MEMORANDUM OPINION IN SUPPORT OF JUDGMENT ORDER DECLARING CERTAIN DEBTS TO BE NON-DISCHARGEABLE AND EXCEPTING THE SAME FROM THE DEBTOR'S DISCHARGE AND DISMISSING THE COMPLAINT AS TO OTHER DEBT THAT SHALL BE DISCHARGED

ROBERT A. GORDON, Bankruptcy Judge.

I. Preliminary Statement

This litigation represents a part of Plaintiffs Timothy and Lisa Limberger's effort to be made whole in the wake of their badly bungled, $1.2 million dollar new home construction project commenced in 2006. Interminable contractual breaches and the resulting frustration ultimately convinced the Limbergers that their original contractor — Trinity Home Builders, L.L.C. (Trinity), partially owned and fully controlled by the Debtor/Defendant, Michael Cleary — had to be terminated, a new contractor able to complete the job hired and a state court complaint against Trinity, their lender SunTrust Mortgage (SunTrust), the Debtor's sister (Mary Kate), and Mr. Cleary, filed.1 The Limbergers' decision was justified: the evidence that chronicled the missteps and queer business practices of SunTrust and the Debtor was often astounding and, while he may have known how to build large homes, Mr. Cleary was simply in well over his head as a financial manager. Per his sister's testimony, pre-bankruptcy Trinity, a company born in 1994, was frequently in need of emergency lending as a direct result of Mr. Cleary's fiscal mismanagement.2 Likewise, from October 2006 until its bankruptcy filing Trinity's operating account was often overdrawn. While evidence detailing the foregoing broad overview was proffered to either establish or rebut certain points, or simply for context, this Opinion is limited to the narrow inquiry of whether the debts arising from the Limbergers' three claims for relief should be excepted from the Debtor's discharge.

The Court concludes that Mr. Cleary's fraudulent procurement of `deposit' money from SunTrust by falsely representing that the same was needed as a condition to purchasing specific construction materials, but which money was neither needed nor used for the purposes represented, and which money was charged against the Limbergers' construction loan, supplies a clear and convincing basis for declaring non-dischargeable the debts arising from those transactions and for that reason, excepting them from the Debtor's discharge. Conversely, the Limbergers' third claim, arising from the money paid to Trinity by SunTrust to cover the cost of a pre-existing water well that Trinity did not construct, but which SunTrust had prior knowledge of, cannot be declared non-dischargeable because SunTrust, and therefore the Limbergers, cannot be held to have justifiably relied upon any misrepresentation of Mr. Cleary that caused the payment to be made.

II. Procedural History

Mr. Cleary filed for personal bankruptcy in this Court on January 7, 2008 at least in part to stay the state court litigation filed against him by the Limbergers.3 On April 14, 2008, the Limbergers filed a three count Complaint to Determine Non-Dischargeability (Complaint) against Mr. Cleary.4 The Complaint relies upon 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4) and 523(a)(6) and prays that three distinct debts be excepted from the Debtor's discharge.5 The Debtor filed his Answer to the Complaint to Determine Non-Dischargeability on August 5, 2008 and generally denied the Complaint's factual allegations.6 Trial was held on October 26th, 27th and November 12, 2010 and closing arguments were heard on January 24, 2011. The parties were encouraged to submit post-hearing memoranda and the same were filed on February 23, 2011. The dispute is now ripe for decision.7

III. Factual Background

At the time of the events in question, the Debtor was President and a forty per cent (40%) shareholder of Trinity. Mary Kate testified that she and their mother were also shareholders but she made it clear that it was the Debtor who was in charge, directing and managing Trinity's day to day operations.8 On May 2, 2006, Trinity entered into a construction contract with the Limbergers. The contract's purpose was to build a home on a parcel of unimproved land located at 1109 Glenville Road in Churchville, Maryland (Glenville Road). Around the same time, in order to fund the project, the Limbergers entered into construction financing arrangements with SunTrust. One agreement among several was a Construction-Permanent Loan Retail Commitment Letter (Commitment Letter) executed on May 16, 2006 and another was a Construction Loan Agreement (Loan Agreement) dated May 26, 2006. There was no real dispute that, among other things, those agreements were intended to govern the disbursement of financing to Trinity in order to fund Glenville Road's construction.

