Memorandum of Decision Re: Misrepresentation of Credentials

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re STEPHEN MATSON,                                               No. 1-84-01316      Debtor. ______________________/ EDEN WEINMANN,      Plaintiff,    v.                                                                              A.P. No. 1-87-0122 STEPHEN MATSON,      Defendant. ________________________/
Memorandum of Decision
     In 1980, plaintiff Eden Weinmann decided to remodel his duplex in the small seaside town of Bolinas, California. He contacted a contractor about performing the work, and the contractor advised Weinmann to hire an architect to design the project. The contractor recommended defendant and debtor Stephen Matson.      Matson is not an architect. He attended architecture school but did not receive a degree. California law permits non-architects to perform architectural work on some smaller projects, and Matson had performed such work on several projects in the Bolinas area. However, California law does not permit an uncertified person to call himself an architect.      Matson was introduced to Weinmann by the contractor as an architect, and did not correct Weinmann's wrong impression that he was an architect. For almost two years Matson performed architectural services for Weinmann on what became a $300,000.00 remodelling. Matson never corrected the impression that he was an architect, and further admits that on one occasion he told Weinmann that he had a degree in architecture. Weinmann paid Matson a total of $19,049.00 for his services.      At the end of the project, a dispute arose between Weinmann and the contractor, who then refused to complete the work. Weinmann hired another contractor, who inspected the project and gave his opinion that it would cost $400,000.00 to correct what he perceived as numerous defects in design and construction. Weinmann sued both the first contractor and Matson, who then filed a bankruptcy petition. In this adversary proceeding, Weinmann seeks to have his claim against Matson declared nondischargeable pursuant to section 523(a)(2)(A) of the Bankruptcy Code.      At the trial, both sides wanted to make the quality of Matson's architectural services an issue. Weinmann produced a structural engineer who testified that the second floor of the structure was unsafe in the event of a major earthquake. Matson repeatedly defended his work and alleged that the structure is basically sound and that any deficiencies were the result of contractor error or informed decisions to cut corners made by Weinmann himself.      The Court does not see the quality of the work as being relevant. Professional negligence claims are fully dischargeable, and damages for fraud under section 523(a)(2) are limited to the amount of money obtained by the fraud, not amounts attributable to negligence. In any event, while the evidence did establish that the remodelling should have been better designed and constructed, it did not establish that Matson failed to meet the standard of care to which a small-town architect would be held. Matson demonstrated at least a basic understanding of the problems inherent in remodelling, and none of his work was shown to be patently incompetent.      The question the Court must resolve is whether Weinmann has a nondischargeable claim for refund of the fees paid to Matson notwithstanding that Matson may have done an acceptable job, because Matson deceived him as to his status as an architect. Upon reflection, the Court resolves this question affirmatively.      It is undisputed that Matson lied to Weinmann when he told Weinmann that he had a degree in architecture. Regardless of Matson's actual skill in architecture, the representation that one is officially licensed or certified conveys to a lay person a concept of authority and standards upon which the lay person may justifiably rely; when such representations are false they may be the basis for a nondischargeable debt. In re Baiata (Bkrtcy.E.D. N.Y.1981) 12 B.R. 813, 820. The Court need not find malpractice in order to render the debt nondischargeable, but only that Weinmann was induced to pay fees to Matson by Matson's deliberately false representations that he was an architect, and would not have hired Matson if he knew the truth. The Court has no trouble making these findings from the evidence.      While it appears from the evidence that Matson did not affirmatively lie about his status until almost six months into the work, at which time he had already been paid about $4,500.00, it is clear that Matson did nothing from the very beginning to correct Weinmann's obvious impression that Matson was an architect. If there is fraudulent intent, a nondischargeable debt can be based on nondisclosure as well as affirmative misrepresentations. The essence of the claim is deception; the misrepresentation need not be expressed in words. 3 Bkr.L.Ed. sec. 22:69; In re Pommerer (Bkrtcy.D.Minn.1981) 10 B.R. 935, 939. The Court has no trouble inferring the requisite intent from the considerable evidence that Matson actively fostered the notion that he was an architect whenever he could.      Accordingly, Weinmann shall have a nondischargeable judgment against Matson in the sum of $19,049.00, together with interest at the legal rate from and after the commencement of the state court action against Matson. Weinmann shall also recover his costs of suit. Counsel for Weinmann shall submit an appropriate form of judgment.      This memorandum constitutes findings and conclusions pursuant to FRCP 52(a) and Bankruptcy Rule 7052.
Dated: November 22, 1988                                                                          ________________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy