*1 Bankruptcy No. 92-07362-9P1. 92-719, 92-723 to 92-728. Adv. Nos. HINSHAW, Bigham In re Wallace Hinshaw, B. and Suzanne Jr. Court, United States Debtors. Florida, M.D. Tampa Division. EXPRESS CENTURION AMERICAN Plaintiff, BANK, 1995. v. Clarifying Decision Order Bigham HINSHAW, Jr.

Wallace 28, 1995. Rehearing Aug. Hinshaw, B. and Suzanne Defendants. (SOUTH DAKOTA), Plaintiff,

CITIBANK

v. HINSHAW, Bigham Jr.

Wallace Hinshaw, B.

and Suzanne

Defendants. EXPRESS CENTURION

AMERICAN Division,

BANK, Optima Card

Plaintiff,

v. Bigham HINSHAW,

Wallace

Jr., Defendants. BANK, Plaintiff,

BARNETT

v. HINSHAW, Bigham Jr.

Wallace Hinshaw, B.

and Suzanne

Defendants. SERVICES, CREDIT

HOUSEHOLD

INC., Plaintiff,

v. Bigham HINSHAW, Jr.

Wallace Hinshaw, B.

and Suzanne

Defendants. BANK, Plaintiff,

SUN

v. HINSHAW, Bigham Jr.

Wallace Hinshaw, B.

and Suzanne

Defendants. SERVICES,

FIRST CARD

INC., Plaintiff,

v. Bigham HINSHAW, Jr.

Wallace Hinshaw,

and Suzanne

Defendants. *2 Orlando, FL, Spradley, Randolph

Scott W. Fabal, O’Brien, Copien, Robert M. Kevin P. FL, Tampa, for Plaintiffs. LeVine, FL, Tampa, for Defen-

Dennis J. dant. FACT,

FINDINGS OF CONCLUSIONS AND OF LAW MEMORANDUM OPINION PASKAY, Judge. L. Chief ALEXANDER Reorganization THIS IS ease, and the matter under consideration dischargeability vel non of the debts ad- mittedly owing by due and WALLACE (Debtor) HINSHAW, to AMERICAN JR. existing, BANK, owned Both Charlotte Jamaica CITI- EXPRESS CENTURION OPTIMA, projects, which were out condominium BANK, built EXPRESS AMERICAN During selling completed units. the relevant BANK, BARNETT HOUSEHOLD CRED- time, from various the Debtor borrowed SERVICES, AND FIRST IT SUN BANK institutions, lending funds in excess of (Plaintiffs). $1 The court CARD SERVICES repaid *3 million. Some of these loans adversary pro- has consolidated these seven condominium units were sold. when the complaints ceedings. Although original the a in the sale of Southwest acted as broker Hinshaw, a named as defendant Suzanne by sold Charlotte and Ja- the condominiums wife, all of Plaintiffs dis- the Debtor’s the maica. against her at the complaint their missed of the trial.