Per Section II of the Commitment Letter, funds were only supposed to be advanced to Trinity in accordance with an "Approved Draw Schedule", incorporated into the Commitment Letter and Loan Agreement. The Commitment Letter expressly provided that the, "funding of Draws will be for completed work only."9 A total of approximately $844,661.51 in draws was paid by SunTrust to Trinity over the course of the project and, for the most part, it appears draws were made in accordance with the quoted requirement: an inspector would visit Glenville Road and inscribe percentages within different category headings on a printed form and thereby confirm completed work.10 The Limbergers complained of three specific instances of payment to Trinity, one of which occurred subsequent to an inspection and two of which did not.

a. The Well

The first debt complained of is the payment by SunTrust of $23,793.29 — two per cent (2%) of the total loan amount — to Trinity on July 21, 2006 for the completion of the water well. On July 20, 2006, the same day the building permit was issued, Mr. Cleary marked up a draw request by hand and submitted it to SunTrust. At the bottom of the facsimile that Mr. Cleary used to transmit the Draw Schedule, he also hand wrote, "Kathy, I included a copy of the Limberger's draw schedule and I have document (sic) what items are done to this point. Thanks Mike". The attached Draw Schedule was filled in and signed by Mr. Cleary with five separate percentages (spanning five separate categories) identified.11 The two per cent payment for the well was handwritten next to category 17, "Septic/Well/Tap Fees" listed on the Draw Schedule.

Before issuing the payment, SunTrust sent an inspector — Alan "Bud" Howe — to examine the project. Mr. Howe testified that he approved the two per cent draw request for the well because while inspecting Glenville Road he observed a well cap. Mr. Howe did not encounter Mr. Cleary during his inspection and Mr. Cleary never made any representations to Mr. Howe about the construction of the well. In sum, Mr. Howe testified that because the well cap was visible, he confirmed in writing the well's completion by noting an appropriate percentage on the Inspection Report. In turn, his confirmation gave SunTrust a basis to approve the two per cent draw.

There is no dispute that SunTrust knew that the well had already been dug and completed on Glenville Road when the Limbergers purchased the real estate. The existence of the completed well was noted in both the Limberger's Improved Land Contract of Sale (Contract of Sale) for the lot and in a separate Well Completion Report, both of which were in SunTrust's possession when the financing was settled and, moreover, prior to Mr. Howe's inspection. Thomas Redfern, SunTrust Senior Vice-President for Mid-Atlantic Construction Permanent Lending, testified to the foregoing and Mrs. Limberger asserted the same under oath in an affidavit filed against SunTrust in the state court litigation in addition to acknowledging the same at trial. Hence, SunTrust had specific, advance knowledge of the well. However, notwithstanding that knowledge, and the fact that Trinity neither dug nor completed the well, the requested draw was funded by SunTrust by wire transfer to Trinity.

b. Windows and Trusses

On August 7, 2006 Mr. Cleary submitted another request for payment to SunTrust. However, in this instance he was not seeking payment for completed work. Instead, he wrote to SunTrust, "I am requesting 2% from the windows/exterior door category & 2% from the roof framing/sheathing from the Limberger draw schedule to cover deposits required from the following invoices I have provided for you." The letter then went on to explain that the two suppliers — 84 Lumber and Precision Built Truss Company (allegedly subcontracted by Jarvis Steel & Lumber Co., Inc. (Jarvis)) — demanded a fifty per cent (50%) deposit on orders of the magnitude required.12 Attached to the Debtor's letter was an estimate from each supplier. The 84 Lumber estimate was dated January 20, 2006 and it was undisputed that this estimate (for window frames) was not created for the Glenville Road project but instead was created for the Limbergers' much larger prospective home project at another location that had been abandoned by the Limberger's well before August 2006.13 Mr. Cleary testified that when he put the request to SunTrust, both suppliers required the fifty per cent deposits as a matter of policy. However, he also testified that they both independently `changed their policy' thereafter and became willing to forego deposits. Hence, Mr. Cleary said, he did not have to (and did not) use the advance to pay deposits although he could not specify what the money was used to purchase after the advance was made.14

