PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
In Re: ELWOOD DEAN FRENCH,
Debtor.
MERCANTILE PENINSULA BANK, a
Delaware Corporation,
Plaintiff-Appellee,
v. No. 06-1405
ELWOOD DEAN FRENCH,
Defendant-Appellant,
and
GEORGE W. LIEBMANN,
Trustee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Richard D. Bennett, District Judge.
(1:05-cv-00376-RDB; AP-01-05201; BK-01-56579)
Argued: May 24, 2007
Decided: August 27, 2007
Before KING and GREGORY, Circuit Judges, and
Frank D. WHITNEY, United States District Judge for the
Western District of North Carolina, sitting by designation.
Vacated and remanded by published opinion. Judge King wrote the
majority opinion, in which Judge Gregory joined. Judge Whitney
wrote an opinion concurring in part and concurring in the judgment.
2 IN RE: FRENCH
COUNSEL
Stanton J. Levinson, Silver Spring, Maryland, for Appellant. John B.
Robins, IV, Salisbury, Maryland, for Appellee.
OPINION
KING, Circuit Judge:
Debtor Elwood Dean French appeals from the final judgment of the
district court in this matter, affirming the bankruptcy court. See
French v. Peninsula Bank, No. 1:05-cv-00376-RDB (D. Md. Feb. 21,
2006). By its opinion of January 7, 2005, the bankruptcy court denied
French’s discharge petition and awarded summary judgment to credi-
tor Mercantile Peninsula Bank ("Peninsula") on two independent
grounds. See In re: French, No. 01-5-6579-JS (Bankr. D. Md. Jan. 7,
2005). First, the bankruptcy court determined that French’s discharge
petition should be denied because he had knowingly made false oaths
during his bankruptcy proceedings. Second, the court concluded that
the petition should be denied because French had failed to keep and
preserve adequate records from which his financial condition could be
ascertained. French contends on appeal that the bankruptcy court
erred by failing to apply the appropriate principles to its assessment
of Peninsula’s summary judgment motion, and that the district court
erred in affirming that decision. More specifically, French maintains
that there are genuine issues of material fact concerning whether he
knowingly made false oaths in his bankruptcy proceedings, and
whether he failed to keep and preserve adequate financial records. As
explained below, we vacate and remand.
I.
A.
On October 10, 2000, French filed a Chapter 7 petition for bank-
ruptcy relief in the Middle District of Florida, claiming that he was
a Florida resident and seeking to protect his Florida residence from
his creditors under the state homestead exemption.1 On January 12,
1
The facts underlying this appeal are presented in the light most favor-
able to French, as he is the non-moving party with respect to the sum-
IN RE: FRENCH 3
2001, Peninsula, one of French’s creditors, filed a Complaint in the
bankruptcy court, seeking the denial of French’s petition to discharge
his debts. The Complaint alleged that French had, inter alia, (1) know-
ingly made false oaths in connection with his bankruptcy petition, in
contravention of 11 U.S.C. § 727(a)(4)(A); and (2) failed to keep or
preserve recorded information from which his financial condition
could be ascertained, in contravention of 11 U.S.C. § 727(a)(3). Fol-
lowing the filing of its Complaint, Peninsula, along with other credi-
tors of French, filed a motion to transfer the Florida bankruptcy case
to the District of Maryland for the convenience of the parties. The
case was transferred on April 10, 2001.
On March 7, 2002, Peninsula moved for summary judgment on its
Complaint, contending that French’s bankruptcy petition should be
denied on the grounds asserted in its Complaint. In support of its
claim that French had knowingly made false oaths, Peninsula referred
the bankruptcy court to several examples of inconsistent statements
that French had made under oath in connection with his bankruptcy
proceedings, including statements that he had subsequently acknowl-
edged as inaccurate. More particularly, Peninsula focused on state-
ments French had made concerning his entitlement to the Florida
homestead exemption, whether he was a resident of Maryland or Flor-
ida, and his financial interests in several partnerships and investment
groups. With regard to its claim that French had failed to keep and
preserve adequate financial records, Peninsula relied on statements
French had made indicating that he either had not kept or was unsure
of the existence of certain records. These included records of the 1991
sale of New Cherokee Lanes, a corporation owned by French’s wife;
of any sources of income — other than Social Security benefits —
that French may have had in 2000; of income he had received in 1998
and 1999; and of a 1991 transaction involving an entity called Chesa-
peake Group.
On March 28, 2002, French filed a memorandum opposing Penin-
sula’s summary judgment motion. In responding to Peninsula’s con-
mary judgment motion. See Seabulk Offshore, Ltd. v. Am. Home Assur.
Co., 377 F.3d 408, 418 (4th Cir. 2004). The facts are drawn from the
summary judgment record presented in the bankruptcy court.
