Slip Opinion
Bankr. N.D. Ohio2025Background
- Trenton Sutton (Plaintiff) filed a complaint against Thomas R. Berkley (Defendant) seeking to have a debt declared nondischargeable under 11 U.S.C. § 523(a)(2)(A) in Berkley’s Chapter 7 bankruptcy case.
- Sutton alleged that Berkley represented he would provide three ATM machines and related services for $19,000, but only delivered two ATMs and failed to provide services.
- Payments were made by Sutton to Berkley Marketing Inc., not Berkley individually, as shown by attached eCheck receipts and a service agreement bearing Berkley’s signature solely on behalf of the corporation.
- Sutton did not allege, nor do the documents support, any basis for holding Berkley personally liable (no veil piercing alleged).
- Sutton’s fraud allegations were general and lacked detail (timing, content, circumstances) as required by Rule 9(b).
- Berkley moved to dismiss under Rule 12(b)(6) for failure to state a claim; the court agreed and dismissed the adversary proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sutton alleged a plausible claim against Berkley individually under § 523(a)(2)(A) | Berkley made fraudulent misrepresentations regarding ATM purchase; Sutton relied and was harmed | Sutton dealt with Berkley Marketing Inc.; no individual liability alleged or shown | Sutton failed to plausibly allege individual liability; complaint dismissed |
| Whether the complaint stated fraud with sufficient particularity under Rule 9(b) | Repeated that Berkley failed to deliver all goods/services as promised | Allegations are conclusory and not particularized as required | Allegations were general, not particular; failed Rule 9(b) standard |
| Whether Sutton alleged facts supporting piercing the corporate veil | No explicit allegations (argued debt owed by Berkley personally) | No allegations/grounds to disregard the corporate form | No basis to pierce the corporate veil; debt not shown to be Berkley’s individually |
| Whether a mere breach of contract can be nondischargeable as fraud under § 523(a)(2)(A) | Berkley’s failure to perform fully was fraudulent and intentional | Nonperformance is at most breach of contract, not evidence of fraud | General nonperformance insufficient for nondischargeability under § 523(a)(2)(A) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (establishing the plausibility standard for pleadings under Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (setting the standard for factual plausibility in pleadings)
- Rembert v. AT&T Universal Card Servs., 141 F.3d 277 (6th Cir. 1998) (standards for exception to discharge under § 523(a)(2)(A))
- Williams v. Browman, 981 F.2d 901 (6th Cir. 1992) (liberal construction of pro se pleadings)
- LeRoux’s Billyle Supper Club v. Ma, 77 Ohio App.3d 417 (Ohio Ct. App. 1991) (corporate separateness and veil-piercing doctrine)
- Belvedere Condo. Unit Owners’ Ass’n v. R.E. Roark Cos., 67 Ohio St. 3d 274 (Ohio 1993) (standards for piercing the corporate veil)