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                                                        [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                            No. 13-13620
                        Non-Argument Calendar
                      ________________________

                 D.C. Docket No. 9:13-cv-80243-KMM,
                       Bkcy No. 11-02334-EPK

In Re: DENISE ROBERTS-DUDE,

                                        Debtor.
_________________________________________________

STEWART TITLE GUARANTY COMPANY,

                                             Plaintiff - Appellee,

versus

DENISE ROBERTS-DUDE,

                                             Defendant - Appellant.

                      ________________________

               Appeal from the United States District Court
                   for the Southern District of Florida
                     ________________________

                           (February 11, 2015)

Before MARCUS, WILLIAM PRYOR and MARTIN, Circuit Judges.

PER CURIAM:
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      Debtor-Defendant-Appellant Denise Roberts-Dude (“Roberts”) appeals from

the district court’s order reversing and remanding the bankruptcy court’s judgment

in an adversary bankruptcy proceeding initiated by Plaintiff-Appellee Stewart Title

Guaranty Company, a title insurance company. The appeal stems from a real estate

scheme involving Roberts, her husband Harald Dude, and their real estate agent

David Lester, who worked together to sell certain property in Aspen, Colorado

without disclosing that Washington Mutual Bank (“WAMU”) held a $1,900,000

deed of trust on the property. In connection with the sale, Stewart Title performed

a title search on the property prior to closing, but failed to discover the undisclosed

encumbrance and issued title insurance policies on the property. Several months

later, WAMU informed the new owner of the Aspen property about the WAMU

deed of trust, and Stewart Title was obligated to pay WAMU $1,950,000. Stewart

Title filed a civil suit against Roberts and her conspirators for falsely stating in

affidavits -- upon which Stewart Title relied prior to issuing title insurance on the

property -- that there were no loans, unpaid judgments, or liens on the property,

even though Roberts, Dude and others had been personally aware of the WAMU

deed of trust. Just prior to trial, Roberts declared bankruptcy.

      Stewart Title subsequently filed an adversary proceeding against Roberts in

bankruptcy court, with a five-count complaint seeking allowance of claims based

on fraud, concealment, breach of contract, and unjust enrichment, and for an


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exception from discharge of bankruptcy. Following proceedings in bankruptcy

court and district court, Roberts was held liable to Stewart Title for both fraud and

concealment, among other things. On appeal, Roberts argues that the district court

erred in concluding that Stewart Title had justifiably relied on Roberts’s

misrepresentations about the Aspen property. After thorough review, we affirm. 1

        As the “second court of review of a bankruptcy court’s judgment,” we

examine independently the determinations of the bankruptcy court and employ the

same standards of review as the district court. In re Issac Leaseco, Inc., 

, 1209 (11th Cir. 2004) (quotation omitted). Thus, we review the factual

findings of the bankruptcy court for clear error, In re Calvert, 

, 1071

(11th Cir. 1990), and review de novo legal questions concerning the issue of

justifiable reliance, In re Masvidal, 

, 762 (11th Cir. 1993).

        Section 523 of the Bankruptcy Code outlines the exceptions to discharge in

bankruptcy. See generally 11 U.S.C. § 523. Because “the opportunity for a

completely unencumbered new beginning” is limited to the honest debtor, Grogan

v. Garner, 

, 286–87 (1991)), section 523(a)(2)(A) excludes from

discharge debts obtained through “false pretenses, a false representation, or actual

fraud,” 11 U.S.C. § 523(a)(2)(A). Indeed, “the fraud exceptions to discharge exist

to punish the debtor for committing fraud.” In re St. Laurent, 

, 680


1
    We also DENY AS MOOT Stewart Title’s motion for limited remand.
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(11th Cir. 1993). Courts interpreting § 523(a)(2)(A) require a plaintiff to prove the

traditional elements of common law fraud. In re Bilzerian, 

, 1281

(11th Cir. 1998) (per curiam).      Therefore, the elements of a claim under §

523(a)(2)(A) are: (1) the debtor made a false representation with the intention of

deceiving the creditor; (2) the creditor relied on the false representation; (3) the

reliance was justified; and (4) the creditor sustained a loss as a result of the false

representation. 

only one element disputed in this appeal -- whether Stewart Title’s

reliance on Roberts’s misrepresentation was justified. To constitute justifiable

reliance, “[t]he plaintiff’s conduct must not be so utterly unreasonable, in the light

of the information apparent to him, that the law may properly say that his loss is

his own responsibility.” In re Vann, 

, 283 (11th Cir. 1995) (quotation

omitted). Thus, “[a]lthough the plaintiff’s reliance on the misrepresentation must

be justifiable, . . . this does not mean that his conduct must conform to the standard

of the reasonable man.” 