SunTrust paid the requested draw — $47,586.56 — to the Defendant. Nevertheless, both Mr. Redfern and Rebecca Hall (nee Mayberry), SunTrust's then construction loan manager and administrator, testified that when they did so, they relied on Mr. Cleary's representation that the deposit was needed in order to effectuate the transaction and they believed he was telling the truth when the decision was made to release the money. They also testified that had they known that deposits were not required and, moreover, that Mr. Cleary did not intend to use the money to pay deposits (in other words that the Defendant had misrepresented the truth) then the payment would not have been approved. Because they did not know of the deception and relied upon Mr. Cleary's representations, SunTrust wired the money into Trinity's account.

c. The Cabinetry

The final transaction occurred on November 1, 2006. That day, Mrs. Limberger, both personally and through her business, paid $70,916.76 to Baldwin Kitchen and Bath, Inc. (Baldwin) as deposits for cabinetry to be installed at Glenville Road. The deposits were needed to cover the net overage above the total allowance for cabinets as fixed by the cost schedule. Christopher Conley, Baldwin's President, testified that he personally received the deposit payments from Mrs. Limberger and made handwritten notations on the invoices (that also referenced her check numbers) to the effect that her deposits were "paid in full". Mr. Conley also testified that he gave copies of the invoices to Mr. Cleary.15

Later that day, Mr. Cleary forwarded a letter to Ms. Hall of SunTrust. In pertinent part, he wrote, "I am faxing a request for deposit monies for the Limberger's cabinet order for 1109 Glenville Road. I included a copy of the two cabinet contracts that are $164,530.94 and $31,385.52 collectively. These total 195,916.46 which is $120,916.46 more than the $75,000 amount allocated for the cabinet portion of the $125,000 cabinet, countertop, vanity top and appliance allowance. Obviously, the Limbergers are putting a lot of quality in their home. I am therefore requesting 2% from the cabinet category, 1% from appliances and 1% from miscellaneous. Please wire those funds into my account today."

Attached to his letter, transmitted to SunTrust via facsimile, were copies of the invoices given to Mrs. Limberger when she paid the deposits, save for one important change. Mr. Conley's handwritten notations indicating that the deposits had been "paid in full" by Mrs. Limberger were gone from the versions sent to SunTrust by Mr. Cleary. The reason for this is simple: Mr. Cleary used correction fluid, or "white-out", to delete the evidence of Mrs. Limberger's payment and forwarded the now defaced invoices to SunTrust as if nothing had been paid. As a result, SunTrust wired the requested payment — $47,586.56 — into Trinity's account the same day.

Mr. Redfern and Ms. Hall both testified that they were unaware of the documents' alteration by Mr. Cleary, that they relied on his representation that the deposit was needed in order to effectuate the transaction and that they believed he was telling the truth when the decision was made to release the money. They also testified that had they known Mr. Cleary had altered the documents and was not telling the truth, then the money would not have been released. Mr. Conley also testified that he did not request any deposits from either the Debtor or Trinity and, needless to say, none were paid by them.16

IV. The Debtor, Michael Cleary

Debts excepted from the general discharge comprise a narrow class of obligations with each one grounded upon, and reflecting, a particular policy choice of Congress. Section 523(a)(2)(A), which guards against the discharge of debts created by false pretenses, false representations, or actual fraud, has a special significance in the overall context of bankruptcy. The subsection focuses upon conduct that is central to the Code's `fresh start' policy — a debtor's honest behavior.17 As the Debtor's honesty at the time of the questioned transaction(s) is a crucial inquiry, the debtor's intent must necessarily be examined. In this case, the totality of the circumstances leaves the Court utterly convinced that Mr. Cleary intentionally behaved dishonestly in each of the three transactions. This is so for several reasons.

Mr. Cleary's crude alteration of the cabinetry invoices is singular, powerful evidence. The different sets of cabinetry invoices admitted at trial present two different versions of the same documents: one set is marked "paid in full" while on the other set, that crucial indication (and accompanying notations) is obliterated. There is no question that Mr. Cleary altered the invoices. He admitted as much during his Section 341 meeting of creditors, although he changed his testimony during his deposition and at trial. The Court concludes that he told the truth during the Section 341 meeting (which was held on February 14, 2008, prior to the filing of the Complaint) before he realized that he might continue to be held liable for the Limbergers' claims. Once that realization hit home however, the Court finds that he decided to change his testimony.

