560 B.R. 895
S.D. Ga.2016Background
- In 2007 Hardigan (debtor) hired K.A.P., Inc. (creditor) as general contractor to renovate his Savannah home on an at-cost, time-and-materials basis; no written contract was executed.
- K.A.P. billed periodically and was paid for much work, but cost overruns depleted Hardigan’s first loan by Oct. 2008 and arrears accrued.
- K.A.P. provided a completion estimate in December 2008; Hardigan obtained a $350,000 unsecured SunTrust loan (Jan. 2009) and told K.A.P. the proceeds would be used to pay arrears and finish the job.
- Relying on that promise, K.A.P. resumed work; Hardigan received the loan proceeds but did not pay K.A.P.; a billing dispute arose in February 2009 and K.A.P. recorded a materialmen’s lien and later sued in state court.
- Hardigan filed Chapter 7 in 2012; K.A.P. sued in bankruptcy to except the debt from discharge under 11 U.S.C. § 523(a)(2)(A) alleging fraudulent intent when Hardigan promised to pay.
- The Bankruptcy Court granted Hardigan summary judgment (Mar. 28, 2016); the district court affirmed, holding K.A.P. failed to produce factual evidence from which a reasonable jury could infer fraudulent intent at the time the promise was made.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hardigan’s promise to pay from the SunTrust loan was a false representation made with intent to deceive under § 523(a)(2)(A) | K.A.P. says circumstances (short six‑month loan, prompt receipt of funds, short delay before dispute) permit a clear inference Hardigan never intended to pay when he promised | Hardigan says he intended to pay when he made the promise and later withheld payment because a bona fide billing dispute arose | Court held K.A.P. failed to produce evidence raising a genuine issue of material fact as to Hardigan’s intent at the time of the promise; summary judgment for Hardigan affirmed |
Key Cases Cited
- In re Bilzerian, 100 F.3d 886 (11th Cir. 1996) (elements of fraud exception to discharge and narrow construction of exceptions)
- In re Villa, 261 F.3d 1148 (11th Cir. 2001) (elements required under § 523(a)(2)(A))
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (summary judgment standard and impermissibility of weighing evidence)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant’s initial burden on summary judgment)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (genuine issue for trial standard)
- In re Optical Techs., Inc., 246 F.3d 1332 (11th Cir. 2001) (de novo review of bankruptcy summary judgment)
- Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256 (11th Cir. 2004) (summary judgment principles)
- Rosen v. Protective Life Ins. Co., 817 F. Supp. 2d 1357 (N.D. Ga. 2011) (fraudulent intent may be inferred from unusual or suspicious post-contract conduct)