4 IN RE: FRENCH
tention on false oaths, French maintained that there was a genuine
issue of material fact on whether he had knowingly and intentionally
made any false statements. In this regard, French offered his own affi-
davit, asserting that he had always sought to be truthful in his testi-
mony in the bankruptcy proceedings, and maintaining that any
inconsistencies in the evidence were the result of confusion, his fail-
ure to understand certain questions he had been asked (in part because
of his limited education — high school only — and unfamiliarity with
legal terminology), and his inability to recall the information
requested. French’s affidavit also stated that he had been preliminarily
diagnosed with a medical condition that affected his memory, his
understanding of language, and his ability to give full, complete, and
consistent testimony.
With regard to his financial records, French’s affidavit asserted
that, although he initially believed that he had lost many of the finan-
cial records sought, he eventually produced many of the records that
Peninsula had alleged were missing. More specifically, French
advised that he had disclosed: (1) complete bank records, including
all checks, check registers, bank statements, and deposit tickets, from
his Atlantic Bank checking account, which he had used for all busi-
ness and personal transactions in 1998 and 1999; (2) records showing
his personal monthly expenses for 1998, 1999, and 2000; (3) bank
records for the two personal checking accounts he maintained in
2000; and (4) tax returns for 1998, 1999, and 2000. French also
explained that, early in the bankruptcy proceedings, he had not known
of the existence or whereabouts of many of these records, but that he
had subsequently located and produced in 2001 substantially all of the
records Peninsula and the trustee sought.
On April 17, 2002, French filed a pre-trial memorandum and
attached two additional affidavits from proposed expert witnesses.
French’s first expert was Dr. Daniel J. Freedenburg, a psychiatrist
who had examined French and whose affidavit specified that "Mr.
French was suffering from a progressive disorder in the nature of a
dementia which adversely impacts his cognitive functions and which
is particularly intensified under stressful situations, such as testimony
in a deposition or hearing." J.A. 1988.2 Dr. Freedenburg further
2
Citations to "J.A. ___" refer to the Joint Appendix filed by the parties
in this appeal.
IN RE: FRENCH 5
asserted in his affidavit that "[w]hile I am not yet prepared to label
this disorder as Alzheimer’s, I am of the opinion that Mr. French’s
apparent difficulties at times in recollection, in organizing thoughts,
and even in keeping full and accurate records, derive from this disor-
der rather than from a lack of honesty or effort." Id. The Freedenburg
affidavit continued: "This problem causes him at times to provide
inaccurate and sometimes even contradictory responses to questions
despite a desire and effort to be truthful, a symptom I personally
observed during my examination." Id. Moreover, Dr. Freedenburg
asserted that "[t]his problem also exhibits itself in Mr. French’s
inability at times to understand questions or terms used by a ques-
tioner in the same way as they are intended to be understood." Id.
French’s second expert was Charles G. Fagan, a CPA, whose affi-
davit asserted that he had examined French’s financial records and
concluded that they were reasonably sufficient to determine French’s
financial condition for the years 1998 and 1999. More specifically,
Fagan stated, "While Mr. French is not able to document all transac-
tions in detail, . . . it is my opinion that the records he provided are
sufficient to determine his financial condition in general terms with-
out necessarily tracking each transaction." J.A. 1987. Fagan advised
that he had not yet examined French’s bank records for 2000 and thus
had not formulated an opinion on the adequacy of French’s records
relating to that year.
On May 10, 2002, Peninsula filed an amended motion for summary
judgment, asserting the same claims it had addressed in its earlier
motion, and providing additional examples of inconsistent statements
French had made in connection with his bankruptcy proceedings. On
June 12, 2002, French filed a memorandum opposing Peninsula’s
amended summary judgment motion, again asserting that genuine
issues of material fact were apparent on Peninsula’s claims that he
had knowingly made false oaths and that he had failed to keep and
preserve adequate financial records. Several months later, on Septem-
ber 25, 2002, the bankruptcy court heard oral argument on Peninsu-
la’s amended summary judgment motion. At the conclusion of the
argument, the court announced from the bench that it would grant
Peninsula’s motion for summary judgment and deny the discharge in
bankruptcy sought by French.
6 IN RE: FRENCH
B.
More than two years later, on January 7, 2005, the bankruptcy
court entered its Memorandum Opinion and Order awarding summary
judgment to Peninsula and denying French the discharge he had
sought. See In re: French, No. 01-5-6579-JS (Bankr. D. Md. Jan. 7,
2005) (the "Bankruptcy Opinion").3 The Bankruptcy Opinion con-
cluded that French had made false oaths and had failed to keep and
preserve adequate financial records, and that each of those grounds
warranted the denial of his discharge in bankruptcy. The court
rejected French’s position that the inaccuracies in his testimony were
the result of misunderstandings and his impaired mental function,
concluding that French was not credible and declining to give any
weight to Dr. Freedenburg’s affidavit. Specifically, the court
explained that "[g]iven the importance of honesty in the administra-
tion of bankruptcy proceedings, this Court will not reward a dishonest
debtor with the privilege of a discharge merely because of a doctor’s
excuse that the debtor is a compulsive liar." Bankruptcy Opinion 30.
