Haemonetics Corporat v. Dupre ( 2000 )

[NOT FOR PUBLICATION--NOT TO BE CITED AS PRECEDENT]
United States Court of Appeals
For the First Circuit
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No. 99-2038
THERESA DUPRE,
Debtor,
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HAEMONETICS CORPORATION;
NOVA BIOMEDICAL CORPORATION,
Plaintiffs, Appellees,
v.
THERESA DUPRE,
Debtor, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
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Before
Torruella, Chief Judge,
Bownes, Senior Circuit Judge,
and Lipez, Circuit Judge.
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Charles A. Dale III, with whom Kimberly M. Parker and Gadsby &
Hannah LLP were on brief, for appellant.
John Foskett, with whom Richard D. Bickelman, Anthony M. D'Imperio
and Deutsch Williams Brooks DeRensis Holland & Drachman, P.C. were on
brief, for appellees.
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JULY 3, 2000
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Per Curiam. This is an appeal by appellant Theresa Dupre
from the decision of the United States District Court for the District
of Massachusetts vacating the judgment of the United States Bankruptcy
Court for the District of Massachusetts and remanding the case to the
bankruptcy court with the instruction that judgment be entered for the
appellees, Haemonetics Corporation and Nova Biomedical Corporation.
See Haemonetics Corp. v. Dupre, 238 B.R. 224 (D. Mass. 1999).
The appellant's husband Paul Dupre was convicted of
embezzling nearly one million dollars from Nova and Haemonetics between
1988 and 1994. Nova and Haemonetics brought suit against the Dupres
alleging a civil conspiracy. While motions for summary judgment were
pending, Theresa Dupre filed a Chapter 7 bankruptcy petition. The
appellees challenged the discharge of her debt relying on section
523(a) of the Bankruptcy Code which provides in relevant part:
A discharge under . . . this title does not
discharge an individual debtor from any debt--
. . .
(2) for money, property, services, or an
extension, renewal, or refinancing of credit, to
the extent obtained by--
(A) false pretenses, a false
representation, or actual fraud,
other than a statement respecting
the debtor's or an insider's
financial condition;
. . .
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(6) for willful and malicious injury by the
debtor to another entity or to the property of
another entity.
11 U.S.C. § 523(a).
The bankruptcy court found the following relevant facts: the
embezzled funds were deposited into six joint accounts maintained by
the Dupres in six different banks. "Theresa was aware that her husband
was providing funds for the various accounts far in excess of his
earnings" and far in excess of their combined wages. Haemonetics v.
Dupre (In re Dupre), 208 B.R. 609, 611 (Bankr. D. Mass. 1997).
Nevertheless, she regularly wrote checks from those accounts, and
maintained the check registers, for expenditures that went beyond the
Dupre's disposable income from their wages. Accordingly, the court
found that Theresa was "intimately familiar" with the amount of funds
coming into the household, refuting "her attempts to appear
unsophisticated in financial dealings." Id. In addition, Theresa
Dupre deleted a Quicken software program from her home computer to
conceal the family's financial affairs from her creditors, denied this
act to the creditors, and testified falsely in court about the purpose
of the deletions.1
Despite these findings implicating Theresa in her husband's
embezzlement, the bankruptcy court concluded that "[t]here is not an
1 For a full disposition of the facts, see Haemonetics Corp., 238 B.R.
at 226-27.
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iota of evidence that Theresa acted in concert with Paul in the act of
converting the Plaintiffs' funds." Id. at 612. The bankruptcy court
inexplicably determined that there was insufficient evidence that
Theresa knew the source of the funds. See id. Based on this
conclusion, the court held that § 523(a) did not apply and entered
judgment for Theresa Dupre. See id.
The district court in vacating the bankruptcy court's
judgment relied on the bankruptcy court's subsidiary findings and the
additional evidence that Theresa had occasionally reviewed the regular
bank statements sent to the Dupre home. At least some of those
statements explicitly detailed the numerous deposits of very large sums
of money from Haemonetics and Nova. See Haemonetics, 238 B.R. at 228.
Finding both knowledge and participation, the district court properly
concluded that the appellant acted in concert with her husband in
converting the appellees' property and, consequently, that her debt
should not be discharged under § 523(a). See id. at 229-30.
Based on our independent judgment that the bankruptcy court's
ultimate finding is clearly erroneous, we affirm the decision of the
district court. See Palmacci v. Umpierrez, 121 F.3d 781, 785 (1st Cir.
1997). With all due deference to the bankruptcy court as the trial
court in this case, see Palmacci, 121 F.3d at 785; Williams v. Poulos,
11 F.3d 271, 278 (1st Cir. 1993), Theresa Dupre's willful destruction
of evidence, untruthful testimony, knowledge of income far in excess of
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earnings, and review of the bank statements indisputably establish that
she knew the illicit source of the funds. Where, as here, there is no
other plausible inference, we are compelled to hold that the bankruptcy
court's conclusion that Theresa lacked knowledge of the source of the
funds and could not therefore act in concert with her husband is
clearly erroneous. See Jackson v. United States, 156 F.3d 230, 232-33
(1st Cir. 1998); Irving v. United States, 49 F.3d 830, 835 (1st Cir.
1995); Williams, 11 F.3d at 278.
It follows that Theresa's willful participation in the
conversion of the appellees' property through embezzlement satisfies
the exception to discharge. See § 523(a)(6); Kawaauhau v. Geiger, 523
U.S. 57, 61-62 (1998) (holding that the injury -- the deprivation of
property -- must be wilful, not just the intentional act that results
in the injury); Roumeliotis v. Popa (In re Popa), 140 F.3d 317, 318
(1st Cir. 1998) (applying Geiger); cf. Barclays American Business
Credit v. Long (In re Long), 774 F.2d 875, 879 (8th Cir. 1985)
(observing that discharge exception requires egregious conduct rather
than mere conversion).
CONCLUSION
For the reasons discussed above and set forth more fully in
the district court opinion, we affirm.
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