USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 92-2405
No. 93-1075
IN RE BELMONT REALTY CORPORATION
Debtor, Appellant.
__________
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK,
Plaintiff, Appellee,
v.
ELIZABETH V. BOGOSIAN,
Defendant, Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Raymond J. Pettine, Senior U.S. District Judge]
__________________________
____________________
Before
Torruella, Circuit Judge,
_____________
Campbell, Senior Circuit Judge,
____________________

and Boudin, Circuit Judge.

_____________
____________________

Michael J. McGovern with whom Indeglia & McGovern was on br

____________________
___________________
for appellants.
Richard W. MacAdams with whom Myrna S. Levine and MacAdams
____________________
________________
________
Wieck Incorporated were on brief for appellee.
__________________
____________________
November 29, 1993
____________________

CAMPBELL,

Senior Circuit Judge.

______________________

Hospital

Trust

Bogosian

on two separate

Belmont

National Bank

Realty

herself

(the

("Belmont") and

Note").

defenses and counterclaims.

initiated

was

res

The district

judicata

executed by

guaranteed

by

by Bogosian

filed

The district court

in a bankruptcy court

by Belmont

counterclaims.

Bogosian

Island

sued Elizabeth

Note"), and one executed

"Bogosian

earlier decision

"Bank")

promissory notes, one

Corporation

Bogosian (the "Belmont

(the

Rhode

certain

held that an

adversary proceeding
as

to

Bogosian's

court granted summary judgment

for

the

amended

Bank, finding
complaint

counterclaims.

in its

and

favor on

dismissing

Bogosian

appeals.

all counts
all

of

of its

Bogosian's

Belmont appeals

from the

district court's denial of its Rule 60(b) motion to amend the

court's separate
bankruptcy

order dismissing Belmont's appeal

court

adversary

proceeding.

Belmont's appeals were consolidated.

from the

Bogosian's

and

We affirm in part

and

vacate and remand in part.

I.
Bogosian

created

purchasing and developing

Belmont

for

the

parcels of real estate

purpose

of

in Newport

and Middletown, Rhode Island.

She secured a loan to Belmont

of $1.2 million from the Bank.

In 1987, Belmont executed and

gave

the

guaranteed

Belmont Note

to

the Bank.

the Belmont Note.

Though she

Bogosian personally
gave one-third of

-2-

Belmont's stock

to her

son and one-third

to her

daughter,

Bogosian herself controlled Belmont's activities.

Bogosian was

a partner with her brother

in a real

estate company called

from the Bank.
of

a bitter

brother.

E&J, which also had

In 1986, E&J went

management struggle

Bogosian

into receivership because

between

accepted direct

one-half of E&J's debt to

outstanding loans

Bogosian and

her

personal liability

for

the Bank and executed the Bogosian

Note in March 1989.

Never

receiving

approvals for the

properties,
1989.

In

Belmont

the

governmental

development of the Newport

Belmont defaulted on
order

necessary

to delay

and Middletown

the Belmont Note

foreclosure

on the

in early

properties,

filed for bankruptcy protection in the United States

Bankruptcy

Court for

"Bankruptcy
brought

the

Proceeding").

the instant

of

Rhode

September
the

Island

1989,

the

United States

of Rhode Island (the

Action") against Bogosian

Belmont.

In

action in

Court for the District

seeking to collect

District

as Guarantor of the

it from

the Bank amended its complaint to

second claim

Note.

Bogosian admits that both notes remain unpaid.

court

District

Belmont Note,

add a

against Bogosian

One might think

Bank

"District Court

the outstanding indebtedness due

In October 1989,

(the

based on

the Bogosian

that such facts would lead, as the

below described wishfully,

-3-

to "a

simple action

by a

lender to collect on two

of more

than four years,

over these

and

Over the course

however, the parties

promissory notes

United States
Court,

promissory notes."

in three

District Court, the

now here.

They

have battled

separate arenas:

United States

leave

behind them

the

Bankruptcy
what

the

district court described as a "tortuous procedural trail."

A.