Additionally, the court asserted that "[t]he timing of the false state-
ments alone is enough for this Court to determine that they were
intended to reach a certain result." Id. at 31. The court, however,
failed to assess whether a reasonable trier of fact, viewing the evi-
dence in the light most favorable to French, would be entitled to con-
clude that his inconsistent statements were made innocently.
With respect to the claim concerning French’s preservation of
financial records, the bankruptcy court asserted that the condition of
French’s financial records had placed "an intolerable burden upon the
Court, the trustee and the creditors of the estate to attempt a recon-
struction of the financial affairs of the debtor and his various entities."
Bankruptcy Opinion 23. Specifically, the court relied on deficiencies
in records of the 1991 sale of New Cherokee Lanes and records of
French’s income in 2000. Furthermore, it concluded that French’s ini-
tial denials that he had maintained the requested records "caused
unreasonable delay and expense to creditors." Id. at 24. The court
3
The Bankruptcy Opinion is found at J.A. 2731-64. The bankruptcy
court did not specify therein any reasons for the two-year delay between
the summary judgment argument and the Bankruptcy Opinion’s issu-
ance.
IN RE: FRENCH 7
failed, however, to mention or assess the Fagan affidavit. Moreover,
as with its evaluation of Peninsula’s contention on false oaths, the
court did not discuss whether a reasonable trier of fact, viewing the
evidence in the light most favorable to French, would be entitled to
find that French had satisfied his obligation with regard to financial
records.
French thereafter appealed the bankruptcy court’s rulings to the
district court for the District of Maryland, pursuant to 28 U.S.C.
§ 158(a). On February 21, 2006, the district court entered its Memo-
randum Opinion and Order affirming the bankruptcy court. See
French v. Peninsula Bank, No. 1:05-cv-00376-RDB (D. Md. Feb. 21,
2006) (the "District Court Opinion").4 It agreed that no genuine issues
of material fact existed concerning whether French had knowingly
made false oaths and whether he had kept and preserved adequate
financial records. See District Court Opinion 2. Although the district
court also did not discuss the Fagan affidavit, it concluded that,
according all reasonable inferences to French, the Freedenburg affida-
vit did not create a genuine issue of material fact with respect to Pen-
insula’s claims. See id. at 10, 12.
French has timely appealed, and we possess jurisdiction pursuant
to 28 U.S.C. § 1291.
II.
We review de novo a bankruptcy court’s award of summary judg-
ment and a district court’s affirmance thereof. In re Ballard, 65 F.3d
367, 370 (4th Cir. 1995). In bankruptcy, summary judgment is gov-
erned in the first instance by Federal Rule of Bankruptcy Procedure
7056, which expressly incorporates into bankruptcy proceedings the
standards of Federal Rule of Civil Procedure 56. A court may award
summary judgment only when there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter
of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986); In re Apex Express Corp., 190 F.3d 624, 633 (4th Cir. 1999);
see also Fed. R. Civ. Proc. 56(c) (providing that award of summary
4
The District Court Opinion is found at J.A. 2770-84.
8 IN RE: FRENCH
judgment is appropriate only "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law").
In evaluating a summary judgment motion, a court "must consider
whether a reasonable jury could find in favor of the non-moving
party, taking all inferences to be drawn from the underlying facts in
the light most favorable to the non-movant." Apex Express Corp., 190
F.3d at 633. In so doing, a court is not entitled to either weigh the evi-
dence or make credibility determinations. See Anderson, 477 U.S. at
255 ("Credibility determinations, the weighing of the evidence, and
the drawing of legitimate inferences from the facts are jury functions,
not those of a judge . . . ."). If the moving party is unable to demon-
strate the absence of any genuine issue of material fact, summary
judgment is not proper and must be denied. See Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986); Honor v. Booz-Allen & Hamilton,
Inc., 383 F.3d 180, 185 (4th Cir. 2004).
III.
Put simply, French contends on appeal that the bankruptcy court
erred in failing to apply the applicable summary judgment principles
in its evaluation of Peninsula’s motion. More specifically, French
asserts that a genuine issue of material fact exists as to each of Penin-
sula’s grounds for the denial of his discharge petition, and that sum-
mary judgment was thus inappropriate. We address in turn the rulings
of the Bankruptcy Opinion on Peninsula’s two claims — that French
knowingly made false oaths and that he failed to keep and preserve
adequate financial records.
A.
