In Re: Dennis

United States Court of Appeals
Fifth Circuit
F I L E D
May 23, 2003
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 02-30765
_______________
IN THE MATTER OF:
KELLY DENNIS,
Debtor.
SIDNEY ROBERTSON, III,
Appellant,
VERSUS
KELLY DENNIS
AND
GULF SOUTH TITLE CORPORATION,
Appellees.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________

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Before SMITH, DENNIS, and CLEMENT,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Sidney Robertson sued Kelly Dennis,1 his
ex-wife and a chapter 7 debtor, in bankruptcy
court over a debt of about $6,000. After a
bench trial, the bankruptcy court entered judg-
ment for Dennis and discharged her debts, in-
cluding the debt owed to Robertson. The dis-
trict court affirmed. Finding no clear error, we
affirm.
I.
Though the marriage of Robertson and
Dennis lasted for barely six years, the litigious
aftermath has lasted for over a decade. The
state court granted their divorce in 1992 and
divided their personal property, with Dennis
receiving approximately $8,200 more in value
than did Robertson. The court also allowed
Dennis to continue living in their marital home.
In 1997, Dennis married Clinton Smith,
who eventually moved in with Dennis at the
house she once had shared with Robertson.
Shortly thereafter and perhaps not coinciden-
tally, Robertson sought a revised property set-
tlement in state court. Dennis did not appear,
and the court entered a default judgment re-
quiring her to pay Robertson monthly rent for
use of the house, including accrued rent and
interest from 1992.
Once they learned of this judgment, Dennis
and Smith sold the house and bought their
own. At about the same time, Robertson de-
manded that Dennis pay him roughly $63,000
to satisfy the judgment for her post-divorce
use of the house. Within days, Dennis filed a
petition for chapter 7 bankruptcy.
Robertson filed two adversary proceedings
in bankruptcy court. First, he requested that
the court lift the automatic stay so he could
obtain, from escrow, the proceeds from the
sale of the house. The court denied the re-
quest, and the district court affirmed.2 Sec-
ond, and the subject of this appeal, Robertson
sought to deny Dennis a discharge under 11
U.S.C. § 727(a) or t o make Dennis’s debt to
him non-dischargeable under 11 U.S.C. § 523-
(a)(15). Against the approximately $63,000 in
accrued rent and interest, the court recognized
an offset of about $57,000 for Dennis’s mort-
gage payments, repairs, and improvements.
Thus, the court concluded that Robertson had
a valid claim against Dennis for about $6,000,
which estimate neither Robertson nor Dennis
disputes.
After a two-day trial, the bankruptcy court
entered judgment for Dennis. First, the court
found that she lacked actual intent to defraud
her creditors or the bankruptcy estate by trans-
ferring savings bonds to her son in the year
preceding bankruptcy. The court therefore
held that § 727(a)(2)(A) does not prevent her
from receiving a discharge. Second, the court
found that Dennis kept and filed adequate fi-
1 Dennis has remarried and is now legally
known as Kelly Smith. For the sake of clarity, and
because she filed for bankruptcy under her maiden
name, we refer to her as “Dennis.”
2 Robertson wanted not only his share of the
sale proceeds, but also Dennis’s share to compen-
sate for the earlier unequal distribution of the per-
sonal property. Coincidentally, Dennis’s share al-
most exactly made up for the $8,200 difference in
the personal property distribution. Notwithstand-
ing Robertson’s vehement arguments to the con-
trary, this adversary proceeding is not a subject of
the instant appeal.

