author: WILLIAM PRYOR, Circuit Judge: ROSENBAUM, Circuit Judge,

text:
    IN RE: R. Scott APPLING, Debtor. R. Scott Appling, Plaintiff-Appellant, v. Lamar, Archer & Cofrin, LLP, Defendant-Appellee.
    No. 16-11911
    United States Court of Appeals, Eleventh Circuit.
    (February 15, 2017)

      Paul Whitfield Hughes, Michael B. Kimberly, Jonathan Weinberg, Mayer Brown, LLP, Washington, DC, Daniel L. Wilder, Law Offices of Emmett L. Goodman, Jr. LLC, Macon, GA, for Plaintiff-Appellant.
    David William Davenport, Robert C. Lamar, Lamar Archer & Cofrin, Atlanta, GA, for Defendant-Appellee.
    Before WILLIAM PRYOR and ROSENBAUM, Circuit Judges, and MARTINEZ, District Judge.

       Honorable Jose E. Martinez, United States District Judge for the Southern District of Florida, sitting by designation.

   WILLIAM PRYOR, Circuit Judge:

This appeal presents a question that' has divided the federal courts: Can a statement about a single asset be a “statement respecting the debtor’s ... financial condition”? 11 U.S.C. § 523(a)(2). Ordinarily, a debtor cannot discharge any debt incurred by fraud, id. § 523(a)(2)(A), but a debtor can discharge a debt incurred by a false statement respecting his financial condition unless that statement is in writing, id. § 523(a)(2)(B). R. Scott Appling made false oral statements to his lawyers, Lamar, Archer & Cofrin, LLP, that he expected a large tax refund that he would use to pay his debt to the firm. After Lamar obtained a judgment against Appling for the debt, Appling filed for bankruptcy and Lamar initiated an adversary proceeding to have the debt -ruled nondischargeable. The bankruptcy court and the district court ruled that Appling’s debt could not be discharged under section 523(a)(2)(A) because it was incurred by fraud. But we disagree. Because Appling’s statements about his tax refund “respect! ] [his] ... financial condition,” id. § 523(a)(2)(B)(ii), and were not in writing, id. § 523(a)(2)(B), his debt to Lamar can be discharged in bankruptcy. We reverse and remand.

I. BACKGROUND

R. Scott Appling hired the law firm Lamar, Archer & Cofrin, LLP, to represent him in litigation against the former owners of his néw business. Appling agreed to pay Lamar on an hourly basis with invoices for fees and costs due monthly. Appling became unable to keep current on the mounting legal bill and as of March 2005, owed Lamar $60,819.97. Lamar threatened to terminate the firm’s representation and place an attorney’s lien on all work product unless Appling paid the outstanding fees.

Appling and his attorneys held a meeting in March 2005. The bankruptcy court found that during this meeting Appling stated he was expecting a tax refund of “approximately $100,000,” which would be enough to pay current and future fees. Lamar contends that in reliance on this statement, it continued its representation and did not begin collection of its overdue fees.

When Appling and his wife submitted their tax return, they requested a refund of only $60,718 and received a refund of $59,851 in October. The Applings spent this money on their business. They did not pay Lamar.

Appling and his attorneys met again in November 2005. The bankruptcy court found that Appling stated he had not yet received the refund. Lamar contends that in reliance on this statement, it agreed to complete the pending litigation and forego immediate collection of its fees but refused to undertake any additional representation. In March 2006, Lamar sent Appling his final invoice for a principal amount due of $55,303.66 and $6,185.32 in interest.

Five years later, Lamar filed suit against Appling in a superior court in Georgia. In October 2012, Lamar obtained a judgment for $104,179.60. Three months later, the Applings filed for bankruptcy.

Lamar initiated an adversary proceeding against Appling in bankruptcy court. The bankruptcy court ruled that because Ap-pling made fraudulent statements on which Lamar justifiably relied, Appling’s debt to Lamar was nondischargeable, 11 U.S.C. § 523(a)(2)(A). The district court affirmed. The district court rejected Appling’s argument that his oral statements “respect[ed] ... [his] financial condition,” 11 U.S.C. § 523(a)(2)(B), and should have been dis-chargeable. The district court ruled that “statements respecting the debtor’s financial condition involve the debtor’s net worth, overall financial health, or equation of assets and liabilities. A statement pertaining to a single asset is not a statement of financial condition.” The district court agreed with the bankruptcy court that Ap-pling made material false statements with the intent to deceive on which Lamar justifiably relied.

II. STANDARD OF REVIEW

When we sit as the second appellate eo.urt to review a bankruptcy case, In re Glados, Inc., 83 F.3d 1360, 1362 (11th Cir. 1996), we “assess the bankruptcy court’s judgment anew, employing the same standard of review the district court itself used,” In re Globe Mfg. Corp., 567 F.3d 1291, 1296 (11th Cir. 2009). “Thus, we review the bankruptcy court’s factual findings for clear error, and its legal conclusions de novo.” Id.

III. DISCUSSION

The Bankruptcy Code gives a debtor a fresh start by permitting him to' discharge his pre-existing debts. But there are many exceptions to discharge. And some of those exceptions protect victims of fraud.

Section 523(a)(2) creates two mutually exclusive exceptions to discharge:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debt- or from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition',
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; ...

11 U.S.C. § 523(a)(2) (emphasis added).

The Code treats debts incurred by a statement “respecting the debtor’s ... financial condition” differently from other debts. Id. All fraud “other than a statement respecting the debtor’s ... financial condition” is covered by subsection (A). Id. § 523(a)(2)(A). Under subsection (A), a debtor cannot discharge a debt obtained by any type of fraudulent statement, oral or written. Id. A creditor also need prove only justifiable reliance. Field v. Mans, 516 U.S. 59, 61, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995). But if a statement is made “respecting the debtor’s ... financial condition,” then subsection (B) governs. 11 U.S.C. § 523(a)(2)(B)(ii). To avoid discharge of a debt induced by a statement respecting the debtor’s financial condition, a creditor must show reasonable reliance and that the statement was intentional, materially false, and in writing. Id. § 523(a)(2)(B). Thus, a debt incurred by an oral, fraudulent statement respecting the debtor’s financial condition can be discharged in bankruptcy.

We must determine whether Ap-pling’s statements about a single asset are “statements] respecting [his] ... financial condition.” Id. § 523(a)(2). The bankruptcy court found that Appling made false oral statements about his anticipated tax refund to receive an extension of credit from Lamar. If these statements do not respect his financial condition, Appling can discharge his debt to Lamar in bankruptcy only if he disproves an element of fraud. Id. § 523(a)(2)(A). But if the statements do respect his financial condition, Appling can discharge his debt to Lamar because the statements were not in writing. Id. § 523(a)(2)(B).

The circuits and other federal courts are split on this question. The Fourth Circuit has held that a “debtor’s assertion that he owns certain property free and clear of other liens is a statement respecting his financial condition.” Engler v. Van Steinburg, 744 F.2d 1060, 1061 (4th Cir. 1984). Several bankruptcy courts — including one in this Circuit, In re Aman, 492 B.R. 550, 565 & n.47 (Bankr. M.D. Fla. 2010) — have agreed. See, e.g., In re Carless, No. 10-42988, slip op. at *3-4, 2012 WL 32700 (Bankr. D.N.J. Jan. 6, 2012); In re Nicolai, No. 05-29876, slip op. at *1, 2007 WL 405851 (Bankr. D.N.J. Jan. 31, 2007); In re Hambley, 329 B.R. 382, 399 (Bankr. E.D.N.Y. 2005); In re Priestley, 201 B.R. 875, 882 (Bankr. D. Del. 1996); In re Kolbfleisch, 97 B.R. 351, 353 (Bankr. N.D. Ohio 1989); Matter of Richey, 103 B.R. 25, 29 (Bankr. D. Conn. 1989); In re Rhodes, 93 B.R. 622, 624 (Bankr. S.D. Ill. 1988); In re Howard, 73 B.R. 694, 702 (Bankr. N.D. Ind. 1987); In re Panaia, 61 B.R. 959, 960-61 (Bankr. D. Mass. 1986); In re Roeder, 61 B.R. 179, 181 n.1 (Bankr. W.D. Ky. 1986); In re Prestridge, 45 B.R. 681, 683 (Bankr. W.D. Tenn. 1985). But the Fifth, Eighth, and Tenth Circuits have held that a statement about a single asset does not respect a debtor’s financial condition because it “says nothing about the overall financial condition of the person making the representation or the ability to repay debt.” In re Bandi, 683 F.3d 671, 676 (5th Cir. 2012); see also In re Lauer, 371 F.3d 406, 413-14 (8th Cir. 2004); In re Joelson, 427 F.3d 700, 706 (10th Cir. 2005). And some bankruptcy courts in other circuits have agreed. See, e.g., In re Feldman, 500 B.R. 431, 437 (Bankr. E.D. Penn. 2013); In re Banayan, 468 B.R. 542, 575-76 (Bankr. N.D.N.Y. 2012); In re Campbell, 448 B.R. 876, 886 (Bankr. W.D. Penn. 2011).

“[Interpretation of the Bankruptcy Code starts ‘where all such inquiries must begin: with the language of the statute itself.’ ” Ransom v. FIA Card Servs. N.A., 562 U.S. 61, 69, 131 S.Ct. 716, 178 L.Ed.2d 603 (2011) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)). Because the Code does not define the relevant terms, we look to “their ordinary, everyday meanings — unless the context indicates that they bear a technical sense.” Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 69 (2012); see also In re Piazza, 719 F.3d 1253, 1261 (11th Cir. 2013) (applying this canon to the Bankruptcy Code). The text and context establish that a statement about a single asset can be a “statement respecting the debtor’s ... financial condition.” 11 U.S.C. § 523(a)(2).

“Financial condition” likely means one’s overall financial status. Elsewhere in the statute, the Bankruptcy Code defines “insolvent” as the “financial condition such that the sum of such.'entity’s debts is greater than all of such entity’s property.” Id. § 101(32)(A). In this context, the statute uses “financial condition” to describe the overall state of being insolvent, not any particular asset on its own. Because “[a] word or phrase is presumed to bear the same-meaning throughout a text,” Scalia & Garner, supra, at 170, we should interpret “financial condition” in section 523(a)(2) in the same way. Whether by its ordinary meaning or as á term of art, “financial condition” likely refers to the sum of all assets and liabilities.

But even if “financial condition” means the sum of all assets and liabilities, it does not follow that the phrase “statement respecting the debtor’s ... financial condition,” Id. § 523(a)(2) (emphasis added), covers only statements that encompass the entirety of a debtor’s financial condition at once. Read in context, the phrase “statement respecting the debtor’s ... financial condition,” id. includes a statement about a single asset. We must not read the word “respecting” out of the statute. See Scalia & Garner, supra, at 174 (“If possible, every word ... is to be given effect.”).

