Am. Express Bank v. Mowdy (In re Mowdy)

Decision Date16 January 2015
Docket NumberAdv. Pro. 14–01023–SAH,Case No. 13–15321–SAH
Citation526 B.R. 63
PartiesIn re: Michal Todd Mowdy, d/b/a Mike Mowdy Autoplex, Debtor. American Express Bank, F.S.B. Plaintiff, v. Michal Todd Mowdy, Defendant. Michal Todd Mowdy, Counter–Claimant, v. American Express Bank, FSB, Counter–Defendant.
CourtU.S. Bankruptcy Court — Western District of Oklahoma

Lyle R. Nelson, Oklahoma City, OK, for Plaintiff/Counter–Defendant.

Valerie A. Williford, Oklahoma City, OK, for Defendant/Counter–Claimant.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT, STATEMENT OF FACTS NOT IN DISPUTE, MEMORANDUM OF LAW AND OF NOTICE OF OPPORTUNITY FOR HEARING [DOC. 35]

Sarah A. Hall, United States Bankruptcy Judge

Plaintiff American Express Bank, FSB (American Express) seeks summary judgment on its claims under 11 U.S.C. § 523(a)(2)(A) and (c) pursuant to the Plaintiff's Motion for Summary Judgment, Statement of Facts Not in Dispute, Memorandum of Law and Notice of Opportunity for Hearing [Doc. 35], filed on November 6, 2014 (the “Motion”). Defendant Michal Todd Mowdy (Mowdy) objects to entry of summary judgment pursuant to his Defendant Michael Todd Mowdy's Response to Plaintiff's Motion for Summary Judgment [Doc. 36], filed on November 20, 2014.

For the reasons set forth below, the Court grants the Motion.

STATEMENT OF UNDISPUTED MATERIAL FACTS

The following are the undisputed material facts:

1. The Court has jurisdiction to hear this Complaint pursuant to 28 U.S.C. § 157(a), (b)(1) and (b)(2)(I) (core proceeding) and 1334(b) and 11 U.S.C. 523(c). (Exhibit A, p. 1, ¶ 1; Exhibit B, p. 1, ¶ 1).
2. On December 4, 2013 (the “Petition Date”), Mowdy filed a chapter 7 petition, commencing the above-captioned chapter 7 case. (Exhibit B, p. 1, ¶ 1).
3. American Express is the holder of a claim against Mowdy arising from credit card account number * * * * * * * * * * *4004 (“Account 1”) which was opened by Mowdy in August of 2010 under the business name of “Mike Mowdy Chevrolet.” (Exhibit B, p. 1, ¶ 5; Exhibit C, p. 2, ¶ 7).
4. The balance of Account 1 as of the date of the filing of the Chapter 7 petition was $95,898.16. (Exhibit F, p. 1, ¶ 1; Exhibit C, p. 2, ¶ 9).
5. American Express is the holder of a claim against Mowdy arising from credit card account number * * * * * * * * * * *3005 (“Account 2”), which was opened by Mowdy in May of 2008 under the business name of “Mike Mowdy Chevrolet.” (Exhibit B, p. 1, ¶ 3; Exhibit C, p. 2, ¶ 10).
6. The balance of Account 2 as of the date of the filing of the Chapter 7 petition was $34,491.40. (Exhibit F, p. 1, ¶ 2; Exhibit C, p. 2, ¶ 12).
7. The terms and conditions of the account agreements for Account 1 and 2 (“Account Agreement(s)) call for payment by Mowdy of reasonable attorney fees and all costs expended by American Express in the collection of Account 1 and Account 2 as follows:
You agree to pay all reasonable costs, including attorneys' fees, that we incur to collect amounts you owe or to protect ourselves from loss, harm or risk relating to default.
(Exhibit C, Appendix C, p. 98 and Appendix D, p. 110).
8. Between May 8, 2013, and June 22, 2013, Mowdy incurred one-hundred and eighty-two (182) transactions totaling $93,349.13 on Account 1 for goods and services (Exhibit F, p. 7, ¶ 54), most of which appear to be luxuries (Exhibit C, p. 3, ¶ 14). While Mowdy disputed this fact claiming that the “vast majority of the charges were for necessities,” the evidence in the record, as specifically set forth in paragraphs 9 and 10 below, belies this claim. Mowdy incurred excessive charges in slightly more than a month at Victoria's Secret, Bubblegum Divas, Touch of Beauty, Neiman Marcus, Best Buy, Lowes, Target, Costco, Verizon, Boot Star, Sunglass Hut, The Buckle, Finish Line, Marks Marine, Western Construction, Harbour Freight, Boat US, Southwest Airlines, Bed Bath & Beyond, Payless, H & M, Brighton, Starbucks, Walmart, True Religion, Macy's, Chicos, Casual Male, Home Depot, Lenscrafter and hotels, to name just a few. To boldly assert, without any supporting evidence as Mowdy does, that the vast majority of these charges incurred during a 45–day period are for necessities is disingenuous if not blatantly misleading.
9. Of the transactions at issue, seventeen totaling $22,359.06 were incurred in Las Vegas, Nevada, within a three-day period and include the following:
1 charge in the amount of $10,709.71 at The Buckle
4 charges totaling $6,820.08 at Neiman–Marcus
1 charge in the amount of $1,811.76 at Boot Star
5 charges totaling $1,605.44 at Treasure Island
5 charges totaling $1,391.85 at Pacific Sun, Sunglass Hut, MAC and Finish Line
(Exhibit B, p. 2, ¶ 8; Exhibit C, p. 3, ¶ 15). Other charges incurred on Account 1 from May 8, 2013, to June 22, 2013 (a mere 45 days) include:
6 charges totaling $12,690.26 at Best Buy
1 charge in the amount of $6,619.20 at Western Construction in Fontana, CA
1 charge in the amount of $5,900.00 was incurred for legal services by Sidney Brown
10 charges totaling $4,870.58 at Harbor Freight, Lowe's and Home Depot
4 charges totaling $4,836.36 were incurred at Costco
1 charge in the amount of $4,635.00 at Menifee Valley
1 charge in the amount of $4,610.00 at PayPal *HLGPER
4 charges totaling $4,198.88 at America's Tire
2 charges totaling $3,176.28 at Payless Furniture
9 charges totaling $2,740.80 at Southwest Airlines for airfare and related fees
8 charges totaling $2,032.47 at BoatUS, Mark's Marine Electric, Southern California and San Diego Marine Exchange for boating related goods and services
17 charges totaling $1,905.25 were incurred at AutoZone, O'Reilly Auto, Star Auto Parts, Brakemasters, Team Auto Aid and Pep Boys
1 charge in the amount of $1,971.25 at Inside Out Renovation
4 charges totaling $1,839.49 at Target, Wal–Mart and Sears Roebuck
1 charge in the amount of $1,711.00 at Raxter Law for legal services
4 charges totaling $1,438.59 at Verizon Wireless and 4GW Verizon Retailer
1 charge in the amount of $1,198.49 at Bed, Bath & Beyond
1 charge in the amount of $679.32 at Black Velvet Auto Fabrics
1 charge in the amount of $269.99 at Koech Corp

