Amundson v. Slaton (In Re Slaton), 469 B.R. 814

Debtors Ted and Vicki Slaton operated an auction/collectibles business in West Salem, WI.
Karina Amundson and Steven Lankford invested $145,000 for a 49% partnership interest, though no signed partnership agreement existed.
Investment funds were allegedly used to pay business debt, including a mortgage on the business building.
Parties anticipated a partnership; disputes arose over management and ownership when the relationship deteriorated.
Plaintiffs seek nondischargeability under 11 U.S.C. § 523(a)(2)(A), § 523(a)(4), and § 523(a)(6), plus unjust enrichment.
Court allowed post-trial accounting; decision addresses whether the debt is nondischargeable and whether unjust enrichment applies.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 523(a)(2)(A) nondischargeability is proven	Slatons lied/defrauded to obtain investment.	No false representations or intent to deceive; investment framed as partnership risk.	Not proven; no evidence of false representations or intent to deceive.
Whether § 523(a)(4) fiduciary defalcation applies	There was a fiduciary relationship with power imbalance.	Parties were joint venture-like equals; no fiduciary breach predated the wrong.	Not proven; no fiduciary relationship under § 523(a)(4).
Whether § 523(a)(6) willful and malicious injury applies	Debt was caused willfully and maliciously when funds were misused.	Use of funds to pay debt; no conscious disregard or malice toward plaintiffs.	Not proven; actions not willful or malicious.
Whether plaintiffs' unjust enrichment claim is cognizable	Slatons benefited from plaintiffs' funds and should repay net proceeds of sale.	No agreement required; benefits flowed from business venture.	Proven; net proceeds of the building sale awarded to plaintiffs.

Brown v. Felsen, 442 U.S. 127 (U.S. 1979) (strict construction of discharge exceptions)
Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (preponderance standard for exceptions to discharge)
In re Crosswhite, 148 F.3d 879 (7th Cir.1998) (strict application of § 523(a) standards against creditors)
In re Scarlata, 979 F.2d 521 (7th Cir.1992) (context of discharge exceptions and intent)
McClellan v. Cantrell, 217 F.3d 890 (7th Cir.2000) (deceit and intent elements under § 523(a)(2)(A))
In re Sheridan, 57 F.3d 627 (7th Cir.1995) (intent to deceive and reliance in § 523(a)(2)(A))
In re Woldman, 92 F.3d 546 (7th Cir.1996) (fiduciary concepts under § 523(a)(4) with power imbalance test)
In re Marchiando, 13 F.3d 1111 (7th Cir.1994) (fiduciary relationship in partnership context)
In re Frain, 230 F.3d 1014 (7th Cir.2000) (definition of fiduciary capacity for § 523(a)(4))
Berman v. Follett Higher Educ. Group, 629 F.3d 761 (7th Cir.2011) (scope of fiduciary capacity under § 523(a)(4))
Thirtyacre v. Deangelo, 36 F.3d 697 (7th Cir.1994) (willfulness/malice standard in § 523(a)(6))
Lawlis v. Thompson, 405 N.W.2d 317 (Wis. 1987) (unjust enrichment principles in Wisconsin law)