“Respecting” is defined broadly as “[w]ith regard or relation to; regarding; concerning.” Respecting, Webster’s New International Dictionary 2123 (2d ed. 1961); see also Respecting, Oxford English Dictionary (online ed.) (“With respect to; with reference to; as regards.”). For example, documents can “relate to” or “concern” someone’s health without describing their entire medical history. Articles can “reference” the Constitution without quoting its entire text. Likewise, a statement can “respect” a debtor’s “financial condition” without describing the overall financial situation of the debtor. The Supreme Court has interpreted “with respect to” in a statute to mean “direct relation to, or impact on.” Presley v. Etowah Cty. Comm’n, 502 U.S. 491, 506, 112 S.Ct. 820, 117 L.Ed.2d 51 (1992). And the Court has interpreted “respecting” in the First Amendment to include any partial step toward the establishment of religion. Lemon v. Kurtzman, 403 U.S. 602, 612, 91 S.Ct. 2105, 29 L.Ed.2d 745 (1971). A statement about a single asset “relates to” or “impacts” a debtor’s overall financial condition. And knowledge of one asset or liability is a partial step toward knowing whether the debtor is solvent or insolvent.

If the statute applied only to statements that expressed a debtor’s overall financial condition, Congress' could have said so. Lamar argues that “the preposition ‘respecting’ has no magic, expansive effect in the statute, it is simply a required grammatical. device necessary to connect two related terms.” Perhaps this argument would have more sway if the statute said “statement of the debtor’s financial condition.” But Congress did not use this language. Congress also did not say “statement indicating” or “revealing” or “disclosing” or “encompassing” the debtor’s financial condition, phrases that would connote a full or complete expression of financial condition.

Lamar dismisses the focus on the word “respecting” as “nothing more than a game of semantics,” but judges have a responsibility to interpret the whole text. And “[sjometimes the canon [of ordinary meaning] governs the interpretation of so simple a word as a preposition.” Scalia & Garner, supra, at 71. A statement about a single asset is still a statement respecting a debtor’s financial condition.

Lamar argues that because the legislative history often used “financial statement” in place of “statement respecting the debtor’s ... financial condition,” 11 U.S.C. § 523(a)(2), we should read the statute to apply only to financial statements, but the word “statement” should also be given its ordinary meaning. Mere proximity of “statement” to “financial condition” is not enough to limit the meaning of the text. “Statement” is defined as “[t]hat which is stated; an embodiment in words of facts or opinions; a narrative; recital; report; account.” Statement, Webster’s New International Dictionary 2461 (2d ed. 1961). The definition of financial statement is technical and would exclude a statement about a single asset: “A balance sheet, income statement, or annual report that summarizes an individual’s or organization’s financial condition on a specified date or for a specified period by reporting assets and liabilities.” Financial Statement, Black’s Law Dictionary ■{ 10th ed. 2014). Setting aside the problems with legislative history, Lamar’s argument works against it. Precisely because “[t]he term ‘financial statement’ has a strict, established meaning,” Joelson, 427 F.3d at 709, we should expect the statute to say “financial statement” if it conveys that meaning. But the statute instead says “statement.” To limit the definition to only “financial statements,” Congress need only say so. Cf. 11 U.S.C. § 1125 (using the term “disclosure statement”); Id. § 101(49)(A)(xii) (“registration statement”).

The surplusage cannon supports our determination that “statement” should be given its ordinary meaning. “If possible, every word and every provision is to be given effect.... None should needlessly be given an interpretation that-causes it to duplicate another provision or to have no consequence.” Scalia & Garner, supra, at 174; see also Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979). In subsection. (B), the statute says “use of a statement in writing.” 11 U.S.C. § 523(a)(2)(B). Because a formal financial statement is almost always a written document (it is hard to imagine an oral recitation of all assets and liabilities), reading the statute to cover only financial statements would render the writing requirement surplusage.

And in the context of a statute about fraud, the ordinary meaning of the word “statement” makes sense. Section 523(a)(2) creates two similar exceptions to discharge for debts incurred by fraud. Subsection (A) references specific common-law torts. See Field, 516 U.S. at 69, 116 S.Ct. 437 (“ ‘[F]alse pretenses, a false representation, or actual fraud,’ carry the acquired meaning of terms of art.... [T]hey imply elements that the common law has defined them to include.” (quoting 11 U.S.C. § 523(a)(2)(A))). Subsection (B) enumerates its own elements which are analogous, but not identical to the common law elements. For example, where the common law requires justifiable reliance, section 523(a)(2)(B)(iii) requires reasonable reliance. Field, 516 U.S. at 72-75, 116 S.Ct. 437. Similarly, where the common law requires either an affirmative representation or an intentional omission, section 523(a)(2)(B) requires a “statement,” as opposed to an omission. True, if Congress wanted to exclude omissions from subsection.(B), it could have used the term “representation” and avoided the confusion with the term “financial statement.” But Congress would not have said “false representation” without implying the common law term of art. See Field, 516 U.S. at 69, 116 S.Ct. 437. Accordingly, “statement” means an expression or embodiment in words, as opposed to a nonaetionable omission.

Lamar also argues that the “only way to give Section 523(a)(2)(A) meaning is to interpret it to provide a distinction between oral and written representations,” but this argument reveals a fundamental misunderstanding of the statute. Section 523(a)(2)(A) covers most fraud. But section 523(a)(2)(B) covers statements respecting financial conditions. Lamar states that “certain oral misrepresentations must be non-dischargeable.” They are. Any debt incurred by an oral misrepresentation that is not “respecting the debtor’s financial condition” is nondischargeable under subsection (A). Appling provides a list of examples, including false representations about job qualifications and lies about the purpose and recipient of a payment. The question is how broadly to define the phrase “statement respecting the debtor’s ... financial condition,” not whether allowing discharge of debts incurred by oral misrepresentations about finances is- a good idea. The statute allows the discharge of debts incurred by oral statements so long as they “respect” the debtor’s “financial condition.” Lamar’s argument is based on policy, not statutory structure.

When the language of the statute is clear, we need not look any further. See Puerto Rico v. Franklin Cal. Tax-Free Tr., - U.S. -, 136 S.Ct. 1938, 1946, 195 L.Ed.2d 298 (2016) (When “the statute’s language is plain,” “that is also where the inquiry should end.” (internal quotations omitted)); United States v. Great Northern Ry. Co., 287 U.S. 144, 154, 53 S.Ct. 28, 77 L.Ed. 223 (1932) (“[W]e have not traveled, in our search for the meaning of the lawmakers, beyond the borders of the statute.”). A distaste for dishonest debtors does not empower judges to disregard the text of the statute. Because the text is not ambiguous, we hold that “statement[s] respecting the debtor’s ... financial condition” may include a statement about a single asset.

This result is also perfectly sensible. The requirement that some statements be made in writing promotes accuracy and predictability in bankruptcy disputes that often take place years after the facts arose. Lamar refers to our interpretation as a “giant fraud loophole.” But the requirement of a writing is not at all unusual in the history of the law. From the Statute of Frauds to the Uniform Commercial Code, law sometimes requires that proof be in writing as a prerequisite to a claim for relief. This requirement may seem harsh after the fact, especially in the case of fraud, but it gives creditors an incentive to create writings before the fact, which provide the court with reliable evidence upon which to make a decision. In the context of a debt incurred by fraud, a lender concerned about protecting its rights in bankruptcy can easily require a written statement from the debtor before extending credit. Lamar, a law firm, could have required Appling to put his promise to spend his tax return on their legal fees in writing before continuing to represent him.

This rule strikes a reasonable balance between the “ ‘conflicting interests’ of discouraging fraud and of providing the honest but unfortunate debtor a fresh start.” In re Vann, 67 F.3d 277, 284 (11th Cir. 1995) (quoting Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)). The code does not unfairly reward dishonest debtors, but instead imposes different requirements of proof for different kinds of statements. A statement respecting a debtor’s financial condition must be in writing, which helps both the honest debtor prove his honesty and the innocent creditor prove a debtor’s dishonesty. And providing an incentive for creditors to receive statements in writing may reduce the incidence of fraud. Because a statement about a single asset can be a “statement respecting the debtor’s ... financial condition,” and because Appling’s statements were not in writing, his debt can be discharged under section 523(a)(2)(B).

IV. CONCLUSION

We REVERSE the order ruling that Appling’s debt to Lamar is nondisehargeable and REMAND for further proceedings consistent with this opinion.

ROSENBAUM, Circuit Judge,

concurring:

Sometimes things are not as they seem. Today we conclude that the phrase “statement respecting ... the debtor’s financial condition” in 11 U.S.C. § 523(a)(2) warrants a broad reading. As a result, Ap-pling, the debtor in this case, will receive a discharge of the debt he incurred by lying about how he would pay for the legal services he dishonestly obtained. That certainly seems to frustrate a “primary purpose” of the Bankruptcy Act to provide relief to only the “honest debtor.” See Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230 (1934) (citation and internal quotation marks omitted).

But in actuality, the broad reading we give to the phrase “statement respecting ... the debtor’s financial condition” better promotes congressional intent to give a fresh start to only the “honest debtor” than does a narrow construction of the same phrase. This is so because the very same phrase appears in both §§ 523(a)(2)(A) and (B), and it must have the same meaning in both subsections. Though a narrow construction of the phrase in subsection (A) seems to further congressional intent to protect only the “honest debtor,” a broad interpretation of the phrase in subsection (B) better comports with congressional intent. And the reality is that a broad construction of the phrase “statement respecting ... the debtor’s financial condition” in subsection (B) advances congressional intent to provide relief for only the “honest debtor” more than a narrow interpretation of the same phrase in subsection (A).

Because the words of the phrase alone are ambiguous, we must construe the phrase with an eye towards congressional intent in enacting the Bankruptcy Act. When we do that, it is clear that “statement respecting ... the debtor’s financial condition” must have the broad meaning that the panel attributes to it.

I.

There’s no getting around it. Standing alone, the words of the phrase “statement respecting ... the debtor’s financial condition” are not unambiguous. True, the panel seems to think they are and argues that the words clearly mean any statement about any finance, asset, or liability that the debtor may have. .But other courts have concluded that the language “statement respecting ... the debtor’s financial condition” refers to only statements about a debtor’s overall financial circumstances — which do not include statements about only a single asset or liability.