French first contends that the bankruptcy court erred in awarding
summary judgment on the basis of Peninsula’s claim that he know-
ingly made false oaths during his bankruptcy proceedings. The Bank-
ruptcy Code provides that a debtor seeking Chapter 7 relief shall be
granted a discharge of his debts unless "the debtor knowingly and
fraudulently, in or in connection with the case . . . made a false oath
or account." 11 U.S.C. § 727(a)(4)(A). In order to be denied a dis-
charge under this provision, "the debtor must have made a statement
IN RE: FRENCH 9
under oath which he knew to be false, and he must have made the
statement willfully, with the intent to defraud." Williamson v. Fire-
man’s Fund Ins. Co., 828 F.2d 249, 251 (4th Cir. 1987). Significantly,
in evaluating a claim under § 727(a)(4)(A), we have recognized that
the question of whether a debtor has made a false oath is generally
a question of fact. See id.
On appeal, French focuses on the essential element of intent, main-
taining that a genuine issue of material fact is present on whether he
made any false statements with an intent to defraud. In particular,
French points to his personal affidavit, in which he maintains that any
inaccurate or inconsistent statements he made under oath in the bank-
ruptcy proceedings were the result of confusion or impaired mental
function. He also relies on Dr. Freedenburg’s affidavit, in which
French’s psychiatrist opined that French suffers from a progressive
cognitive disease that makes it difficult for him to answer questions
accurately. Based on these affidavits, French contends that a genuine
issue exists as to whether he possessed the intent to defraud essential
for a denial of discharge under § 727(a)(4)(A).5
Notwithstanding the evidence forecast by these affidavits, the
bankruptcy court concluded that there was no genuine issue of mate-
rial fact as to French’s intent to defraud. In so ruling, the court made
several points. First, the court observed that the timing of French’s
inaccurate statements indicated that they were made with an intent to
5
Peninsula maintains that the Freedenburg and Fagan affidavits should
be excluded from consideration on summary judgment for two reasons.
First, it asserts that they are not part of the summary judgment record
because they were submitted as attachments to French’s pre-trial memo-
randum rather than with his memorandum in opposition to summary
judgment. Peninsula, however, failed to object to these affidavits during
the summary judgment proceedings, and the Freedenburg affidavit was
discussed at length at the summary judgment argument. Second, Penin-
sula asserts that the affidavits should not be considered because they
were not made on personal knowledge, as required by Federal Rule of
Civil Procedure 56(e). As the affidavits reflect, however, they were each
based upon personal observations — in the case of the Freedenburg affi-
davit, Dr. Freedenburg’s personal examination of French; and in the case
of the Fagan affidavit, Fagan’s personal examination of French’s finan-
cial records.
10 IN RE: FRENCH
defraud. Second, the court made known that it simply disbelieved the
Freedenburg affidavit, describing it as "a doctor’s excuse that the
debtor is a compulsive liar." Bankruptcy Opinion 30. Third, the court
indicated that, even if the Freedenburg affidavit was correct, it would
nonetheless deny French a discharge because of "the importance of
honesty in the administration of bankruptcy proceedings." Id.
In these circumstances, we conclude that the bankruptcy court
erred and that a genuine issue of material fact exists on whether
French made false statements in his bankruptcy proceedings with an
intent to defraud. Although the court evaluated French’s affidavit and
the Freedenburg affidavit, it did not address the question central to the
assessment of Peninsula’s summary judgment motion: whether a rea-
sonable trier of fact, viewing the evidence in the light most favorable
to French, could have found that he lacked the fraudulent intent nec-
essary to deny him a discharge under § 727(a)(4)(A). See In re Apex
Express Corp., 190 F.3d 624, 633 (4th Cir. 1999) (recognizing that
court "must consider whether a reasonable jury could find in favor of
the non-moving party, taking all inferences to be drawn from the
underlying facts in the light most favorable to the non-movant").
Viewing the evidence in the light most favorable to French (the non-
moving party), a reasonable factfinder could, in this case, readily con-
clude that French lacked the requisite intent to make false oaths. This
is particularly so in light of the expert medical evidence indicating
that French’s inaccuracies were likely the result of a mental impair-
ment, plus French’s own affidavit that he did not intend to mislead the
court.6
In its ruling, the bankruptcy court also made credibility determina-
tions which are not appropriate in a court’s assessment of a motion
for summary judgment. We have recognized that, in evaluating a
§ 727(a)(4)(A) claim, "a determination concerning fraudulent intent
depends largely upon an assessment of the credibility and demeanor
of the debtor." Williamson, 828 F.2d at 252. In awarding summary
judgment to Peninsula, the bankruptcy court made credibility determi-
nations on both French’s and Dr. Freedenburg’s proffered testimony,
6
We note that there were no counter-affidavits filed by Peninsula to
contradict the opinions of Dr. Freedenburg. Furthermore, there was no
proffered evidence that the debtor was a "compulsive liar."
IN RE: FRENCH 11
and specifically rejected their testimony as unreliable. In the summary
judgment context, a court is simply not empowered to make such
determinations. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986) ("Credibility determinations . . . are jury functions, not
those of a judge . . . ."). In these circumstances, the bankruptcy court
erred in awarding summary judgment to Peninsula on the ground that
French made false oaths during his bankruptcy proceedings.7
B.
