Stipulated Judgment Is an Admission of Liability (Not a “Promise to Pay”) for § 523(a)(2)(A), and Mid-Trial Judgment in a Bench Trial Proceeds Under Civil Rule 52(c), Not Rule 50(a)

Case: Desiree Myrum v. Anthony Michaels (In re Anthony Quinn Michaels), BAP No. WY-25-016 (10th Cir. BAP Apr. 15, 2026) (unpublished)

I. Introduction

This bankruptcy appeal arises from a tragic noncommercial event: Desiree Myrum was severely bitten in the face by a Mastiff Pit Bull owned by Anthony Michaels while the dog was staying at her father’s residence. Myrum sued in Wyoming state court and obtained a $30,000 stipulated judgment against Michaels (the “Stipulated Judgment”). After Michaels made no payments, Myrum pursued wage garnishment; Michaels then filed a Chapter 7 petition and scheduled Myrum as a creditor.

Myrum commenced an adversary proceeding asserting (1) nondischargeability under 11 U.S.C. § 523(a)(2)(A) (false pretenses, false representation, or actual fraud) and (2) denial of discharge under § 727(a)(4). After Myrum rested at a bench trial, the bankruptcy court entered judgment for Michaels. The Tenth Circuit BAP affirmed.

The appeal centered on two practical questions: (a) whether a debtor’s entry into—and later nonpayment of—a stipulated tort judgment can be reframed as “fraud in the inducement” under § 523(a)(2)(A), and (b) what procedural rule governs a defendant’s request for judgment after the plaintiff rests in a nonjury adversary proceeding.

II. Summary of the Opinion

The BAP affirmed for two principal reasons:

• No § 523(a)(2)(A) fraud proven: The record did not establish false pretenses, false representation, or actual fraud in the procurement of the Stipulated Judgment, nor the required intent to deceive and justifiable reliance.
• Correct procedure in a bench trial: The bankruptcy court was not required to apply Civil Rule 50(a) (a jury-trial rule). In a nonjury trial, Civil Rule 52(c) permits judgment on partial findings, and the court may weigh evidence and assess credibility rather than view the record in the light most favorable to the nonmoving party.

The panel also held that any § 727 issue was waived because it was not properly preserved in the statement of issues and opening brief.

III. Analysis

A. Precedents Cited (and How They Shaped the Result)

1. Waiver and appellate framing

• Fed. Ins. Co. v. Tri-State Ins. Co. and Wheeler v. Comm'r supplied the waiver doctrine the panel used to decline review of Myrum’s belated § 727 theory (raised at oral argument and only minimally in reply). This framing mattered: it narrowed the appeal to § 523(a)(2)(A) and procedure.

2. Finality and appellate jurisdiction

• In re Durability, Inc. supported treating the adversary proceeding as the relevant “judicial unit” for finality—confirming that the judgment resolving all adversary claims was appealable.

3. Standard of review (why deference mattered)

• Lee v. Peeples (In re Peeples) and U.S. Tr. v. Garland (In re Garland) were invoked for abuse-of-discretion review language in discharge contexts, while the opinion also acknowledged differing formulations in Cousatte v. Lucas (In re Lucas). Practically, the panel emphasized it would review legal conclusions de novo, but factual findings (including intent and reliance) for clear error, and would not disturb discretionary calls absent a “definite and firm conviction” of error (drawing on United States v. Ortiz, Cruz v. Farmers Ins. Exch., Jackson v. Los Lunas Cmty. Program, and Ohlander v. Larson).
• In re Woods, Glencove Holdings, LLC v. Bloom (In re Bloom), and Snyder v. Schlesselman (In re Snyder)

4. The core § 523(a)(2)(A) elements and burden

• Fowler Bros. v. Young (In re Young) and Bank of Cordell v. Sturgeon (In re Sturgeon)
• Grogan v. Garner
• Hatfield v. Thompson (In re Thompson)

5. “Justifiable reliance,” not “reasonable reliance”

• Field v. Mansjustifiable reliance as the § 523(a)(2)(A) standard and explains it is subjective and context-driven, while still requiring a creditor not to “blindly” ignore obvious warning signs.
• Johnson v. Riebesell (In re Riebesell)

6. Nonpayment, intent at inception, and permissible inference

• Chevy Chase Bank FSB v. Kukuk (In re Kukuk)
• Groetken v. Davis (In re Davis)Farmers Co-op. Ass'n of Talmage, Kan. v. Strunk
• The opinion also noted out-of-circuit bankruptcy decisions taking a more inference-friendly view—Creal Dallas, LLC v. Viciedo (In re Viciedo) and Wang v. Ling (In re Ling)—but did not adopt them, implicitly favoring the restraint reflected in Kukuk.

7. Stipulated judgments, settlements, and the “promise to pay” problem

• Archer v. Warner
• United States v. Rothhammer
• Krietzberg v. Mucci (In re Mucci)

8. “Actual fraud” beyond misrepresentation

• Husky Int'l Elecs., Inc. v. Ritz

9. Bench-trial procedure: Rule 52(c) vs Rule 50(a)

• On jury-trial judgment-as-a-matter-of-law standards, the panel cited Reeves v. Sanderson Plumbing Prods., Inc. and Jones v. United Parcel Serv., Inc. (view evidence favorably to the nonmovant; no credibility weighing).
• For the bench-trial “partial findings” standard, Roth v. Am. Hosp. Supply Corp., Blankenship v. Herzfeld, and Feldman v. Pioneer Petroleum, Inc.

B. Legal Reasoning

1. Why § 523(a)(2)(A) failed: the theory targeted the wrong moment

The panel’s throughline was temporal: § 523(a)(2)(A) scrutinizes the debtor’s conduct and state of mind when the creditor parted with value or altered position—not the debtor’s later inability or unwillingness to pay.