But whether Mr. Cleary testified on the topic or not, the Court would still conclude that he was responsible for the alteration. He prepared the facsimile transmittal to SunTrust that requested the release of the `deposit' and he attached and used the altered invoices to spark the payment. Then, when the draw was issued, it is undisputed that the money was not used by him to fund a cabinet deposit. Indeed, he could not have used it for that purpose because Mr. Conley of Baldwin had not requested a deposit and would have known that the Limbergers deposit had already been paid. The conclusion is inescapable that Mr. Cleary actively (and crudely) misrepresented the truth in this transaction in order to cause SunTrust to release a portion of the Limbergers' financing and then used it for his own purposes.18

Beyond the explosive impact of that particular transaction, Mr. Cleary's body language and general demeanor while testifying also spoke volumes. This is particularly so with respect to his video-taped deposition. Mr. Cleary was evasive, argumentative, contradictory and calculating in his testimony. Simply put, during his deposition he did not appear to be telling the truth in response to even the simplest questions from Plaintiffs counsel. Indeed, at one point, even his own attorney Mr. Kotz lost patience with his string of evasive responses. An honest witness has no reason to respond to straight forward inquiries with a string of evasions. Yet, that is precisely what Mr. Cleary did.

Finally, Trinity's dire long term financial circumstances help to sketch in a motivation for Mr. Cleary's dishonest conduct. While Mr. Cleary's sister Mary Kate admittedly was not affiliated with Trinity during the time of the Limberger project, she testified with compelling force (called as her brother's witness) as to the company's historical inability to pay its debts in the ordinary course of business. In sum, she testified that a total of approximately $700,000 was lent to Trinity by her mother, herself and Mr. Cleary during Trinity's life. She explained that the reason for Trinity's financial struggles was Mr. Cleary's well-meant penchant for underbidding jobs. Whatever the reason, and if her testimony is to be believed, the volume of emergency loans extended to Trinity over its relatively brief lifespan is compelling evidence that it was never strong enough to stand on its own. Trinity's fortunes do not excuse Mr. Cleary's decisions, but they do help explain why he would take the desperate and dishonest steps outlined and proven at trial.

V. Jurisdiction and Venue

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b) and Local Rule 402 of the United States District Court for the District of Maryland. This is a core proceeding pursuant to Section 157(b)(2)(I). Venue in this district is proper pursuant to 28 U.S.C. § 1409(a).

VI. Legal Standard for Dischargeability Under the Subsections Relied Upon

The Limbergers rely upon Sections 523(a)(2)(A), 523(a)(4) and 523(a)(6) as their bases for asserting non-dischargeability.19 A plaintiffs case must satisfy five elements in order to prevail under Section 523(a)(2)(A). Grogan v. Garner, 498 U.S. 279, 287-288, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); In re Rountree, 478 F.3d 215, 218 (4th Cir.2007); Dubois v. Lindsley (In re Lindsley), 388 B.R. 661, 668 (Bankr. D.Md.2008); Guaranty Residential Lending, Inc. v. Koep (In re Koep), 334 B.R. 364, 371-72 (Bankr.D.Md.2005). Those elements are: (1) that the defendant made a representation; (2) that the defendant knew at the time the representation was made that it was false; (3) that the defendant made the representation with the intent and purpose of deceiving the plaintiff; (4) that the plaintiff justifiably relied upon the false representation; and (5) that the plaintiff suffered damages as a proximate result of the representation. Lindsley, 388 B.R. at 668; Koep, 334 B.R. at 371-72. The debtor's intent shall be determined subjectively with a totality of the relevant circumstances taken into account. In re Rembert, 141 F.3d 277, 281 (6th Cir.1998); In re Pleasants, 231 B.R. 893, 898 (Bankr. E.D.Va.1999), aff'd, 219 F.3d 372 (4th Cir. 2000). The applicable standard of reliance is justifiable, as opposed to reasonable, and that element is likewise to be assessed in accordance with the overall circumstances of the case. Field v. Mans, 516 U.S. 59, 73, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995); Colombo Bank v. Sharp (In re Sharp), 340 Fed.Appx. 899, 905 (4th Cir.2009). It is not necessary that misrepresentations be communicated directly to the creditor so long as there is reason to expect that the creditor will rely on the misrepresentation and that her conduct will be detrimentally influenced thereby. Sempione v. Provident Bank of Md., 75 F.3d 951, 962 (4th Cir.1996).20