French next contends that the bankruptcy court erred in awarding
summary judgment on the basis of Peninsula’s claim that he had
failed to keep and preserve adequate financial records. The Bank-
ruptcy Code provides that a debtor seeking Chapter 7 relief shall be
granted a discharge of his debts unless
the debtor has concealed, destroyed, mutilated, falsified, or
failed to keep or preserve any recorded information, includ-
7
With respect to whether Dr. Freedenburg’s affidavit qualifies as such
under Rule 56(e), as discussed by our concurring colleague, we can
respond simply: Peninsula has never challenged the "affidavit" (so
denominated on the face thereof) — either in the bankruptcy court, the
district court, or in its briefs or oral argument in this appeal — on the
basis that it may be deemed unsworn. In fact, the bankruptcy and district
courts’ opinions each considered that submission in connection with the
summary judgment issue and treated it as an "affidavit." See Bankruptcy
Opinion 29; District Court Opinion 9. Thus, we have no reason to sua
sponte reject Dr. Freedenburg’s affidavit as unsworn. See In re Unisys
Sav. Plan Litig., 74 F.3d 420, 437 n.12 (3d Cir. 1996) (considering
unsworn affidavit when party did not move to strike it in lower court);
Gasaway v. Nw. Mut. Life Ins. Co., 26 F.3d 957, 960 (9th Cir. 1994)
(same); DeCintio v. Westchester County Med. Ctr., 821 F.2d 111, 114
(2d Cir. 1987) (same); McCloud River R.R. Co. v. Sabine River Forest
Prods., Inc., 735 F.2d 879, 882 (5th Cir. 1984) (same); Noblett v. Gen.
Elec. Credit Corp., 400 F.2d 442, 445 (10th Cir. 1968) (same). With no
such contention having been raised on appeal, this issue is not even sub-
ject to plain error review — it has been waived. As a result, we are
unable to agree with our concurring colleague on this point, for to do so
would sanction our use of a roving writ to ferret out possible error that
counsel has already determined not to pursue.
12 IN RE: FRENCH
ing books, documents, records, and papers, from which the
debtor’s financial condition or business transactions might
be ascertained, unless such act or failure to act was justified
under all of the circumstances of the case.
11 U.S.C. § 727(a)(3). Thus, a party objecting to a bankruptcy dis-
charge petition on this basis must make an initial showing that (1) the
debtor failed to keep and preserve adequate financial records, and (2)
such a failure makes it impossible to ascertain the debtor’s financial
condition. See § 727(a)(3); see also Meridian Bank v. Alten, 958 F.2d
1226, 1232 (3d Cir. 1992).
On appeal, French contends that there is a genuine issue of material
fact on whether he maintained adequate records from which his finan-
cial condition could be ascertained. In assessing this contention, we
must first review the obligations of a debtor under § 727(a)(3).
Although we have not heretofore addressed this specific point in a
published decision, several other courts of appeals have done so.8
These courts have consistently determined that a debtor’s books "need
not be perfect nor follow any particular system." Noroian v. Hern,
422 F.2d 1092, 1094 (9th Cir. 1970); see also In re Schifano, 378
F.3d 60, 69 (1st Cir. 2004) (concluding that Bankruptcy Code does
not require perfect bookkeeping); Meridian Bank, 958 F.2d at 1230
("The Bankruptcy Code does not require a debtor seeking a discharge
specifically to maintain a bank account, nor does it require an impec-
cable system of bookkeeping.").
The essential requirement of § 727(a)(3) under these authorities is,
as the Third Circuit has explained, that the records "sufficiently iden-
tify the transactions so that intelligent inquiry can be made of them.
The test is whether there is available written evidence made and pre-
served from which the present financial condition of the bankrupt,
and his business transactions for a reasonable period in the past may
be ascertained." Meridian Bank, 958 F.2d at 1230 (internal quotation
8
In In re: Shigo, we reasoned that a debtor is not required under
§ 727(a)(3) to maintain perfect financial records. See No. 95-1959, 1996
WL 405223, at *2 (4th Cir. July 19, 1996). Rather, we explained that a
debtor need "just provide the trustee with the records he has, and, if he
has none, give an explanation as to why." Id.