The Bankruptcy Proceeding

_________________________
Initially,

Bogosian

ignored

Action, and a default judgment

attentions
January

may have been

1990,

Belmont

the

District

Court

was entered against her.

on the bankruptcy
filed

an

"Adversary Proceeding") against

court where, in

adversary

the Bank.

Her

complaint (the
Belmont asserted

various claims based on an alleged oral agreement by the Bank

not

to call the Belmont Note

until the purchased properties

could be developed.
Less than six

months later,

decision

"Belmont

Belmont's

adversary

complaint.

determined

that

alleged

issued

(the

the

unenforceable by virtue
Laws.

9-1-4,

the bankruptcy
Decision")
The

oral

of the Statute of

and the

Belmont Realty Corp., 116

_____________________

parol

court

would

be

Frauds, R.I. Gen.

evidence rule.

Bankr. 21

dismissing

bankruptcy

agreement

court

See In re
___ ______

(Bankr. D.R.I.

1990).

Belmont

appealed from the

Belmont Decision to

the district

court (the "Bankruptcy Appeal").

-4-

B.

The District Court Action

_________________________
Meanwhile,

withdrew
allowed

in

March

the default judgment

1990,

the

district

against Bogosian.

court

The court

her to file counterclaims against the Bank asserting

what were in essence the same claims based on an alleged oral

agreement by the Bank not to call the Belmont

Note, that had

constituted

Bank

Belmont's

Adversary Proceeding.

claims

against

in

the

On August 24, 1990, the district court

dismissed Bogosian's counterclaims

parol

the

evidence rule would

on the

grounds that

the

prohibit introduction of evidence

of the alleged oral agreement at trial.

In
granted
based

December

a motion by
on

"newly

1990,

however,

Bogosian to file

discovered"

the

district

court

amended counterclaims

information.

The

amended

counterclaims were based

by

the Bank,

as well

on the same alleged

as new

alleged conflict of interest

oral agreement

allegations of

fraud and

that the Bank had with

an

respect

to Bogosian's estranged family members.

C.

The Consent Order

and the Dismissal
of the
___________________________________________________
Bankruptcy Appeal
_________________
At that point, there were two cases

district court

relating to Belmont

the Bankruptcy Appeal and the

the

similarity of

pending in the

and the Belmont

District Court Action.

the issues

involved

in both

Note
Due to

cases, the

parties agreed that the Bankruptcy Appeal should be continued

nisi pending resolution of the District Court Action.
____

Thus,

-5-

on

February 22, 1991,

Order setting out

the district court

the agreement.

District Court Action

The Order

entered a Consent
stated that the

"may resolve all pending

issues," but

made it clear that if "further proceedings in [the Bankruptcy

Appeal] become necessary or desirable, any party may initiate
it in the same manner as if this order had not been entered."

In effect, the order

that the issues between the
District Court Action
The

Order did

parties would be resolved in the

rather than in the

not refer

judicata effects

simplified the proceedings so

to

of the

Bankruptcy Appeal.

any agreement

Belmont Decision

as

to the

in the

res

Adversary

Proceeding.
The
already
purposes.
(normal

appeal notwithstanding,

constituted

final

See Katchen
___ _______
rules

of

bankruptcy courts);

judgment

v. Landy, 382
_____

res

judicata

Turshen v.
_______

the Belmont
for

res

U.S. 323,

apply

to

Chapman, 823
_______

Decision
judicata
334 (1966)

decisions
F.2d 836,

of
839

(4th Cir. 1987) (in bankruptcy case, a final resolution of an

adversary proceeding has preclusive effect even if underlying
bankruptcy proceeding
Federal Practice and

continues); Wright,
Procedure:

Miller &

Jurisdiction

Cooper,

4433 (1981)

(judgment has preclusive effect while appeal is pending).