Among the courts that appear to have understood the phrase to mean the opposite of what we conclude today is the Supreme Court, though the Supreme Court has not expressly addressed the meaning of the language. In Field v. Mans, 516 U.S. 59, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995), the Court held that a creditor need show only justifiable reliance on a fraudulent misrepresentation in order to except the debt incurred as a result of that reliance, from discharge under § 523(a)(2)(A). In reaching this conclusion, the Supreme Court discussed § 523(a)(2)(A) and (B)’s references to “a statement respecting the debtor’s ... financial condition” and conveyed its understanding that the words “financial condition” in § 523(a)(2) are a prohibition on excepting from discharge under both subsections (A) and (B) “debts traceable to ... a materially false financial statement,” id. at 64, 116 S.Ct. 437 (emphasis added), apparently meaning “financial statement” as a term of art referring to a statement of net worth, not a statement about a single asset or liability. So at least at the time it decided Field, the Supreme Court appeared to have a different understanding of the phrase “a statement respecting the debtor’s ... financial condition” than we embrace today.

To be sure, I do not suggest that Field’s discussion of the meaning of “a statement respecting the debtor’s ... financial condition” purports to instruct courts on, the proper meaning of § 523(a)(2)(A). But the Supreme Court’s understanding as conveyed in Field demonstrates that the language of the phrase is fairly susceptible of more than one meaning.

Three other circuits have likewise concluded that the phrase “a statement respecting the debtor’s ... financial condition” must be construed narrowly, to refer to only those statements about a debtor’s overall net worth — though they do not appear to have determined the language of the phrase to have an unambiguous meaning. See, e.g., In re Bandi, 683 F.3d 671 (5th Cir. 2012); In re Lauer, 371 F.3d 406 (8th Cir. 2004); In re Joelson, 427 F.3d 700 (10th Cir. 2005).

But while the language itself of the phrase in question may not be unambiguous, that doesn’t mean that § 523(a)(2) is ambiguous in the overall statutory scheme.' When we construe a statute, we must do so not only by looking to the language itself, but also by reference to “the specific context in which that language is used, and the broader context of the statute as a whole.” Yates v. United States, — S.Ct. —, 135 S.Ct. 1074, 1081-82, 191 L.Ed.2d 64 (2015) (citation and quotation marks omitted). And when we do that, it is clear that we must give the phrase “a statement respecting the debtor’s ... financial condition” a broad construction.

The Supreme Court has repeatedly emphasized that the Bankruptcy Code “limits the opportunity for a completely unencumbered new beginning to the ‘honest but unfortunate debtor.’ ” Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (quoting Hunt, 292 U.S. at 244, 54 S.Ct. 695). For this reason, only honest debtors receive the benefit of the general policy that exceptions to discharge are to be construed strictly against the creditor and liberally in favor of the debtor. In re St. Laurent, 991 F.2d 672, 680 (11th Cir. 1993). Indeed, we have said that “the malefic debtor may not hoist the Bankruptcy Code as protection from the full consequences of fraudulent conduct.” Id. at 680-81.

So to the extent that the language “statement respecting ... the debtor’s financial condition” is fairly and reasonably susceptible of a construction that better furthers congressional intent to protect only the honest debtor, we are obliged to apply that interpretation. When it comes to § 523(a)(2), a broad construction is reasonable and better accomplishes this' purpose than a narrow one.

As the panel notes, the phrase “statement respecting ... the debtor’s financial condition” appears in both subsections (A) and (B). We therefore presume it to have the same meaning in both subsections. See Mohasco Corp. v. Silver, 447 U.S. 807, 826, 100 S.Ct. 2486, 65 L.Ed.2d 532 (1980) (“[W]e cannot accept respondent’s position without unreasonably giving the word ‘filed’ two different meanings in the. same section of the statute”).

But though the words have the same meaning in both subsections (A) and (B), they have opposite effects on whether a debtor may discharge a debt for something obtained through the use of a “statement respecting ... the debtor’s financial condition.” Under subsection (A), which refers to oral statements, if a statement falls within the meaning of “statement respecting ... the debtor’s financial condition,” the debt incurred as a result of that statement is dischargeable. Meanwhile, under subsection (B), which refers to written statements, if a statement comes within the meaning of “statement respecting ... the debtor’s financial condition,” the debt incurred as a result of that statement is not dischargeable, provided that the other conditions in subsection (B) are satisfied.

So if the phrase has a broad meaning, more false oral statements will have the effect of exempting a debt incurred as the result of a misrepresentation, from the exception to discharge (meaning that such debts will be discharged), than if we construe the phrase narrowly. But fewer false written statements will result in excusing a debt for a fraudulently obtained asset, service, or loan. And since it seems likely that, at least in arm’s length transactions, most significant debts are obtained as the result of written representations about finances, as opposed to oral ones, a broader interpretation of the phrase is less likely to benefit dishonest debtors than a narrow construction of it.

II.

For these reasons, I agree with the panel that we must construe the phrase “statement respecting ... the debtor’s financial condition” broadly. To be sure, doing so has the effect of allowing Appling’s debt for legal services, which the bankruptcy court concluded he obtained by lying to Lamar about the tax refund, to -be discharged. But in the overall statutory scheme, the broad interpretation better promotes Congress’s concern to provide relief to “honest debtors” only.


source: Caselaw Access Project

license: Public Domain

text:
    IN RE: Jon E. LUNSFORD, Sr., Debtor. Jon E. Lunsford, Sr., Plaintiff-Appellant, v. Process Technologies Services, LLC, Defendant-Appellee.
    No. 16-11578
    United States Court of Appeals, Eleventh Circuit.
    (February 15, 2017)

      Ryan Lance Isenberg, Isenberg & Hewitt, PC, ATLANTA, GA, for Plaintiff-Appellant.
    Stephen Paul Drobny, Jones Walker, LLP, MIAMI, FL, April Freeman, Jones Walker, LLP — ATL, ATLANTA, GA, Kathryn Healy Hester, Jones Walker, LLP, JACKSON, MS, for Defendant-Appellee.
    Before WILIAM PRYOR and ROSENBAUM, Circuit Judges, and UNGARO, District Judge.

       Honorable Ursula Ungaro, United States District Judge for the Southern District of Florida, sitting by designation.

   WILLIAM PRYOR, Circuit Judge:

This appeal requires us to decide whether a bankruptcy court made a finding of fact that a debtor violated state securities laws. After a business venture went awry, Process Technologies obtained a judgment in state court against Jon Lunsford for violations of state securities laws. Lunsford then filed for bankruptcy. A debtor ordinarily may discharge debts in bankruptcy, 11 U.S.C. § 727, but not if the debt “is for the violation of ... securities laws” and results from a court judgment, § 523(a)(19)(A)-(B). Process Technologies filed an adversary proceeding in which it complained that section 523(a)(19)(A) barred Lunsford from discharging the debt. Lunsford answered that his liability arose from a third party’s violation of securities laws and that the bar under section 523(a)(19)(A) from a discharge applies only when the debtor violates securities laws. Lunsford also sought leave to amend his answer to assert that Process Technologies fraudulently obtained the judgment. Luns-ford’s arguments fail: the bankruptcy court made a finding of fact that Lunsford violated securities laws; alternatively, section 523(a)(19)(A) applies irrespective of debtor conduct; and Lunsford is estopped from arguing that the award was procured by fraud. We affirm the order that excepted the debt from discharge and denied leave to amend.

I. BACKGROUND

In 2009, Process Technologies Services, LLC, met with MIPCO, LLC, and its president, Jon Lunsford, to discuss purchasing securities in MIPCO. MIPCO sent Process Technologies documents that stated that MIPCO maintained $1.2 million in tangible assets and $500,000 in intangible assets. Not knowing that title problems plagued the tangible assets and that MIP-CO had not acquired the intangible assets, Process Technologies invested $300,000.

After discovering the asset problems, Process Technologies sued in a chancery court in Mississippi to rescind the sale. The chancery court ordered the parties to arbitrate the dispute. Lunsford filed for bankruptcy, but the bankruptcy court stayed the action pending the arbitration. The arbitrator ruled in favor of Process Technologies and awarded the company $606,892. The chancery court confirmed the award and entered a final judgment against Lunsford, MIPCO, and another individual as jointly and severally liable. Lunsford neither objected to the confirmation nor appealed to the Supreme Court of Mississippi.

The bankruptcy court then lifted the stay of its proceeding, and Process Technologies filed an adversary proceeding, complaining that Lunsford could not discharge the debt because the debt was “for the violation” of securities laws, 11 U.S.C. § 523(a)(19)(A). After Lunsford filed an answer, he sought leave to amend that answer to assert that Process Technologies fraudulently obtained the arbitrator’s award. The bankruptcy court then directed Lunsford to pursue that argument in the chancery court. Lunsford filed a motion for relief from judgment in the chancery court, but the chancery court declined to set aside its judgment.

Lunsford’s motion for relief from judgment having been resolved, the bankruptcy court ruled ■ that section 523(a)(19)(A) prohibited Lunsford from discharging the debt. The bankruptcy court determined that the arbitrator “found that [Lunsford] violated the [Mississippi Securities] Act. More specifically, the Arbitrator found that [Lunsford] violated the Act by offering and selling an unregistered security. The Arbitrator also found that [Lunsford] violated the Act by making an offer that contained untrue statements.” The bankruptcy court ruled that the arbitration award constituted a judgment “for a violation” of securities laws against Lunsford because “there is a determination outside the Bankruptcy Court that [Lunsford] violated securities laws and because the state courts confirmed the arbitration award.

Lunsford appealed to the district court on the ground that section 523(a)(19)(A) bars discharge only when the debtor committed a securities violation, not when his liability arose from a third-party’s violation. The district court held that section 523(a)(19)(A) applies irrespective of debtor conduct and that Lunsford is not entitled to amend his complaint.

II. STANDARD OF REVIEW

This court is the second appellate court to reviéw decisions from the bankruptcy court. In re Glados, Inc., 83 F.3d 1360, 1362 (11th Cir. 1996). We “assess the bankruptcy court’s judgment anew, employing the same standard of review the district court itself used.” In re Globe Mfg. Corp., 567 F.3d 1291, 1296 (11th Cir. 2009). “Thus, we review the bankruptcy court’s factual findings for clear error, and its legal conclusions de novo.” Id.

III. DISCUSSION

We divide our discussion in two parts. First, we explain that Lunsford cannot discharge his debt because the bankruptcy court made a finding of fact that Lunsford violated securities laws and, in the alternative, section 523(a)(19)(A) applies irrespective of whether Lunsford violated securities laws. Second, we explain that Lunsford is not entitled to leave to amend his complaint.