IN RE: FRENCH 13
marks omitted); see also Schifano, 378 F.3d at 69 (concluding that
records preserved must reasonably allow court and parties to ascertain
accurate picture of debtor’s financial affairs); Noroian, 422 F.2d at
1094 ("All that is required is that a competent accountant should be
able to determine from such books and records the financial condition
of the bankrupt."); In re Green, 202 B.R. 68, 71 (Bankr. D. Md. 1996)
("The appropriate inquiry is whether the debtor kept records which
would allow creditors to ascertain the debtor’s present financial con-
dition and business transactions over a reasonable period of time. The
Bankruptcy Code does not demand perfection, but it does require
debtors to maintain records in a manner that is reasonable under the
circumstances of the particular case." (internal citations omitted)); In
re Baxter, 96 B.R. 58, 60 (Bankr. E.D. Va. 1989) ("A debtor’s records
must at least reasonably allow for the reconstruction of the debtor’s
financial condition to meet the requirements of the Bankruptcy
Code." (internal quotation marks omitted)). We are content with the
principle that a bankruptcy debtor is not required to maintain perfect
records. A debtor is, however, obliged by the statute to preserve suffi-
cient and adequate financial records to enable the court and the parties
to reasonably ascertain an accurate picture of his financial affairs.
Although the parties did not take issue with the foregoing principle,
Peninsula makes two contentions on appeal concerning its applicabil-
ity to the circumstances of French’s discharge petition. First, Penin-
sula contends that it is entitled to summary judgment on its
inadequate records claim because French was a sophisticated debtor
and thus should be held to a higher standard. In the Bankruptcy Opin-
ion, the bankruptcy court agreed on that point. The court then deter-
mined that, because it found French to be a sophisticated
businessman, he should have better maintained his business records.
Although the sophistication factor may be important in assessing a
denial of discharge under § 727(a)(3), whether French was a sophisti-
cated debtor was itself a contested fact, and such a finding does not,
in any event, justify an award of summary judgment to Peninsula.
Instead, as the Third Circuit explained, the level of a debtor’s sophis-
tication is simply another factor that a trier of fact may take into
account in determining whether a debtor maintained sufficient
records. See Meridian Bank, 958 F.2d at 1231 (concluding that Bank-
ruptcy Code requires trier of fact to make determination on adequacy
of debtor’s records and his justification for not maintaining certain
14 IN RE: FRENCH
records based on all circumstances, including "the education, experi-
ence, and sophistication of the debtor; the volume of the debtor’s
business; the complexity of the debtor’s business; the amount of
credit extended to debtor in his business; and any other circumstances
that should be considered in the interest of justice" (internal quotation
marks omitted)).
Next, Peninsula contends that it is entitled to summary judgment
on its inadequate records claim because French did not disclose the
requested financial records in a timely fashion. Specifically, it con-
tends that, although French eventually produced an abundance of
records, such production occurred after he had already informed the
trustee that he believed the requested records had been destroyed or
that they did not exist. Thus, Peninsula asserts that the bankruptcy
court properly ruled that "by denying the existence of certain records
that were later produced by his attorney . . . , French caused unreason-
able delay and expense to creditors who were entitled to have him
make full disclosure of his financial records." Bankruptcy Opinion 24.
Again, whether the timeliness of a debtor’s disclosure of records
caused a delay for the parties in adequately ascertaining his financial
condition is a factor that a trier of fact may assess in its determination
as to whether he has satisfied the standard of § 727(a)(3).9
Finally, we must assess whether there is a genuine issue of material
fact concerning whether the records French disclosed would permit
9
We are not opining here that an award of summary judgment should
never be granted under § 727(a)(3) on the basis of a debtor failing to pro-
duce requested financial records within a reasonable time. In this case,
however, Peninsula failed to show that the timing of French’s financial
disclosures caused any unreasonable delay and expense, and thus it can-
not be awarded summary judgment on this ground as a matter of law. See
Fed. R. Civ. P. 56(c) (providing that award of summary judgment is
appropriate only "if the pleadings, depositions, answers to interrogato-
ries, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law"). More specifically, Penin-
sula did not demonstrate, by affidavit or otherwise, when French was
obliged to disclose such records, how long he waited in fulfilling such
requests, or that Peninsula was not able to reasonably ascertain French’s
financial condition because of a delay in producing requested records.
IN RE: FRENCH 15
the parties to reasonably ascertain his financial condition. French
asserts that, although his records are not complete, there is a question
of fact as to whether an accurate picture of his financial affairs can
be developed. In so maintaining, French points to his affidavit, where
he explains that, despite his statements in earlier proceedings that
there were significant gaps in his record-keeping, he ultimately was
able to produce records of his income, expenses, and banking transac-
tions for several years prior to the filing of his bankruptcy petition.
French also points to the Fagan affidavit, where his expert asserts that
the records are sufficient to ascertain his financial condition (except,
perhaps, for the year 2000). Based on these affidavits, French con-
tends that a genuine issue of fact exists on whether he adequately kept
and preserved his financial records.
Notwithstanding the evidence forecast by French, the bankruptcy
court ruled against him, concluding that there was no genuine issue
of material fact on whether he had kept and preserved adequate
records. In so doing, the court determined that the condition of
French’s financial records had placed "an intolerable burden upon the
Court, the trustee and the creditors of the estate to attempt a recon-
struction of the financial affairs of the debtor and his various entities."
