670 B.R. 794
Bankr. W.D. Okla.2025Background
- Skyline Air Ops, Inc. hired Phillip D. Conkle as a subcontractor to perform interior refurbishments on an aircraft.
- After Skyline paid Conkle via three invoices, Conkle demanded additional payment and, when unpaid, filed a mechanic’s lien on the aircraft with the FAA.
- The untimely lien prevented Skyline from selling the aircraft and led to state court litigation, ultimately resulting in Conkle releasing the lien without payment from Skyline, and a judgment in favor of Skyline for damages and attorneys’ fees.
- Skyline sought to except the state court judgment from Conkle’s Chapter 7 discharge under 11 U.S.C. § 523(a)(2)(A) (fraud) and § 523(a)(6) (willful and malicious injury).
- At trial, Skyline’s only witness was its president, Allen; Conkle rested without presenting evidence based on Skyline’s failure to carry its burden.
- The court ruled on summary judgment for Conkle, finding Skyline did not provide sufficient evidence of fraudulent or malicious intent as required by the relevant code sections.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| §523(a)(2)(A): Fraudulent Debt | Conkle’s late, knowingly false lien was fraudulent and led to damages | No fraud; no money or property received from filing lien | Skyline failed to prove fraud or enrichment; debt thus dischargeable |
| §523(a)(2)(A): Fraudulent Intent | Conkle filed lien with intent to deceive | No evidence of intent to defraud | No preponderance of evidence showing fraudulent intent |
| §523(a)(6): Willful Injury | Filing the lien was intended to injure Skyline by blocking sale | Act was to get paid for labor, not to injure | No evidence of willful injury; intent was to receive payment, not harm Skyline |
| §523(a)(6): Malicious Injury | Act of filing false lien was malicious | No consciousness of wrongdoing | No evidence of malice; record suggests, at most, negligence |
Key Cases Cited
- Cohen v. de la Cruz, 523 U.S. 213 (U.S. 1998) (section 523(a)(2)(A) requires that money or property be obtained by fraud for a debt to be nondischargeable)
- Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (preponderance of the evidence is the standard for nondischargeability)
- Kawaauhau v. Geiger, 523 U.S. 57 (U.S. 1998) (section 523(a)(6) covers only acts done with actual intent to cause injury)
- Panalis v. Moore (In re Moore), 357 F.3d 1125 (10th Cir. 2004) (section 523(a)(6) requires willful and malicious injury)
- DSC Nat’l Props. v. Johnson (In re Johnson), 477 B.R. 156 (10th Cir. BAP 2012) (intent to deceive is required for §523(a)(2)(A))