A. Lunsford Cannot Discharge the Debt.

Section 523(a)(19)(A) provides that a person cannot discharge a debt in bank-ruptey if the debt “is for the violation of securities laws”: •

(a) [bankruptcy] discharge ... does not discharge an individual debtor ⅛0111 any _
(19) that—
(A) is for—
(i) the violation of any of the Federal securities laws (as that term is defined in section 3(a)(47) of the •Securities Exchange Act of 1934), any of the State securities laws, or any regulation or order issued under such Federal or State securities laws; or
(ii) common law fraud, deceit, or manipulation in connection with the purchase or sale of any security; and
(B) results, before, on, or after the date on which the petition was filed, from—
(i) any judgment, order, consent order, or decree entered in any Federal or State judicial or administrative proceeding; .
(ii) any settlement agreement entered into by the debtor; or '
(iii) any court or administrative order for any damages, fine, penalty, citation, restitutionary payment, disgorgement payment, attorney fee, cost, or other payment owed by the debtor.

11 U.S.C. § 523(a)(19) (emphases added).

Lunsford argues that the bankruptcy court and the arbitrator never found that he violated securities laws, only that he is liable for a third party’s violation of securities laws. Relying on this premise, Luns-ford argues that the bar under section 523(a)(19)(A) from a discharge applies only if he violated securities laws. We reject both arguments.

1. The Bankruptcy Court Made a Finding of Fact That Lunsford Violated Securities Laws.

Lunsford concedes that section 523(a)(19)(A) prohibits discharge if the bankruptcy court found that Lunsford violated securities laws, but he argues that the bankruptcy court “adopted the arbitrator’s award” and applied collateral estop-pel only to determine that it was “possible” to conclude that Lunsford violated securities laws. He maintains that the bankruptcy court never made a specific finding of culpability. We agree that the district court “adopted” the findings of the arbitrator, but by adopting those findings, the bankruptcy court determined that Luns-ford violated securities laws.

The bankruptcy court stated that it “should focus not on the underlying facts but on the nature of the judgment at issue” to avoid “the need to re-litigate the matter [of culpability] in bankruptcy court,” but the bankruptcy court did not, as Lunsford contends, fail to make findings of fact. Instead, by precluding relitigation of facts, “the bankruptcy court utilized issue preclusion to reach conclusions about facts that the’ court would then consider as ‘evidence of nondischargeability.’” In re Halpern, 810 F.2d 1061, 1064 (11th Cir. 1987) (emphasis added). In adopting the arbitrator’s award, the district court adopted the facts that the arbitrator found. The bankruptcy court could not have applied section 523(a)(19)(A) without first finding a violation because the section applies only if there exists a “violation” of securities laws that a “debt ... is for.”

Lunsford contends that the bankruptcy court could not have found that Lunsford violated securities laws because the arbitrator did not find as much, but the findings of the bankruptcy court rest on ample support from the arbitrator’s award. On the first page of its award, the arbitrator stated that “the use of ‘MIPCO’ will include Mr. Lunsford ... unless ... referenced individually.” Later, the arbitrator determined that section 75-71-401 of the Mississippi Code, part of the Mississippi .Securities Act, “makes it unlawful for any person to offer or sell a security unless it is registered, an exempt transaction, or a federal security.” The arbitrator found that “MIPCO” violated securities laws because “the securities were unregistered and MIPCO has not established that the ... transactions were exempt from registration,” and nobody disputes that the securities were not federal. The arbitrator did not limit these findings to MIPCO, so the bankruptcy court had sufficient reason to determine that the arbitrator made a specific finding that Lunsford violated securities laws. Because Lunsford agrees that section 523(a)(19)(A) prohibits discharge of debts where a debtor violated securities laws, Lunsford cannot discharge his debt.

2. Alternatively, Section 523(a)(19)(A) Applies Irrespective of Debtor Conduct.

Even if the bankruptcy court had not made a finding that Lunsford violated securities laws, we would reject his argument that the Bankruptcy Code prohibits discharge of a debt that is for the violation of state securities laws only when the debt- or violated the securities laws, not when the debtor’s liability arises from securities violations committed by a third party. The text of section 523(a)(19)(A) makes no such distinction; the statute applies irrespective of debtor conduct.

The text and structure of section 523(a)(19)(A) unambiguously prevent discharge of debts “for the violation” of securities laws irrespective of debtor conduct. The term “for” in section 523(a)(19)(A) denotes causation. The Supreme Court has interpreted the term “debt for” to mean “ ‘debt as a result of,’ ‘debt with respect to,’ ‘debt by reason of,’ and the like.” Cohen v. de la Cruz, 523 U.S. 213, 220, 118 S.Ct. 1212, 140 L.Ed.2d 341 (1998) (citing American Heritage Dictionary 709 (3d ed. 1992); Black’s Law Dictionary 644 (6th ed. 1990)). Although section 523(a)(19)(A) includes the slightly different phrase “debt that is for,” this alteration only serves as a drafting tool to enable the division found in section 523(a)(19). Section 523(a)(19)(A) employs the phrase “debt that is for,” and section 523(a)(19)(B) employs the phrase “debt that ... results . -.. from.” But “debt for” is used in similar but undivided subparts of 523(a). § 523(a)(l)-(2), (4)-(6), (9), (12)-(13), (16)-(17). Congress did not materially alter the phrase “debt for” when it inserted a pronoun and a linking verb, so “debt that is for” retains the same meaning as “debt for” and refers to debt caused by a violation of securities laws. See Antonin Scalia & Bryan Garner, Reading Law: The Interpretation of Legal Texts 170 (2012).

Because Congress also did not restrict section 523(a)(19)(A) to subsets of causation, we should not construct such a limit. If Congress had wanted to limit section 523(a)(19)(A) based on debtor conduct, it could have done so as it did with other provisions in the statute. Even within section 523(a)(19), .the text considers debtor conduct, but it considers debtor conduct in a provision not pertinent to this appeal. For a debt to be excepted from discharge, it must be “for” a violation of securities laws, § 523(a)(19)(A), but it must also “re-sulte ] ... from” a court order or “any settlement agreement entered into by the debtor,” § 523 (a)(19)(B)(i)-(ii) (emphasis added). Other subsections similarly limit application based on debtor conduct. Debts cannot be discharged if they are “for willful and malicious injury by the debtor to another entity,” § 523(a)(6) (emphasis added), or “for death or personal injury caused by the debtor’s operation of a motor vehicle,” § 523(a)(9) (emphasis added). Nor can debts be discharged if they are “obtained by use of a statement in writing ... that the debtor caused to be made or published,” § 523(a)(2)(B)(iv) (emphasis added), or are “for a tax or a customs duty with respect to which the debtor made a fraudulent return,” § 523(a)(1)(C) (emphasis added). Because Congress rendered discharge in some subsections dependent on debtor conduct but never did so for section 523(a)(19)(A), we infer that the limit does not extend to section 523(a)(19)(A). See Scalia & Garner, supra, at 107; Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983). The whole text establishes that section 523(a)(19)(A) precludes discharge regardless of whether the debtor violated securities laws as long as the securities violation caused the debt.

The Tenth Circuit arrived at a contrary conclusion, but even if we found its reasoning persuasive, its decision involved circumstances inapplicable here. After Oklahoma obtained judgments for unjust enrichment against investors in a Ponzi scheme, the Tenth Circuit held that the debtors could discharge their debts because “[t]he judgments at issue [wejre not ‘for a violation’ of securities laws but for unjust enrichment resulting from someone else’s violation of those statutes.” Okla. Dep’t of Sec., ex. rel. Faught v. Wilcox, 691 F.3d 1171, 1173, 1175 (10th Cir. 2012). In contrast, Lunsford’s debt does not arise from a judgment against him for unjust enrichment. Lunsford was a party to the same decision in which the state courts entered a judgment against MIPCO for a violation of securities laws.

The Ninth Circuit also arrived at a contrary decision, but it too is unpersuasive. In that decision, a client had pre-paid an attorney with funds derived from violations of securities laws. By the time the matter settled, the attorney had not billed enough work to justify 'all the pre-paid funds, but after a receiver ordered the attorney to disgorge those funds, the attorney filed for bankruptcy to shield the funds. In re Sherman, 658 F.3d 1009, 1010 (9th Cir. 2011), abrogated on other grounds by Bullock v. BankChampaign, N.A., — U.S. —, 133 S.Ct. 1754, 185 L.Ed.2d 922 (2013). The Ninth Circuit acknowledged that the plain language of section 523(a)(19)(A) did not limit application based on debtor conduct, but determined that the text was ambiguous in the light of circuit precedent that had held that similar portions of section 523 required inquiry into debtor conduct. To further the supposed “purpose” of the Bankruptcy Code to allow a “fresh start” and to protect “the honest but unfortunate debtor,” the Ninth Circuit limited section 523(a)(19)(A) to debts caused by the debtor. In re Sherman, 658 F.3d at 1013-15 (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230 (1934)). We depart from the Ninth Circuit because it grounded its decision on precedent that does not bind us and followed prescriptions of general statutory purpose over the text.

B. Lunsford Is Not Entitled to Leave to Amend. His Complaint.

Lunsford argues that Process Technologies fraudulently obtained the arbitration award. He maintains that because “the bankruptcy court is not obligated to recognize a judgment procured by fraud and perjury,” he should be granted leave to amend. We disagree.

Lunsford is not entitled to leave to amend his complaint because Mississippi law precludes him from relitigating the claim of fraud. We “give preclusive effect to a state court judgment to the same extent as would courts of the state in which the judgment was entered.” Battle v. Liberty Nat’l Life Ins. Co., 877 F.2d 877, 882 (11th Cir. 1989). In Mississippi, collateral estoppel precludes Lunsford “from re-litigating a specific issue actually litigated, determined by, and essential to the judgment in a former action, even though a different cause of action is the subject of the subsequent action.” Dunaway v. W.H. Hopper & Assoc., Inc., 422 So.2d 749, 751 (Miss. 1982). Twice, state courts rebuffed Lunsford’s claim of fraud. And because his argument, if successful, would have defeated the complaint against him, the decision of the state court as to the claim of fraud was essential to the judgment against Lunsford. Lunsford is not entitled to leave to amend his complaint to allege a futile claim barred by an earlier judgment. Bryant v. Dupree, 252 F.3d 1161, 1163 (11th Cir. 2001).

IV. CONCLUSION

We AFFIRM the judgment against Lunsford.

ROSENBAUM, Circuit Judge,

concurring:

Sometimes one reason is enough. That’s the case here. As Judge Pryor ably demonstrates, Lunsford cannot discharge the debt of $606,892 under 11 U.S.C. § 523(a)(19)(A)’ because the bankruptcy court correctly determined that the arbitration award found that he violated securities laws. This is not a close question; the answer is clear. I would have stopped there.