So long as
however,

the bankruptcy proceeding was

the parties were

under no practical

pending,

compulsion to

negotiate any agreement about the res judicata effects of the

-6-

Belmont Decision.
to

Bogosian's

Belmont
to the
raise

If the

Bank raised a res judicata defense

counterclaims in

could simply reopen

Consent Order.

the District

Court Action,

the Bankruptcy Appeal, pursuant

It was not

in the Bank's interest to

the res judicata defense in

the District Court Action

because Belmont and Bogosian had an effective way to counter,

i.e., by reopening the Bankruptcy Appeal.
____
The Consent Order,

however, did not spell

out any

agreement as to what would happen to the Bankruptcy Appeal if

the

underlying Bankruptcy Proceeding

were dismissed.

potentiality

occurred little

February 28,

1992, the United States Trustee

to

dismiss the

Belmont had
had

never

more than

Bankruptcy Proceeding

failed to confirm
filed monthly

cash

on

a plan of
flow

Belmont

the

Bankruptcy

did not

Proceeding

object, and

the

later.

On

filed a motion

the grounds

that

reorganization and

and

statements, as required by the Trustee.

dismissed

a year

This

profit

and

loss

The bankruptcy court

on

March

dismissal was

20,

1992.

considered

voluntary.
Neither Belmont
the

Bankruptcy

advised

of

Appeal.

the

nor Bogosian
The

consensual

district
dismissal

attempted to
court,
of

the

having been
Bankruptcy

Proceeding, "passed," i.e., dismissed, the Bankruptcy

____
on April 30, 1992.

reopen

Appeal

-7-

Once the Bankruptcy

lost her ability to pursue
any

assertion by the

Appeal was dismissed, Bogosian

that appeal as a counterweight to

Bank of a res

counterclaims in the District Court

court, the

Bank accordingly

Counterclaims
collateral

to

include

estoppel.

judicata defense to her

Action.

amended its
defenses

By leave of the

Answer to

of

res

Amended

judicata

and

Shortly thereafter, in June, 1992, the

Bank filed its motion for summary judgment.

Several months later, Belmont filed a motion in the
district court pursuant to Rule 60(b) of the Federal Rules of
Civil

Procedure, seeking to amend the district court's order

passing the Bankruptcy

clarify

that the

right of Elizabeth
any assertion in

Appeal.

dismissal was

Belmont

asked the court

to

prejudice to

the

"without

V. Bogosian to raise any

defense or make

the [District Court Action]."

The district

court denied the motion.

On November 20, 1992, the district court granted in

entirety the Bank's motion for

summary judgment.

As for the

Belmont Note, the district court dismissed Bogosian's amended

counterclaims
Bogosian's

on res judicata

argument

that

the

construed to prohibit the Bank

defenses.

Regarding

Bogosian's

amended

grounds.
Consent

The

court rejected

Order

should

be

from raising its res judicata

the Bogosian Note, the

counterclaims

on

the

court dismissed
grounds

that

-8-

Bogosian's

fraud and

breach of

fiduciary duty

could not succeed as a matter of law.

allegations

These appeals ensued.

-9-

II.
As
the Bogosian

the issues pertaining

to the Belmont

Note are distinct, we begin

Note and

by considering the

grant of

summary judgment to

The key

issue on

the Bank on the

appeal, as

it was

Belmont Note.

below, is

whether the

Belmont Decision in the Adversary Proceeding was res judicata

in the

District Court

disagree

with

the

Action.

We hold

district

court

that it

was.

We

in

respect

to

only

Bogosian's fraud in the inducement claim, based on an alleged

conflict

of

uncertain

at

interest on
this

the

part

time whether

the

of the

Bank.

Belmont

We

are

decision had

preclusive effect on that issue.

A.

The Application of Res Judicata.

________________________________
In granting summary

on

its suit

to collect

judgment in favor of

on the

Belmont Note,

the Bank

the district

court held:
having had the opportunity to litigate
these issues in the Bankruptcy Court,
having received a final judgment on the
merits (right or
wrong), and having
failed to protect its rights with respect
to the appellate process, [Belmont] and
those in privity with it cannot attempt
to relitigate
these issues
in this
proceeding.
On the facts of this case,
any other result would undermine the
primary goal of the doctrine of res
judicata -- that there be finality in
litigation.
The
Dennis v.
______

district court's

point was

well

taken.