Bankruptcy Opinion 23. It then relied on deficiencies in the records
concerning the 1991 sale of New Cherokee Lanes and French’s
income in 2000.
In the circumstances presented, we are constrained to disagree with
the bankruptcy court, and conclude that it erred on this aspect of the
discharge petition as well. Viewing the evidence in the light most
favorable to French, a reasonable factfinder could find that the
records produced by French were sufficient to permit an assessment
of his financial condition and that, to the extent French had failed to
produce certain records, such failure was justified in the circum-
stances. Specifically, with regard to his 2000 income, French’s affida-
vit maintains that he had produced his 2000 banking and income tax
records. And, with respect to the 1991 New Cherokee Lanes transac-
tions, a reasonable factfinder could conclude that the absence of such
possibly outdated records was justified by the time factor involved.
Furthermore, French presented evidence, through the Fagan affidavit
(which the bankruptcy court failed to mention or assess), that an
16 IN RE: FRENCH
accountant could reasonably ascertain his financial condition based
upon the records he produced.10
IV.
Pursuant to the foregoing, we vacate and remand to the bankruptcy
court for such other and further proceedings as may be appropriate.11
VACATED AND REMANDED
WHITNEY, District Judge, concurring in part and concurring in the
judgment:
With the exception of Section A of Part III, I concur in the majority
opinion. As to Section A of Part III, I concur in the result reached by
the majority, but write separately to express my concerns with the rea-
soning in that portion of the majority opinion’s analysis.
The majority opinion not only concludes that Dr. Freedenburg’s
"affidavit" constitutes "expert medical evidence," but further con-
cludes the affidavit creates a genuine issue of material fact regarding
French’s knowledge and intent to defraud. Although I agree that a
10
Had the bankruptcy court conducted a bench trial on either of the
claims made by Peninsula, it would have been entitled to make such
findings of fact as it did in the Bankruptcy Opinion. Critically, however,
the court disposed of Peninsula’s Complaint on summary judgment. It
therefore was not authorized to weigh the evidence, make credibility
determinations, or draw inferences unfavorable to French. See Anderson,
477 U.S. at 255.
11
French makes two additional contentions on appeal. First, he asserts
that the bankruptcy court erred in granting Peninsula’s motion to supple-
ment its Complaint so that it would more fully comply with the pleading
requirements of Federal Rule of Civil Procedure 9(b). On this point, we
are satisfied that the bankruptcy court did not abuse its discretion in
allowing Peninsula to supplement its Complaint. See Franks v. Ross, 313
F.3d 184, 198 n.15 (4th Cir. 2002). Second, French asserts that the bank-
ruptcy court erred in considering two related bankruptcy court opinions,
which involved his claim of a Florida homestead exemption and his
wife’s bankruptcy proceeding. Because we vacate and remand, we need
not reach this contention.
IN RE: FRENCH 17
genuine issue of fact exists on the issue of fraudulent intent, I disagree
that this issue of fact was created by Dr. Freedenburg’s statement.
The statement fails to comply with the requirements of Rule 56(e) and
therefore should not be considered. Peninsula’s failure to object to Dr.
Freedenburg’s "affidavit" at the summary judgment hearing did not
require the bankruptcy court to consider or give credit to it. CMS
Industries, Inc. v. L.P.S. Inern., Ltd., 643 F.2d 289, 295 (5th Cir.
1981). Contrary to the majority’s suggestion in footnote 7, it should
in no way prejudice Peninsula, as the appellee and party seeking to
sustain the judgment below, that the courts below properly disre-
garded Dr. Freedenburg’s statement, notwithstanding Peninsula’s fail-
ure to object.
Thus, I cannot join the majority opinion because it results in a rul-
ing that not only suggests that the bankruptcy court had to consider
Dr. Freedenburg’s "affidavit," but also goes so far as to say the bank-
ruptcy court should have denied summary judgment based on the
assertions contained therein. Instead, I concur in the result reached by
the majority opinion because the evidence contained in the record —
circumstantial or otherwise — is insufficient to conclude at the sum-
mary judgment stage that French possessed the requisite fraudulent
intent.
I.
Rule 56(e) of the Federal Rules of Civil Procedure provides that
when affidavits are used to support or oppose a summary judgment
motion, they "shall be made on personal knowledge, shall set forth
such facts as would be admissible in evidence, and shall show affir-
matively that the affiant is competent to testify to the matters stated
therein." These requirements are mandatory. 10B Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Pro-
cedure § 2738 (3d ed. 2007).