commencement past, six-figure had a In the the Debtor instance, 1990, the Debtor income. For that the obli- It is the Plaintiffs’ contention $240,000 $20,025 of had taxable income gations by the Debtor should be ex- owed However, by 1992 the Debtor’s per month. provisions cepted protective from the overall considerably according to his income fell discharge general bankruptcy because of the affairs, had taxable statement of financial no credit he had the Debtor obtained when $38,000 only first five income of the repay the same or knew that he intent year. not months of that The Debtor did ability obligation. lacked the regular income in the conventional receive Plaintiffs, Thus, according to this debt time, During the relevant the Debtor sense. by nondischargeable virtue of available funds which were derived from had Additionally, Bankruptcy cer- Code. repayment of loans Charlotte and Debtor, charges tain of the made Jamaica, proceeds from loan when he refi- $10,000 charge the AMERI- specifically, a on mortgages properties, nanced the of these $1,800 Platinum Card and CAN EXPRESS mortgage loans and from from additional EX- in cash advances on the AMERICAN made on commissions earned Southwest Card, OPTIMA were incurred within PRESS addition, initially In the Debtor also sales. twenty days of the commencement received some dividend income on stocks. this, Chapter 11 on the Plain- case. Based However, liquidated all the Debtor his stock presumed debts are tiffs contend holdings by Chap- the commencement of nondischargeable of to be virtue 11 ter case. The Code. Plaintiffs also seek an award of reasonable extraordinary of this case involve The facts attorney fees and costs based on TranSouth a financ- the Debtor’s use of credit cards as Johnson, Corp. Florida v. Financial ing of his real estate business. Not- vehicle (11th Cir.1991). F.2d 1505 The extraordi- rate, withstanding high interest evidentiary nary facts established at the final it convenient to use cash ad- Debtor found hearing relevant to the matter under consid- cards to finance various vances on his credit are as follows: eration projects, including purchase of real estate Chapter and condominiums. The Debtors The Debtor in this case is real estate (including schedules list some 48 credit cards entrepreneur prior who to the commence credit) a com- various unsecured lines of with very ment of this case was involved some $432,648.15 as of the date of bined balance After ten substantial real estate ventures. filing. appears excessive on its While years experience of real sales with a estate face, borrowing the Debtor contends that his publicly company, large, traded land sales past was well established over the six scheme compa began his own estate real years, accumulated or seven and that his sales, ny in 1981. In addition to real estate actually months balances decreased actively involved in the Debtor also became prior filing. to his 1992, development. In real estate the Debt- separate apparently practice the sole shareholder of three The Debtor was was Realty Corp. running up large á Florida amount credit entities: Southwest (Char (Southwest), working project, debt while on a which he Charlotte Points West (Jamaica). lotte) fi- Way Corp. paid proceeds permanent off with the and Jamaica Code, completed. possible reliefs under nancing project was once the contrary protestations of the Debtor. testimony given at trial to the There was extensive attorney him a attor referred to second which concerning a transaction land 7,May ney met on who he with early which would close in scheduled to using bankruptcy to possibility discuss the million provided Debtor with $2.5 have property involved in avoid a transfer existing estate to refinance his real dollars Monti, prop dispute with & which Sabbia However, through, and this loan fell loans. erty to a Mr. Jim Moore the Debtor deeded if the loan had Plaintiffs assert that even 13, 1992. April It is the Plaintiffs’ conten closed, pay proceeds full were needed already tion that the Debtor had decided property and on the off the secured debt bankruptcy Petition not later than file a capital expenditures. needed 1992 when he met with his first fortunes of the Spring In the attorney and all additional made *4 suddenly dive when an took a nose Debtor cards leaves no doubt that him on the credit Monti, a Nether- entity known as Sabbia & In repay to the same. he had no intention corporation, Antilles and Jim Moore lands points that his opposition the Debtor out against a civil suit the Debtor filed to file a Petition was in fact actual decision Charlotte, against Jamaica and Southwest against triggered by the lawsuit filed his against making accusations the criminal May, that corporations in late that the fact in concerning his activities relation to Debtor sought protection under 11 also projects. estate The Debtor claims his real proposition the that he did not intend belies May until was unaware of this lawsuit that he repay charges to these and also claims that 1992, 24, story ran on the front when attorney at neither his first nor the second newspaper. adverse page of the local The torney any him advised not to use his devastating to the debtor’s publicity was any longer. credit cards sought Additionally, this lawsuit businesses. facts, it is Based on these the contention up compa- all of the debtor’s to tie the assets the Plaintiffs that the balance owed nies, receiving anticipated which he from excepted from overall debtor should be repay funds to his creditors. The Debtor provision general bankruptcy dis- lawsuit, unexpected that this and its contends 523(a)(2)(A) § Bank- charge based bn businesses, reputation on his effect provides pertinent part ruptcy Code which underlying reason his decision to seek as follows: protection Bankruptcy Code and Discharge. Exceptions § 523. not his credit card debts. (a) discharge A under section that he first met with The testified 1228(b) 1228(a), of this title does not dis- attorney an 1992 to discuss a any from charge an individual debtor problem” having with “business that he was debt— Monti, & and that he was not aware Sabbia (2) services, money, property, or an for attorney practiced in the area of extension, renewal, refinancing or of cred- meeting. In bankruptcy until after the it, by— obtained the extent connection, however, pointed it be out should (A) representa- pretenses, false a false Debtor, County, in Charlotte who resides tion, fraud, or actual other than a state- County adjacent County to Lee which is respecting debtor’s or an insid- ment an established Division of the condition; er’s financial attorneys practicing where there are Court establishing a claim and the The burden of familiar with commercial matters Code, nondischargeability party is on the who elected to visit a The burden of attorney offices are in Clear- seeks such determination. the first whose Florida, convincing water, prominently proof longer is no the clear and and who is standard, preponderance of merely but expertise for in the matter of known his Garner, Grogan v. 498 U.S. Bankruptcy. It not unreasonable to infer evidence. (1991). To particular 112 L.Ed.2d that the visit of a Debtor with this S.Ct. a claim under attorney purpose discussing establish viable was for the incapable obligations, granted would be to meet the privilege for to credit abuse holder, proof competent there must be at least until 1992. card the card holder used the credit that either knowing that he had no intention to unwilling accept This Court debt, knowing that he will