R.I. Hospital Trust Nat. Bank, 744 F.2d

______________________________

-10-

In

893, 898

(1st Cir.

1984), we

aspect of

res judicata

"that

was, or

subject matter
original)

explained that

might have been,

________________
of the prior

(citations

"collateral

bars the

the "claim

relitigation of
raised in

litigation."

omitted).

estoppel,"

on

any claim

respect to
Id.
___

"Issue

the

preclusion"

(emphasis in

preclusion"

other

the

hand,

or

prohibits

relitigation "of any factual or legal issue that was actually

________
decided in previous litigation
on

the same

or on a

different claim.'"

original)

(quoting

(1982)).

We emphasized that

decided even
have

component
original).

Restatement,

when it is

constituted,
of

the

Second,

(emphasis in

Judgments

"[a]n issue may

decision

or

practically,

reached."

the

exception of

issues

and

in section B
claims

the

Id.
___

necessary
in

4402.
of interest

below, we have
in

it may

(emphasis

conflict

litigated

27

be "actually"

not explicitly decided, for

__________

logically

allegations discussed
the

Id.
___

See Wright, Miller & Cooper, supra,

___
_____
With

that

'between the parties, whether

the

no doubt
Adversary

Proceeding were substantially the same issues and claims with

respect

to the Banks's

alleged oral promise

that defendant

Bogosian sought to litigate with respect to the Belmont

in the District Court Action.
granting

summary

litigate

those

Proceeding.

As the district court noted in

judgment, Belmont
matters

Note

had every

exhaustively

On appeal, Bogosian's

in

incentive to

the

Adversary

principal contention

is

-11-

that the usual rules of res judicata should not apply in this
case.
Before
consider

and

turning

reject

to

three

Bogosian.

First, Bogosian

should not

have applied res

party

in

nor

Proceeding.

privity
The

court

this
other

argument,
arguments

argues that

we

briefly

now

made

by

the district

court

judicata because she was

not a

with
below,

party

in

the

Adversary

however, accurately

stated

that,
It is undisputed that Mrs. Bogosian is an
officer of [Belmont], that she participated
directly in obtaining the loan for [Belmont]
to purchase the Newport and Middletown, R.I.

properties, that she signed the Guaranty of

the [Belmont] indebtedness at issue in this
case, and that she was very active in the
bankruptcy proceedings.
Thus, privity exists
between defendant Bogosian and [Belmont].
Bogosian points
conclusion
court.

to nothing

of law

or the

that makes
finding of

us doubt either
fact by

See Restatement, Second, Judgments

___

the

the district

59(3)(a) (1982)

(judgment against a closely-held corporation is conclusive as

to

shareholder who

behalf

of

the

shareholder

and

actively participates
corporation,

corporation

unless
are

so

in

an action

interests
different

on

of

the

that

the

shareholder deserves an opportunity to relitigate issues).

Second, Bogosian contends that the bankruptcy court
did

not have jurisdiction to

guaranty

and that

adjudicate the validity of her

"the preclusive

effect

of a

Bankruptcy

-12-

Court
See
___

must reflect the reality of its limited jurisdiction."

Latham v. Wells Fargo Bank, 896
______
________________

1990).

F.2d 979, 983 (5th Cir.

Bogosian forgets, however, that res judicata includes

issue, as

well as claim,

preclusion.

She does

not dispute

that the bankruptcy court properly exercised its jurisdiction

over

Belmont's

claims

and

that

the

issues

necessarily

considered in Belmont's claims were the same as in Bogosian's

counterclaims

in

the

District Court

Action.

Given that

Bogosian and Belmont were in privity, Bogosian is barred from

litigating

those same issues

again, even if

the bankruptcy

court did not have jurisdiction over her personal claims.

Third, Bogosian contends that the Bank procured the
Belmont

Decision through

produce

an

Proceeding.
"Source of

internal

sources

Repayment"

the

memorandum

for the
property

by

in

failing

the

to

Adversary

Belmont

Note the

for resale

and

"Sale

refinance

of
a

The document, to our eyes, simply lists potential

of repayment

evidence of

Bank

fraud,

The memo, prepared by the loan officer, lists as

assets/Conversion of
mortgage."

discovery

of the

a promise not

completion

of

loan;

it does

not amount

to require repayment

Belmont's

project.

