Martin v. Mowery (In re Mowery), 591 B.R. 1

In 2015 Plaintiffs Katrina Martin and Jamie Voit each hired Andrew Mowery (doing business as Mowery Scandinavian Concepts) to build log structures; both paid substantial sums and the projects were left incomplete. Martin paid ~$93,988; Voit paid ~$122,000.
Both Plaintiffs sued Mowery in West Virginia state court (alleging fraud/fraudulent inducement). Criminal charges for obtaining money by false pretenses were filed against Mowery; he pled guilty to two misdemeanors (one for each plaintiff’s matter).
Mowery filed a Chapter 7 bankruptcy; plaintiffs filed adversary complaints seeking nondischargeability under 11 U.S.C. § 523(a)(2)(A) for debts arising from alleged fraud.
Plaintiffs moved for partial summary judgment arguing Mowery’s guilty pleas collaterally estop him from relitigating fraud in the § 523(a)(2)(A) adversary proceedings (issue preclusion).
Mowery objected, arguing (1) West Virginia preclusion law, not Idaho’s, applies and (2) his pleas established the value of the property involved was under $1,000, affecting nondischargeability.
The bankruptcy court considered whether West Virginia issue-preclusion law bars relitigation and whether the criminal pleas establish all elements of § 523(a)(2)(A).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether criminal guilty pleas collaterally estop defendant from litigating fraud elements in § 523(a)(2)(A) adversaries	Pleas adjudicated fraudulent conduct; issue preclusion bars relitigation of fraud	Preclusion law of West Virginia applies; pleas may not establish all civil elements (notably damages/value)	Denied: preclusion does not supply all § 523(a)(2)(A) elements because crime lacks a civil-damage requirement
Whether West Virginia or Idaho preclusion law governs	(implicit) use state law where judgment entered	West Virginia law controls; Idaho law should not be used	West Virginia preclusion law applies
Whether a guilty plea to obtaining property by false pretenses establishes defendant's intent/knowledge for § 523(a)(2)(A)	Pleas establish intent and fraud element	Argues differences in statutory elements (e.g., value threshold) may limit effect	Court: plea establishes intent/fraud elements for preclusion purposes under WV law
Whether damages (reliance/pecuniary loss) required by § 523(a)(2)(A) are established by the criminal pleas	Plaintiffs treat the pleas as resolving reliance/damage	Mowery notes WV statute does not require proof of pecuniary loss; pleas may not establish damages	Court: WV crime does not require showing of damage; because § 523(a)(2)(A) requires damage, issues are not identical and preclusion is incomplete

Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
In re Sabban, 600 F.3d 1219 (elements required for § 523(a)(2)(A))
Holloman v. Nationwide Mut. Ins. Co., 217 W.Va. 269 (West Virginia offensive issue preclusion discussion)
State v. Blankenship, 208 W.Va. 612 (elements of obtaining property by false pretenses under WV law)
State v. Moore, 166 W.Va. 97 (intent/knowledge requirement in false pretense cases)
State v. Barnes, 177 W.Va. 510 (WV rule that no separate proof of pecuniary loss is required for the crime)
State ex rel. Leach v. Schlaegel, 191 W.Va. 538 (guilty plea may have collateral estoppel effect in later civil proceedings)