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nancial records. The court therefore held that
§ 727(a)(3) does not prevent a discharge.
Third, the court found that Dennis could not
pay the debt to Robertson and that a discharge
would benefit her more than it would harm
Robertson. The court therefore held that the
debt is dischargeable under § 523(a)(15). The
district court affirmed.
II.
Robertson does not argue that the bank-
ruptcy court misunderstood or misapplied the
governing bankruptcy law, but only that the
court clearly erred in its factual findings. “We
review the bankruptcy court’s findings of fact
for clear error and its conclusions of law de
novo.” Gamble v. Gamble (In re Gamble),
143 F.3d 223, 225 (5th Cir. 1998). A finding
of fact is clearly erroneous only if “on the en-
tire evidence, the court is left with the definite
and firm conviction that a mistake has been
committed.” Hibernia Nat’l Bank v. Perez (In
re Perez), 954 F.2d 1026, 1027 (5th Cir.
1992) (quotation marks and citations omitted).
“[W]e must give ‘due regard . . . to the
opportunity of the [bankruptcy] court to judge
the credibility of the witnesses.’” Id. (quoting
FED. R. CIV. P. 52(a)). After a review of the
record, we conclude that the court did not
clearly err in any of its factual findings.
A.
Robertson argues first that the bankruptcy
court clearly erred by granting Dennis a dis-
charge at all. In particular, he contends that
the court should have denied Dennis a dis-
charge under 11 U.S.C. § 727(a)(2)(A) for
fraudulently transferring or concealing assets
and under 11 U.S.C. § 727(a)(3) for failure to
keep and file adequate financial records.
1.
Robertson reasons that the bankruptcy
court clearly erred by finding that Dennis
lacked actual intent to defraud under § 727-
(a)(2)(A). He contends that her fraudulent
intent is shown by her purchase of savings
bonds for her son in the year preceding
bankruptcy.
Section 727(a)(2)(A) entitles individual
debtors to a discharge unless “the debtor, with
intent to hinder, delay, or defraud a creditor
. . . has transferred . . . property of the debtor,
within one year before the date of the filing of
the petition.” 11 U.S.C. § 727(a)(2)(A). The
purpose of this section “is to deny a discharge
to those debtors who, intending to defraud,
transfer property which would have become
property of the bankrupt estate.” Pavy v.
Chastant (In re Chastant), 873 F.2d 89, 90
(5th Cir. 1989). Section 727(a)(2)(A) has four
elements: “(1) a transfer of property; (2) be-
longing to the debtor; (3) within one year of
the filing of the petition; (4) with intent to
hinder, delay, or defraud a creditor . . . .” Id.
Dennis disputes only that she had actual intent
to defraud.
“The finding of intent to hinder, delay, or
defraud a creditor is a factual one which must
be reviewed under the clear error standard.”
Perez, 954 F.2d at 1029 (citing Thibodeaux v.
Olivier (In re Olivier), 819 F.2d 550, 552 (5th
Cir. 1987)). As plaintiff, Robertson bore the
burden to prove Dennis’s intent to defraud.
Chastant, 873 F.2d at 90-91. “Moreover,
evidence of actual intent to defraud creditors
is required to suppo rt a finding sufficient to
deny a discharge. Constructive intent is insuf-
ficient.” Id. at 91 (quotation marks and inter-
nal citation omitted).
Given the obvious problems of proof,

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though, “[a]ctual intent . . . may be inferred
from the actions of the debtor and may be
shown by circumstantial evidence.” Id. We
have identified several factors that tend to
prove actual intent to defraud:
(1) the lack or inadequacy of consider-
ation; (2) the family, friendship or close
associate relationship between the par-
ties; (3) the retention of possession, ben-
efit, or use of the property in question;
(4) the financial condition of the party
sought to be charged both before and
after the transaction in question; (5) the
existence or cumulative effect of the
pattern or series of transactions or
course of conduct after the incurring of
debt, onset of financial difficulties, or
pendency or threat of suits by creditors;
and (6) the general chronology of the
events and transactions under inquiry.
Id.
Robertson leans heavily on the second fac-
tor, namely, Dennis’s purchase of the bonds
for her (and Robertson’s) minor son. Rob-
ertson also notes that “a presumption of actual
fraudulent intent to bar a discharge arises
when property . . . is transferred to relatives.”
Id. (quoting In re Butler, 38 B.R. 884, 888
(Bankr. D. Kan. 1984)). He therefore con-
tends that the purchase of the bonds creates a
presumption of Dennis’s actual intent to de-
fraud, which she has not rebutted.
Chastant, however, is distinguishable from
this case. Most important, the court in Chas-
tant reviewed a finding of actual intent to de-
fraud, whereas we review a finding that Dennis
lacked actual intent. Next, Dennis, unlike the
debtor in Chastant, offered evidence to rebut
the presumption of actual intent. Id. at 91.
Finally, the Chastant debtor transferred far
more valuable property than did Dennis.
Though Chastant, id. at 90, does not specify
the value of the property transferred, the debt-
or created an income trust fund from which he
expected to live, so presumably the transfer
was sizable. In contrast, the limited evidence
in the record suggests that the bonds were
worth $300; at the very most, they could have
been worth about $1,200. Had Dennis actu-
ally intended to defraud her creditors, she
surely would have transferred considerably
more assets to her son. This is doubly true
because she believed her debt to be $63,000,
not $6,000, when she filed for bankruptcy
Moreover, the fourth factor of Chastant al-
lows the court to weigh the minimal value of
the transfer against the fact of transfer to a
relative. A transfer of only a small amount of
property likely would not materially affect “the
financial condition of the [debtor] . . . before
and after the transaction.” Although a transfer
to a relative might suggest intent, a minimal
transfer just as strongly suggests a lack of
intent. Other courts agree that “the low value
of assets [is] one factor to be considered when
determining whether the debtor had an intent
to defraud,” Baker v. Mereshian (In re
Mereshian), 200 B.R. 342, 346 (B.A.P. 9th
Cir. 1996), as does Collier on Bankruptcy.3
Given the low value of the bonds, we con-
clude that the bankruptcy court did not clearly
err by finding that Dennis lacked actual intent
to defraud. Moreover, other factors from
Chastant also support the court’s finding: The
record reveals no sinister or calculating pattern
3 6 COLLIER ON BANKRUPTCY ¶ 727.02[3][b],
at 727-19-20 (L. King ed., 15th ed. 2003) (“The
fact that the property transferred or concealed is of
small value . . . tends to negate fraudulent intent.”).