But

to

until after
even

if the

document were more persuasive, there is absolutely nothing in

the

record suggesting

fraud,

that the

Bank

engaged in

discovery

as the bankruptcy court specifically refused to allow

_______

Belmont to engage

in discovery before the

-13-

Belmont Decision.

In re Belmont, 116 Bankr. at 24.

_____________
produced

in the District

Moreover, the document

Court Action several

was

weeks before

the Belmont Decision in the Adversary Proceeding; at no

did

Belmont attempt

to bring

it

to the

time

attention of

the

argument here

is

bankruptcy court.
Bogosian's fourth
that the Bank

must be deemed by implication to have "waived"

any res

judicata effects

agreed,

in the

of the

Consent Order,

counterclaims decided
than in

and principal

in

Belmont
to

have the

the District

the Bankruptcy Appeal.

Decision when
merits of

Court Action

Bogosian contends

the

rather
that the

parties' obvious desire to have their dispute decided in

District

Court Action rather

leads ineluctably
effects

of the

to the

than in the

it

the

Bankruptcy Appeal

conclusion that

the res

Belmont

Decision

were

to

This scenario,

however,

ignores

be

judicata

permanently

cancelled.

under the Consent Order, the Bankruptcy

the

fact

that,

Appeal was merely to

be continued nisi, with both parties being expressly entitled

____
to

initiate

further

Nothing was said

proceedings in

about waiving the

that

appeal

at will.

res judicata effects

the Belmont Decision, there being no need

of

to do so since, as

previously discussed, any attempt of

judicata

defense in

the

District

the Bank to raise a res

Court

Action

could

be

-14-

counteracted

by

Belmont's

Appeal.1

It

bankruptcy

petition and the

that

the

was when

reopening

Belmont

happy balance

its

voluntarily

Bankruptcy

dismissed its

Bankruptcy Appeal was "passed,"

of

compromise came to an end.

of

power
The Bank

that had

supported

the

could thereafter assert

res judicata with impunity.

In
in the

effect, Bogosian is asking this Court to supply

Consent Order

a missing contract

parties never expressly

so.

Nothing

implication, shows
judicata defense.

in

which the

agreed, namely, an agreement

Bank to forego its res judicata defense.

do

term to

the

Consent

an intent
If the

We see no reason to

Order, expressly

by the Bank

to waive

have been due

or

by

its res

parties foresaw the possibility of

the current situation, their failure to have provided

could well

by the

to their inability to

for it

find common

ground.

See
___

(1982).

We see

where

E.

Allan

Farnsworth,

nothing unjust

they have found

about

Contracts
_________

7.15-16

leaving the

themselves, i.e, without

parties

any special

____________________
1. Nor would the unresolved res judicata issue have lingered
to destabilize any judgment later reached in the District
Court Action.
Res judicata is an affirmative defense.
If
the Bank had allowed the District Court Action to proceed to
judgment without raising it, res judicata would have been
deemed waived at that point. Wright, Miller & Cooper, supra,
_____
4405. The judgment would stand, even if inconsistent with
the Belmont Decision. Of course, the chances are slight that
the judgments would remain inconsistent for long, as the
Bankruptcy Appeal could then be reopened and the Belmont
Decision reversed (if need be, to achieve consistency), the
same judge and court being in control of both proceedings.
-15-

agreement,

express or

implied, that

would

bar use

of the

still viable res judicata defense.

This holding is supported by the fact that Bogosian
could easily have

avoided this result either

by seeing that

Belmont's bankruptcy proceeding was maintained or by promptly

reopening the Bankruptcy

Appeal.

She

failed to do

either.

Now, after failing to protect herself, she asks this court to

step in

and provide protection

Consent

Order

requiring

an

agreement

either by reading
that

the district court

does not

to amend its

exist,

into a
or

by

order dismissing

the Bankruptcy Appeal.

