535 B.R. 203
Bankr. N.D. Ohio2015Background
- Debtor Piaj E. Hunter contracted with James Risk to buy a house and have Risk move and set it on Hunter’s Hancock Street lots for $25,000; Hunter paid $7,000 and allegedly spent additional funds obtaining permits and third‑party work.
- Dispute arose over incomplete performance; Risk sued in Erie County, which found both parties breached but entered judgment for Risk for $16,458.07, including $4,000 for steel beams Risk said Hunter converted.
- Hunter quitclaimed the Hancock Street property to his father in December 2012; father reconveyed title back to Hunter June 20, 2014; Hunter filed Chapter 7 on June 25, 2014; Risk filed this adversary complaint October 16, 2014.
- Risk sought nondischargeability under 11 U.S.C. §§ 523(a)(2), (a)(6), (a)(11) and sought denial of Hunter’s discharge under §§ 727(a)(2), (a)(4), (a)(5).
- The parties filed cross‑motions for summary judgment; the court treated most facts as undisputed and applied summary judgment standards to each claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| §523(a)(2)(fraud) — whether debt obtained by false pretenses/representations/actual fraud | Risk: Hunter never intended to pay and obtained services by fraud (pointing to transfers and nonpayment) | Hunter: paid deposits and other sums; stopped payments because Risk breached; no material misrepresentation or intent to deceive shown | Denied Risk’s SJ; granted Hunter’s SJ on this claim (court found no evidence of material misrepresentation or intent) |
| §523(a)(6) — willful and malicious injury (conversion of steel beams) | Risk: Hunter cut up and sold beams; state court awarded $4,000 for conversion; debt nondischargeable as willful/malicious | Hunter: he purchased the beams and had right to dispose; grand jury declined to indict | Denied both parties’ SJ motions: Hunter’s SJ denied (ownership not dispositive); Risk’s SJ denied — genuine issue remains on willfulness/maliciousness despite collateral estoppel on ownership |
| §523(a)(11) — judgment for fraud/defalcation while fiduciary to depository institution | Risk: judgment should except debt under §523(a)(11) | Hunter: never acted as fiduciary to a depository institution; statute inapplicable | Granted Hunter’s SJ; §523(a)(11) does not apply (no fiduciary/depository institution nexus) |
| §727(a)(2), (a)(4), (a)(5) — denial of discharge for transfers, false oaths, unexplained loss | Risk: transfers to father and back and alleged concealment/omissions justify denial | Hunter: transfer to father occurred >1 year pre‑petition; no specific false oaths or identified missing assets; no evidence of intent to hinder/defraud | Granted Hunter’s SJ on all §727 claims (no timely §727(a)(2) transfer within one year, no specific false oaths or evidence of fraudulent intent, no proof under §727(a)(5)) |
Key Cases Cited
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (summary judgment inferences must favor nonmovant)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant's initial burden on summary judgment and nonmovant must show specific facts)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (reasonable juror standard for genuine issues of material fact)
- Rembert v. AT & T Universal Card Servs., 141 F.3d 277 (6th Cir. 1998) (exceptions to discharge construed narrowly; fraud elements and intent inquiry)
- Kawaauhau v. Geiger, 523 U.S. 57 (U.S. 1998) ("willful" in §523(a)(6) requires deliberate or intentional injury)
- Markowitz v. Campbell (In re Markowitz), 190 F.3d 455 (6th Cir. 1999) (distinguishing willful and malicious elements under §523(a)(6))
- Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (burden of proof for nondischargeability is preponderance of the evidence)
- McClellan v. Cantrell, 217 F.3d 890 (7th Cir. 2000) ("actual fraud" under §523(a)(2) not limited to misrepresentations)