ever proposition that the Debtor was not aware of obligations in capable to meet the not be ongoing dispute & Monti and with Sabbia through curred the use of the card. In re ability the real likelihood that his to further (Bankr.M.D.Fla.1993). Stokes, B.R. carry funds on his business on borrowed might seriously charges The be threatened. proposition example classic of the first made, attorney especially visited the after he attorney an is when the debtor consults totally April, present picture. different bankruptcy purpose filing and then First, charges may carry presump makes on the credit card before scenario, nondisehargeability tion of virtue of filing bankruptcy. In the second it advances. either as relates cash the debtor’s income is nonexistent monthly question during insufficient to meet his other fixed There is no the visits one, obligations attorneys, including and he has no basis to the two the first realistic anticipate a substantial increase in his in- topic bankruptcy as a was discussed come the near future. The Plaintiffs property means to recover the deeded to this case assert that the Debtor falls under Moore and the fact that he did not file his *5 categories. both of these May Petition for relief until 1992 would presump not take these out of the ease, noted, The facts of this as are nondisehargeability provided ap it tion of highly say unor unusual to the least. While plies. difficulty applicability with the of thodox, that his the debtor has established presumption and the Plaintiffs’ reliance practice past in the to use his credit carefully if on same should be evident one financing cards for short term of his real specific language considers the of the Stat supports estate ventures. The record also language of ute. The relevant the Statute now, prac proposition up that until this 523(a)(2)(C), § reads as follows: “consumer tice enabled him to earn substantial income single aggregat debts owed to a creditor and arrange refinancing and for the sale or of $1,000 ing ‘luxury goods more than for repay certain assets to term short ... aggregating services’ or cash advances convincing debts. The Plaintiffs make a ar $1,000 more than that are extensions of con schedules, gument based on the facts and days ... 40 sumer credit within before the figures, that the Debtor’s current level of title, presumed for under order relief this are grossly inadequate income was to service the nondischargeable to ...” be 11 U.S.C. that level of credit card debts he amassed. 523(a)(2)(C) (1992). § The Code defines However, individual, unlike a normal debt” as “debt incurred an “consumer repayment Debtor has shown that his of primarily personal, family, individual for past credit card debts in the came from 101(8). purpose.” § 11 household U.S.C. sources other than income. The Debtor of Thus, apply exception, to this the record permanent financing pro ten received on requisite degree must establish with the jects, proceeds pay of which to were used proof that the debts under consideration are debt, including down short term credit cards. they consumer for debts were obtained instance, For on March 1992 the Debtor 101(8) purposes § in of the $700,000 described mortgage had received a on the impossible this it is Code. On record property, proceeds Sabbia & Monti purpose determine what these funds were loans, pay which used off in he various considering past used but cluding credit credit cards. these funds were While sense, activity of this Debtor it fair that they not in to infer “income” the traditional they purpose personal, not for the provided repay means to credit card debt. family purpose analysis, Based court or household use but for the is satisfied keeping enterprise prove that the Plaintiffs have failed to that his business alive or charges knowing possibly pay attorneys that the Debtor made fees. It foregoing, this Court is satis- is well established that the bur

