 See In re Eashai, 167 B.R. 181, 183 (9th Cir. BAP 1994), aff'd, 87
F.3d 1082 (9th Cir. 1996).

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these requirements, it found that Dynamic failed to establish by a pre-
ponderance of the evidence that it met the fifth--suffered tangible
damages as a result of Cullen's misrepresentation.

On appeal, Dynamic argues that mere forbearance of exercising its
legal remedies constitutes loss. Dynamic alleges that it might have
been successful in pursuing its questionable claim against Mrs. Cullen
based upon the idea that she benefited from the loans and because one
of the loan checks was deposited into the Cullens' joint checking
account. However, we agree with the district court that the bankruptcy
court's finding that Dynamic suffered no damage when they gave up
a dubious claim against Mrs. Cullen was not clearly erroneous. Mrs.
Cullen was never a party to any of the transactions between Dynamic
and Mr. Cullen, nor does an agency relationship exist between hus-
band and wife. She was not involved in her husband's business ven-
tures, and Dynamic did not produce any evidence that she used or
benefited from the loans to her husband. Therefore, we do not find
that the bankruptcy court erred in concluding that Dynamic failed to
meet its burden to establish false representation under the bankruptcy
code. Accordingly, we affirm the order of the district court affirming
the bankruptcy court's judgment.

AFFIRMED

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