United States Court of Appeals,

                            Fifth Circuit.

                             No. 95-50213

                           Summary Calendar.

 In the Matter of Robert William NORRIS and Emily Waller Norris,
Debtors.

                Robert William NORRIS, Appellant,

                                  v.

            FIRST NATIONAL BANK IN LULING, Appellee.

                             Dec. 4, 1995.

Appeal from the United States District Court for the Western
District of Texas.

Before POLITZ, Chief Judge, and DUHÉ and PARKER, Circuit Judges.

     POLITZ, Chief Judge:

     Robert William Norris, a Chapter 7 bankruptcy debtor, appeals

the district court's ruling that his debt to the First National

Bank in Luling is not dischargeable in bankruptcy.    Perceiving no

error in the finding that this debt falls within the exception to

dischargeability provided in 11 U.S.C. § 523(a)(2)(B), we affirm.

                              Background

     In separate transactions in 1985 and 1986 Norris and his wife

Emily Waller Norris bought a home and over 200 acres of land near

Luling, Texas. These purchases were financed with loans from First

National Bank in Luling.    On November 1, 1986 the Norrises signed

a note in the principal amount of $397,991.86, consolidating their

existing obligations to First National.        This note, which was

secured by the Norris real estate near Luling, was due on December


                                   1
1, 1988. The note contained a provision for annual renewal subject

to bank approval.

     Because of the substantial value of the real estate securing

the note, and the respected position Norris held as a local family

practitioner, First National summarily renewed the note in years

1989-1991.     During this time Norris never missed a scheduled

payment.     In 1991 the Norrises moved their household to Austin,

Texas and leased the Luling property.        They continued to make

timely payments to First National.

     As part of the annual renewal process First National required

Norris to provide a balance sheet, income statement, and current

income tax return.      The documentation submitted to the bank in

conjunction with the 1992 loan renewal claimed that the Norrises

had a "cash flow surplus" of $45,016.        The financial statement

represented     that   the   Norrises   therefore   had   $45,016   of

discretionary income which would be available to service existing

debts.

     On December 23, 1992 Robert Norris, prompted by the fact that

the declining real estate market had significantly reduced the

value of the Luling property, wrote the bank reaffirming his

commitment to servicing and ultimately retiring the note.       First

National renewed the note on December 31, 1992.

     The Norrises, who had begun to experience marital problems in

1990, separated in May of 1993.    Finding themselves unable to meet

their financial obligations, they filed for Chapter 7 bankruptcy in

September of 1993. The bankruptcy schedules revealed that the 1992


                                   2
financial     submissions   were    inaccurate.    Specifically,   the

bankruptcy schedules demonstrated that although the Norrises had

represented that they enjoyed a cash flow surplus of over $45,000

in late 1992,1 in fact they were barely making ends meet and their

subsequent marital difficulties had made their financial situation

untenable.2

     First National filed a complaint in the bankruptcy proceeding,

contending that the debt was not dischargeable under section

523(a)(2)(B) because the Norrises had intentionally misled the bank

by providing false information in their 1992 financial statement.

After a trial on the merits, the bankruptcy court found that Emily

Norris had not acted with any intent to deceive the bank and

therefore the debt was dischargeable as to her.        The bankruptcy

court found the debt nondischargeable as to Robert Norris, who

actually prepared the 1992 financial statement, concluding that he

deliberately had misled the bank by providing misinformation to

obtain the loan renewal.           The district court, acting in its

appellate role, affirmed the bankruptcy court's judgment, and

Robert Norris timely appeals.

                               Analysis


     1
      Although the financial documents were dated November 2,
1992, Norris argues that the information was not actually
delivered to the bank until as late as December 28, 1992. The
bank had this financial statement in its possession when it
approved the loan on December 31, 1992.
     2
      An "income and expense report" later prepared by Emily
Norris from contemporaneous records and filed into the record of
the bankruptcy proceedings showed a "cash flow surplus" of only
$5,530.46 for fiscal year 1992.

                                     3
         When reviewing a bankruptcy court's factual findings which

have been affirmed by the district court, we will reverse "only if,

considering all the evidence, we are left with the definite and

firm conviction that a mistake has been made."3                 We review all

conclusions of law de novo.

         Section 523(a)(2)(B) of Title 11 of the United States Code

creates a rule of nondischargeability for any debt

     for money, property, services, or an extension, renewal, or
     refinancing of credit, to the extent obtained, by use of a
     statement in writing—

             (i) that is materially false;

             (ii) respecting the debtor's or an insider's financial
             condition;

             (iii) on which the creditor to whom the debtor is liable
             for such ... credit reasonably relied; and

             (iv) that the debtor caused to be made or published with
             intent to deceive.

The existence of each of these four elements is a question of fact4

which the creditor must prove by a preponderance of the evidence.5

         Norris contends that this exception is not applicable to the

First National debt, despite the fact that Section 523(a)(2)

expressly lists "renewal ... of credit" as one of the class of

obligations excepted from discharge, because no "new" funds were

disbursed in response to the 1992 financial statement.                    Norris

contends    that   a   showing   that   the   bank   suffered    damage    as   a

     3
      Matter of Young, 

, 548 (5th Cir.1993).
     4
      Matter of Coston, 

(5th Cir.1993) (en banc ).
     5
      Grogan v. Garner, 

, 

, 

(1991).