A debt shall be declared nondischargeable under Section 523(a)(4) if it was obtained through: 1) fraud or defalcation while acting in a fiduciary capacity, 2) embezzlement, or 3) larceny. See Wilcoxon Construction, Inc. v. Woodall (In re Woodall), 177 B.R. 517 (Bankr.D.Md.1995). The Limbergers asserted that Mr. Cleary embezzled the money advanced to him.21 In order to establish embezzlement, the creditor must prove the entrustment to the debtor of her property which the debtor, with intent to defraud, appropriates for a use other than that for which it was entrusted. Board of Trustees v. Bucci, 493 F.3d 635, 644 (6th Cir.2007); In re Hambley, 329 B.R. 382, 401 (Bankr.E.D.N.Y. 2005); In re Bevilacqua, 53 B.R. 331, 333-34 (Bankr.S.D.N.Y.1985).

In order to achieve nondischargeability under Section 523(a)(6), the creditor must prove that the debtor's actions constituted a tortious injury to property that was willful and malicious. See McLean, Koehler, Sparks & Hammond v. Hildebrand (In re Hildebrand), 230 B.R. 72, 79 (Bankr.D.Md.1999). Under Section 523(a)(6), "nondischargeability takes a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury." Id. (quoting Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998)); In re Duncan, 448 F.3d 725, 729 (4th Cir.2006).

In all non-dischargeability cases, a creditor must prove their allegations by a preponderance of the evidence, Grogan, 498 U.S. at 291, 111 S.Ct. 654, and all exceptions to discharge are strictly construed against the creditor. This high evidentiary threshold is meant to "protect the purpose of providing debtors a fresh start." In re Rountree, 478 F.3d at 219.

VII. Analysis

a. The Cabinetry

All five criteria of Section 523(a)(2)(A) are met clearly and convincingly with respect to the debt — $47,586.56 — created by Mr. Cleary's draw request for a non-existent cabinetry deposit. It is undisputed that Mr. Cleary made the written representation — a specific request for a draw payment to cover a needed `deposit' — via the facsimile transmittal quoted in Section III c. above. While Mr. Cleary denied at trial that he altered the invoices, the Court concludes that his testimony in that regard is just as false as the altered invoices themselves. Mr. Cleary prepared the facsimile and with it sent the invoices. He therefore had to have known from the face of the original invoices (given to him by Mr. Conley) that Mrs. Limberger had already paid the deposits, making his representations to SunTrust knowingly false when made. Likewise, there can be no other reasonable conclusion but that Mr. Cleary made the representations with the intent and purpose of deceiving SunTrust into releasing the draw. The false representation was the direct cause of SunTrust's action and the bank's reliance upon it was, at a minimum, justifiable: under all the relevant circumstances, SunTrust was entitled to take the invoices, and Mr. Cleary's request, at face value, foregoing further investigation of the same.22 Mr. Cleary prepared the invoices, and the written representations, to appear legitimate under the circumstances. SunTrust knew Mr. Cleary and had worked with him before. Indeed, Trinity was the bank's customer, running thousands of dollars through its operating account. These facts are sufficient to justify SunTrust's release of the draw as a part of a normal, working relationship, without further investigation. Finally, as the money was not used for the purpose intended, or any purpose directly related to construction of Glenville Road, Mr. Cleary's fraud wrongfully increased the Limberger's loan balance, leaving them liable for money that was neither needed nor used for their new home project.23

In Defendant's Post-Trial Memorandum (Defendant's Memorandum), Mr. Cleary does not deny that he used the artifice described above to secure the subject draw from SunTrust. Instead, he contends that he "intended" to use the draw for deposits when he caused SunTrust to release the money and, moreover, that after Trinity's ouster from the Glenville Road project, he told the Limbergers he would repay the money. These after the fact pieties are ineffective to rebut the charge. How could he have "intended" to pay a deposit to Baldwin when Mrs. Limberger had already done so and why, if he was behaving honestly, would he use deceptive measures to secure the money in the first instance?

