PACCAR Financial Corp. v. Dhaliwal
Case Information
IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXES ENTERED HOUSTON DIVISION 05/18/2021 IN RE: §
SUKHDEV S DHALIWAL § CASE NO: 20-31944 аnd §
KULWANT KAUR, § CHAPTER 7
Debtors. §
§ PACCAR FINANCIAL CORP., §
Plaintiff, §
§ VS. § ADVERSARY NO. 20-3391
§ SUKHDEV S DHALIWAL §
and §
KULWANT KAUR, §
Defendants. §
MEMORANDUM OPINION
Before the Court is the creditor/plaintiff’s, PACCAR Financial Corp., request that Sukhdev S.
Dhaliwal and Kulwant Kaur, debtors in the underlying bankruptcy, be denied a discharge pursuant
to
FACTS Defendants, Sukhdev S. Dhaliwal and Kulwant Kaur are husband and wife, who were married in 2011. In 2014, they started a trucking business, wherein they purchased their first truck.
Plaintiff, PACCAR Financial Corp., financed defendants’ purchase of one (1) 2016 Kenworth T680 model bearing vehicle identification number 1XKYD49XXGJ101649 (the “Truck”) on June 22, 2015, and defendants executed a Security Agreement (OTIS Web) Retail Installment Contract and Security Agreement in favor of plaintiff, giving plaintiff a perfected security interest in and to said vehicle. By that time, defendants’ business had grown, and they had at least four (4) trucks which they used in their transportation business. Defendants made regular payments on the Truck for the next several years. The Truck broke down on or about February 1, 2019, and was towed to Pape Kenworth, a major truck and trailer repair shop in Bakersfield, California. Pape Kenworth inspected the Truck and estimated the repairs would cost about $21,500. At that time Pape Kenworth sent an estimate of the repairs needed on the Truck to TruNorth Warranty (“TruNorth”). The debtors had purchased an extended warranty from TruNorth and believed the damages to the Truck were covered by the warranty. However, on or about February 5, 2019, TruNorth informed Pape Kenworth that the damage to the Truck was not covered by the warranty. After their claim was denied, the debtors moved the Truck from Pape Kenworth to JR Truck Trailer Repair (“JR Truck Repair”), also located in Bakersfield, California. Debtors continued to make payments on the truck through July 2019.
In August 2019, the defendants moved from Cаlifornia to Texas. Thereafter, they sold their California home on September 30, 2019. The proceeds from the sale, an estimated $90,000.00, were used to repay relatives and friends for funds that they had borrowed.
Debtors filed a Chapter 7 bankruptcy proceeding in the Southern District of Texas, Houston Division on March 26, 2020 under Case Number 20-31944. Defendants stated that the Truck would be surrendered on their Statement of Intention for Individuals Filing Under Chapter 7. Defendants failed to surrender the Truck, and Plaintiff filed a Motion for Relief from Stay in the main case on May 5, 2020 to recover the vehicle. The motion was granted on May 26, 2020, and an Order Granting Relief from Stay was entered by the Court. To date, the plaintiff has not been able to locate the Truck.
At trial, debtors admitted that they failed to list the payment of $90,000.00 they received from the proceeds of sale of their California home, which they used to pay to unsecured creditors within one year from date of filing of the bankruptcy case on March 26, 2020, on their Statement of Financial Affairs.
On August 12, 2020, Plaintiff filed a Complaint Objecting to Discharge of Debtor and/or for Non- Dischargeability of Debt resulting in this adversary proceeding in the U. S. Bankruptcy Court Southern District of Texas Houston Division.
The Court finds that defendants made false statements under oath with respect tо property belonging to this estate by failing to disclose the proceeds of sale of California real estate within one year of filing, transferring $90,000.00 to friends and family, and thereby concealing and permitting this property to be concealed.
Defendant Mrs. Dhaliwal, aka Kulwant Kaur, testified the engine of the Truck was taken apart by Pape Kenworth in Bakersfield, California, that they lacked the funds to make the repairs, or to get the Truck back. The Court finds that testimony is not credible. The Truck was inspected by the Federal Motor Carrier Safety Association in August 2019, finding an audible air leak in tire and leak in sealed hub.
JURISDICTION AND VENUE
The Court has jurisdiction of this matter pursuant to
STANDARD OF REVIEW “Nondischargeability must be еstablished by a preponderance of the evidence.” The preponderance of the evidence standard requires the finder of fact to believe it is “more probable than not that a fact exists in order to find for the party putting forth that fact.”