(second alteration in original).

Justifiable reliance is gauged by “an individual standard of the plaintiff’s own

capacity and the knowledge which he has, or which may fairly be charged against

him from the facts within his observation in the light of his individual case.” 

. As the Supreme Court has explained, when “a seller of land . .

. says it is free of encumbrances,” then “a buyer’s reliance on this factual


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representation is justifiable, even if he could have walk[ed] across the street to the

office of the register of deeds in the courthouse and easily have learned of an

unsatisfied mortgage.” Field v. Mans, 

, 70 (1995) (quotation omitted)

(second alteration in original). The Supreme Court has elaborated that “only

where, under the circumstances, the facts should be apparent to one of [plaintiff’s]

knowledge and intelligence from a cursory glance, or he has discovered something

which should serve as a warning that he is being deceived” is the plaintiff

“required to make an investigation of his own.” 

(quotation omitted;

emphasis added). To put it another way, reliance is not justified “only when the

recipient of the misrepresentation is capable of appreciating its falsity at the time

by the use of his senses. Thus a defect that any experienced horseman would at

once recognize at first glance may not be patent to a person who has had no

experience with horses.” 

emphases added).

      The following facts are undisputed here. Before issuing title insurance on

the Aspen property, Stewart Title, through its agent, performed three date down

searches in order to find any unknown liens or encumbrances. The three searches

were: (a) a search using the legal description of the property; (b) a grantor search

using the name of the record owner listed on the title commitment, Dee

Investments; and (c) a search using the name of the proposed security interest

grantee, Wells Fargo.     Nevertheless, Stewart Title’s agent failed to find the


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WAMU deed of trust. It is also undisputed that the WAMU deed of trust was

improperly recorded without a legal description of the property, and that Dude --

not the owner named on the title commitment, Dee Investments -- was the grantor

of the WAMU deed of trust. Finally, it is undisputed that Roberts’s completed

affidavit upon which Stewart Title relied falsely responded “none” where she

should have listed the WAMU deed of trust as an encumbrance on the property.

      In a related action, the Tenth Circuit recently addressed nearly identical

fraud claims and justifiable reliance issues as those before us, in Stewart Title

Guar. Co. v. Dude, 

(10th Cir. 2013). In that case, which preceded

this one, Stewart Title sued Roberts, her husband Dude and his company Dee

Investments, and several others, for making misrepresentations about the Aspen

property.   However, the trial there proceeded only against Dude and Dee

Investments, because Roberts and the remaining defendants had settled or sought

shelter in bankruptcy. See 

That jury found Dude and his company

liable for, among other things, fraudulent misrepresentation under Colorado law.

Dude argued “that Stewart Title ‘constructively’ knew of [Dude’s]

fraud because the Washington Mutual loan was publicly recorded. All Stewart

Title had to do . . . [was] visit the county clerk’s office to find it. The company’s

failure to do so . . . render[ed] its reliance on [Dude] unjustifiable.” 

The Tenth Circuit disagreed. It concluded that “Stewart Title did look for recorded


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loans and liens on the property and failed to find the [WAMU] loan only because

the deed was defectively recorded.” 

Circuit then affirmed the

district court’s decision finding that Stewart Title should win on its fraudulent

misrepresentation claim. 

      In the instant case, however, the bankruptcy court reached the opposite

conclusion -- that Stewart Title did not justifiably rely on misrepresentations by

Roberts. The court deemed Stewart Title’s conduct to be:

      more than negligence. In light of the Plaintiff’s relevant skill, knowledge,
      and experience, the level of title review that would have revealed the deed of
      trust was the slightest inspection, a cursory glance. It is not that the Plaintiff
      did not look. Here the Plaintiff looked but did not see. The Plaintiff cannot
      now complain that its injury was brought about by the Defendant’s
      misrepresentation.

In re Roberts-Dude, 

, 899 (Bankr. S.D. Fla. 2012), rev’d sub nom.

