Trustworthiness Trumps Certification: Third Circuit Clarifies Preservation Standards and Upholds Discharge for Lack of Intent under § 523(a)(2)(B)

Introduction

This appeal from the United States Court of Appeals for the Third Circuit arises out of a creditor’s effort to prevent discharge of state-court judgments in a Chapter 7 case. Patricia Elliott, the creditor, contended that debtor Vincent A. Piazza, III, obtained credit by means of materially false written statements regarding his financial condition, making the debts nondischargeable under 11 U.S.C. § 523(a)(2)(B). Two issues framed the appeal:

Evidence: Whether the Bankruptcy Court abused its discretion by excluding a third-party “Affidavit and Certification” and attached payment records as hearsay notwithstanding self-authentication under Federal Rules of Evidence 902(8) and 902(11) and the business-records exception in Rule 803(6).
Merits of nondischargeability: Whether the Bankruptcy Court clearly erred in finding that Elliott failed to prove Piazza’s “intent to deceive” under § 523(a)(2)(B).

After the Bankruptcy Court rejected Elliott’s nondischargeability claim and the District Court affirmed, Elliott appealed. In a non-precedential opinion authored by Judge Shwartz and joined by Judges Matey and McKee, the Third Circuit affirmed. Of particular note, the Court corrected the District Court’s reliance on criminal “plain error” review in a civil appeal, clarified preservation standards for evidentiary arguments in civil cases, underscored that self-authentication does not itself supply a hearsay exception, and held that lack of trustworthiness under Rule 803(6)(E) justified exclusion of the proffered records. On the merits, the Court held the record supported the Bankruptcy Court’s finding that Elliott failed to prove Piazza’s intent to deceive, especially in light of his substantial payments.

Summary of the Opinion

Standard of review and preservation: The Court held that Federal Rule of Criminal Procedure 52’s plain-error standard does not apply in civil appeals. Instead, waiver/forfeiture principles govern. Here, Elliott preserved her hearsay-exception arguments: the title and contents of the Strahl Affidavit referenced Rules 803(6) and 902, sufficiently alerting the court and the opposing party to the evidentiary ground.
Evidentiary ruling affirmed: Despite preservation, the Bankruptcy Court did not abuse its discretion by excluding the Strahl Affidavit and its attachments. The documents were hearsay, and even if self-authenticated, they were excludable under Rule 803(6)(E) because the source and circumstances indicated a lack of trustworthiness—most notably, the affiant’s alignment with a company in dispute with Piazza and the inability to test the assertions through cross-examination.
Dischargeability under § 523(a)(2)(B): The Bankruptcy Court’s finding that Elliott failed to prove that Piazza made the written statements with an “intent to deceive” was not clearly erroneous. Piazza’s documented payment history—about $902,000 charged and about $836,000 paid between February 2012 and July 2013 (roughly 93%)—supported the finding that he intended to repay and undermined an inference of fraudulent intent.

Accordingly, the Third Circuit affirmed the District Court’s order upholding the Bankruptcy Court’s discharge of the judgments owed to Elliott.

