O'Connor v. Burg, 641 B.R. 120

In 2013 Burg and attorney Michael O’Connor signed a contingent-fee agreement: 30% of any recovery pre-appeal and 35% if there was an appeal, covering reductions in her mortgage indebtedness.
O’Connor litigated and obtained a 2014 final judgment (affirmed on appeal in 2016) that cancelled Burg’s mortgage debt; under the fee pact he was entitled to 35% of the reduction—calculated as $170,591.02.
Burg filed Chapter 7 bankruptcy in January 2019; O’Connor (later his executor, Sandra O’Connor) sued to except the $170,591.02 fee from discharge under 11 U.S.C. § 523(a)(2)(A).
At trial the court found Burg not credible and found evidence she cut off communication and took a reverse mortgage shortly after the mandate issued, using funds for home improvements and personal expenses rather than paying O’Connor.
The Court held Burg made a knowing, fraudulent misrepresentation of intent to pay, relied upon by O’Connor, and therefore the $170,591.02 debt is nondischargeable; it awarded the plaintiff $56,617.75 in attorney’s fees, $518.48 in expenses, plus post-judgment interest.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Existence & amount of debt under fee agreement	Fee agreement signed; judgment canceled debt; 35% of reduction = $170,591.02	Debt disputed on schedules	Court found fee agreement enforceable and amount proven by preponderance; $170,591.02 owed
Statute of frauds re: alleged oral promise to sell home	Oral promise irrelevant to the clear written fee term for 35% recovery	Oral promise to sell home unenforceable under Texas statute of frauds	Statute of frauds did not void the remainder of the written fee agreement; defense rejected
Nondischargeability under § 523(a)(2)(A) (false pretenses/representations)	Burg promised to pay contingent fee but intended not to; O’Connor relied and provided services	Burg denies intent to defraud; argues no misrepresentation of current/past fact	Court found Burg knowingly misrepresented intent to perform, described present fact, O’Connor relied—debt nondischargeable
Attorney’s fees, costs, and interest	Prevailing party entitled to reasonable fees and expenses; sought $56,617.75 fees + $518.48 costs	Burg did not controvert reasonableness/necessity	Fees and costs awarded as reasonable; post-judgment interest granted at prevailing rate

Stern v. Marshall, 564 U.S. 462 (constitutional limits on bankruptcy courts’ final adjudicatory power)
Wellness Int’l Network, Ltd. v. Sharif, 575 U.S. 665 (party consent can cure adjudicatory-authority defects)
Husky Int’l Elecs., Inc. v. Ritz, 136 S. Ct. 1581 (distinction and scope of § 523(a)(2)(A) fraud theories)
Grogan v. Garner, 498 U.S. 279 (preponderance standard in nondischargeability proceedings)
Palmacci v. Umpierrez, 121 F.3d 781 (intent not to perform at time of promise can constitute false representation)
Bank of La. v. Bercier, 934 F.2d 689 (Fifth Circuit discussion of false-representation element under § 523(a)(2)(A))
Copper Liquor, Inc. v. Adolph Coors Co., 701 F.2d 542 (post-judgment interest on attorney’s fees)
Cohen v. De La Cruz, 523 U.S. 213 (nondischargeability of certain debts includes related relief such as fees)