LEGAL ANALYSIS
The plaintiff first seeks the Court to deny debtors a discharge pursuant to
PACCAR further seeks the Court to find its debt non-dischargeable as a result of defendants’
“deception by omission the monetary loss to the extent obtained by false pretenses, false
representations and actual fraud” pursuant to
Whether or not the elements are identical for actual fraud, false pretenses and false representations,
a creditor must prove that the debtor had an “intent to deceive” for the debt to be deemed non-
dischargeable under
Plaintiff next argues the Court find its debt non-dischargeable as debtors were fiduciaries, and
committed fraud, defalcation, embezzlement and larceny while acting in a fiduciary capacity
pursuant to
The concept of fiduciary duty is narrowly defined, applying only to technical or express trusts. [16] In this case there was no special relationship of trust, or written trust agreement betwеen the defendants and plaintiff. It was just a relationship of lender and borrower.
fiduciary relationship between the parties, or evidence of embezzlement or larceny, the plaintiff does not meet the elements of this section.
Finally, the plaintiff requests the Court find the debt non-dischargeable as the debtors “engaged in
a scheme tо conceal collateral of creditor and otherwise defraud Plaintiff” pursuant to
“Willful” means that there is objective substantial certainty of injury to subjective motive to
injure.
[25]
“Malicious” means an act done with the actual intent to cause injury.
[26]
The Fifth Circuit
employs a two-part test to determine willful and malicious injury.
[27]
An injury is willful and
malicious if the plaintiff proves “either an objective substantial certainty of harm or a subjective
motive to cause harm.”
[28]
The Fifth Circuit has held that for a debt to be nondischargeable, a debtor
must hаve acted with ‘objective substantial certainty or subjective motive’ to inflict injury.”
[29]
An injury is willful and malicious if the plaintiff proves “either an objective substantial certainty
of harm or a subjective motive to cause harm.” To establish an objective substantial certainty of
harm, the court must “analyze whether the defendant's аctions, which from a reasonable person's
standpoint were substantially certain to result in harm, are such that the court ought to infer that
the debtor's subjective intent was to inflict a willful and malicious injury on the plaintiff.” Here,
the evidence shows that it was substantially certain that the debtors’ actions in not advising plaintiff
the location of the Truck, and the concealment of the proceeds from the sale of their real property
were certain to result in harm; therefore, plaintiff has shown that it is entitled to relief under
SIGNED 05/18/2021
___________________________________ Jeffrey Norman United States Bankruptcy Judge
Notes
[1] Bky Case No. 20-31944 ECF No. 1 Page 58.
[2] Bky Case No. 20-31944 ECF No. 12
[3] Bky Case No. 20-31944 ECF No. 20
[4] Bky Case No. 20-31944 ECF No. 1 Page 53.
[5] Adv. Proceeding No. 20-03391, ECF No. 1
[6]
Countrywide Home Loans, Inc. v. Cowin (In re Cowin)
,
[7]
Neo Ventures v. Hamann
,
[8]
Pavy v. Chastant (In re Chastant)
,
[9] The debtors have scheduled unsecured debts of $136,500 (ECF No. 1). The court finds that they prefеrentially paid friends and family holding unsecured claims from the sale of their California real estate to the determent of their scheduled unsecured debts in the year proceeding the filing of their case. They then intentionally failed to make required disclosures in their schedules and to the Trustee of these prefеrential payments.
[10] Here the plaintiff has established a prima facie case and met their burden. As to the defenses alleged by the debtor the court requires the debtor to present evidence that he is innocent of the charged offense. In re Duncan , 562 F.3d 688, 695–96 (5th Cir. 2009) (internal citations omitted). The debtors have failed in that burden and their testimony is vague and unreliable.
[11] Id . at 91 (Although “[a]ctual intent . . . may be inferred from the actions of the debtor and may be proven by circumstantial evidence.”)
[12]
In re Chastant citing In re Butler
,
[13]
Labella v. Steves (In re Steves),
[14]
Dorsey v. Dorsey
,
In re Davenport
[17] ,
[18]
Moore v. United States
,
[19]
In re Miller
,
supra quoting In re Sokol
,
[20]
Id.
at 602;
see also Powers v. Caremark, Inc.
[21]
Winn v. Holdaway (In re Holdaway)
[22]
Grogan v. Garner
,
[23]
Kawaauhau v. Geiger
,
[24]
Id
. at 61,
[25]
Miller v. J.D. Abrams, Inc. (In re Miller),
[26] Id. at 606.
[27]
In re Williams
,
[28] Id. citing In re Miller , supra at 603.
[29] In re Williams at 508–09 (5th Cir. 2003) (quoting (In re Miller) , supra at 603).
[30]
In re Powers
,