Leominster Housing Authority v. Dunbar (In re Dunbar)
474 B.R. 14
Bankr. D. Mass.2012Background
- LHA seeks summary judgment that Dunbar’s debt is nondischargeable under 11 U.S.C. § 523(a)(2)(A) and (B).
- Dunbar signed a lease August 17, 2000 for a public housing unit and did not read it before signing.
- Rent was determined annually from reported household income and subject to verification; Takai and Tremain were household members at times, with changing inclusion across years.
- Dunbar underreported Takai’s and Tremain’s income; LHA discovered discrepancies in 2008–2010, leading to a demand for back rent ($7,632) and later lease termination in January 2011.
- Dunbar filed Chapter 13 bankruptcy on March 9, 2011 while eviction proceedings were pending; the court denied summary judgment on the misrepresentation issue (count II) and granted judgment for Dunbar on count I, with trial to determine debtor’s intent to deceive on count II.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dunbar’s paystubs and filings were a false statement under 523(a)(2)(B). | LHA contends the omissions were material false statements. | Dunbar argues she did not know of the falsehoods. | Yes, material false statements exist; §523(a)(2)(B) applicable. |
| Whether §523(a)(2)(A) or §523(a)(2)(B) governs the nondischargeability. | LHA asserts §523(a)(2)(A) applies to false pretenses/representations. | In this case, statements regarding financial condition fall under §523(a)(2)(B). | §523(a)(2)(B) applies; §523(a)(2)(A) is inapplicable. |
| Whether summary judgment on count I (dischargeability under 523(a)(2)(A)/(B) as to back rent) is warranted. | LHA seeks summary judgment on dischargeability. | There are genuine issues about intent; no summary judgment on count II. | Denied for count I; judgment for Dunbar on count I. |
| Whether there is a genuine issue of material fact on Dunbar’s intent to deceive. | Evidence supports intentional misrepresentation. | Intention to deceive is disputed by Dunbar’s testimony and circumstantial evidence. | Trial needed to resolve whether Dunbar acted with fraudulent intent. |
Key Cases Cited
- Shawmut Bank, N.A. v. Goodrich (In re Goodrich), 999 F.2d 22 (1st Cir. 1993) (material omission can be a false statement for § 523(a)(2)(B))
- Missouri Dept. of Family Services v. Jones (In re Jones), 37 B.R. 195 (E.D. Mo. 1984) (debtors’ misreporting benefits can be material for § 523(a)(2)(B))
- Palmacci v. Umpierrez, 121 F.3d 781 (1st Cir. 1997) (court recognizes the seriousness of misreported income on housing subsidies)
- Danvers Sav. Bank v. Alexander (In re Alexander), 427 B.R. 183 (Bankr. D. Mass. 2010) (discusses scope of statements regarding financial condition under 523(a)(2))
- In re Kosinski, 424 B.R. 599 (1st Cir. BAP 2010) (examination of 523(a)(2) applicability to financial-condition statements)