Lussier v. Sullivan (In Re Sullivan)
444 B.R. 1
Bankr. D. Mass.2011Background
- Debtor filed Chapter 7 on Nov 13, 2008 and signed a perjury Declaration; Trustee appointed the following day.
- On Schedule B, Debtor listed only modest assets and checked 'NONE' for many items, including cash on hand.
- Plaintiff (a former partner with whom Debtor shares a child) claimed a Rolex watch and a larger bank balance and a classic car were undisclosed or undervalued.
- Bank account records later showed balances and deposits inconsistent with Schedule B values.
- Trial established the Rolex watch, the bank balance and the Chevelle value were materially misrepresented or undervalued; Plaintiff sought denial of discharge under § 727(a)(4)(A).
- Court applied controlling standards for false oaths under § 727(a)(4)(A) and found intentional omission/understatement with material impact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Debtor knowingly and fraudulently lied on schedules | LussiER argues omissions/understatements were intentional. | Sullivan contends statements were incomplete or mistaken, not intentional. | Yes; deliberate omissions/understatements found. |
| Materiality of omitted assets (Rolex, cash, Chevelle) | Omissions relate to assets and estate value. | Missed items were either de minimis or not material. | Omissions related to assets and estate; material. |
| Credibility and impact of amended schedules | Amendment before trial confirms prior omissions. | Amendment was belated clarification. | Amendment evidence supports finding of false oath. |
| Valuation inconsistent with evidence of asset value | Trustee appraisal undervalued Chevelle; Rolex evidenced higher value. | Debtor relied on prior estimates; discrepancies explained. | Debtor intentionally undervalued asset to benefit from value increase. |
Key Cases Cited
- In re Sohmer, 434 B.R. 234 (Bankr.D.Mass.2010) (standard for § 727(a)(4)(A) false oath and materiality; equitable bankruptcy policy)
- In re Tully, 818 F.2d 106 (1st Cir.1987) (reckless indifference to truth treated as fraud)
- Gordon v. Mukerjee (In re Mukerjee), 98 B.R. 627 (Bankr.D.N.H.1989) (materiality and false oath require relationship to estate/assets)
- In re Beaubouef, 966 F.2d 174 (5th Cir.1992) (materiality broader than mere dollar value; relates to estate/assets)
- In re Koss, 403 B.R. 191 (Bankr.D.Mass.2009) (schedules are sworn declarations; honest, detailed disclosures required)
- United States Trustee v. Garland (In re Garland), 417 B.R. 805 (10th Cir. BAP 2009) (materiality and duty to disclose assets despite value)