492 B.R. 43
Bankr. D. Colo.2013Background
- Defendant William Wagner, later known as William McDonough, filed Chapter 7 on Jan 18, 2011.
- Plaintiff Martin Wagner is the Defendant’s father and owner of a cabin at 725 County 5 NW, Hackensack, MN.
- Defendant sought a loan secured by the Cabin; Plaintiff was to supply collateral with free proceeds used to reduce the loan balance.
- Defendant allegedly told Plaintiff he would use $100,000 of equity from selling his Forest Lake home to reduce the Cabin Loan; a pending sale existed but was not disclosed.
- Cabin Loan 801382 for $194,000 was secured by a deed of trust on the Cabin; Forest Lake home sale closed four days after the Cabin Loan closing, with substantial proceeds realized by Defendant.
- Court found Defendant had cash proceeds totaling at least $116,829.77 from both transactions and did not apply Forest Lake proceeds to the Cabin Loan; Defendant lacked present intent to repay as promised.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| §523(a)(2)(A) fraud nondischargeability | Wagner misrepresented intent to pay down Cabin Loan | No present intent to deceive | Nondischargeable debt proven |
| §523(a)(6) willful and malicious injury | Defendant’s actions were willful and malicious | No willful injury intent | Not established; damages not proven; discharge not denied on this ground |
| §727(a)(4) false oath in bankruptcy | Failed to disclose Premier Account interest | Non-disclosure inadvertent/unclear | Discharge denied for false oath; intentional concealment found |
| §727(a)(5) failure to explain loss of assets | Defendant failed to explain asset losses; profligacy | No loss of assets meaningfully shown | Denied on §727(a)(5) not sustained |
Key Cases Cited
- In re Riebesell, 586 F.3d 782 (10th Cir. 2009) (elements for §523(a)(2)(A) fraud require proof of false representation and intent to deceive)
- Geiger, 523 U.S. 57 (Supreme Court 1998) (willful injury requires intentionality to cause injury, not merely the act)
- In re Longley, 235 B.R. 651 (10th Cir. BAP 1999) (willful and malicious injury may be shown indirectly by knowledge and anticipated harm)
- In re Kukuk, 225 B.R. 778 (10th Cir. BAP 1998) (intent to deceive may be inferred from totality of circumstances)
- In re Young, 208 B.R. 189 (Bankr. S.D. Cal. 1997) (reliance on family member's intent is reasonable under certain circumstances)
- Gullickson v. Brown (In re Brown), 108 F.3d 1290 (10th Cir. 1997) (false oath requires materiality and willful falsehood)
- Panalis v. Moore (In re Moore), 357 F.3d 1125 (10th Cir. 2004) (Geiger standard applied to assess dischargeability where intent to injure is at issue)