Cary v. Vega (In re Vega), 503 B.R. 144

From 1998–2008 Cary advanced money to Vega to fund Vega’s construction business and The Verandas condo project; Cary proceeded pro se in an adversary to except debts from Vega’s Chapter 7 discharge under 11 U.S.C. § 523(a)(2)(A).
Cary’s transfers fell into three categories: various undocumented “Home Loans” (1998–2007), a $78,000 short-term advance (Apr. 2007), and a $200,000 transfer (May 2008) made by check payable to Winter Park Partners Development, LLC (WPPD).
Evidence was sparse: no promissory notes, repayment schedules, or collateral for the Home Loans or the $78,000 loan; Vega made some repayments (e.g., $38,400 aggregate; a $28,700 A/C installation credited toward the $78,000).
The $200,000 was made payable to WPPD; WPPD’s amended operating agreement and tax return showed Cary as a 6% member; emails and conduct indicated Cary treated it as an equity contribution and at times as a loan to WPPD, not a personal loan to Vega.
The Verandas project failed due to alleged architect errors and market collapse; WPPD stopped construction, later changed ownership, and Vega filed Chapter 7 in April 2010 (discharge entered June 23, 2011).
Court found no credible evidence Vega made false representations to induce the transfers and concluded the $200,000 was an equity contribution (or, at most, a loan to WPPD), so Cary failed to prove nondischargeability under § 523(a)(2)(A).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Home Loans are nondischargeable under § 523(a)(2)(A)	Cary: Vega obtained advances by fraud/misrepresentations	Vega: loans were made with Vega’s intent to repay; no misrepresentations	Denied — Cary failed to prove any misrepresentation, reliance, or loss causally tied to fraud
Whether $78,000 advance is nondischargeable under § 523(a)(2)(A)	Cary: Vega represented urgency (would lose property) to obtain funds	Vega: sincerely intended to repay; gave postdated check and later paid A/C cost as partial repayment	Denied — no actionable misrepresentation; reliance unjustified as matter of proof
Characterization of $200,000 transfer (loan to Vega vs. equity in WPPD)	Cary: $200,000 was a personal loan to Vega (or loan to project)	Vega: transfer was an equity contribution to WPPD; if loan, it was to WPPD, not Vega personally	Court: $200,000 was an equity contribution to WPPD; even if a loan, no evidence Vega personally liable or committed fraud — nondischargeability not established
Whether any transfer is nondischargeable under § 523(a)(2)(A) given conduct (e.g., misleads to bank, fake deposits)	Cary: overall scheme and false assurances make debts nondischargeable	Vega: some misleading to bank occurred, but Cary consented to and participated; lacks proof of fraudulent inducement to Cary	Denied — plaintiff bore burden and did not prove elements (false representation, justifiable reliance, causation)

Perez v. Campbell, 402 U.S. 637 (U.S. 1971) (bankruptcy discharge policy: fresh start for honest debtors)
Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (plaintiff bears preponderance burden to except debt from discharge)
Field v. Mans, 516 U.S. 59 (U.S. 1995) (§ 523(a)(2)(A) requires justifiable reliance standard)
SEC v. Bilzerian (In re Bilzerian), 153 F.3d 1278 (11th Cir. 1998) (elements of fraud for nondischargeability)
In re Lane, 742 F.2d 1311 (11th Cir. 1984) (factors for characterizing advances as debt or equity)