Nevertheless, and perhaps more to the point, Mr. Cleary also contends that he did not, in fact, secure the money by misrepresentation, fraud or false pretenses. Instead, he blames SunTrust and the Limbergers. As for SunTrust, he asserts that since Mrs. Limberger had instructed the bank not to release any draws to be used for deposits, SunTrust "could not have relied upon anything Cleary said or requested" in that regard.24 Defendant's Memorandum at 11. Moreover, Mr. Cleary asserts that, contrary to her testimony, Mrs. Limberger approved the draw request as reflected by the SunTrust business records that memorialize Ms. Hall's asserted communications with Mrs. Limberger.

The apparent conundrum raised by the evidence regarding the alleged communications between SunTrust and Mrs. Limberger as to whether the two draw requests (the cabinetry request discussed in this Section and the windows and trusses request addressed in the next Section) were approved by Mrs. Limberger is fairly mystifying. In brief, the SunTrust records appear to suggest on the surface that after Mr. Cleary made his fraudulent requests for deposit draws, Ms. Hall contacted Mrs. Limberger to request her consent and that SunTrust made the advances after consent was given. Yet, while SunTrust's emails and log books reflect a pattern of diligence by Ms. Hall in seeking Mrs. Limberger's approval, Ms. Hall could not affirmatively state that she remembered a conversation with Mrs. Limberger where consent was expressly given. There are no written confirmations. Mrs. Limberger, on the other hand, testified convincingly that she did not give her consent; indeed, why would she have given her consent to the cabinetry draw after having paid the deposit herself in full earlier the same day? Furthermore, Mrs. Limberger's multiple written communications to SunTrust over the course of the project are equally convincing in evidencing her concern over SunTrust's release of draw payments and its overall handling of payments to Trinity. Finally, when Mr. Cleary made the fraudulent windows and trusses draw request in August 2006, Mrs. Limberger was in Seattle on business. She testified that she neither spoke with Ms. Hall nor had the electronic equipment available to communicate with her in writing during that trip.

Significant trial time was devoted to the debate over this issue and, ultimately, whether Mrs. Limberger approved the draw requests. Nevertheless, the mystery does not need to be conclusively untangled to resolve this dispute. This is so because even if Mrs. Limberger had approved the release of the money, she would have done so solely on the basis of Mr. Cleary's fraudulent representation.25 The lack of agreement on this point between the Limbergers and SunTrust cannot change the fundamental fact that Mr. Cleary misrepresented the truth to secure the payment of money he was not entitled to under the circumstances and then did not use the money for the specific purpose asserted.26

b. The Windows and Trusses

While not quite as egregious as document alteration, Mr. Cleary's use of a stale, inflated invoice to fraudulently secure a $47,586.56 draw ostensibly for the purpose of paying deposits on windows and trusses is just as wrongful. Hence, the same remedy — exception of the resulting debt from his discharge — shall apply. All five criteria of Section 523(a)(2)(A) are again satisfied clearly and convincingly by the evidence with respect to Mr. Cleary's request for a materials deposit that was neither needed nor used for that purpose.

It is undisputed that Mr. Cleary made the written representation to SunTrust via the August 7, 2006 facsimile transmittal quoted in Section III b. above. While Mr. Cleary asserted that the request was for a legitimate purpose, the 84 Lumber invoices that he used to make the request were not created by the supplier for the Glenville Road project. If there had been a legitimate demand for a fifty per cent deposit from the suppliers the day Mr. Cleary forwarded the request to SunTrust, then integrity, honesty and fair dealing would have mandated a timely estimate that gave pricing specifically for the Glenville Road project. Moreover, the court finds that Mr. Cleary's express representation that the money was needed to fund deposits was false; instead, the Court concludes that no deposits were required by the suppliers and, contrary to Mr. Cleary's testimony, the best evidence of this is that no confirmation from a supplier's representative was offered into evidence and no deposit was ever paid.27 The Court finds that Mr. Cleary used the stale invoices to draw against the Limbergers loan account with no intention of using the money for the stated purpose. Hence, the Court also finds that he knew the representation was false when made. Likewise, there can be no other reasonable conclusion but that Mr. Cleary made the representation with the intent and purpose of deceiving SunTrust, as his false representation was the direct cause of the payment of the draw to Trinity. The Court further finds and concludes that for the same reasons explained with respect to the cabinetry, SunTrust's reliance upon his representations was, at a minimum, justifiable. Finally, as the money was not used for the purpose intended, or apparently any purpose directly related to the construction of Glenville Road, Mr. Cleary's fraud wrongfully increased the Limberger's loan balance, leaving them liable for money that was neither needed nor used for the construction of their home.