(Exhibit B, p. 2, ¶¶ 8, 10, 11, 12 and 13; Exhibit G, p. 1, ¶ 1; Exhibit F, p. 7, ¶ 54; Exhibit C, pp. 3–5, ¶¶ 16–34).

10. The card activity at issue represents a sudden change in Mowdy's spending habits and is inconsistent with his previous use of Account 1. (Exhibit C, p. 5, ¶ 36).
11. Mowdy used Account 1 for multiple charges on thirty-nine (39) separate days. (Exhibit F, p. 2, ¶ 8; Exhibit C, p. 5, ¶ 37).
12. Mowdy made one payment on Account 1 during the charge activity period in the amount of $9,545.34 on May 31, 2013. However, such payment was simply payment of the bulk of the minimum amount due, i.e. the balance of charges incurred in the previous billing cycle. There were no payments made on the charges incurred by Mowdy that are at issue in this adversary. (Exhibit E, Appendix B, p. 42).
13. The terms and conditions of the Account Agreement between Mowdy and American Express call for full payment of the charges due on Account 1 upon receipt of the monthly billing statement (Exhibit C, p. 6, ¶ 43; Exhibit E, Appendix C). While Mowdy disputes this fact, citing Exhibit E, pp. 90–100, Mowdy is incorrect. Based on the Account Statements and the Account Agreement, the “Pay Over Time” feature was never added to Account 1 and, if added, would have only applied to certain charges. Those eligible charges would have been placed in a “Pay Over Time” balance. (Exhibit E, Appendix C, p. 95 and Appendix, D, p. 107). A simple review of the Account Statements reveals that Account 1 simply had a “New Balance” with no “Pay Over Time” balance. (Exhibit E, pp. 41, 51, 58, 61, 77, 82, 84, 86, 88 and 95 (“When you must pay”)). Thus, the full balance was due upon receipt of the monthly billing statement.
14. The relevant portion of the Account Statements for Account 1 were attached to the Complaint as Exhibit A. (Exhibit F, pp. 2–3, ¶ 14; Exhibit C, p. 7, ¶ 47; Exhibit E, Appendix A).
15. Between May 21, 2013, and June 19, 2013, Mowdy personally incurred forty-nine (49) transactions totaling $2,983.18 on Account 2 for goods and services. (Exhibit F, p. 4, ¶ 25; Exhibit C, p. 9, ¶ 64).
16. The transactions at issue include the following: three totaling $1,388.88 were incurred at Best Buy; one in the amount of $500.00 was incurred at the Law Office of Brooke Elia for legal services (Exhibit F, p. 4, ¶ 27); and thirteen totaling $498.56 were incurred at GameStop, Google Gamevil and Charge.ncsoft.com for games. (Exhibit C, p. 9, ¶¶ 65–67).
17. Additionally, between May 21, 2013, and June 22, 2013, Lisa Mowdy (“Ms.Mowdy”), Mowdy's wife and the supplementary cardholder, incurred charges totaling $30,580.31 on Account 2 with the authorization and/or knowledge of Mowdy. (Exhibit F, p. 7, ¶ 54; Exhibit C, p. 9, ¶ 68).
18. The card activity at issue represents a sudden change in Mowdy's spending habits and is inconsistent with the previous use of Account 2. (Exhibit C, p. 10, ¶ 69).
19. Mowdy made one payment on Account 2 during the charge activity period in the amount of $1,473.04 on June 10, 2013. However, such payment was simply payment of the minimum amount due, i.e. the balance of charges incurred in the previous billing cycle. There was no payment made on the charges incurred by Mowdy that are at issue in this adversary. (Exhibit E, Appendix B, p. 62). Mowdy did not make any payments on Account 2 during or after the charge activity at issue. (Exhibit B, p. 3, ¶ 25; Exhibit C, p. 10, ¶ 73).
20. The terms and conditions of the Account Agreement between Mowdy and American Express call for full payment of the charges due on Account 2 upon receipt of the monthly billing statement. (Exhibit C, p. 6, ¶ 43; Exhibit E, Appendix C). While Mowdy disputes this fact, citing Exhibit E, pp. 90–100, Mowdy is incorrect. Based on the Account Statements and the Account Agreement, the “Pay Over Time” feature was never added to Account 2 and, if added, would have only applied to certain charges. Those eligible
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