• False pretenses: Myrum did not identify a “series of events” or contrived course of conduct that wrongfully induced her to enter the Stipulated Judgment. The panel treated her showing as largely a post-judgment nonpayment narrative, not an inducement narrative.
• False representation: The key move was characterizing the Stipulated Judgment as an admission of liability, not a representation of present intent or ability to pay. Without a false statement (or actionable omission) inducing the stipulation, Myrum could not satisfy the first element under Fowler Bros. v. Young (In re Young).
• Actual fraud: Even under Husky Int'l Elecs., Inc. v. Ritz, the panel found no evidence of a preexisting scheme or artifice by which Michaels “obtained” something from Myrum through wrongful means. A later bankruptcy filing and nonpayment, without indicia of an inception-stage fraudulent plan, did not bridge the statutory “obtained by” requirement.

2. Intent to deceive: nonpayment and bankruptcy were not enough

Applying Chevy Chase Bank FSB v. Kukuk (In re Kukuk), the panel held that the “no payments” fact pattern did not alone permit a finding that Michaels lacked intent to perform at inception. The panel also rejected Myrum’s attempt to treat Michaels’s statement that he “might file bankruptcy” as a confession of fraud: warning of a potential bankruptcy is not, without more, evidence of a deceitful plan to induce the creditor into a disadvantageous position.

3. Justifiable reliance: advance warning undermined the claim

The panel treated Field v. Mans as controlling and concluded the bankruptcy court used the correct standard. Factually, the decisive circumstance was that Myrum—through counsel—was advised before the stipulation that Michaels might file bankruptcy. That warning functioned as a “red flag” inconsistent with a claim that she justifiably relied on an implied assurance of payment when agreeing to the stipulated judgment.

Importantly, the panel did not accept the reframing that “a judicial judgment” itself is the reliance hook; § 523(a)(2)(A) requires reliance on a misrepresentation or deceptive conduct, not reliance on the legal enforceability of a judgment.

4. Procedure: Rule 52(c) allowed the bankruptcy court to end the case mid-trial

Myrum argued the bankruptcy court effectively granted judgment as a matter of law under Civil Rule 50(a) and therefore had to draw all inferences in her favor and refrain from credibility determinations. The panel rejected the premise: this was a bench trial, so Civil Rule 52(c) governed.

Under Civil Rule 52(c), the bankruptcy judge could weigh evidence, evaluate credibility, and decide whether Myrum had proved essential elements by a preponderance—precisely what the record reflected. The issuance of oral findings and a later written judgment satisfied Civil Rule 52(a)(1).

C. Impact

• Limits on “settlement-as-fraud” theories: The decision reinforces that creditors cannot convert an otherwise dischargeable debt into a § 523(a)(2)(A) debt simply by pointing to a later breach of a settlement/judgment and a subsequent bankruptcy filing. Absent concrete inception-stage deceit, nonpayment remains nonpayment.
• Stipulated judgment characterization matters: Treating a stipulated judgment as an admission of liability rather than a payment promise can be dispositive in fraud-based nondischargeability litigation, especially where the creditor’s theory depends on an “implied promise to pay.”
• Reliance is fact-sensitive and can be defeated by warnings: A creditor’s awareness (including through counsel) that bankruptcy is possible can undercut justifiable reliance on any implied assurance that the debt will be paid outside bankruptcy.
• Bench-trial defense tool: The opinion underscores the practical strength of Civil Rule 52(c) in adversary proceedings. After a plaintiff rests, the court may decide the case without hearing the defense if the plaintiff has not carried its burden on essential elements.

IV. Complex Concepts Simplified

• Discharge vs. nondischargeability: A Chapter 7 discharge wipes out most personal liabilities, but § 523 lists categories of debts that survive. § 523(a)(2)(A) is aimed at debts created by certain kinds of fraud.
• False pretenses / false representation / actual fraud:
  • False pretenses often means misleading conduct or omissions that create a false impression.
  • False representation typically involves an affirmative false statement (or a knowingly deceptive omission) that induces the creditor’s action.
  • Actual fraud (per Husky) can be a broader fraudulent scheme even without a specific misrepresentation, but it must still be the mechanism by which the debtor “obtained” something and from which the debt “arises.”
• Intent to deceive: The focus is the debtor’s subjective intent at the time of the alleged deceptive act. Later nonpayment may be relevant, but it cannot automatically prove the debtor intended to deceive from the outset.
• Justifiable reliance (Field v. Mans): This is a subjective standard: what this creditor, in these circumstances, was justified in believing. It is not “what a reasonable person would do,” but it still does not protect blind reliance in the face of clear warnings.
• Civil Rule 50(a) vs Civil Rule 52(c): Rule 50(a) applies in jury trials and requires evidence to be viewed favorably to the nonmoving party. Rule 52(c) applies in bench trials and lets the judge weigh evidence and decide mid-trial whether the plaintiff proved the case.
• Issue waiver on appeal: If an appellant fails to include an issue in the statement of issues or develop it in the opening brief, appellate courts commonly treat it as waived.

V. Conclusion

The BAP’s affirmance rests on two practical rules with recurring significance in bankruptcy litigation. Substantively, a creditor seeking nondischargeability under § 523(a)(2)(A) must prove fraud at the time the debt was created—later nonpayment and bankruptcy, without concrete inception-stage deceit, will not supply intent to deceive or justifiable reliance, and a stipulated judgment may be treated as an admission of liability rather than a promise to pay. Procedurally, in a nonjury adversary proceeding the correct mechanism for judgment after the plaintiff rests is Civil Rule 52(c), under which the bankruptcy court may weigh evidence and make credibility findings without employing the jury-trial constraints of Civil Rule 50(a).