UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

AT&T UNIVERSAL CARD SERVICES,
Plaintiff-Appellant,

v.                                                                     No. 99-1595

WALTER J. BAKER,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Richard L. Williams, Senior District Judge.
(CA-98-269-3, BK-97-35077-S)

Argued: December 3, 1999

Decided: March 2, 2000

Before WIDENER and TRAXLER, Circuit Judges, and
Cynthia H. HALL, Senior Circuit Judge of the
United States Court of Appeals for the Ninth Circuit,
sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Kevin Michael Fitzpatrick, KEVIN M. FITZPATRICK,
P.C., Fairfax, Virginia, for Appellant. Randal Kirk Masters, AFFILI-
ATED ATTORNEYS, Richmond, Virginia, for Appellee.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Appellant AT & T Universal Card Services ("AT & T") appeals
from a judgment of the district court affirming the bankruptcy court's
determination that Walter J. Baker's ("Baker's") debt to AT & T be
discharged under 11 U.S.C. § 523(a)(2)(A). The bankruptcy court had
concluded that Baker neither made false representations to AT & T
nor intended to deceive AT & T. The bankruptcy court also found
AT & T's reliance on Baker's representations to be unjustifiable. We
have jurisdiction under 28 U.S.C. § 158(d) and affirm.

In order to prove a debtor's ineligibility for discharge under
§ 523(a)(2)(A), the creditor must prove every element of that statu-
tory provision by a preponderance of the evidence. Section
§ 523(a)(2)(A) prevents the discharge of a debtor from any debt "for
money, property, services, or an extension, renewal, or refinancing of
credit, to the extent obtained by false pretenses, a false representation,
or actual fraud." To succeed in a § 523(a)(2)(A) claim, a creditor
therefore needs to show by a preponderance of the evidence that the
debtor made a representation to the creditor; that the debtor knew the
representation was false at the time it was made; that the debtor made
the representation with the intention and purpose of deceiving the
creditor; that the creditor relied on such representation; and that the
creditor sustained the alleged loss and damage as a proximate result
of the false representation having been made. See In re Eashai, 

, 1086 (9th Cir. 1996).

The district court concluded, and Appellee concedes, that Appellee
made an implied representation to Appellant when he accepted the
cash advance on his credit card. Accordingly, our inquiry turns to
whether Appellee knew his representation was false when he made it.

Appellant argues that the Court should infer knowing misrepresen-
tation from the recklessness of Appellee's spending practices. Appel-

                     2
lant emphasizes that Appellee was deeply in debt and that Appellee
knew or should have known about all his liabilities, so he must have
known that he would be unable to repay Appellant. Whatever the
merits of Appellant's legal argument, we need not decide today
whether knowledge of falsity can be inferred from the magnitude of
a debtor's insolvency, because Appellee's conduct does not rise to the
level of recklessness.

Several factors considered by the bankruptcy court suggest that
Appellee was merely optimistic about his future economic situation.
First, the bankruptcy court concluded as a matter of fact that at the
time Appellee obtained the cash advance, he believed the sale of his
house and his prospective new job would increase his income and
decrease his expenses. Second, the bankruptcy court found that
Appellee believed he would be able to reduce his children's day care
expenses significantly because his new job would allow him to work
the night shift. Third, the bankruptcy court determined that Appellee
dramatically underestimated the interest payments he would have to
make on the cash advance. These factors might have caused a reason-
able person in Appellee's shoes to believe that he could pay off his
AT & T debts. It is easy to second-guess Appellee's choices in hind-
sight, but there is a difference between optimism and recklessness.
See, e.g., Rembert v. AT & T Universal Card Servs., 

,
282 (6th Cir. 1998) (affirming a decision that allowed a compulsive
gambler to discharge her debt of a cash advance taken from a casino's
ATM). There is no basis for holding that the court below abused its
discretion by failing to find reckless behavior by Appellee.

Because we find that Appellee did not know his representation was
false at the time he obtained the cash advance, this panel need not
reach the questions of whether Appellee intended to defraud Appel-
lant, whether Appellant relied on Appellee's representations, or
whether Appellant sustained a loss as a proximate result of the mis-
representations.

Appellant has failed to sustain its claim under§ 523(a)(2)(A). We
therefore affirm the judgment of the district court.

AFFIRMED

                    3