FIA Card Services, N.A. v. Morrow (In re Morrow)
488 B.R. 471
Bankr. N.D. Ga.2012Background
- Janet Morrow filed Chapter 7 relief on April 27, 2012; FIA Card Services, N.A. filed an adversary for nondischargeability under § 523(a)(2) on July 27, 2012.
- Morrow allegedly incurred $12,263 in retail charges on a Bank of America account between Nov 9, 2011 and Jan 23, 2012, some related to cosmetic surgery.
- Plaintiff contends Morrow obtained credit with no intent to pay and that she certified credit counseling shortly after the last charge.
- Debtors’ schedules show $55,817.19 of general unsecured debt and high credit-card balances; Plaintiff alleges those balances far exceeded income in 2011.
- Plaintiff argues that the charges and payments were part of a “credit card kiting” scheme to conceal true finances; Debtors contend for dismissal or insufficient proof of fraud.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FIA has standing/no need to join a subsidiary | FIA has sworn consolidated status after merger with Bank of America. | Morrow argues FIA lacks an account or standing. | Denied; FIA has standing; no joinder required. |
| Whether complaint states a claim under § 523(a)(2) | Complaint alleges actual fraud and kiting showing intent not to pay. | Implied representations and pre-revival reliance not viable; need more specificity. | Plaintiff may state a claim for actual fraud under § 523(a)(2). |
| Whether credit-card kiting supports nondischargeability | Kiting demonstrates fraudulent intent to avoid repayment. | Kiting alone cannot prove misrepresentation of financial condition under § 523(a)(2)(A). | Kiting can indicate intent but does not by itself satisfy § 523(a)(2)(A); may support actual fraud under totality of circumstances. |
| Whether the complaint improperly relied on unwritten misrepresentations | Unwritten misrepresentations cannot ground § 523(a)(2)(A); but totality of allegations may support actual fraud under § 523(a)(2). |
Key Cases Cited
- Roe v. Aware Woman Ctr. for Choice, Inc., 253 F.3d 678 (11th Cir.2001) (pleading must contain plausible factual support)
- In re Plywood Antitrust Litigation, 655 F.2d 627 (5th Cir. Unit A 1981) (elements of recovery must be pled with facts)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (claims must be plausible on their face)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim)
- Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194 (11th Cir.2001) (set forth time, place, content, and parties in fraud claims)
- Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364 (11th Cir.1997) (pleading standard for fraud in the Eleventh Circuit)
- First Nat. Bank of Mobile v. Roddenberry, 701 F.2d 927 (11th Cir.1983) (assumption of risk theory for credit card misrepresentation)
- Ford (Matter of Ford), 186 B.R. 312 (Bankr.N.D.Ga.1995) (implied misrepresentation criticisms; need misrepresented intent)
- In re Alam, 314 B.R. 834 (Bankr.N.D.Ga.2004) (implied misrepresentation not viable under § 523(a)(2)(A))