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of transactions to place assets outside her
bankruptcy estate, and the general chronology
is similarly benign. Indeed, Dennis began to
purchase the bonds months before she consid-
ered filing for bankruptcy, i.e., months before
Robertson began to hector her for payment of
the greatly exaggerated debt. In short, Dennis
effectively rebutted the Chastant presumption,
and Robertson did not prove that she intended
to defraud her creditors by purchasing a few
savings bonds for their son.4
2.
Robertson further contends that the bank-
ruptcy court clearly erred by finding that Den-
nis kept and filed adequate financial records.
Section 727(a)(3) entitles individual debtors to
a discharge unless “the debtor has . . . failed to
keep or preserve any recorded information . . .
from which the debtor’s financial condition . . .
might be ascertained, unless such . . . failure
. . . was justified under all the circumstances.”
11 U.S.C. § 727(a)(3). As plaintiff, Robertson
bore the initial burden to prove that Dennis
failed to keep and preserve her financial
records and that this failure prevented him
from ascertaining her financial condition.
Grant v. Sadler (In re Sadler), 282 B.R. 254,
263 (Bankr. M.D. Fla. 2002); Spiezio v. Vitek
(In re Vitek), 271 B.R. 551, 558 (Bankr. S.D.
Ohio 2001). A debtor’s financial records need
not contain “full detail,” but “there should be
written evidence” of the debtor’s financial
condition. Goff v. Russell Co. (In re Goff),
495 F.2d 199, 201 (5th Cir. 1974).5 If
Robertson satisfied his burden, Dennis must
prove that the inadequacy is “justified under all
the circumstances.” Sadler, 282 B.R. at 263;
Vitek, 271 B.R. at 558. The bankruptcy court
has “wide discretion” in both inquiries, Goff,
495 F.2d at 202, and its determination is a
finding of fact reviewed for clear error, id. at
200.
The court did not clearly err by finding that
Dennis kept and filed adequate records. Rob-
ertson failed his burden of proof: He never
specifies which records are missing or why
their absence prevented him from understand-
ing Dennis’s financial condition. He claims
that Dennis filed no bank or payroll records,
but the record contains numerous bank, pay-
roll, and other records. Dennis also filed sev-
eral income tax returns, the “quintessential
documents” in a personal bankruptcy. Nissel-
son v. Wolfson (In re Wolfson), 152 B.R. 830,
833 (S.D.N.Y. 1993); see also Lubman v. Hall
(In re Hall), 174 B.R. 210, 215 (Bankr. E.D.
Va. 1994). Notably, the chapter 7 trustee did
not object to these submissions. In sum, Den-
nis is “an unsophisticated wage earner” who
kept and filed records appropriate to her com-
monplace assets and liabilities. Goff, 495 F.2d
at 201.
B.
Failing in his effort to deny Dennis a dis-
charge altogether, Robertson argues that the
bankruptcy court clearly erred by finding that
Dennis’s debt to him was dischargeable. A
property settlement “incurred by the debtor in
the course of a divorce” is non-dischargeable
unless “the debtor does not have the ability to
4 In addition, Robertson argues that Dennis be-
trayed her actual intent to defraud by omitting a
small savings account and child support payments
from her bankruptcy court financial statements.
The bankruptcy court attributed this omission to a
clerical oversight, not actual fraudulent intent.
Robertson does not cite, and the record does not
contain, any evidence to contradict this finding.
5 Goff, 495 F.2d at 201 n.4, interprets an older
version of § 727(a)(3), but that version is materi-
ally identical to the current § 727(a)(3).