The panel opinion, however, goes on to reach an alternative holding — concluding that “section 523(a)(19)(A) precludes discharge regardless of whether the debtor violated securities laws as long as the securities violation caused the debt.” Maj. Op. at 968. That alternative holding may or may not prove to be correct, but by reaching it in this case, where we do not need to do so, we have needlessly created confusion about how that holding should be applied in cases where an innocent third party has a judgment against it that results from someone else’s securities fraud.

The panel suggests that we might not apply § 528(a)(19)(A)’s discharge preclusion if the situation that arose in Oklahoma Department of Securities, ex. rel. Faught v. Wilcox, 691 F.3d 1171 (10th Cir. 2012), presented itself in our Circuit. See Maj. Op. at 968-69. But this suggestion creates confusion as to how our alternative holding should be applied in cases involving innocent third parties.

In Wilcox, a Ponzi schemer defrauded investors of millions of dollars and pled guilty to various crimes related to her activities. Wilcox, 691 F.3d at 1173. The scheme also violated Oklahoma’s securities laws. Id. Following the schemer’s conviction, the Oklahoma Department of Securities sued more than 150 investors — including several who were entirely innocent — to recover the funds distributed in the Ponzi scheme. Id. The Oklahoma trial court granted summary judgment for the Department on grounds of unjust enrichment and ordered return of the investors’ profits. Id. Some of the investors filed for bankruptcy and sought to discharge the debt from the Department’s judgment against them. Id. Because the bankruptcy and district courts concluded that these debts fell under § 523(a)(19)(A), they declined to discharge them. Id.

The Tenth Circuit reversed. Though it noted that the investors “were not charged with securities violations,” id. at 1175 (citation and quotation marks omitted), the Tenth Circuit nonetheless observed that the valid state-court judgment against them “require[d] them to repay profits distributed to them as a result of [the schemer’s] Ponzi scheme,” id. at 1174 (emphasis added) — in other words, as a result of a third party’s securities violations.

So under the Majority’s reasoning, though the judgments that were the cause of the debts at issue in Wilcox were for unjust enrichment, they nonetheless also seem to be “debt as a result of,” see Maj. Op. at 968 (citations and quotation marks omitted), a securities-fraud violation and therefore non-dischargeable under § 523(a)(19)(A). Yet the panel suggests that § 523(a)(19)(A)’s preclusion did not apply to the Wilcox investors’ situation because “ ‘[t]he judgments at issue [in Wilcox] [we]re not “for a violation” of securities laws but for unjust enrichment resulting from someone else’s violation of those statutes.’ ” Id. at 968 (quoting Wilcox, 691 F.3d at 1175). This internal inconsistency in the panel’s reasoning will no doubt create confusion about how courts and litigants in this Circuit are to construe and apply our alternative holding.

Maybe the panel reaches this conclusion because the judgment against the Wilcox investors was not, in name, a judgment for securities violations, though this interpretation would seem to require us to construe' the meaning of “judgment” in § 523(a)(19)(B)’s language:

(b) A [bankruptcy] discharge ... does not discharge an individual debtor from any debt—
(19) that—
(B) results, before, on, or after the date on which the petition was filed, from—
(i) any judgment, order, consent order, or decree entered in any Federal or State judicial or administrative proceeding;
(ii) any settlement agreement entered into by the debtor; or
(in) any court or administrative order for any damages, fine, penalty, citation, restitutionary payment, disgorgement payment, attorney fee, cost, or other payment owed by the debtor.

11 U.S.C. § 523(a)(19)(B) (emphasis added). That issue, of course, is not before us. So we have not had the benefit of briefing' on it. And if we reached out and grabbed the issue, anyway, our analysis on that question would be mere dicta, since Luns-ford’s ease, in fact, does involve a decision against him for securities fraud and therefore does not require us to resolve the question of whether the judgment must, on its face, find securities violations.

Plus, if the panel’s alternative holding is implicitly based on the conclusion that the judgment must actually be on a securities-violation cause of action (as opposed to unjust enrichment or other non-securities-violation causes of action), that would create significant potential for uneven application of § 523(a)(19)’s discharge preclusion — particularly when it comes to innocent third parties. Under those circumstances, whether an innocent debtor could discharge his debt would depend on the way in which the state or private party chose to prosecute its claim against the innocent debtor.

And if, contrary to its distinguishing of Wilcox, the panel intends for all judgments that ultimately result from securities violations — including judgments against entirely innocent investors — to be subject to § 523(a)(19)’s discharge preclusion, that interpretation appears to be at odds with “a central purpose” of the Bankruptcy Code to provide “a completely unencumbered new beginning to the honest but unfortunate debtor.” Grogan v. Garner, 498 U.S. 279, 286-87, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (citation and quotation marks omitted).

These matters raise some difficult questions, and we would, no doubt, benefit from advocacy on these issues by parties with an actual interest in them. We don’t have that here. For these reasons, I concur in only our holding that the bankruptcy court correctly concluded that the arbitration award found that Lunsford violated securities laws, so § 523(a)(19)(A)’s preclusion applies to the debt at issue in this ease. I would leave the issue addressed by the alternative holding to a case where it is better developed.

      . Though the Oklahoma lower court ordered return of all profits without exception, the Oklahoma Supreme Court determined that innocent investors had to return profits only to the extent that they had received an unreasonable rate of return. Wilcox, 691 F.3d at 1173 n.3.


author: PER CURIAM:

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Oswaldo VARGAS, Defendant-Appellant.
    No. 16-14714 Non-Argument Calendar
    United States Court of Appeals, Eleventh Circuit.
    (February 16, 2017)

      Michael B. Billingsley, Joyce White Vance, Birmingham, AL, Austin D. Shutt, Tampa, FL, U.S. Attorney’s Office, for Plaintiff-Appellee.
    James Derek Drennan, Kirk Drennan Law, Birmingham, AL, for Defendant-Appellant.
    Before ED CARNES, Chief Judge, TJOFLAT, and WILLIAM PRYOR, Circuit Judges.
   PER CURIAM:

Alabama law enforcement officers discovered cocaine and methamphetamine in a vehicle that Oswaldo Vargas was riding in. He was charged with conspiracy to possess with intent to distribute and possession with intent to distribute those drugs. The district court denied Vargas’ motion to suppress, finding that the traffic stop that led to the discovery of the drugs did not violate the Fourth Amendment’s prohibition of unreasonable seizures. Vargas later pleaded guilty to both charges, and he has appealed the denial of his motion to suppress.

I.

Corporal Shone Minor of the Alabama Law Enforcement Agency pulled a Ford Freestyle SUV with a Texas license plate to the side of Interstate 20/59 for “following too close” (tailgating) and for failing to maintain its lane. The driver, Antonio Castro, immediately admitted that he did not have a driver’s license, so Minor asked Castro to come back to Minor’s patrol car, where Minor asked him a series of routine questions. When Minor asked Castro where he was going, Castro said Alabama, then changed his answer to Georgia, before finally clarifying that he was going to Atlanta specifically. He also stated that he was driving from El Paso, although he later revealed that he lived in New Mexico. Two minutes and fifty-seven seconds after he made the traffic stop, Minor informed Castro that he was issuing him a warning for a “following too close” violation.

For an additional three minutes Minor continued asking Castro questions in order to fill out the written warning. Then Minor approached the vehicle’s passenger, Vargas, to determine whether he could legally operate the vehicle once the stop was completed. Vargas admitted that he did not have a driver’s license either. After that, Minor spent about twelve minutes working with Castro and Vargas in an attempt to determine how to safely and legally get the car moved. For example, he asked them if they knew anyone who could come drive the vehicle for them.

Eighteen minutes and thirty-four seconds into the traffic stop — about fifteen minutes after Minor first informed Castro that he was issuing a warning — Minor asked Castro for consent to search the vehicle. Castro consented. The search, conducted by Minor and a partner, revealed cocaine and methamphetamine hidden in the vehicle.

A grand jury charged Vargas with conspiracy to possess with intent to distribute cocaine and methamphetamine and substantive possession with intent to distribute cocaine and methamphetamine, both violations of 21 U.S.C. § 841. Before trial, Vargas moved to suppress the government’s evidence, contending that Minor had violated the Fourth Amendment by continuing the stop after he informed Castro that he was issuing him a warning.

Minor was the sole witness at the suppression hearing. He testified that under state law he could not allow Castro or Vargas to drive the vehicle away from the traffic stop since neither one had a driver’s license. He explained that he eventually asked for consent to search the vehicle because he found numerous aspects of Castro and Vargas’ trip to be suspicious and he suspected they may have been involved in illegal activity.

The district court denied Vargas’ motion to suppress. He pleaded guilty, but reserved the right to appeal the court’s ruling on his suppression motion. He was sentenced to 128 months imprisonment.

II.

Vargas contends that the length of the traffic stop violated the Fourth Amendment. “We review a district court’s denial of a defendant’s motion to suppress under a mixed standard of review, examining the district court’s findings of fact for clear error and the district court’s application of law to those facts de novo.” United States v. King, 509 F.3d 1338, 1341 (11th Cir. 2007).

As a general matter, a traffic stop “exceeding the time needed to handle the matter for which the stop was made violates the Constitution’s shield against unreasonable seizures.” Rodriguez v. United States, 575 U.S. -, 135 S.Ct. 1609, 1612, 191 L.Ed.2d 492 (2015). The Supreme Court explained in Rodriguez that, in addition to issuing a ticket or warning, a police officer’s “mission includes ordinary inquiries incident to [the traffic] stop.” Id. at 1615 (quotation marks omitted). Those inquiries “involve checking the driver’s license, determining whether there are outstanding warrants against the driver, and inspecting the automobile’s registration and proof of insurance.” Id. Because they “serve the same objective as enforcement of the traffic code” — namely, “ensuring that vehicles on the road are operated safely and responsibly” — those inquiries do not unconstitutionally extend the traffic stop. See id. at 1614-15.

In the Rodriguez case the officer who made the stop had completed the “ordinary inquiries,” given the driver back his documents, and handed him a written warning. Id at 1613. It was only then, after he had gotten those tasks “out of the way” (in his own words), that the officer asked the driver to consent to a drug dog sniff of the vehicle. Id. The driver refused to consent. Id. The officer then ordered him out of the vehicle and made him stand in front of the patrol car until another officer arrived and the dog sniff was conducted. .Id. “All told, seven or eight minutes had elapsed from the time [the officer] issued the written warning until the dog indicated the presence of drugs.” Id The Supreme Court held that the search, resulting from that extension of the detention, was unconstitutional. Id. at 1615-16.

