527 B.R. 416
10th Cir. BAP2015Background
- Wagner loaned the Cabin as collateral for a $194,000 loan to McDonough in June 2004; no writing or lawyer involvement occurred.
- The Cabin loan was intended to be repaid with equity from McDonough’s Forest Lake Home sale, with a plan to reduce the outstanding balance by $100,000.
- McDonough defaulted in August 2005, after which Wagner pursued remedies and the parties’ relationship deteriorated.
- McDonough and Kuznia moved into the Cabin in 2004–2005; Kuznia left in 2005, and McDonough’s employment and finances later worsened.
- Wagner obtained a Minnesota judgment against McDonough in 2006, later registered in Colorado in 2006, and began collection efforts; McDonough filed Chapter 7 in January 2011.
- McDonough’s bankruptcy filings failed to disclose a Premier Federal Credit Union account (Premier Account) in which he had a removed-but-then-used interest, and the court later found false statements and omissions related to this account.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the false oath under § 727(a)(4)(A) was proven | Wagner contends McDonough knowingly omitted the Premier Account and misrepresented assets. | McDonough contends there was no false oath or misrepresentation; credibility issues dominate. | McDonough’s false oath finding not clearly erroneous. |
| Whether §523(a)(2)(A) non-dischargeability was established | Wagner asserts McDonough’s statement about paying down $100,000 with equity was a false representation causing a loss. | McDonough argues the representation was not knowingly false or not tied to loss. | Debt non-dischargeable under §523(a)(2)(A) for the false $100,000 pay down; loss shown. |
Key Cases Cited
- Garland (In re Garland), 417 B.R. 805 (10th Cir. BAP 2009) (authorities review standard for § 727 and evidentiary findings in discharge decisions)
- Johnson v. Riebesell (In re Johnson), 477 B.R. 156 (10th Cir. BAP 2012) (narrow construction of § 523(a)(2) and false oath considerations)
- Grogan v. Garner, 498 U.S. 279 (1989) (establishes standard for dischargeability and abuse of discretion review)
- In re Berge, 37 B.R. 705 (Bankr. W.D. Wis. 1983) (discusses record limitations and appellate consideration of transcripts)