482 B.R. 15
Bankr. D. Mass.2012Background
- Levasseur, a Massachusetts nurse and former real estate agent, obtained a $124,200 line of credit from Fleet Bank, later Bank of America, secured by the Rowley Property; the line remained open after she sold the Rowley Property.
- She used Fleet/BOA statements showing an available credit of $124,200 and subsequently drew funds in June–July 2005, despite having sold the Rowley Property in 2003 and paying off the Fleet line.
- Old Republic insured Levasseur’s Byfield property via title policy; it paid BOA the debt after Levasseur failed to repay the funds and BOA foreclosed, leading to Old Republic’s claim.
- Levasseur filed for Chapter 13, converted to Chapter 7, claimed a homestead exemption in Byfield Property valued at $674,000 with liens totaling $482,596, leaving at least $191,404 encumbered by equity.
- Old Republic pursued (i) nondischargeability under §523(a)(2)(A), (a)(4), and (a)(6); (ii) objection to exemption under §522(i) and §522(o)/(q); and (iii) motion to avoid the judicial lien under §522(f).
- Trial established that Levasseur procured funds through a false pretense, exploited a bank error, and caused Bank of America injury, while the exemption issues turned on statutory limitations and the avoidance motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Nondischargeability under §523(a)(2)(A) | Levasseur made a false pretense with intent to deceive Bank of America to obtain funds. | No duty to disclose; Bank records were independently relied upon; no intentional misrepresentation. | Levasseur’s debt is nondischargeable under §523(a)(2)(A) for false pretenses. |
| Nondischargeability under §523(a)(4): larceny | Collection fits the concept of larceny by false pretense. | Larceny requires wrongful taking; here Bank voluntarily parted with funds. | Not larceny under §523(a)(4) because no wrongful taking. |
| Nondischargeability under §523(a)(6): willful and malicious injury | Levasseur’s conduct injured Bank of America willfully and maliciously. | No intentional injury to Bank; no duty to disclose; no injury caused. | Debt is nondischargeable for willful and malicious injury under §523(a)(6). |
| Objection to homestead exemption | Nondischargeable conduct warrants disallowing or reducing exemption. | Conduct for discharge does not automatically bar exemption; statute limits apply only when expressly provided. | Exemption upheld; §522(o)/(q)(l)(B)(ii) does not apply; exemption preserved in full. |
| Motion to avoid judicial lien under §522(f) | Lien impairment requires full avoidance because exemption is fully available. | Limitations under §522(o)/(q) might reduce impairment; other factors irrelevant to §522(f). | Lien avoided in full; impairment of exemption found in entirety. |
Key Cases Cited
- Grogan v. Garner, 498 U.S. 279 (1991) (preponderance standard governs §523(a) dischargeability)
- Palmacci v. Umpierrez, 121 F.3d 781 (1st Cir. 1997) (elements for nondischargeability under §523(a))
- In re Moen, 238 B.R. 785 (8th Cir. BAP 1999) (false pretenses concept and duty to disclose)
- In re Brandon, 297 B.R. 308 (Bankr. S.D. Ga. 2002) (false pretenses standard and reliance)
- Field v. Mans, 516 U.S. 59 (1995) (justifiability of reliance under §523(a))
- Cohen v. de la Cruz, 523 U.S. 213 (1998) (scope of 'to the extent obtained by' in §523(a)(2))
- Hancock v. Caliri, 335 B.R. 2 (Bankr.D. Mass. 2005) (larceny requires wrongful taking in §523(a)(4))
- In re Romano, 353 B.R. 738 (Bankr.D. Mass. 2006) (distinction between larceny and embezzlement)
- In re Neronha, 344 B.R. 229 (Bankr.D. Mass. 2006) (malicious injury elements under §523(a)(6))
- Snyder v. Rockland Trust Co. (In re Snyder), 279 B.R. 1 (1st Cir. BAP 2002) (statutory plain language governs lien avoidance under §522(f))