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pay such debt,” or “discharging such debt
would result in a benefit to the debtor that
outweighs the detrimental consequences to . . .
[the creditor] former spouse.” 11 U.S.C.
§ 523(a)(15)(A)-(B).
Robertson and Dennis agree that the disput-
ed debt is a property settlement incurred in the
course of a divorce. They dispute only
whether Dennis qualifies for an exception to
the general rule of non-dischargeability. Den-
nis bears the burden to prove one of the ex-
ceptions. Gamble, 143 F.3d at 226. Though
either exception would suffice, the bankruptcy
court found that Dennis qualified for both.
These determinations are findings of fact re-
viewed for clear error. Id.
The bankruptcy court did not clearly err by
finding that Dennis “does not have the ability
to pay” the debt to Robertson, in either a lump
sum or periodic payments. 11 U.S.C. § 523-
(a)(15)(A). Smith and Dennis had a combined
income of about $100,000, which would seem
to put them comfortably in the middle class.
Gamble, 143 F.3d at 226 (noting that the
court should consider income and assets of
debtor’s new spouse). Yet, they also had
primary custody of three dependent children,
and the court found that this gave them high
but reasonable expenses. The court also found
that their monthly income exceeded their
monthly expenses by just a few dollars, based
on Dennis’s financial records and her
testimony. Finally, the court found that
Dennis would retain sizable debt,
notwithstanding the discharge, because her
student loans were non-dischargeable, and she
had to reaffirm several other debts, e.g.,
mortgages and a car loan. These findings are
not clearly erroneous, so neither is the court’s
conclusion that Dennis lacked the ability to
pay the debt to Robertson.6
III.
Robertson also appeals the bankruptcy
court’s decision to quash a deposition sub-
poena to Smith because the subpoena did not
come with a reasonable mileage allowance.7
We review the decision to quash a subpoena
for abuse of discretion, Theriot v. Parish of
Jefferson, 185 F.3d 477, 491 (5th Cir. 1999).
“Service of a subpoena upon a person
named therein shall be made by delivering a
copy . . . and, if the person’s attendance is
commanded, by tendering to that person the
fees for one day’s attendance and the mileage
allowed by law.” FED. R. CIV. P. 45(b)(1).8
“Although the correct reading of this portion
of Rule 45[(b)(1)] is an issue of first im-
pression for this court, it requires little com-
ment.” CF&I Steel Corp. v. Mitsui & Co.
(U.S.A.), 713 F.2d 494, 496 (9th Cir. 1983).
The conjunctive form of the rule indicates
that proper service requires not only personal
delivery of the subpoena, but also tendering of
the witness fee and a reasonable mileage al-
lowance. “[T]he plain meaning of Rule
45[(b)(1)] requires simultaneous tendering of
witness fees and the reasonably estimated
6 Because we uphold the decision that the debt
was dischargeable under § 523(a)(15)(A), we need
not address the alternative finding that it also was
dischargeable under § 523(a)(15)(B).
7 Robertson sent two subpoenas to Smith, but
acknowledged the deficiency of the first and then
sent the second subpoena at issue here.
8 Rule 45(b)(1) applies to proceedings in the
bankruptcy court. FED. R. BANKR. P. 9016. Until
1991, this part of the rule appeared in sub-
section (c).