Under
36 (1950),
Supreme
judicata

United States v. Munsingwear, Inc., 340 U.S.

_____________
_________________

we are

not required

Court held

that

effect in a

as

moot

a judgment

either.
could be

subsequent litigation even

original judgment was

dismissed

to do

rendered unreviewable
by

the

appellate

There,

accorded res
though the

because it

court.

the

The

was
Court

acknowledged that the usual course is for the appellate court

to

dismiss

the

judgments below,
when the party
the lower court

appeal

with

instructions

destroying their

to

vacate

preclusive effects.

the
But

that lost below fails to request a vacatur of

_______
judgments, the appellate court

does not err

when it allows the judgments to stand.

The
case
is
therefore
one where
the
[appellant], having slept on its rights, now
asks us to do what by orderly procedure it
could have
done for itself.
The case
-16-

illustrates not the

hardship of res judicata,

___ ________
but the need for it in providing terminal
points for litigation.
Id. at 41.
___
Here, too,
rights" at
the

their peril.

Bankruptcy

Belmont

Bogosian and Belmont

Appeal

"slept on [their]

The district court's

did

Decision, and absent

not

"passing" of

automatically

a request for

vacate

the

vacatur, it was

not error for the district court to fail to order vacatur sua
___
sponte.
______
Five months after the district judge
appeal and
judicata
60(b)

over four
defense,

months after the

Belmont finally

Belmont Decision
motion

could

vacatur,

had no preclusive

be

generously

it is doubtful

Munsingwear.
___________

As the

have acted sooner to

Munsingwear, "if
___________
preventable."

the

its res

pursuant to

Rule

to make clear that the

effect.

construed

that such a

as

Even if
a

such a

request

for

request sufficed under

district court

noted, Belmont

should

protect its right to an appeal.

As in

there

is hardship

in

this case,

it

was

Munsingwear, 340 U.S. at 39.

___________

Bogosian might have presented

that

Bank raised

moved

that the judge amend his order

dismissed the

district

court erred

in

a colorable argument

passing

the Bankruptcy

Appeal when

it was

controlling law in

not in

fact moot.

While

there is

this Circuit, the apparent

no

majority rule

in other jurisdictions is that bankruptcy courts may continue

-17-

to exercise

jurisdiction over pending

adversary proceedings

even after a dismissal of a related bankruptcy petition.

2

Collier

Bankruptcy

on Bankruptcy
Service, L.

349.03
Ed.

3C:99

&

nn. 4a,
(1989).

See
___

4b

(1993);

Some

courts

continue

to exercise jurisdiction "for cause shown" under 11

U.S.C.

349(b).

(11th Cir. 1992).

or as

a matter of

See,
___

e.g., In re Morris,
____ _____________

950 F.2d

1531

Some retain jurisdiction for other reasons

course.

See,
___

e.g., In re Carraher, 971

____ _______________

F.2d 327 (9th Cir. 1992); In re Pocklington, 21 Bankr. 199, 7

_________________
Collier Bankr.

Cas. 2d

185 (Bankr. S.D.

Lake Tahoe Land Co., 12 Bankr. 479,

___________________
1089 (Bankr. D. Nev. 1981).

Cal. 1982);

In re
_____

4 Collier Bankr. Cas. 2d

But Belmont
appeal

never contested

below, and neither Bogosian nor

argument

on appeal

argument

is

dismissal was

that the

therefore

waived.

the

Belmont has made the

dismissal was

in error.

The

even

the

Moreover,

if

in error, Belmont could have cured any harmful

effect with a simple motion to

judgment.

the dismissal of

Under

vacate the Bankruptcy Court's

Munsingwear,
___________

Belmont

must

share

the

responsibility for seeing to it that lower court judgments do

not prejudice them later.
We therefore

affirm the district

court's decision

to apply res judicata in the District Court Action.

affirm
motion.

the district court's

denial of Belmont's

Except for the one fraud claim

We

also

Rule 60(b)

based on conflict of

-18-

interest

described below,

we

affirm

grant of summary judgment against

court's

Bogosian as to the Belmont

Note.
B.

the district

The Conflict of Interest Claim

______________________________

In Bogosian's amended counterclaims, she set

a

claim

of

fraud.

