The opinion of the court was delivered by: Judge Vanaskie
Mr. Joseph Burns entered into a construction contract with Mrs. Erma Malo to remodel areas of her home. A dispute arose between the parties as to who was responsible for obtaining the necessary building permits. Because the permits were never obtained, a stop work order was issued by the local borough officer. Subsequently, Mr. Burns filed for bankruptcy, and Mrs. Malo was listed by Burns as an unsecured creditor. Mrs. Malo filed suit to have the debt deemed non-dischargeable under 11 U.S.C. § 523(a)(2)(A).*fn1 After a two day trial,*fn2 the United States Bankruptcy Court for the Middle District of Pennsylvania found that the debt was non-dischargeable.
Mr. Burns appealed.*fn3 For the reasons that follow, this Court will affirm.*fn4
As revealed in the Bankruptcy Judge's Opinion, a copy of which is attached to the Appellee's Brief (Dkt. Entry 11),*fn5 Mrs. Erma Malo, an 86 year-old widow who lives in Clarks Green, Pennsylvania, pursued this action after paying Mr. Burns $37,518.00 for his services. Her daughter, Christine Malo, was living with her at all relevant times in this action as she was recovering from surgery.
Mr. Burns has worked in the construction industry for the past 40 years. He has worked on a wide array of construction projects.
Around late November, 2006, Erma Malo and Mr. Burns entered into negotiations to build a sunroom above Mrs. Malo's garage. Christine Malo participated in the negotiations, aiding her mother who has hearing impairments. During the negotiations, Burns said that he was a licensed contractor who had participated in numerous projects in the Wilkes-Barre area. Additionally, he showed the Malos a glossy pictorial binder of various commercial buildings he had worked on, and told Mrs. Malo he would take care of the entire project. Moreover, Burns represented that he would acquire the architectural plans that were necessary to obtain the building permits from the Clarks Green Borough. Subsequently, around December 15, 2006, Erma and Christine Malo signed a contract prepared by Burns, and Erma Malo tendered a $1,000.00 check.
Difficulties were encountered in completing the project. Although expressing dissatisfaction with the quality of the work, Mrs. Malo tendered "progress payments" to Mr. Burns that totaled $37,518 when work on the addition was halted by a borough official.
The work suspension was based upon the absence of a building permit for the construction work. Christine Malo and her friend, David Jacobosky, related that they confronted Burns multiple times about the permit. Each time Burns had an excuse, either claiming that the paper work was in the process of being completed, or he was waiting on the architect to finish the drawings. A subcontractor for Mr. Burns on the project, Robert William Shaffer, stated that he addressed the building permit issue with Burns. First, Burns told Shaffer he had the permit, but later stated that he was waiting for the homeowner to obtain the proper permits. Notably, the evidence indicated that Code Enforcement Officer Willard Ziesemer, the sole permit officer in Clarks Green, never met nor spoke with Burns.
On January 15, 2007, Code Enforcement Officer Ziesemer sent Erma Malo a letter warning her that she was violating Pennsylvania's Uniform Construction Code and various local ordinances by undertaking construction without a permit. Not comprehending the import of the letter, Mrs. Malo placed the correspondence with other construction related paper work. Around February, 2007, Christine Malo came across the letter, and initiated a meeting with the code enforcement officer. Also, Christine Malo called Burns and demanded that he produce the building permit. On February 26, 2007, the Malos met with Code Enforcement Officer Ziesemer. He provided the Malos with the appropriate permit paperwork, and issued a stop work order until a permit was obtained.
Erma Malo filled out her portion of the permit application. Mr. Burns, however, refused to return multiple messages left for him by Christine Malo, and never completed his portion of the permit application. The relationship further deteriorated, and, in March 2007, the Malos prohibited Burns from entering Mrs. Malo's property in order to complete the project.
Concluding that the evidence established fraudulent conduct on the part of Mr. Burns and justifiable reliance by Mrs. Malo that resulted in financial loss, the Bankruptcy Judge, without finding a specific amount of loss, held that Mr. Burns's indebtedness to Mrs. Malo was not dischargeable under 11 U.S.C. § 523(a)(2)(A). Mr. Burns now appeals, arguing that the Bankruptcy Court erred in finding any indebtedness he may have to Mrs. Malo to be non-dischargeable.
The standard of review of the Bankruptcy Court's decision is well-established. This Court reviews findings of fact for clear error. Fed. R. Bankr. P. 8013; In re CellNet Data Systems, Inc., 327 F.3d 242, 244 (3d Cir. 2003). "We review legal conclusions de novo and mixed questions of law and fact under a mixed standard, affording a clearly erroneous standard to integral facts, but exercising plenary review of the lower court's interpretation and ...