Vargas argues that his stop is analogous to the one in Rodriguez because Minor completed the matter for which the stop was made at the time he informed Castro, two minutes and fifty-seven seconds into the stop, that he was issuing Castro a warning. He argues that the fact Minor continued the stop for another fifteen minutes rendered the detention unconstitutional, and the evidence discovered as a result of it should have been suppressed.

The problem for Vargas is that Minor did not complete his duties between the time the stop was made and the time Castro consented to the search of the vehicle, or for that matter at any time during the search. Minor had stopped Castro because he was not operating his vehicle in a safe manner — he was tailgating and he did not stay in his lane. In the course of permissible “ordinary inquiries,” he discovered that Castro did not have a driver’s license, so Castro could not legally operate the vehicle. In an attempt to find someone who could, Minor asked Vargas if he had a driver’s license but Vargas didn’t have one either. Finally, Minor went even further in his attempt to end the detention and get the vehicle off the side of the interstate highway. He asked Castro and Vargas if they knew someone with a license they could call to drive the vehicle away. They didn’t. All of Minor’s actions were taken in the lawful discharge of his duties, which included enforcement of the law requiring that any person driving a vehicle be licensed to do so. That is, in the words of the Rodriguez opinion, “fairly characterized as part of [his] traffic mission.” Id. at 1615. It was after Minor discovered that neither man had a driver’s license, and while the continued detention was still lawful, that Minor asked Castro for permission to search the vehiclé. And unlike the driver in Rodriguez, Castro consented.

The fact that Minor had earlier informed Castro that he was issuing a warning is irrelevant. Under state law Minor had a duty not to allow Castro or Vargas, who were unlicensed, to drive the vehicle. Preventing them from driving off without a license is lawful enforcement of the law, not unlawful detention. What prolonged the stop was not Minor’s desire to search the vehicle but the fact that both occupants of it could not lawfully drive it away. The district court’s ruling that the seizure did not violate the Fourth Amendment was correct.

AFFIRMED.

      . Statements about the timing of various events during the traffic stop come from the timestamp on Minor’s dashboard camera, which recorded the entire stop.


author: BUCKLEW, District Judge:

text:
    Lester J. SMITH, Plaintiff-Appellant, v. Brian OWENS, Commissioner, Georgia Department of Corrections, in his official and individual capacities, Defendant-Appellee.
    No. 14-10981
    United States Court of Appeals, Eleventh Circuit.
    (February 17, 2017)

      Mark Goldfeder, Sarah Marie Shalf, Emory University School of Law, Atlanta, GA, Lester J. Smith, Pro Se, for Plaintiff-Appellant.
    Hye Min Park, Tina Michelle Piper, Joseph J. Drolet, Samuel Scott Olens, Attorney General’s Office, Atlanta, GA, for De-fendanh-Appellee.
    Before WILSON and JILL PRYOR, Circuit Judges, and BUCKLEW, District Judge.

       Honorable Susan C. Bucklew, United States District Judge for the Middle District of Florida, sitting by designation.

   BUCKLEW, District Judge:

Lester Smith, a Georgia state prisoner, alleges the grooming policy enforced in Georgia state prisons violates the Religious Land Use and Institutionalized Persons Act (“RLUIPA”) by substantially burdening his exercise of a sincerely held religious belief that Islam requires him to grow an uncut beard. The district court granted summary judgment in favor of the defendant, Brian Owens, Commissioner of Georgia’s Department of Corrections (“GDOC”). Smith appeals, contending that Holt v. Hobbs, a Supreme Court opinion issued after the district court’s order, renders the district court’s analysis inadequate. After review, and with the benefit of oral argument, we vacate and remand.

1. BACKGROUND

Smith filed a pro se action against Owens, arguing that he had been denied his constitutional right to practice Islam by operation of a GDOC grooming policy that forced him to shave his beard. He stated his belief that “cutting of the beard is against a command from God in al-islam,” Doc. 1 at 4, No. 5:12-cv-00026-WLS-CHW, and he sought nominal damages and injunctive relief for violations of RLUIPA, 42 U.S.C. § 1983, the First Amendment, and the Georgia constitution.

Owens filed a motion to dismiss, which the district court (by adoption of the magistrate judge’s Report and Recommendation) granted as to every claim except Smith’s RLUIPA claim for injunctive relief against Owens in his official capacity. While the motion to dismiss was pending, Smith filed a motion for summary judgment, which the district court denied.

Owens then filed his own motion for summary judgment. He argued Smith could not establish a prima facie case under RLUIPA. Owens explained that though the GDOC’s grooming policy generally prohibited growing beards, Smith qualified for a medical-condition exception that allowed him to grow a beard of ⅛ inch; consequently, Smith’s religious exercise was not substantially burdened. Owens argued in the alternative that, even if the grooming policy substantially burdened Smith’s religious exercise, it furthered compelling governmental interests in security, discipline, hygiene, and safety by the least restrictive means.

Responding in opposition, Smith noted the inconsistency between allowing a medical exception to the grooming policy but refusing religious accommodation. He argued such an inconsistency demonstrated the GDOC was not employing the least restrictive means of furthering its interests. In support, he identified an alternative, less restrictive option:

An alternative for both parties would be to revise the G.D.O.C. grooming policy to allow not only muslims, but all inmates to grow a beard no longer than ⅛ ... inch, with respect to all other religions who are required to wear a beard. This would be an absolute Jess restrictive means that addresses and resolves the State’s underlying interests, security, safety, and health concerns.

Doc. 117-1 at 3. He reiterated this alternative in what he styled as a “settlement offer.” Doc. 122 at 2.

The magistrate judge recommended granting Owens’ motion for summary judgment. In his Report and Recommendation, the magistrate judge reasoned that Smith failed to present specific evidence of a substantial burden because Smith was able to grow a ⅛-inch beard in accordance with the grooming policy’s medical exception. Doc. 124 at 6. The magistrate judge also concluded Owens demonstrated that the grooming policy furthered several compelling governmental interests — security, discipline, hygiene, sanitation, and safety— by the least restrictive means. Doc. 124 at 7-9. The district court adopted the Report and Recommendation and entered judgment in favor of Owens. Doc. 125.

Smith appealed pro se. While Smith’s appeal'was pending, the Supreme Court held in Holt v. Hobbs that the Arkansas Department of Corrections’ grooming policy violated RLUIPA insofar as it prevented the plaintiff from growing a ½-inch beard in accordance with his religious beliefs. 574 U.S. -, -, 135 S.Ct. 853, 867, 190 L.Ed.2d 747 (2015). The GDOC then revised its grooming policy to allow all inmates to grow a beard of up to ½ inch.

Smith grew a ½-inch beard after the policy revision, and Owens moved to dismiss Smith’s appeal as moot, arguing Smith had received the relief he sought. We denied Owens’ motion to dismiss, appointed . Smith counsel, and ordered new briefing.

II. STANDARD OF REVIEW

Mootness is a question of law that we consider de novo. Troiano v. Supervisor of Elections, 382 F.3d 1276, 1282 (11th Cir. 2004) (citation omitted).

We review a district court’s decision on summary judgment de novo and apply the same legal standard used by the district court, drawing all inferences in the light most favorable to the non-moving party and recognizing that summary judgment is appropriate only where there are' no genuine issues of material fact. Rich v. Sec’y, Fla. Dep’t of Corr., 716 F.3d 525, 530 (11th Cir. 2013) (citation omitted).

III. DISCUSSION

A. This Case Is Not Moot.

A federal court does not have authority to decide moot questions or declare principles or rules of law that cannot impact the parties in the case before it. Id. at 531 (citation omitted). “ ‘[I]f, pending an appeal, events transpire that make it impossible for this court to provide meaningful relief, the matter is no longer justicia-ble.’” Id. (alteration in original) (quoting Beta Upsilon Chi Upsilon Chapter at the Univ. of Fla. v. Machen, 586 F.3d 908, 916 (11th Cir. 2009)).

Throughout the course of this litigation, Smith consistently expressed his belief that cutting his beard (without qualification as to length) contravenes the teachings of Islam. Although Smith articulated an alternative policy that would allow all inmates to grow a jit-inch beard, he expressed that alternative more than a year and a half into litigation in response to Owens’ summary judgment motion. And regardless of whether Smith intended that alternative as a compromise or as an example of a less restrictive means of furthering the GDOC’s interests, it does not alter the relief that he sought beforehand and afterward, once compromise was off the table.

The GDOC’s revised grooming policy does not permit Smith to grow an uncut beard. Because we may still provide meaningful relief, this case is not moot.

B. Holt v. Hobbs Requires the District Court to Focus Its Summary Judgment Analysis on Application of the GDOC’s Grooming Policy to Smith.

RLUIPA provides, in pertinent part:

No government shall impose a substantial burden on the religious exercise of a person residing in or confined to an institution ... even if the burden results from a rule of general applicability, unless the government demonstrates that imposition of the burden on that person—
(1) is in furtherance of a compelling governmental interest; and
(2) is the least restrictive means of furthering that compelling governmental interest.

42 U.S.C. § 2000ec-1(a). “The term ‘religious exercise’ includes any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” Id. § 2000cc-5(7)(A). To establish a prima fa-cie case under RLUIPA, the plaintiff must demonstrate that his engagement in religious exercise was substantially burdened by the law, regulation, or practice he challenges. Knight v. Thompson, 797 F.3d 934, 943 (11th Cir. 2015) (“Knight II”). If he makes this prima facie showing, the burden then shifts to the defendant to prove the challenged regulation is the least restrictive means of furthering a compelling governmental interest. Id. (citations omitted).

The Supreme Court clarified the analysis demanded by RLUIPA in Holt v. Hobbs, in which the Court considered the Arkansas Department of Corrections’ (“Department”) grooming policy and concluded that policy violated RLUIPA insofar as it prohibited the petitioner from growing a ½-inch beard in accordance with his religious beliefs. 574 U.S. at -, 135 S.Ct. at 867. There was no dispute as to the sincerity of the petitioner’s beliefs, and the Court concluded the petitioner “easily satisfied” his obligation of demonstrating the grooming policy substantially burdened his religious exercise. The Court explained:

The Department’s grooming policy requires petitioner to shave his beard and thus to “engage in conduct that seriously violates [his] religious beliefs.” If petitioner contravenes that policy and grows his beard, he will face serious disciplinary action. Because the'grooming policy puts petitioner to this choice, it substantially burdens his religious exercise.

