In re Patrick, 99-3213
Decision Date | 08 August 2001 |
Docket Number | 99-32694.,No. 99-3213,99-3213 |
Citation | 265 BR 913 |
Parties | In re Billy Joe PATRICK, Debtor. Bernard Lumber Co., et al., Plaintiffs, v. Billy Joe Patrick, Defendant. |
Court | U.S. Bankruptcy Court — Northern District of Ohio |
C. Drew Griffith, Toledo, OH, for plaintiffs.
K. Alex Thornton, Willard, OH, Co-Counsel for plaintiffs.
H. Buswell Roberts, Jr., Toledo, OH, for defendant.
DECISION AND ORDER
This cause comes before the Court after a Trial on the Plaintiffs' Complaint to Determine Dischargeability. Originally, the Plaintiffs' Complaint rested on three statutory grounds: 11 U.S.C. § 523(a)(2)(A); 11 U.S.C. § 523(a)(2)(B); and 11 U.S.C. § 523(a)(6). These statutory grounds, however, were later narrowed after this Court, in a Memorandum Opinion and Decision, granted summary judgment in favor of the Defendant on the Plaintiffs' compliance with the requirements of § 523(a)(2)(B) and § 523(a)(6).
With respect to the Plaintiffs' cause of action under § 523(a)(2)(A), the Court found that based upon the facts presented — which for brevity's sake will not be repeated here in their entirety — a plausible inference of fraud had been raised. In particular, the Court found that summary judgment was inappropriate given the existence of two indicia of fraud: (1) the Defendant gave certain assurances of future payments at a time when he was experiencing financial difficulties; and (2) while the Defendant was giving his assurances of future payments to the Plaintiffs, the Defendant was also executing patently false lien waivers. (Court's Memorandum Opinion and Decision dated May 29, 2001, at pg. 7)
Based upon this decision, the Court, at the Trial held on the Plaintiffs' Complaint, limited the scope of factual inquiry to solely those questions relating to the Defendant's purported fraud under § 523(a)(2)(A). From this inquiry, and from the other evidence presented at the Trial, the Court, in accordance with Bankruptcy 7052, makes the following findings of fact:
It is a long-standing principle of bankruptcy jurisprudence that only those debts honestly incurred are afforded the benefits of a bankruptcy discharge. Cohen v. de la Cruz, 523 U.S. 213, 217, 118 S.Ct. 1212, 1216, 140 L.Ed.2d 341 (1998). Section 523(a)(2)(A) sets forth this principle by excluding from the scope of a bankruptcy discharge those debts incurred by a false pretense, a false representation, or actual fraud; § 523(a)(2)(A) of the Bankruptcy Code provides that: ,
As with most other exceptions to discharge, the moving party bears the burden of proof; this burden may be sustained under § 523(a)(2)(A) by a creditor establishing, by a preponderance of the evidence, that the five common law elements of fraud have been met. Burt v. Maurer (In re Maurer), 256 B.R. 495, 500 (8th Cir. BAP 2000). These elements are as follows: (1) the debtor made false representations; (2) the debtor knew such representations to be false at the time they were made; (3) the representations were made with the intent to deceive the creditor; (4) the creditor relied on the representations; and (5) the creditor's loss was the proximate result of the misrepresentation having been made. Colonial Pacific Leasing v. Mayerson (In re Mayerson), 254 B.R. 407, 409 (Bankr.N.D.Ohio 2000); Stifter v. Orsine (In re Orsine), 254 B.R. 184, 188 (Bankr.N.D.Ohio 2000).
With respect to these elements, and as is common in many cases involving actions brought under § 523(a)(2)(A), the...
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...debtor knows or should have known would induce another to advance goods orservices to the debtor." Bernard Lumber Co. v. Patrick (In re Patrick), 265 B.R. 913, 916 (Bankr. N.D. Ohio 2001). Fraudulent intent requires an actual intent to mislead, which is more than mere negligence... A 'dumb ......