Stewart Title Guar. Co. v. Roberts-Dude, 

(S.D. Fla. 2013). But, on

appeal, the district court reversed the bankruptcy court, determining that “more

than a cursory glance would be needed to determine whether Stewart Title was

being deceived” from the agent’s title record search, since “Stewart Title would

have needed to take several steps and make various logical deductions to realize

that Defendant may have lied in her Affidavit.” Stewart 

.

The district court concluded that “Stewart Title should not be required to untangle

the web of deception to uncover fraud when it was apparent on the face of the

transaction that it was business as usual. Therefore, the undisputed facts on the
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record demonstrate that Stewart Title satisfied the justifiable reliance element” of a

§ 523(a)(2)(A) claim. 

      The record before us plainly supports the conclusion that Stewart Title

satisfied the justifiable reliance element of a fraud claim under § 523(a)(2)(A). As

we have detailed, Stewart Title performed three date down searches on the

property, but did not find the WAMU deed of trust, which was improperly

recorded without a legal description of the property and which listed Dude, not the

owner named on the title commitment, Dee Investments, as the grantor. We

cannot say that Stewart Title’s conduct was “so utterly unreasonable, in the light of

the information apparent to [it], that the law may properly say that [its] loss [was

its] own responsibility.” In re 

(quotation omitted). To the

extent the bankruptcy court relied heavily on Stewart Title’s “experience” in

performing title searches to render its conduct “utterly unreasonable,” that reliance

is misplaced under our law. As the Supreme Court has made clear, even a plaintiff

with experience need only have taken a “cursory glance” or a “first glance” by “use

of his senses.” 

. There can be no debate that Stewart Title’s

agent did just that in this case. What’s more, even if Stewart Title should have

performed a more thorough title search, mere negligence is insufficient to protect

the fraudulent defendant. See 

(“We think it unlikely that

Congress . . . would have favored the interest in giving perpetrators of fraud a fresh


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start over the interest in protecting victims of fraud.”). Indeed, the Supreme Court

has expressly said that “contributory negligence is no bar to recovery because

fraudulent misrepresentation is an intentional tort.” 

.

      Finally, to the extent the bankruptcy court made a factual finding that

Stewart Title only needed a “cursory glance” to uncover Roberts’s deception, it

clearly erred in making this finding. Put simply, this is not a case in which the title

searcher ran a search for liens against the property’s legal description, then saw

and brazenly disregarded an undisclosed lien. Instead, the chain of title in the

county’s records showed only a transfer into and out of Dude’s name. To get from

those facts to the conclusion that there was a hidden lien, Stewart Title’s agent

would have had to: (1) note that transfers in and out of Dude’s name were close

together in time; (2) recognize that the transfers in and out of Dude’s name

occurred during the period between the issuance of the title commitment and the

closing, so would not have been part of Stewart Title’s earlier search; (3)

understand that because the transfers were close together in time, they may have

occurred for the purpose of putting a new lien against the property; (4) realize that

if a new lien was the purpose for the transfer, then the grantee for the new deed of

trust would have been the transferee (Dude) rather than the current record owner

(Dee Investments); (5) assume that, contrary to the recording statute’s

requirements, a lien recorded while the property was in Dude’s name might have


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been recorded without a legal description and therefore not have shown up in his

legal description search; (6) search under Dude’s name as grantor for liens; (7)

retrieve the lien filed in Dude’s name from the clerk and recorder’s records; (8)

review the lien to determine whether it contained a description of the property

other than a legal description, such as the street address; (9) investigate whether the

street address on the WAMU deed of trust matched the address on the property he

searched for, despite the lack of legal description; and, finally, (10) discount the

affidavits Roberts and others had just signed to the contrary. On this record, we do

not see how those steps could constitute a “cursory glance,” and therefore are left

with the “definite and firm conviction” that the bankruptcy court clearly erred in

finding to the contrary. See United States v. U.S. Gypsum Co., 

, 395

(1948) (“A finding is ‘clearly erroneous’ when although there is evidence to

support it, the reviewing court on the entire evidence is left with the definite and

firm conviction that a mistake has been committed.”). Accordingly, we affirm the

district court’s conclusion that Stewart Title justifiably relied on Roberts’s

misrepresentations in issuing title insurance on the Aspen property.

      AFFIRMED.




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