Id. at -, 135 S.Ct. at 862 (alteration in original) (citation omitted) (quoting Burwell v. Hobby Lobby Stores, Inc., 573 U.S. -, -, 134 S.Ct. 2751, 2775, 189 L.Ed.2d 675 (2014)).

The Court then addressed the Department’s burden of proving its grooming policy was the least restrictive means of furthering a compelling governmental interest. The Department argued the grooming policy represented the least restrictive means of furthering the “broadly formulated” and compelling interest in prison safety and security, but the Court explained:

RLUIPA ... contemplates a “more focused” inquiry and “requires the Government to demonstrate that the compelling interest test is satisfied through application of the challenged law ‘to the person’ — the particular claimant whose sincere exercise of religion is being substantially burdened.” RLUIPA requires us to “scrutiniz[e] the asserted harm of granting specific exemptions to particular religious claimants” and “to look to the marginal interest in enforcing” the challenged government action in that particular context. In this case, that means the enforcement of the Department’s policy to prevent petitioner from growing a ⅜-inch beard.

Id. at -, 135 S.Ct. at 863 (alteration in original) (citations and internal quotation marks omitted) (quoting Hobby Lobby, 573 U.S. at -, 134 S.Ct. at 2779).

In its analysis, the Court reproved the district and circuit courts for their “unquestioning deference” to the Department, and it explained that the test Congress set forth in RLUIPA “requires the Department not merely to explain why it denied the exemption but to prove that denying the exemption is the least restrictive means of furthering a compelling governmental interest.” Id. at -, 135 S.Ct. at 864. The Court further explained: ‘The least-restrictive-means standard is exceptionally demanding,’ and it requires the government to ‘sho[w] that it lacks other means of achieving its desired goal without imposing a substantial burden on the exercise of religion by the objecting part[y].’ ” Id. (alterations in original) (quoting Hobby Lobby, 573 U.S. at -, 134 S.Ct. at 2780). Moreover, “[i]f a less restrictive means is available for the Government to achieve its goals, the Government must use it.” Id. (quoting United States v. Playboy Entm’t Grp., Inc., 529 U.S. 803, 815, 120 S.Ct. 1878, 146 L.Ed.2d 865 (2000)).

Finally, the Court discussed the Department’s failure to provide adequate responses to two additional arguments implicated by the RLUIPA analysis. First, the Department did not rationalize the substantial underinclusiveness of its grooming policy, evidenced both by the policy’s exception for beards grown for medical reasons and also by the fact that other more plausible vehicles for hiding contraband (such as unshaved heads, shoes, and clothes) were permitted. Id. at 865-66. Second, the Department failed to demonstrate why it could not permit inmates to grow ½-inch beards, while the vast majority of States and the federal government permitted inmates to grow ½-inch beards for religious reasons or for any reason at all. Id. at 866.

Following Holt, the Supreme Court granted the petition for writ of certiorari in Knight v. Thompson, 723 F.3d 1275 (11th Cir. 2013) (“Knight /”), vacated judgment, and remanded for further consideration. In Knight I, Native American inmates in the custody of the Alabama Department of Corrections (“ADOC”) brought a RLUIPA claim challenging the ADOC’s hair-length policy. The plaintiffs sought an exemption from the policy because it prohibited them from wearing long hair, which was a central tenet of their religious faith. Id. at 1277. In Knight I, we affirmed the district court’s conclusion that the ADOC’s hair-length policy did not violate RLUIPA, id. at 1287, and we reinstated that affirmance with modifications in Knight II, 797 F.3d at 948. We concluded the district court’s focused inquiry, factual findings, and extensive record distinguished that case from Holt.

But the focused inquiry, factual findings, and extensive record that supported our affirmance in Knight II are not present in this case. And because the Supreme Court’s guidance as to the proper RLUIPA analysis was not available to the district court when it ruled on Owens’ summary judgment motion, additional consideration is warranted.

First, in its analysis of whether Smith has established the GDOC’s grooming policy substantially burdens his religious exercise, Holt requires the district court to consider the choice that the grooming policy imposes on Smith: either to engage in conduct that violates his sincerely held religious beliefs, or to face disciplinary action. Second, Holt demands a more particularized, less deferential analysis as to those issues for which the GDOC bears the burden, namely, whether the grooming policy is the least restrictive means of furthering compelling governmental interests. Specifically, Holt calls for an individualized, context-specific inquiry that requires the GDOC to demonstrate that application of the grooming policy to Smith furthers its compelling interests. It requires the GDOC to consider the “marginal interest in enforcing” the grooming policy in Smith’s case.

IV. CONCLUSION

The district court in this case did not have the benefit of Holt v. Hobbs when it considered Owens’ motion for summary judgment, and this case lacks the eviden-tiary record that supported affirmance in Knight II. Because Smith’s case was never analyzed in a manner consistent with Holt v. Hobbs — with respect to substantial burden, compelling interests, or least restrictive means — and because the GDOC has revised its grooming policy since the district court rendered its decision, the district court’s order granting Owens’ motion for summary judgment is vacated, and the case is remanded for further consideration. On remand, the district court is instructed to analyze Smith’s RLUIPA claim as it relates to the GDOC’s revised grooming policy in a manner consistent with Holt v. Hobbs.

VACATED AND REMANDED.

      . 42 U.S.C. § 2000cc et seq.

      . 574 U.S. -, 135 S.Ct. 853, 190 L.Ed.2d 747 (2015).

      . Owens did not challenge the sincerity of Smith’s religious beliefs, nor did he challenge Smith’s belief that growing a beard is central to his religious exercise. Doc. 114-2 at 4 n.l; Doc. 124 at 5.

      . Smith appeals only the district court's summary judgment order on his RLUIPA claim against Owens in his official capacity.

      . "An unaccepted settlement offer — like any unaccepted contract offer — is a legal nullity, with no operative effect.... [T]he recipient’s rejection of an offer leaves the matter as if no offer had ever been made.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. -, -, 133 S.Ct. 1523, 1533, 185 L.Ed.2d 636 (2013) (Kagan, J., dissenting) (citation and internal quotation marks omitted); see also Stein v. Buccaneers Ltd. P’ship, 772 F.3d 698, 703 (11th Cir. 2014) (quoting Symczyk, for this proposition, with approval).
      Furthermore, "\p]ro se pleadings are held to a less stringent standard than pleadings drafted by attorneys and will, therefore, be liberally construed.” Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998) (per curiam) (citation omitted).

      . Knight v. Thompson, - U.S. -, 135 S.Ct. 1173, 191 L.Ed.2d 130 (2015).

      . Knight v. Thompson, 796 F.3d 1289, 1291-93 (11th Cir. 2015) (per curiam).


author: HUGHES, Circuit Judge.

text:
    SHIRE DEVELOPMENT, LLC, Shire Pharmaceutical Development, Inc., Cosmo Technologies Limited, Giuliani International Limited, NKA Nogra Pharma Limited, Plaintiffs-Appellees v. WATSON PHARMACEUTICALS, INC., NKA Actavis, Inc., Watson Laboratories, Inc.—Florida, NKA Actavis Laboratories FL, Inc., Watson Pharma, Inc., NKA Actavis Pharma, Inc., Watson Laboratories, Inc., Defendants-Appellants
    2016-1785
    United States Court of Appeals, Federal Circuit.
    Decided: February 10, 2017

      Edgar Haug, Frommer Lawrence & Haug LLP, New York, NY, argued for plaintiffs-appellees. Also represented by Elizabeth Murphy, Erika Selli, Jason Aaron Lief, Andrew S. Wasson. ■
    Steven Arthur Maddox, Maddox Edwards, PLLC, Washington, DC, argued for defendants-appellants. Also represented by Jeremy J. Edwards, Kaveh Saba.
    Before PROST, Chief Judge, TARANTO and HUGHES, Circuit Judges.
   HUGHES, Circuit Judge.

Plaintiffs (collectively, Shire) sued Defendants (collectively, Watson) for infringing claims 1 and 3 of U.S. Patent No. 6,773,720 by filing Abbreviated New Drug Application No. 203817 with the Food and Drug Administration seeking to market a generic version of Shire’s mesalamine drug, LIALDA®. Because Watson’s ANDA Product does not satisfy the Mar-kush group requirements in claim 1(b), we reverse and remand with instructions to enter judgment of non-infringement.

I

A

The ’720 patent is directed to a controlled-release oral pharmaceutical composition of mesalamine (also known as mesa-lazine or 5-amino-salicylic acid) used to treat certain inflammatory bowel diseases. Shire Dev., LLC v. Watson Pharm., Inc., 787 F.3d 1359, 1361 (Fed. Cir. 2015) (2015 Decision). That composition includes the mesalamine active ingredient; an inner, li-pophilic matrix; an outer, hydrophilic matrix; and other optional excipients. ’720 patent col. 2 ll. 36-44.

When a matrix is hydrophilic, it “has an affinity for water” and therefore “readily dissolves in” it. 2015 Decision, 787 F.3d at 1362 n.1; see Shire Dev. LLC v. Watson Pharm., Inc., No. 12-60862-CIV, 2016 WL 1258885, at *6 (S.D. Fla. Mar. 28, 2016) (2016 Trial Decision) (noting the parties’ stipulated-to definition of “hydrophilic” as “having an affinity to water”). Conversely, when a matrix is lipophilic, it “has an affinity for lipids” and therefore “resists dissolving in water.” 2015 Decision, 787 F.3d at 1362 n.1; see id. at 1365 (noting the parties’ stipulated-to definition of “lipophilic” as “poor affinity towards aqueous fluids”).

Shire asserts claims 1 and 3 of the ’720 patent. In relevant part, claim 1 reads:

1. Controlled-release oral pharmaceutical compositions containing as an active ingredient 5-amino-salicylic acid, comprising:
a)an inner lipophilic matrix consisting of substances selected from the group consisting of unsaturated and/or hydrogenated fatty acid, salts, esters or amides thereof, fatty acid mono-, di- or triglycerids, waxes, cer-amides, and cholesterol derivatives with melting points below 90° C., and wherein the active ingredient is dispersed both in said [sic] the lipophilic matrix and in the hydrophilic matrix;
b) an outer hydrophilic matrix wherein the lipophilic matrix is dispersed, and said outer hydrophilic matrix consists of compounds selected from the group consisting of polymers or copolymers of acrylic or methacrylic acid, alkylvinyl polymers, hydroxy-alkyl celluloses, carboxyalkyl cellulos-es, polysaccharides, dextrins, pectins, starches and derivatives, alginic acid, and natural or synthetic gums;
c) optionally other excipients....

’720 patent col. 6 ll. 7-30 (emphases added). Dependent claim 3 limits the composition to “the form of tablets, capsules, [or] mintablets [sic].” Id. col. 6 ll. 34-35.

