
USCA1 Opinion

	




                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 97-1510                   GENERAL ELECTRIC MORTGAGE INSURANCE CORPORATION,                                      Appellant,                                          v.                                   PETER M. BELLI,                                      Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Nathaniel M. Gorton, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                           Selya and Boudin, Circuit Judges,                                             ______________                          and Dowd,* Senior District Judge.                                     _____________________                                 ____________________            Richard W.  Gannett with whom  Gannett & Associates  was on  brief            ___________________            ____________________        for appellant.            Harland L. Smith for appellee.            ________________                                 ____________________                                  December 10, 1997                                 ____________________                                    ____________________        *Of the Northern District of Ohio, sitting by designation.                 Per  Curiam.   The General  Electric Mortgage  Insurance                 ___________            Corporation ("GEMIC") appeals from the district court's order            affirming the refusal of the bankruptcy court to declare non-            dischargeable  because of fraud a debt owed to it by Peter M.            Belli.   11 U.S.C.     523(a)(2)(A)-(B).   Unfortunately  for            GEMIC,  the facts  now relied  upon  to show  fraud were  not            proved  at trial in  the bankruptcy  court.   Accordingly, we            affirm.                 GEMIC  insured  loans   for  the  First  Mark   Mortgage            Corporation  of Emerald Isle,  North Carolina ("First Mark"),            which in  1990 lent  Belli $126,800,  secured by  a mortgage.            Belli defaulted.  GEMIC made good the deficiency, First  Mark            assigned  its rights to GEMIC, and GEMIC  in turn won a state            court judgment against Belli on October 20, 1993, for the sum            of $58,719.08, the principal amount still owed to GEMIC after            the  foreclosure sale of  the mortgaged property.   Belli did            not  pay this  sum  but instead  filed  for bankruptcy  under            Chapter 7 on February 18, 1994.                 On  May 27,  1994, GEMIC  filed  a complaint  asking the            bankruptcy court to declare the debt non-dischargeable on the            ground that Belli had lied on his loan application concerning            the  terms   of  his  employment   and  the  amount   of  his            liabilities;  the complaint  did not  assert  that Belli  had            overstated  his assets.  After  some discovery, a bench trial            was held  on July  19, 1995, which  consisted largely  of the                                         -2-                                         -2-            direct examination  and cross-examination  of Belli,  who was            the only witness to testify.   The bankruptcy court dismissed            GEMIC's  complaint and later denied GEMIC's motion for relief            from final  judgment.   GEMIC appealed  these rulings  to the            district court, which affirmed.                 On  appeal, GEMIC tells us that Belli's loan application            overstated   his  gross   monthly  income,   understated  his            outstanding  debts,  and--most  important--misrepresented his            ownership  interest in  certain assets.    Belli had  claimed            ownership  of two  parcels of  land  valued at  $435,000; but            GEMIC now tells us that  Belli had previously lost one parcel            due to foreclosure  and had conveyed most of  his interest in            the  other, so  that his  equity  in the  two properties  was            actually approximately $250.                 Had  GEMIC proved  at trial  the misrepresentations  now            described,  it would have  gone far  toward proving  that the            judgment earlier  won  by GEMIC  was non-dischargeable  under            section 523.   We were surprised  therefore to discover  that            the  trial  record does  not  contain  proof  of the  alleged            misrepresentations.   Instead, it shows that the only witness            called  was Belli  himself  who,  although vigorously  cross-            examined by  GEMIC counsel, declined  to admit that  his loan            application was materially false.                 To explain the absence of  proof, GEMIC says that one of            its own  witnesses was unexpectedly  unavailable; but  absent                                         -3-                                         -3-            extreme  circumstances, refusal  to defer  a scheduled  trial            where a party fails  to produce its own witness is within the            sound discretion of  the trial court.   GEMIC also  complains            that  the district  court refused  to enforce  a subpoena  to            require  Belli's  former  employer to  appear  at  trial with            records as to Belli's former  salary; but GEMIC had sought to            serve the subpoena only the  day before trial and the witness            was  out  of  state.    GEMIC  had  failed  to  preserve  the            employer's testimony by deposition.                 GEMIC next says that Belli did not adequately respond to            discovery;  specifically,  he  failed  to  produce  prior tax            returns, saying they had been  lost.  But GEMIC itself waited            until the last day to submit its discovery requests and, more            important, did  not complain to  the trial  court until  five            days before trial  even though it  had had Belli's  responses            for a month.  Nor did GEMIC move in timely fashion  to compel            Belli to sign an authorization so that it could itself secure            the tax documents from the Internal Revenue Service.                 As  for   the  misrepresentations   concerning  property            ownership, it appears that GEMIC did not discover these facts            until a title search was  performed after trial.  The results            were  the basis  for  GEMIC's motion  for  relief from  final            judgment.   But  GEMIC  has  never explained  why,  with  due            diligence,  it could not have discovered the same information            prior to trial.  In  these circumstances, the trial court was                                         -4-                                         -4-            certainly not obliged  to let GEMIC reopen matters  to repair            the record.                 This case involved a relatively small sum for GEMIC and,            even  if   it  had   prevailed  in   making  the   debt  non-            dischargeable, it  might never have  seen a  penny.   Perhaps            this  justified it  in  stinting  on  trial  preparation  and            gambling that Belli  might be forced on  cross-examination to            admit the  necessary facts.   But having gambled and  lost in            the trial court, GEMIC cannot expect rescue on appeal.                 Affirmed.                 ________                                         -5-                                         -5-
