508 B.R. 488
Bankr. M.D. Fla.2014Background
- Plaintiffs retained Moore Pizazz for interior design services on a Naples home; engagement letter required a $1,500 retainer and 80% of anticipated costs as a deposit.
- Moore Pizazz made multiple deposits, including a $30,000 deposit for a custom bar, lighting, window treatments, and other items, supported by assurances of family investment and insurance.
- Showroom leased by Moore Pizazz flooded with black mold; Moore became ill; project progress stalled and deposits remained unpaid on some items.
- Plaintiffs obtained a state court judgment against Jennifer Moore and Moore Pizazz; Defendants filed Chapter 7 bankruptcy shortly thereafter.
- Plaintiffs allege deceptive acts and failures to disclose assets (including vehicle sales and a potential drywall class action claim) in bankruptcy schedules and statements, and seek discharges or non-dischargeability under §§ 727 and 523.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 727(a)(4)(A) false oath applies | Moore defendants knowingly omitted asset transfers and related information. | Omissions were unintentional and cured; no knowing fraud shown. | Not proven; omissions not knowing or fraudulent. |
| Whether § 727(a)(5) explains loss of assets | Defendant failed to explain loss of over $42,000 in deposits. | § 727(a)(5) applies only to debtor’s assets; funds lost were Moore Pizazz’s, not her own. | Not proven; no failure to explain loss of debtor's assets. |
| Whether § 523(a)(2)(A) fraud occurred | Moore misrepresented use of deposits and personal intent to invest/insure. | No evidence of intent to deceive or justifiable reliance; failures due to business issues from mold. | Not proven; no justifiable reliance or misrepresentation with intent. |
| Whether § 523(a)(6) conversion occurred by Moore Pizazz or Mr. Moore | Deposits and resulting goods were Plaintiffs’ property; defendants converted them. | Deposits did not create a bailment or property ownership; funds used for business expenses. | Not proven for Moore Pizazz; no ownership/possession seen; conversion not established. |
| Whether civil conspiracy to convert exists | Defendants conspired to use deposits for non-fulfillment and to obtain office space with those funds. | No underlying conversion proven; conspiracy requires underlying tort. | Not proven; conspiracy claim fails without underlying conversion. |
Key Cases Cited
- In re Wolfson, 56 F.3d 52 (11th Cir. 1995) (conversion requires ownership-like rights; deposits not necessarily held as property)
- Grogan v. Garner, 498 U.S. 279 (Supreme Court 1991) (preponderance standard applies to all § 523(a) non-dischargeability claims)
- In re Nascarella, 492 B.R. 914 (Bankr.M.D.Fla.2013) (standard for misrepresentation and reliance in § 523(a)(2)(A))
- In re Khanani, 374 B.R. 878 (Bankr.M.D.Fla.2005) (analysis of omissions and materiality in disclosure statements)
- In re Harmon, 379 B.R. 182 (Bankr.M.D.Fla.2007) (burden-shifting for discharge objections; ownership considerations for assets)