Analysis

Precedents Cited and Their Influence

Travitz v. Northeast Dep’t ILGWU Health & Welfare Fund, 13 F.3d 704, 711 (3d Cir. 1994):
The Court noted Elliott waived any § 523(a)(2)(A) argument by failing to pursue it in the argument section of her brief, an application of the well-settled waiver rule in appellate practice.
IN RE MINTZE, 434 F.3d 222, 227–28 (3d Cir. 2006):
Reaffirmed the appellate framework for bankruptcy appeals: plenary review of the district court’s appellate ruling; bankruptcy court’s factual findings for clear error; legal conclusions de novo; and discretionary rulings (such as evidentiary rulings) for abuse of discretion.
SELKRIDGE v. UNITED OF OMAHA LIFE INS. CO., 360 F.3d 155, 166 n.16 (3d Cir. 2004):
Key corrective cited by the panel: Federal Rule of Criminal Procedure 52’s plain-error standard does not govern civil appeals. The District Court’s invocation of plain error was therefore mistaken.
Barna v. Bd. of Sch. Dirs. of Panther Valley Sch. Dist., 877 F.3d 136, 145–48 (3d Cir. 2017):
Provided the civil doctrines of waiver and forfeiture, used to assess preservation of arguments. The panel applied these principles to conclude Elliott preserved her hearsay-exception arguments.
WALDEN v. GEORGIA-PACIFIC CORP., 126 F.3d 506, 517–20 (3d Cir. 1997); United States v. Fattah, 914 F.3d 112, 177 (3d Cir. 2019); Fed. R. Evid. 103(a); Fed. R. Civ. P. 46:
Together, these authorities emphasize that an evidentiary ground can be preserved by a sufficient record proffer and identification of the basis for admissibility. Here, the very title and contents of the Strahl Affidavit cited Rules 803(6) and 902, adequately preserving those arguments.
United States v. Price, 458 F.3d 202, 205 (3d Cir. 2006):
Confirmed that legal interpretations of the Federal Rules of Evidence are reviewed de novo—relevant to the threshold legal distinctions between self-authentication and hearsay exceptions.
United States v. Browne, 834 F.3d 403, 409 (3d Cir. 2016):
Clarified that self-authentication under Rule 902 eliminates the need for extrinsic evidence of authenticity, but it does not itself overcome other admissibility hurdles like hearsay, relevance, or Rule 403 concerns. The panel invoked this principle to explain why Rule 902 does not guarantee admission of business records.
United States v. Casoni, 950 F.2d 893, 910–13 (3d Cir. 1991):
A cornerstone of the Court’s evidentiary analysis. Casoni interprets Rule 803(6)(E)’s trustworthiness requirement. The panel relied on Casoni to uphold exclusion where the source or circumstances suggest a motive to falsify or otherwise render the records untrustworthy—precisely the concern raised by the affiant’s alignment with a non-neutral business opponent of the debtor.
IN RE COHN, 54 F.3d 1108, 1113, 1118–19 (3d Cir. 1995):
Provided the Bankruptcy Code backdrop: exceptions to discharge are strictly construed against creditors and in favor of debtors; intent to deceive can be inferred from the totality of the circumstances, including reckless disregard for the truth. The Court applied these principles and concluded the Bankruptcy Court’s no-intent finding was supported by the record.

Legal Reasoning

1) Preservation and Standard of Review

The Court first corrected the District Court’s use of “plain error” review. In civil appeals, the proper inquiry is whether an argument was waived or forfeited—not whether the failure triggers criminal plain-error relief. Because the Strahl submission’s title expressly invoked “Fed. R. Evid. 803(6); 902(11),” and the content described the custodian-like role and ordinary-course recordkeeping, the panel held Elliott preserved her hearsay-exception grounds for review. That triggered the ordinary abuse-of-discretion review of the exclusion, with any underlying legal interpretations reviewed de novo.

2) Self-Authentication Is Not Self-Admissibility

The Court reaffirmed a crucial evidentiary distinction:

Rule 902(8) and Rule 902(11) can “self-authenticate” a document—i.e., establish authenticity without extrinsic evidence such as live testimony.
But authenticity is different from hearsay admissibility. The business-records exception in Rule 803(6) still must be satisfied, including the absence of red flags about trustworthiness under Rule 803(6)(E).

That is where Elliott’s proffer failed. The Bankruptcy Court reasonably viewed the affiant and his company as adverse to Piazza, creating a risk of bias. The absence of any cross-examination opportunity amplified the concern. Relying on Casoni, the Court held that the opponent’s showing of a motive to falsify (or otherwise suspect circumstances) defeats admission under Rule 803(6), even if the records are certified under Rule 902(11). The exclusion was therefore within the Bankruptcy Court’s discretion.

3) Dischargeability Under § 523(a)(2)(B)

Section 523(a)(2)(B) excepts from discharge debts obtained by use of a statement in writing that is: (i) materially false; (ii) respecting the debtor’s (or insider’s) financial condition; (iii) reasonably relied upon by the creditor; and (iv) made or published with intent to deceive. The Court emphasized two longstanding principles:

Exceptions to discharge are strictly construed against creditors and liberally in favor of debtors.
Intent to deceive can be inferred from the totality of circumstances, including reckless disregard for the truth—but there must be a sufficient evidentiary basis.

On this record, the Bankruptcy Court found no intent to deceive. Two features loomed large:

Piazza’s substantial payment history during the relevant period—approximately $902,000 charged and $836,000 paid—strongly suggested he intended to repay, despite later default.
Elliott conceded she lacked proof that Piazza’s statements about property holdings and receivables were false when made. The Bankruptcy Court credited Piazza’s testimony and found Elliott did not rebut it.

Given the deferential clear-error standard on factual findings, the Third Circuit held the Bankruptcy Court’s credibility assessments and inferences were permissible. Without proof of intent to deceive, Elliott’s § 523(a)(2)(B) claim necessarily failed, and the state-court judgments were dischargeable.

Impact and Practical Implications

1) Civil Appeals: No “Plain Error”—Use Waiver/Forfeiture

The decision reinforces that criminal-style plain-error review does not govern civil appeals. Litigants and courts must analyze preservation under civil waiver/forfeiture doctrine. Practically:

Document your evidentiary grounds. Even if counsel does not fully argue the rule orally, a written submission that cites the governing rules and tracks their requirements can preserve the issue.
Trial counsel should still state the rule and its rationale on the record to avoid any doubt, but the Third Circuit’s approach focuses on fair notice and substance over form.

