FOR THE NORTHERN DISTRICT OF CALIFORNIA In re ROBERT and KAREN PARMENTER,                                                                              No. 1-90-02236        Debtor. ___________________________/ MANUFACTURERS HANOVER TRUST COMPANY,        Plaintiff,    v.                                                                                                                                   A.P. No. 91-1054 ROBERT and KAREN PARMENTER,        Defendants. ______________________________/ Memorandum of Decision      In late August, 1990, the debtors used their Manufacturers Hanover Trust (MHT) MasterCard to pay off $2,446.02 in outstanding balances on four other credit cards. About two months later, they wrote MHT and sought to compromise their indebtedness. MHT did not accept the offer, and the debtors filed their Chapter 7 petition on December 20, 1990. MHT believes that these facts mandate a finding that its balance owing of $3,176.90 is nondischargeable for fraud. The court disagrees.      MHT admits that it invites its credit card holders to use cash advances on its card to pay off other credit cards, touting the advantage of a lower interest rate. This is exactly what the debtors did, hoping to make their credit card debt more manageable and reduce the interest. MHT argues that such conduct is fraudulent if the debtors are experiencing financial difficulty at the time they do it. The court finds no support for this position in the law or the facts of this case.      The "implied representation" theory of credit card liability, under which the cardholder is deemed to impliedly represent that he or she has the ability and intention to repay charges, has been rejected by the courts. In re Karelin, 109 B.R. 943, 947 (9th Cir. BAP 1990); In re Dougherty, 84 B.R. 653, 656 (9th Cir. BAP 1988). In the face of this authority, MHT has tried to convince the court that each charge is a "false financial statement." The court sees neither merit in nor justification for such an argument.      In order for a credit card debt to be held nondischargeable, the court must find actual fraud. Dougherty and Karelin, supra. MHT wrongly interprets Grogan v. Garner, 112 L.Ed.2d 755 (1991) as somehow changing this rule or inviting dischargeability actions. In that case, however, the Court did neither, but merely held that the ordinary standard of proof applies to dischargeability cases. In this case, the court finds no evidence whatsoever of any fraud, other than the mere fact that the debtors filed their petition about four months after they consolidated their credit card debt. The court finds that this is insufficient to establish fraud under any standard of proof, and in fact finds that the debtors had a legitimate and nonfraudulent motive for paying off their other cards with their MHT card.      For the foregoing reasons, the court will enter a judgment dismissing the complaint with prejudice and awarding MHT nothing. Although the court finds the complaint substantially without merit, no attorneys' fees can be awarded because the debtors represented themselves.      This memorandum constitutes the court's findings and conclusions pursuant to FRCP 52(a).
Dated: August 21, 1991                                                                          _______________________                                                                                                                     Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy