McCarthy v. Radcliffe (In Re Radcliffe), 317 B.R. 581

Debtor Joanne Radcliffe and James McCarthy cohabited in Bristol; residence purchased in Farmington with title in Radcliffe's name due to mortgage terms.
$15,000 of down payment provided by McCarthy; Radcliffe contributed $6,000 from pension, $3,000 from savings; McCarthy's sister contributed labor and funds via Mrs. McCarthy’s commission.
Agreement signed before closing stating donor would gift $15,000 for purchase, repayable if they separated within 10 years, unless they married; Gift Statement labeled funds as a bona fide gift to Radcliffe.
Radcliffe filed Chapter 7 in Oct 2000; McCarthy later sought to recover the $15,000 as nondischargeable and to establish a trust in the residence.
Defendant claimed residence exempt; court allowed discharge; plaintiff amended schedules to reflect unsecured loan; Protective Order issued against McCarthy relating to Keith, Radcliffe’s son.
Court held third-count jurisdiction via supplemental jurisdiction is proper; no resulting or constructive trust arose over the residence.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the debt is nondischargeable under §523(a)(2)(A).	McCarthy argues funds were obtained by false pretenses/intent to repay.	Radcliffe contends no actual fraud; facts show a loan/gift with intended repayment.	Not nondischargeable; no actual fraudulent intent proven.
Whether the debt is nondischargeable under §523(a)(6).	Breaching the repayment obligation constitutes willful/malicious injury.	Breach of contract—not an intentional tort; not §523(a)(6) eligible.	Not nondischargeable under §523(a)(6).
Whether a trust (constructive or resulting) arose in the residence in favor of McCarthy.	Funds were intended as an equal partnership; resulting/constructive trust implied.	No express/trust by agreement; Statute of Frauds bars express trust; no inequity.	No resulting or constructive trust; no equitable ownership in McCarthy.
Whether the court has jurisdiction to adjudicate the third count under 28 U.S.C. §1334/§1367.	Third count related to bankruptcy estate; supplementation allowed.	State-law issue; no original jurisdiction for third count.	Supplemental jurisdiction exists under §1367(a) to adjudicate Third Count.

Grogan v. Garner, 498 U.S. 279 (1991) (burden of proof for dischargeability)
In re Bonnanzio, 91 F.3d 296 (2d Cir. 1996) (narrow construction of dischargeability exceptions)
In re Owen, 234 B.R. 857 (Bankr. D. Conn. 1999) (five elements of §523(a)(2)(A) fraud)
In re Williams, 214 B.R. 433 (Bankr. D. Conn. 1997) (fraud standards under §523(a)(2)(A))
Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (basis for bankruptcy jurisdiction and arising under/related to)
Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (related-to jurisdiction test)
Glinka v. Murad (In re Housecraft Indus. USA, Inc.), 310 F.3d 64 (2d Cir. 2002) (arising under jurisdiction standard)
Klein v. Civale & Trovato, Inc., 29 F.3d 88 (2d Cir. 1994) (supplemental jurisdiction criterion)
Bell v. Bell, 225 F.3d 203 (2d Cir. 2000) (supplemental jurisdiction over state-law claims in bankruptcy)
In re Turner, 724 F.2d 338 (2d Cir. 1983) (state-law claim must be related to bankruptcy)