                                        4
proximate cause of the misleading financial statement is required

before the debt may be declared nondischargeable.6

      While one of the primary purposes behind the Bankruptcy Act is

to   "relieve   the    honest   debtor       from   the    weight     of   oppressive

indebtedness     and   permit    him     to    start      afresh,"7    we    may   not

cavalierly ignore the clearly expressed intent of Congress.                        The

Supreme    Court       has      observed       that       in    fashioning         the

nondischargeability provisions "Congress evidently concluded that

the creditors' interest in recovering full payments of debts in

these categories outweighed the debtors' interest in a complete

fresh start."8    Because Norris has failed to advance any compelling


      6
      Norris relies primarily upon In re Siriani, 

,
304 (9th Cir.1992), in which a debtor's surety who relied upon
false documentation in renewing the surety bond was required to
prove "that damage proximately resulted from the
misrepresentation" in order to have the debt declared
nondischargeable. See also In re Collins, 

(11th
Cir.1991). Unlike Norris, we do not read these cases as grafting
onto section 523(a)(2) a proximate causation requirement;
rather, we read them as applying the statutory mandate that
qualifying debts are nondischargeable "to the extent obtained by"
the fraudulent documentation. In this case, because the renewal
of the entire note was "obtained by" Norris's false
documentation, it is the entire note which is excepted from
discharge. Insofar as these cases may stand for the proposition
that the renewal of a preexisting debt, without more, does not
fall within the purview of the statute, we join the First and
Tenth Circuits in rejecting such an approach. See In re
Goodrich, 

(1st Cir.1993) (expressly rejecting
reasoning of Siriani ); In re Gerlach, 

(10th
Cir.1990). In addition, we note that such a "proximate
causation" element would in many respects duplicate the
"materiality" and "reasonable reliance" determinations required
by section 523(a)(2)(B)(i) and (iv).
      

. U.S. Fidelity & Guar. Co., 

, 554-
555, 

, 290, 

(1915).
      8
       

, 111 S.Ct. at 659.

                                         5
reason why we should construe the statute as meaning something

other than what it says, we conclude that the 1992 "renewal of

credit"     falls     within   the      class        of   debts    eligible     for

nondischargeability.9

         Norris next challenges the finding that the false information

in the 1992 financial statement was materially false.10                         The

bankruptcy judge found that the discrepancy between the 1992

financial statement and the subsequent revelations about the actual

financial situation of the Norrises at that time was approximately

$37,000.     The bankruptcy court concluded that in light of the sums

involved,     this    amount   "would       be   a   material     discrepancy    in

everybody's book."      We discern no error in this finding.

         Norris also contends that the bank did not reasonably rely

upon the statement. This contention challenges whether the bank in

fact relied upon the statement.              In support of his claim Norris

points to the bank's pre-1992 practice of automatically renewing

the note.       The   bankruptcy     judge,      however,   credited    the   bank

officers' testimony that in 1992 the substantial decline in the

value of the collateral securing the loan caused them to rely to a

greater extent than they previously had upon the Norris financial

     9
      Accord 

, 999 F.2d at 26 ("Congress enacted a
detailed statute without an explicit damage requirement.... In
the face of conflicting policies for and against, there is no
warrant for the court to add such a requirement.").
     10
      A statement is materially false if it "paints a
substantially untruthful picture of a financial condition by
misrepresenting information of the type which would normally
affect the decision to grant credit." Jordan v. Southeast
National Bank (In re Jordan), 

, 224 (5th Cir.1991)
(quotation omitted).

                                        6
statement.     In addition, the bankruptcy judge also noted Norris's

letter of December 23, 1992, in which he recognized the declining

value of the collateral and gave the bank a personal assurance of

payment.     We find no error in the bankruptcy court's finding that

the bank actually relied upon the statement.

          We also agree that the bank's reliance was objectively

reasonable.      Norris maintains that the 1992 financial statement

contained blatant errors which would have led a reasonably prudent

bank to question the information.      The bankruptcy judge disagreed,

finding that the only obvious substantial error, an overestimation

of the value of the Luling real estate, was one of which the bank

already was aware.     The bankruptcy judge concluded that the flawed

financial statement was "not such a "red flag' as to invoke a duty

to investigate."11     This finding is adequately supported by the

record.

      Finally, Norris urges that he did not possess the requisite

intent to deceive the bank when he completed and transmitted the

loan renewal documents.     Norris testified, however, that there had

"been no extra money for the last couple of years" when he filled

out the 1992 financial statement.          The bankruptcy judge, after

reviewing the financial statement in light of the bankruptcy

record, concluded that "there was a reckless disregard for the

truth."12    We previously have stated, in the context of fraudulent

     11
          

, 995 F.2d at 549.
     12
      "Reckless disregard for the truth or falsity of a
statement combined with the sheer magnitude of the resultant
misrepresentation may combine to produce the inference of intent

                                   7
intent under section 523(a)(2)(A), that "[i]f the bankruptcy judge

finds one version of events more credible than other versions, this

Court is in no position to dispute the finding."13   Accordingly, we

must find no error.

     The judgment of the district court is AFFIRMED.




[to deceive]." In re Miller, 

, 305 (11th Cir.1994)
(citations omitted).
     13
          Matter of Martin, 

, 814 (5th Cir.1992).

                                   8