USCA1 Opinion
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 97-1510
GENERAL ELECTRIC MORTGAGE INSURANCE CORPORATION,
Appellant,
v.
PETER M. BELLI,
Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
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Before
Selya and Boudin, Circuit Judges,
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and Dowd,* Senior District Judge.
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Richard W. Gannett with whom Gannett & Associates was on brief
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for appellant.
Harland L. Smith for appellee.
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December 10, 1997
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*Of the Northern District of Ohio, sitting by designation.
Per Curiam. The General Electric Mortgage Insurance
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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
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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
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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
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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.
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