She

based

allegations that were, or could

Adversary

of

this

claim

have been, litigated in

on
the

Proceeding or on allegations that pertained to the

Bogosian Note rather

court

much

forth

properly

than the

granted

Belmont Note.

summary

The

judgment

district

as

to

these

allegations.
Bogosian made one factual allegation concerning the
Belmont

Note,

considered in
before

however,

that

the Adversary

agreeing

to borrow

Middletown properties from

that the
brothers.

Bank was
Given

businesses in which
Bogosian
with

the

the

money for

the Bank,

acrimonious

could

not

been

She claimed

that

the

assurances

with any

dissolution

concerned that

would amount to

Newport and

she sought

she shared interests with

According to Bogosian,
was

Proceeding.

not conducting business

was allegedly

the brothers

apparently

of her

of several

her brothers,

Bank relationship

a conflict

of interest.

the Bank falsely represented

that it

not engaging in business with her brothers, fraudulently

inducing Belmont to accept a

loan and to execute the Belmont

Note.

-19-

In
barred this

granting summary

counterclaim along with

preclusion would
fraud in
enter

not have

barred

the inducement claim

into a

contract

themselves.

Such a claim

district court may have

been raised in

pertains to an

District Court
she

or parol evidence grounds.

grounds.

Without

Her assertion is

could have learned about

bring it to the attention

favorable to Bogosian,
Belmont did not

discovered
the

hardly air-

this misrepresentation
time

of the bankruptcy court in the

Nevertheless,

in

the

it would be reasonable to

know the full dimensions of

ignorance, claim

have

dismissal of

commenced but still in

at the time of the Belmont Decision.

for Belmont's

The

knowing more,

misrepresentation only after

Action began.

Proceeding.

terms

was properly

affirm the summary judgment

after the District Court Action

Adversary

the contract

believed that this claim could

of interest

inducement to

On appeal, Bogosian asserts that she

this conflict

to

to

however.

the Adversary Proceeding, hence

however, we cannot

tight:

this claim,

Issue

would not normally, therefore, be

on claim preclusion

this claim.

district court

all the others.

rather than

decided on statute of frauds

barred

judgment, the

most

infer that

its fraud claim

Depending on the reason

preclusion might

See Wright, Miller & Cooper, supra,

___
_____

light

4415.

not apply.

As

the district court's

reasoning in barring this

particular fraud claim was not clear from its order, we think

-20-

it is best to

vacate summary judgment

remand

for

further

choose

to accept

proceedings.

additional

as to this claim

The

argument

district
as

to

and

court may

whether

the

allegations of conflict of interest could have been raised in

the Adversary Proceeding or whether for any other
claim should now be barred.
inter
_____

alia whether Bogosian

____

material fact

on the merits

summary judgment.

Or else the

court may determine

has created a
of the

reason the

genuine issue of

claim so as

to survive

-21-

III.
We turn last to the Bogosian Note.

Bogosian admits

executing the Bogosian Note for $242,408 on January 19, 1989.

She does not dispute on
that it was
to date
Bank made

appeal the district court's findings

payable (at latest) 18 months later

been paid.

and has not

Nevertheless, she has alleged

that the

certain materially false representations

in order

to encourage her to accept personal liability for one half of

E&J's outstanding

debt to

the Bank.

She argues

on appeal

that

she created

a genuine

claims of fraud and breach

issue

of material

fact as

to

of fiduciary duty, and that these

claims should have survived summary judgment.

Her fraud claim rests

on two factual

allegations.

First, Bogosian declares that shortly before she executed the

Bogosian Note, the

Bank had begun the process of terminating

her credit and calling in her Belmont Note guaranty.

she avows

that the Bank

additional

financing to

"feigned an interest"
her if

she

Second,

in providing

executed the

Bogosian

Note.
The district court held that a fraud claim based on
these allegations could not succeed as
agree.
monitor

As to the first allegation,

Bogosian's

creditworthiness

updated on its assessment.

a matter of law.

