Lowry v. Nicodemus (In re Nicodemus), 497 B.R. 852

Debtor (Nicodemus) and Plaintiff (Lowry) disputed ownership of an extensive model train collection after the death of Lowry’s son; state-court litigation resolved by a 2009 Settlement Agreement requiring Debtor to deliver certain trains to Lowry and auction the remainder.
State court entered multiple orders enforcing the Settlement Agreement; Debtor repeatedly failed to turn over property and shipped items to an auctioneer instead.
After hearings, the state court entered a judgment awarding Lowry $9,386.90 for the deficiency from the auction proceeds and $22,800.00 as a contempt sanction ($100/day) for willful failure to return trains, totaling $32,186.90 plus interest.
Debtor filed Chapter 13; Lowry filed an adversary complaint seeking a determination that the entire judgment is nondischargeable under 11 U.S.C. § 523(a)(2)(A) (fraud) and § 523(a)(7) (later abandoned).
The bankruptcy court held the entire amount nondischargeable under § 523(a)(2)(A); Debtor moved for amended/additional findings under Fed. R. Bankr. P. 7052 and appealed after denial. The BAP affirmed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the $22,800 contempt sanction is nondischargeable under § 523(a)(2)(A)	The contempt award arises from Debtor’s fraudulent misrepresentations in the Settlement Agreement and thus the full judgment "arises out of" fraud and is nondischargeable	Contempt sanctions are punitive/for coercion and not tied to the underlying fraud, so the sanction portion should be dischargeable	Affirmed: the sanction flows from the same fraudulent conduct and is nondischargeable under § 523(a)(2)(A)
Whether the bankruptcy court abused its discretion by denying Debtor’s Rule 7052 motion to amend or add findings	N/A (Plaintiff defended sufficiency of findings)	Court’s findings re: contempt were insufficiently detailed to show fraud nexus	Denial affirmed: the issued findings were adequately specific and not an abuse of discretion

Cohen v. De La Cruz, 523 U.S. 213 (1998) (§ 523(a)(2)(A) bars discharge of any debt that "arises out of" fraud, including punitive/statutory damages)
Grogan v. Garner, 498 U.S. 279 (1991) (burden of proof and fresh-start policy for discharge; exceptions narrowly construed)
Old Republic Title Co. v. Looney (In re Looney), 453 B.R. 252 (6th Cir. BAP 2011) (elements and burden for § 523(a)(2)(A))
Rembert v. AT & T Universal Card Servs. (In re Rembert), 141 F.3d 277 (6th Cir. 1998) (§ 523(a)(2)(A) elements)
Anderson v. City of Bessemer City, 470 U.S. 564 (1985) (clearly erroneous standard for factual findings)
St. Laurent v. Ambrose (In re St. Laurent), 991 F.2d 672 (11th Cir. 1993) (punitive damages and nondischargeability under fraud exception)