In Defendant's Memorandum, Mr. Cleary relies upon his testimony to the effect that when he made the request to SunTrust on August 7, 2006 the two suppliers did require deposits but thereafter (and after the Limbergers adjusted the construction plans) both reversed their policy and ceased requiring advance deposits. Mr. Cleary does not assert that the payment in question was actually used for the purpose he represented. He simply argues that since the specific materials were ultimately installed in Glenville Road before Trinity was booted from the project, he cannot be held liable for this draw request. In Mr. Cleary's words, "Plaintiffs have failed to explain why they are entitled to be reimbursed for work and materials actually supplied by Trinity. Plaintiffs simply cannot show that they were damaged by the payment of the deposits." Defendant's Memorandum at 11. He also asserts that, as with the cabinetry, the SunTrust records establish that Mrs. Limberger gave Ms. Hall her consent to the draw.

What the evidence showed with certainty, and what this Court finds, is that Mr. Cleary intentionally misrepresented the need for these illusory deposits in order to use the Limberger's construction line of credit as if it were Trinity's (or perhaps his own) to do with as he chose. Whether the supplies were actually paid for by additional draws against the SunTrust financing at a later date (and charged again to the Limbergers' account) is irrelevant. What matters is that this particular draw was induced by a false representation and the money was not used for the purpose represented. The correct outcome cannot be to saddle the Limbergers with double liability for a single set of materials or portions thereof. The damages are found in the illegitimate increase of the Limbergers' loan balance for money spent on a purpose unrelated to the Glenville Road project. Moreover, and as with cabinetry, the Court concludes that the mystery as to whether the deposit request was approved or disapproved by Mrs. Limberger does not need to be resolved by way of a conclusive finding — if Mrs. Limberger did approve the request, she did so because she was deceived by Mr. Cleary as was SunTrust. Accordingly, the Court finds that the debt created shall be excepted from Mr. Cleary's discharge.28

c. The Well

The debt created by the two per cent (2%) allowance for the well presents a different set of circumstances than the first two categories of debt. While Mr. Cleary may have been just as dishonest in actively seeking payment for work — the construction of Glenville Road's well — that Trinity did not perform and which had already been completed, the Court cannot find that SunTrust justifiably relied upon Mr. Cleary's representation.29

In Field v. Mans, the Supreme Court held that Section 523(a)(2)(A)'s fraud exception requires a finding of justifiable, as opposed to, reasonable, reliance. 516 U.S. 59, 74-75, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995). The Court relied in part upon the Restatement (Second) of Torts (1976) to give heft to the standard:

Id. at 70-71, 116 S.Ct. 437 (quoting Restatement (Second) of Torts §§ 540, 545A & 541 (1976), internal citations omitted).

In Colombo Bank v. Sharp, the Fourth Circuit stressed the parameters erected by Field and explained that:

340 Fed Appx. at 907, (quoting Field, 516 U.S. at 72, 116 S.Ct. 437).

In this case, and as low a hurdle as the justifiable reliance standard may be, the Limbergers' claim for the money released for the already constructed well must be unhorsed by a common sense application of the rule. SunTrust did not need to investigate to know that the well already existed and was not constructed by Mr. Cleary. SunTrust had the Limberger's Contract of Sale and Well Completion Report in its own records at the time the draw request was made. Mrs. Limberger expressly asserted as much in an affidavit in support of summary judgment in the state court litigation against SunTrust and admitted the same at trial. The Court cannot pretend that SunTrust was ignorant of the facts or that the bank had to do anything other than double check the records already within its possession. In short, SunTrust knew about the well before Mr. Cleary made the request and the fact of its existence could have easily been confirmed by SunTrust before the payment was made.

The Court concludes that if the Limbergers are entitled to rely upon SunTrust's ignorance with regards to Mr. Cleary's false representations regarding the need for deposits for cabinetry, windows and trusses, then they must be bound by SunTrust's knowledge as to the pre-existing well. Accordingly, the debt arising from the two per cent draw advance for the well shall be discharged.30

VIII. Conclusion

In conclusion, the debts arising from Mr. Cleary's fraudulent requests for deposits shall be excepted from his discharge while the debt arising from the payment for the well shall be discharged.31

SO ORDERED.