We

the Bank was entitled to

without

keeping

her

See Centerre Bank of Kansas City,

___ _____________________________

N.A. v. Distributors, Inc., 705 S.W. 2d 42,

____
__________________

52 (Mo. Ct. App.

-22-

1985).

As

to the second, we

find nothing in the

record to

make us doubt the district court's finding that the Bank made
no material misrepresentation, proof of which is necessary to
substantiate
negotiating

a claim

for

intentional

fraud.

Given

the

context in which anyone with Bogosian's business

sense should

have

interest

non-committal encouragement,

in

known

that the

Bank

had

legitimate

Bogosian's

claim

that the Bank "feigned interest" is simply too thin a reed on

which to base a fraud claim.
how

her version

of the

Indeed, it is difficult to see

facts amounts

to an

allegation of

misrepresentation at all.
Bogosian also
fiduciary

business relationship

Baggessen, and

to the

payments on her and her

evaluate

whether

of Bogosian on the Bank;

prior

a breach

of

to the

loan officer

she had

given him

several of her accounts

companies' debts.

fiduciary

district court considered

with Bank

fact that

authority to withdraw funds from

make

make out

duty claim against the Bank, pointing primarily to

her long-term
Robert

attempted to

relationship

several factors: (1)

to

In order to
existed,

the

the reliance

(2) the relationship of the parties

transaction complained

of;

(3) the

parties'

relative business capacities; and (4) Bogosian's readiness to

follow
Simpson
_______
district

the bank's guidance in complicated transactions.

v. Dailey,
______

496

A.2d

126, 129

(R.I.

1985).

See
___
The

court, noting that Bogosian was a sophisticated and

-23-

experienced businessperson who was

represented by counsel at

allrelevant times,found thatnofiduciary dutyhad beenviolated.

Again, we
courts

are split

exist between

agree.

We have

on whether

a bank and

a borrower.

Liuzzo,
______

766

F. Supp.

may

Reid v. Key Bank of

____
____________

9, 16 (1st

Cir. 1987).

No

Rhode Island appears to have since

found such a relationship to

v.

that

fiduciary relationship

Southern Maine, Inc., 821 F.2d

_____________________
state or federal court in

previously noted

exist.
61,

68

See Fleet National Bank

___ ___________________
(D.R.I. 1991)

(granting

summary judgment in favor of lender, finding no evidence that

lender and borrower intended a fiduciary relationship

beyond

relationship of debtor-creditor).
But as in Reid, where
____
denying a claim

we upheld a directed verdict

based on fiduciary duty, the

facts here are

such that we need not decide the broader legal issue.

business

relationship with

banker,

with

whom

A good
one

has

discussed one's underlying business at length, is not enough.

Some

kind

of

dependency

for

advice

that

makes

the

relationship more than a normal banker-client relationship is

necessary.
We do

See Reid, 821

___ ____

not believe

F.2d at 17 (applying

that a reasonable

that such a special relationship

Maine law).

jury could

existed here.

have found
We therefore

affirm the district court's grant of summary judgment against

Bogosian as to the Bogosian Note.
IV.

-24-

In

conclusion,

we

affirm the

grant

of

summary

judgment

against appellant Bogosian as to the Bogosian Note.

We

affirm summary

also

except

for

the

fraud

judgment
in the

allegations of

conflict

district court

for further

also affirm
60(b)

motion

the district
for

of

as to

the

inducement

interest.

court's denial

the district

court

claim

We

proceedings on

Belmont Note,
based

on

to

the

that claim.

We

remand

of Belmont's
to

amend

Rule

its order

dismissing the Bankruptcy Appeal.

Affirmed

in part and vacated and remanded in part.

__________________________________________________
Each party shall bear its own costs of this appeal, without
_____________________________________________________________
prejudice to appellee's right to recover its own costs of
_____________________________________________________________
this appeal from appellant if appellee prevails on remand.
__________________________________________________________

-25-