2) Evidence: Trustworthiness Is the Gatekeeper for Business Records

The ruling highlights that Rule 803(6)(E)’s trustworthiness proviso is a real constraint. Certification under Rule 902(11) expedites authenticity but does not guarantee admissibility. Key takeaways:

If your records originate from a source with potential bias or hostility to the opponent, anticipate a trustworthiness challenge. Consider calling a live custodian, using deposition testimony, or corroborating from independent sources.
Give Rule 902(11) notice in advance and be prepared to address not just the formalities of the certification, but why the records are reliable in context.
Opponents should marshal specific reasons the source or preparation circumstances indicate unreliability (e.g., adverse relationships, litigation motives, selective recordkeeping). Casoni supplies the template.

3) Bankruptcy: Proving § 523(a)(2)(B) Intent to Deceive Is Fact-Intensive

The Court’s analysis underscores the evidentiary burden creditors face. Significant, contemporaneous payments can undercut an inference of fraudulent intent, even if the debtor ultimately defaults. Practical guidance:

Build a record of what was false when written, not just what later turned out false. Contemporaneous emails, internal financials, bank statements, appraisals, and third-party confirmations are crucial.
When relying on third-party records, consider live or deposition testimony from a neutral custodian to mitigate trustworthiness concerns.
Remember the structural limits: § 523(a)(2)(B) requires a written statement respecting financial condition. If the misrepresentations are oral or do not “respect financial condition,” you must pursue § 523(a)(2)(A)—and timely preserve it on appeal.
Debtors can rebut intent by showing consistent payment behavior, credible explanations for nonpayment, and the absence of contemporaneous falsity.

4) Persuasive—but Not Binding—Guidance

Although designated “Not Precedential” under I.O.P. 5.7, the opinion offers persuasive guidance within the Third Circuit, especially on:

How preservation of evidentiary issues can be satisfied by the content and title of a written submission identifying the relevant Evidence Rules;
The continuing vitality of Rule 803(6)(E) as an independent trustworthiness check, even with a Rule 902(11) certification;
The centrality of intent evidence in § 523(a)(2)(B) claims and the weight courts may assign to a debtor’s substantial payments.

Complex Concepts Simplified

Hearsay: An out-of-court statement offered to prove the truth of what it asserts. Generally inadmissible unless an exception applies.
Business-records exception (Rule 803(6)): Allows admission of records made near the time by someone with knowledge, kept in the regular course of business, as a regular practice—unless the source or circumstances indicate a lack of trustworthiness.
Self-authentication (Rule 902): Certain documents can be authenticated without a witness, including certified business records (Rule 902(11)). Self-authentication proves “what it is,” not that the contents are admissible over hearsay objections.
Trustworthiness (Rule 803(6)(E)): Even otherwise qualifying records must be excluded if the opponent shows the source or circumstances suggest unreliability (e.g., bias, motive to falsify, irregular preparation).
Waiver vs. forfeiture: Waiver is intentional relinquishment of a known right; forfeiture is failure to timely assert a right. In civil appeals, these doctrines, not “plain error,” govern preservation.
Standards of review: Clear error (deferential) for facts; de novo for legal conclusions; abuse of discretion for evidentiary rulings.
§ 523(a)(2)(B) elements: To except a debt from discharge, the creditor must prove a materially false written statement respecting the debtor’s financial condition, reasonable reliance, and the debtor’s intent to deceive.
Intent to deceive: Can be inferred from circumstances (including reckless disregard), but evidence of substantial payment and credible testimony can rebut the inference.

Conclusion

The Third Circuit’s opinion delivers three principal lessons. First, in civil appeals, argument preservation is governed by waiver/forfeiture—not criminal “plain error.” A written proffer that identifies, and substantively invokes, Rules 803(6) and 902 can preserve the issue even if counsel’s oral argument is truncated. Second, self-authentication under Rule 902(11) is not a free pass around hearsay; trustworthiness under Rule 803(6)(E) remains a distinct and potent gatekeeper—particularly where the declarant is aligned against the opponent or the records are otherwise suspect. Third, for § 523(a)(2)(B), intent to deceive is often the pivot point. Here, Piazza’s significant payment record and the lack of proof that his statements were false when made supported discharge.

While non-precedential, the decision offers persuasive guidance for bankruptcy and evidentiary practice in the Third Circuit: preserve evidentiary grounds in writing, anticipate trustworthiness challenges to business records, and develop contemporaneous proof of falsity and intent when seeking nondischargeability on written-financial-statement grounds.