Based on proof § that the Plaintiff failed to establish with purposes fied den of for degree proof spite in of the requisite on the Plaintiffs to establish that the debts credit card use enormous and unusual presumption. incurred fall within the In or balances owed to these that this, der to establish the Plaintiffs must show exception are not within the Plaintiffs (1) (2) debt; there exists a consumer 528(a)(2)(A) § Code. (3) creditor; single aggregating owed to a (4) $500.00; luxury goods more that for judgment separate A final shall be entered (5) services; incurred an individual foregoing. debt- accordance with the (6) or; forty days on or within before ORDER ON MOTION FOR order for relief. It should be noted that REHEARING statutorily presumed what is is not the exis elements, any tence of of these six but the Aug. presumption is that the debtor incurred the liquidation case and THIS is debt without the intention to the obli the matter under consideration is a Motion (Bankr. Koch, gation. In re 83 B.R. 898 Rehearing filed the three Plaintiffs Costantino, E.D.Pa.1988); In re 72 B.R. 189 above-captioned adversary proceedings. Leaird, (Bankr.D.S.C.1986); In B.R. re adversary proceedings Each of the three (Bankr.W.D.Wis.1989). There is no obli sought a determination as to whether the law, gation argued by as is Plain (Debtor) Hinshaw debts due Wallace tiffs, requires prove which the Debtor to Bank, Express Barnett American Centurion dischargeable the debt is where the Plaintiff Express, Optima Bank and American Card showing appli has not made the initial (Plaintiffs) nondisehargeable Division are cability presumption contained pursuant 523(a)(2)(C). lengthy Code. On after a evidentiary hearing, final this Court entered considering After the record of this mat- Facts, Findings of Law *6 Conclusions and ter, Fact, Findings and the Conclusions of Opinion concluding Memorandum Opinion by Law Memorandum entered dischargeable. debts were in fact The Mo- this Court on this Court is currently specifically tion before the Court satisfied that the Plaintiffs failed to establish rehearing portion seeks of the Find- presumption contained ings which the cash advances addresses 523(a)(2)(C) applied to the debts incurred presumption period con- made within the by failing to establish that the 523(a)(2)(C). §in tained After a review of cash made advances Fact, Findings Conclusions of Law and upon forego- consumer nature. Based Opinion, Memorandum this Court is satisfied ing, this Court is satisfied that the conclusion appropriate supplement Opin- that it is Fact, Findings reached Memoran- clarify analysis ion in order Opinion dum of Law and Memorandum conclusion reached this Court. correct. Fact, Findings In the Conclusions Accordingly, it is Opinion, Law and Memorandum this Court concluded that certain cash advances made ORDERED, DE- ADJUDGED AND twenty days prior the Debtor within the Rehearing CREED that the Motion filing bankruptcy to the of the Debtor’s ease Fact, hereby granted, Findings and the presumption of nondis- were not within the Opin- Conclusions of Law and Memorandum 523(a)(2)(C). chargeability by § Ac- created hereby ion clarified as set forth above. Plaintiffs, cording to the this court concluded DONE AND ORDERED. that the incurred the Debtor within debts twenty days filing bankruptcy of his presumption not fall con-

case did within upon

tained in based the fail-

ure of the Plaintiffs to establish that

debts incurred were consumer debts.