B

In 2013, following a bench trial, the district court rejected Watson’s invalidity arguments that the ’720 patent lacked written description and enablement, ,and held that Watson infringed claims 1 and 3. Shire Dev. LLC v. Watson Pharm., Inc., No. 12-60862-CIV, 2013 WL 1912208, at *16 (S.D. Fla. May 9, 2013) (2013 Trial Decision).

On appeal, and again after remand from the Supreme Court, we held that the ’720 patent matrices are “defined by mutually exclusive spatial characteristics — one inner, one outer — and mutually exclusive compositional characteristics — one hydro-philic, one lipophilic.” 2015 Decision, 787 F.3d at 1366, remanded by — U.S. -, 135 S.Ct. 1174, 191 L.Ed.2d 130 (2015), granting cert. to and vacating 746 F.3d 1326 (Fed. Cir. 2014). Thus we concluded that a “matrix — not just an excipient within the matrix” — must exhibit the appropriate characteristic. Id. at 1365 (emphasis omitted). We further explained that the matrix compositions are “limited by the Markush groups” added during' prosecution “to overcome the examiner’s rejection of the claims as obvious.” Id. at 1367.

Summarizing the operation of the Mar-kush groups in the ’720 patent, we determined that “the correct construction requires that the inner volume contain substances from the group described for the inner lipophilic matrix (which are all lipophilic substances), and that the outer volume separately contain substances from the group described for the outer hydrophilic matrix (which are all hydro-philic).” Id.

On remand, the district court concluded that Watson’s ANDA Product satisfied the “inner lipophilic matrix” and “outer hydro-philic matrix” limitations. See 2016 Trial Decision, 2016 WL 1258885, at *4, *15. The court also determined that Watson’s ANDA Product satisfied the Markush limitations because the excipients falling outside the respective Markush groups were “unrelated” to the invention since they did not drive the water-affinity property of their respective matrices. Id. at *15. Watson appeals the district court’s constructions of “inner lipophilic matrix” and “outer hydrophilic matrix” and its findings of infringement. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

“Following a bench trial, we review a district court’s conclusions of law de novo and its findings of fact for clear error.” Allergan, Inc. v. Sandoz Inc., 796 F.3d 1293, 1303 (Fed. Cir. 2015).

“A Markush claim is a particular kind of patent claim that lists alternative species or elements that can be selected as part of the claimed invention.” Multilayer Stretch Cling Film Holdings, Inc. v. Berry Plastics Corp., 831 F.3d 1350, 1357 (Fed. Cir. 2016). This typically appears in the form: “a member selected from the group consisting of A, B, and C.” 2015 Decision, 787 F.3d at 1363 n.3 (quoting Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367, 1372 (Fed. Cir. 2005)).

Here, claim l’s (a) and (b) limitations use the phrase “consisting of,” or “consists of,” to characterize the matrix, and “consisting of’ to define the groups, which “creates a very strong presumption that that claim element is ‘closed’ and therefore ‘exclude[s] any elements, steps, or ingredients not specified in the claim.’ ” Multilayer Stretch Cling Film Holdings, 831 F.3d at 1358 (quoting AFG Indus., Inc. v. Cardinal IG Co., 239 F.3d 1239, 1245 (Fed. Cir. 2001)). Overcoming this presumption requires “the specification and prosecution history” to “unmistakably manifest an alternative meaning,” such as when the patentee acts as its own lexicographer. Id. at 1359; see Conoco, Inc. v. Energy & Envtl. Int'l, 460 F.3d 1349, 1359 n.4 (Fed. Cir. 2006).

Though the “consisting of’ presumption is very strong, we permit the rare exception for “aspects unrelated to the invention.” Norian Corp. v. Stryker Corp., 363 F.3d 1321, 1331 (Fed Cir. 2004). In Norian, we considered whether adding a spatula to a calcium phosphate chemical kit designed to repair teeth and bones took the accused product outside the scope of the asserted patent. Id. at 1324, 1331-32. The claim at issue contemplated only aspects of the chemicals themselves:

8. A kit for preparing a calcium phosphate mineral, said kit consisting of:
at least one calcium source and at least one phosphoric acid source free of uncombined water as dry ingredients; and
a solution consisting of water and a sodium phosphate, where the concentration of said sodium phosphate in said water ranges from 0.01 to 2.0 M and said solution has a pH in the range of about 6 to 11.

Id. at 1324-25. We concluded that “[i]n-fringement is not avoided by the presence of a spatula, for the spatula has no interaction with the chemicals, and is irrelevant to the invention.” Id. at 1332.

Here, Watson’s ANDA Product does not facially satisfy the claim 1(b) Markush limitation. The Watson ANDA Product’s extragranular space — which the district court recognized is the outer hy-drophilic matrix — contains the following excipient composition and properties:

Watson’s Opening Br. at 16, see J.A. 2162, 2209. As the district court concluded, “[m]agnesium stearate, an excipient not within the claim 1(b). Markush group, is present within the extragranular space.” See 2016 Trial Decision, 2016 WL 1258885, at *15. So the claim 1(b) limitation is literally violated.

Nonetheless, the district court found that Watson infringed because the component outside of the Markush group — i.e., the lipophilic magnesium stearate in the hydrophilic outer matrix — is unrelated to the invention. Therefore, the district court held that the lipophilic component in the outer hydrophilic matrix fell within the exception announced in Norian. Id. at *14-15. We disagree with the district court’s interpretation of Norian and what constitutes a component unrelated to the invention.

The putative invention of the ’720 patent is a multi-matrix system that relies on the hydrophilic and lipophilic characteristics of the matrices to release mesalamine in the colon “in a sustained and uniform manner.” 2015 Decision, 787 F.3d at 1362. When the outer, hydrophilic matrix interacts with a person’s digestive fluids, the matrix creates a swollen barrier preventing aqueous solution from reaching the inner, lipophilic matrix. See ’720 patent col. 2 ll. 60-64. This delay permits the product to proceed through the digestive system until the water breaks apart the outer matrix, releasing the lipophilic granules. See id. col. 3 l. 57-col. 41. 5.

Here, the district court concluded that the “magnesium stearate in the extragran-ular space is overwhelmed by the hydro-philic properties of the sodium starch gly-colate in the extragranular space” and credited expert testimony that the hydro-philic “sodium starch glycolate is more potent than the mag stearate” when “outside” the granules. 2016 Trial Decision, 2016 WL 1258885, at *15 (emphases added) (internal quotation marks omitted). The district court thereby found that the magnesium stearate exerted lipophilic influence in the outer matrix, and that finding is well supported: Shire’s expert acknowledged that “the magnesium stearate in the spaces between the granules is no less lipophilic than the magnesium stearate in the granules,” see J.A. 1157, and the court found that magnesium stearate is so strongly lipophilic that it may “impart lipo-philic characteristics to a composition even in low concentrations,” 2016 Trial Decision, 2016 WL 1258885, at *11; see id. at *11-12 (crediting expert testimony that magnesium stearate “is one of the most lipophilic things [the expert could] imagine,” and explaining that a concentration of 0.5% magnesium stearate could increase dissolution time by more than tenfold). No one has suggested that magnesium stearate, when in the outer matrix, is neither lipo-philic nor hydrophilic. Thus, we conclude that, based on the district court’s findings, the magnesium stearate retains its lipo-philic character in the extragranular space. Accordingly, the magnesium stearate structurally and functionally relates to the invention, and its presence in the' outer matrix violates the “consisting of’ requirement in claim 1(b).

Shire argues, and the district court held, that the magnesium stearate in Watson’s product — which Watson includes as a lubricant rather than for its lipophilic properties — is unrelated to the invention because it is not sufficiently lipophilic to render the outer matrix lipophilic. But No-Han did not restrict “related” components to only those that advance or are intended to advance a Markush group’s allegedly inventive elements. And we decline to impose such a requirement, which would in effect equate the scope of a Markush group’s “consisting of’ language with either “comprising” or “consisting essentially of’ language. See CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d 1356, 1360 (Fed. Cir. 2007) (“ ‘[Comprising’ ... is inclusive or open-ended and does not exclude additional, unrecited elements or method steps.... ” (quoting Georgia-Pacific Corp. v. U.S. Gypsum Co., 195 F.3d 1322, 1327-28 (Fed. Cir. 1999))); AK Steel Corp. v. Sollac & Ugine, 344 F.3d 1234, 1239 (Fed. Cir. 2003) (“The phrase ‘consisting essentially of ... permit[s] inclusion of components not listed in the claim, provided that they do not ‘materially affect the basic and novel properties of the invention.’ ” (quoting PPG Indus. v. Guardian Indus. Corp., 156 F.3d 1351, 1354 (Fed. Cir. 1998))).

Shire also argues that we must interpret claim 1(b) to coyer products with magnesium stearate in the extragranular space because the ’720 patent examples disclose magnesium stearate in the outer matrix. Assuming that Shire is correct about the content of the examples, we still find that Shire has not “overcome the exceptionally strong presumption” that Markush groups are closed. Multilayer Stretch Cling Film Holdings, 831 F.3d at 1359 (holding that a patent specification’s listing of components not listed in a Markush group was insufficient to overcome the presumption created by “consisting of’ claim language). Shire does not challenge the district court’s construction of “consisting of,” and neither the ’720 patent specification nor the prosecution history reflect intent to' adopt a meaning of “consisting of’ other than the well-established, limited definition. Thus, we apply the-plain claim language.

Accordingly, we conclude that Watson’s ANDA Product does not satisfy the claim 1(b) Markush limitation, and, by extension, does not satisfy dependent claim 3. See Ferring B.V. v. Watson Labs., Inc.-Flori da, 764 F.3d 1401, 1411 (Fed. Cir. 2014) (“One who does not infringe an independent claim cannot infringe a claim dependent [on] (and thus containing all the limitations of) that claim.” (quoting Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546, 1552 n.9 (Fed. Cir. 1989))). We reverse the district court’s judgment and remand for entry of judgment of non-infringement and other proceedings consistent with this opinion.

REVERSED AND REMANDED.

      . SSG is an abbreviation for sodium starch glycolate.

      . The district court’s reliance on claim 1(c), which recites “optionally other excipients,” is erroneous. 2016 Trial Decision, 2016 WL 1258885, at *15 n.15. Claim 1(c) plainly falls under the preamble’s "comprising” transitional phrase and outside of claim l’s (a) and (b) Markush groups. Claim 1(c) therefore does not present a permissive catch-all to those closed Markush groups.

      . Because this conclusion resolves the appeal, we do not address Watson's other claim construction or non-infringement arguments.