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mileage allowed by law with service of a sub-
poena.” Id. The courts uniformly agree with
this interpretation of rule 45(b)(1), 9 as do the
leading treatises on civil procedure.10
Accordingly, the subpoena was not prop-
erly served. A deposition witness is entitled to
a statutory fee of forty dollars and a reasonable
mileage allowance based on his mode and
distance of transportation. 28 U.S.C.
§ 1821(b)-(c). Robertson tendered the forty-
dollar fee with the subpoena but did not tender
the mileage allowance. Yet, by tendering the
fee, he implicitly acknowledged his concomi-
tant duty to tender the mileage allowance. To
be sure, the allowance would have been less
than five dollars, because Smith lived just a
few miles from the deposition site, but rule
45(b)(1) contains no de minimis exception.
Robertson’s strongest argument may seem
intuitively appealing: How can one know the
mileage allowance in advance when one does
not know the precise distance the witness must
travel or even the mode of transportation he
will use? In Robertson’s view, CF&I might
allow a recalcitrant witness to evade a
subpoena through artful travel accounting.
Rule 45(b)(1), however, does not require clair-
voyance, but only “the reasonably estimated
mileage allowed by law.” CF&I, 713 F.2d at
496 (emphasis added).
Of course, even when a subpoena comes
with an estimated mileage allowance, the wit-
ness may persuade the court that the estimate
is unreasonable and therefore have the sub-
poena quashed. In this situation, however, we
can determine whether the court abused its
discretion based on factors such as the wit-
ness’s distance from the deposition site, his
common mode of travel, his expected mode of
travel, the common mode of travel in the com-
munity, advance planning between the sub-
poenaing party and the witness, the expected
length of the deposition, and so forth.11 But
when the subpoenaing party makes no attempt
to calculate and tender at least a reasonably
estimated mileage allowance, he plainly vio-
lates rule 45(b)(1) and leaves us with no fac-
tual basis from which to review the court’s
decision. Thus, a court does not abuse its
discretion by quashing a subpoena where the
subpoenaing party tendered no mileage allow-
ance whatsoever with the subpoena.12
9 See, e.g., Tedder v. Odel, 890 F.2d 210 (9th
Cir. 1989); In re Stratosphere Corp. Secs. Litig.,
183 F.R.D. 684 (D. Nev. 1999); Alexander v. Je-
suits of Mo. Province, 175 F.R.D. 556 (D. Kan.
1997); Smith v. Midland Brake, Inc., 162 F.R.D.
683 (D. Kan. 1995); Coleman v. St. Vincent de
Paul Soc’y, 144 F.R.D. 92 (E.D. Wis. 1992); Mey-
er v. Foti, 720 F. Supp. 1234 (E.D. La. 1989);
Badman v. Stark, 139 F.R.D. 601 (M.D. Pa.
1991).
10 See, e.g., 9 JAMES W. MOORE ET AL.,
MOORE’S FEDERAL PRACTICE § 45.03[4][b][ii] (3d
ed. 1997); 9A CHARLES A. WRIGHT & ARTHUR R.
MILLER, FEDERAL PRACTICE AND PROCEDURE
§ 2454, at 25-26 (2d ed. 1995).
11 We do not suggest that this list is exclusive or
that the courts always must consider every factor
when ruling on a motion to quash. We merely
observe that these factors could prove helpful in
determining whether a subpoenaing party’s esti-
mate of the mileage allowance is reasonable.
12 Though the dispute in this case involves just
a few dollars, consider the more instructive ex-
ample of a witness who travels by plane. The sub-
poenaing party may estimate the price of a ticket at
$200, when the actual price turns out to be $400.
In this example, the court is left with the factual
questions of which amount is proper under
(continued...)

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The judgment of the district court, affirm-
ing the bankruptcy court, is AFFIRMED.13
(...continued)
§ 1821(c)(1) and, if the subpoenaing party’s es-
timate is incorrect, whether it nevertheless rea-
sonably complies with rule 45(b)(1). These would
be discretionary rulings, but the reviewing court
could examine them easily enough for abuse of
discretion.
13 Robertson raises one final issue on appeal:
that the bankruptcy court committed reversible er-
ror by instructing Smith, at trial, that he did not
have to answer questions about his financial con-
dition. Robertson contends that the court violated
FED. R. EVID. 103(a)(2), which requires the pro-
ponent of excluded evidence to make an offer of
proof to preserve an evidentiary ruling for appeal.
We agree that Robertson’s “position was adequate-
ly stated , and the record clearly is susceptible to
proper appellate review.” Parliament Ins. Co. v.
Hanson, 676 F.2d 1069, 1074 (5th Cir. 1982).
Yet, Robertson devotes so much time to the
molehill, i.e., how he preserved the ruling for
appeal, that he completely neglects the mountain,
i.e., why the ruling was incorrect. We therefore
treat this issue as waived for failure to brief ade-
quately. FED. R. APP. P. 28(a)(9)(A).

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