Dr. Freedenburg’s statement was neither sworn under oath nor
made under the penalty of perjury. As a result, the statement fails to
meet the most basic requirement of form required by Rule 56(e). See
Adickes v. S.H. Kress & Co., 398 U.S. 144, 158 n. 17 (1970) (noting
that unsworn statement in support of motion for summary judgment
did not meet the requirements of Fed. R. Civ. P. 56(e)); see also 28
18 IN RE: FRENCH
U.S.C. § 1746 (setting forth requirements for declarations and affida-
vits submitted to the court). Second, Dr. Freedenburg’s statement
does not set forth facts that would be admissible in evidence because
nowhere does Dr. Freedenburg state that his opinions are based on a
reasonable degree of medical certainty. See Fitzgerald v. Manning,
679 F.2d 341, 351 (4th Cir. 1982) (recognizing "the [expert] opinion
testimony may not be stated in general terms but must be stated in
terms of a ‘reasonable degree of medical certainty’"). Finally, Dr.
Freedenburg’s statement does not show affirmatively that he is com-
petent to testify to the matters stated therein. In fact, by his own state-
ment, Dr. Freedenburg concedes he is unable — or incompetent —
to testify to the opinions provided. For example, Dr. Freedenburg rec-
ommended French seek additional medical assistance to "define more
definitely the nature of [French’s] problem . . . ."
Not only does Dr. Freedenburg’s statement not comply with the
standards of Rule 56(e), but the statements hardly constitute "expert
medical evidence" sufficient to create an issue of fact. No facts appear
on the face of the statement that suggest Dr. Freedenburg’s opinions
might withstand reliability analysis under Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). Dr. Freedenburg’s state-
ment contains nothing but general unsworn assertions setting forth
possible causes for French’s inconsistent statements. Accordingly, I
agree with the bankruptcy court’s decision to disregard the "affidavit"
and the purported "doctor’s excuse" contained therein.
II.
Notwithstanding the fact the bankruptcy court properly disregarded
Dr. Freedenberg’s statement, "[s]ummary judgment is not . . . an auto-
matic sanction for non-compliance with Rule 56(e). A movant must
establish the propriety of relief by the strengths of his own showing,
not by the defects in his opponents’ showing." Jackson v. Mississippi,
644 F.2d 1142, 1144 (5th Cir. 1981). I would hold that Peninsula
failed to carry its burden to show no genuine issue exists as to
whether French possessed the requisite fraudulent intent to make his
debt nondischargeable.
Peninsula argued, and the bankruptcy court and district court
agreed, that French’s pattern of making materially false statements
IN RE: FRENCH 19
evidenced fraudulent intent sufficient to show French "knowingly and
fraudulently" made false oaths. The bankruptcy court based its ruling
on In Re Sholdra, 249 F.3d 380 (5th Cir. 2001), which noted, "[T]he
cumulative effect of all the falsehoods together evidences a pattern of
reckless and cavalier disregard for the truth [to support] fraudulent
intent." Id. at 383 (quoting Economy Brick Sales, Inc. v. Gonday (In
re Gonday), 27 B.R. 428, 432 (Bankr. M.D. La.1983)) (alteration in
original). Sholdra is distinguishable from the case at bar. There, the
court upheld a denial of discharge under § 727(a)(4)(A) because the
debtor "remained silent and did not present any facts creating genuine
issues of material fact" regarding his intent to defraud. Id. at 383.
Here, French did not "remain silent" and instead proffered testimony
and an affidavit to demonstrate such lack of intent.
Recognizing that the law on summary judgment is well-settled, it
bears repeating that summary judgment should be granted only where
it is clear that there is no dispute about the facts or inferences to be
drawn therefrom. Fed. R. Civ. P. 56(c). Furthermore, the court must
view the evidence in the light most favorable to the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). It is not
the role of the trial court to weigh the evidence or to determine its
credibility, and the moving party cannot prevail if any essential ele-
ment of its claim for relief requires trial. Id. Here, the bankruptcy
court appears to have disregarded the procedural posture of the case
and the summary judgment principles that give French the benefit of
all reasonable inferences.
Although it is uncontroverted that French made inconsistent state-
ments, the presence of conflicting testimony, without more, does not
inherently establish fraudulent intent. This is especially true at the
summary judgment stage where French has not "remained silent," has
specifically denied having an intent to defraud, and has proffered
explanations for his conflicting statements that he was oftentimes
confused or misunderstood the question asked. See Simas v. First Cit-
izens’ Federal Credit Union, 170 F.3d 37 (1st Cir. 1999) ("[T]he
competence of the nonmovant’s own testimony is treated no differ-
ently than that of any other potential trial witness."). By disregarding
French’s explanations and denial, the bankruptcy court was, in effect,
weighing the evidence and making credibility determinations — all
while failing to give French the benefit of all reasonable inferences.
20 IN RE: FRENCH
While the bankruptcy court is entitled to make these types of deci-
sions following a bench trial, it was inappropriate to make such find-
ings of fact and resolve such conflicts in the evidence on summary
judgment.
For these reasons, as well as those stated in Section B of Part III
of the majority opinion, I concur in the result to vacate the judgment
and remand.