Kyle-Wolf v. McClure, 625 B.R. 733

Debtor Kevin McClure was sole owner of Aeon Social Emotional Health; Plaintiff Lisa Kyle‑Wolf joined as a counselor and agreed to co‑sign a $50,000 business loan to fund her salary and business growth.
Loan closed August 8, 2017; proceeds ($50,000) were deposited into Aeon’s account controlled by McClure; the note named McClure and Kyle‑Wolf as co‑makers and was secured by a mortgage on McClure’s house.
Kyle‑Wolf contends McClure promised (in exchange for her co‑signing) a $6,000 monthly salary, that half the loan ($25,000) would be reserved for her salary, and a 45% ownership interest; McClure admits the salary promise but says ownership discussions were conditional on future profitability.
Kyle‑Wolf received salary payments for September–November 2017; Aeon closed by year‑end and McClure spent the loan proceeds; no bank records were produced tracing expenditures.
McClure filed Chapter 7 in September 2018 and received a discharge without Kyle‑Wolf listed or notified; GRCC later demanded payment from Kyle‑Wolf, who assumed payments and sued McClure in an adversary proceeding seeking a determination that his liability (or indemnity/contribution) is nondischargeable under §523(a)(2)(A).
Court found no clear evidence of an intent to defraud, treated an alternative contribution claim (co‑maker liability under Missouri law) as an actionable prepetition debt, and entered judgment for McClure.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Debtor fraudulently induced Kyle‑Wolf to co‑sign (Illinois fraudulent inducement)	McClure promised 45% ownership, $6,000/month salary, and segregation of $25,000; he had no intent to perform	Promises were conditional; salary obligation was Aeon’s, not McClure’s personal fraud; some salary was paid	Plaintiff failed to prove fraudulent inducement by clear and convincing evidence; claim denied
Whether an alternative contribution/indemnity debt exists as co‑maker (Missouri UCC)	Kyle‑Wolf can recover contribution from McClure as co‑maker who defaulted	Debtor argued debt is corporate, not personal	Contribution right arises by operation of Missouri law; court considered it as an alternative prepetition debt under §523 analysis
Whether the debt (contribution) is excepted from discharge under §523(a)(2)(A)	Misrepresentations and false promises induced reliance; nondischargeability sought	No false representations of present fact; any promises were kept initially; no intent to deceive at time of promise	Plaintiff failed to prove §523(a)(2)(A) elements (especially intent to deceive); debt not excepted from discharge
Whether ownership promise was definite enough to justify reliance	Kyle‑Wolf: 45% conveyed in exchange for co‑signing	McClure: ownership discussions were vague, conditioned on profitability and buy‑in at fair value	Ownership promise was too vague and open‑ended to support reasonable or justifiable reliance

Grogan v. Garner, 498 U.S. 279 (bankruptcy burden of proof for dischargeability)
Palmacci v. Umpierrez, 121 F.3d 781 (7th Cir.) (future promises actionable under §523 only if no intent to perform at time made)
Ojeda v. Goldberg, 599 F.3d 712 (7th Cir.) (elements of §523(a)(2)(A) including justifiable reliance)
HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill.2d 145 (Ill.) (promises to perform future conduct generally not actionable as fraud)
Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill.2d 100 (Ill.) (fraud under Illinois law must be proved by clear and convincing evidence)
Beraha v. Baxter Health Care Corp., 956 F.2d 1436 (7th Cir.) (contractual promise must be sufficiently definite to be enforceable)