554 B.R. 493
Bankr. D. Kan.2016Background
- Debtor Dan H. Oliver, Jr. received $13,246 in Kansas unemployment benefits between Aug. 9, 2008 and May 16, 2009 after weekly claims in which he represented he had no wages. Shawnee County later reported it paid him wages for many of those weeks.
- KDoL issued two overpayment determinations (June 26 and June 30, 2009) totaling about $24,566; the June 30 determination found Debtor "willfully and knowingly" made false representations and assessed $5,012 in overpayments for Aug. 9–Nov. 8, 2008.
- KDoL sent demand notices in 2015 and recorded a statutory lien and notice of intent to levy after Debtor failed to pay; Debtor filed Chapter 13 six weeks after the lien was recorded and listed KDoL as an unsecured creditor for a lower amount.
- KDoL filed (1) a proof of claim asserting most of its $24,592 claim was secured and (2) an adversary complaint under 11 U.S.C. § 523(a)(2)(A) seeking a determination that part of the debt is nondischargeable as fraud.
- KDoL moved for summary judgment on both the claim objection (secured status) and nondischargeability; Debtor objected only to secured status and did not contest liability or amount, and did not submit evidence disputing KDoL’s factual showing.
- The court considered KDoL’s business-record affidavit admissible and, on the undisputed record, found KDoL had a statutory lien but was secured only to the extent of nonexempt estate property ($200), and that $10,534.72 of the claim was nondischargeable under § 523(a)(2)(A).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether portion of KDoL claim is nondischargeable under § 523(a)(2)(A) (fraudulent misrepresentation) | KDoL: Debtor falsely represented no wages, intended to deceive, KDoL justifiably relied, and paid $5,012 based on those misrepresentations; $10,534.72 (June 30 determination balance) should be excepted from discharge | Debtor: Blanket denials; argued intent cannot be resolved on summary judgment and attacked affidavit admissibility | Held: Granted. On undisputed facts Debtor made false representations, intent inferred, reliance justifiable, and $10,534.72 is nondischargeable if discharge is later granted |
| Whether KDoL’s proof of claim is secured by a statutory lien under Kansas law | KDoL: Claim arises under K.S.A. § 44-719 and collection methods in § 44-717 create a statutory lien/levy; thus claim is secured | Debtor: Argued statutory language applies only to employers, not individuals | Held: Granted for KDoL. 2013 amendment extended § 44-717 to individuals; KDoL has a statutory lien but secured only to the extent of estate property value ($200); remainder unsecured |
| Admissibility and sufficiency of KDoL records custodian affidavit | KDoL: Morris is a qualified records custodian with personal knowledge; exhibits are business records admissible under Rule 803(6) and sufficient for summary judgment | Debtor: Challenges personal knowledge/hearsay and that Morris was not listed in the pretrial order | Held: Overruled. Affidavit meets Rule 56(c)(4); competency and business-record foundation satisfied; failure to list the specific custodian did not prejudice Debtor |
| Proper standard/applicability of summary judgment where intent/state of mind is at issue | KDoL: Intent can be inferred from totality of circumstances; summary judgment appropriate where nonmoving party offers no contradicting evidence | Debtor: Asserted intent cannot be decided on summary judgment | Held: Summary judgment appropriate here because evidence (including agency determination and uncontradicted facts) permits inference of intent and Debtor produced no specific contrary evidence |
Key Cases Cited
- Taylor v. Roswell Indep. Sch. Dist., 713 F.3d 25 (10th Cir.) (summary judgment standards and drawing inferences for nonmoving party)
- Thom v. Bristol-Myers Squibb Co., 353 F.3d 848 (10th Cir.) (definition of "genuine" issue of material fact)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Sup. Ct.) (summary judgment burden and assessment of evidence)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct.) (movant's initial burden on summary judgment)
- Grogan v. Garner, 498 U.S. 279 (Sup. Ct.) (plaintiff's burden in nondischargeability actions)
- Field v. Mans, 516 U.S. 59 (Sup. Ct.) (justifiable reliance standard under § 523(a)(2)(A))
- Butner v. United States, 440 U.S. 48 (Sup. Ct.) (bankruptcy court applies state law to property rights and security interests)
- Cohen v. De La Cruz, 523 U.S. 213 (Sup. Ct.) (scope of § 523(a)(2)(A) for fraudulent acquisition of money)
- Agricredit Corp. v. Harrison (In re Harrison), 987 F.2d 677 (10th Cir.) (creditor bears burden to prove claim when contested)