In re Pursley, Bankruptcy No. 92-3508
| Decision Date | 22 July 1993 |
| Docket Number | Related Case: 92-32429.,Bankruptcy No. 92-3508 |
| Parties | In re Benie PURSLEY, Sr. and Bonnie Pursley, Debtors. FIRST DEPOSIT NATIONAL BANK, Plaintiff, v. Benie PURSLEY, Sr., et al., Defendants. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Northern District of Ohio |
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Lee R. Kravitz, Cleveland, OH, for plaintiff.
Colleen M. O'Connell, Bolotin Law Offices, Toledo, OH, for defendants.
This cause comes before the Court upon Plaintiff's Complaint to Determine Dischargeability of Debt and Motion for Summary Judgment. Both parties had the opportunity to conduct discovery and have submitted briefs arguing their position on the instant issue. The Court has reviewed the entire record in this case. Based upon that review, and for the following reasons, this Court finds that the debt owed to Plaintiff in the amount of Five Thousand Two Hundred Forty-five and 67/100 Dollars ($5,245.67) plus interest is Nondischargeable.
In October of 1988, the Defendants, Benie and Bonnie Pursley, signed a membership request certificate for a Visa Gold Card and returned the signed certificate to the Plaintiff, First Deposit National Bank (hereafter "First Deposit"). Shortly after opening a joint charge account, Defendant, Bonnie Pursley, obtained a cash advance for Three Thousand Dollars ($3,000.00). This borrowed sum was later repaid in full.
Later, in March of 1992, Defendant, Bonnie Pursley, took another cash advance in the sum of Five Thousand Dollars ($5,000.00). She made only one payment of One Hundred One Dollars ($101.00) on the second cash advance. This payment was received by First Deposit on April 13, 1992.
Through deposition, the Defendant, Bonnie Pursley, revealed that she had not made any payments on the Five Thousand Dollar ($5,000.00) cash advance after April of 1992 due to lack of funds. She testified that she and her husband began to fall behind on payments on their debts beginning in 1991. In an attempt to stay afloat, Bonnie Pursley took cash advances from the different credit cards such as Discover, Visa and Mastercard that the Defendants possessed to try to catch up on payments (Depo. Transcript pg. 16, lines 1-14). She admitted that she was "robbing Peter to pay Paul." Furthermore, Defendant, Bonnie Pursley, acknowledged at the deposition that she took such cash advances knowing that they did not possess the funds to pay back these creditors (Depo. Transcript pg. 19, lines 1-10). According to her testimony provided at the deposition, around April or May of 1992, Bonnie Pursley reached a point where she could no longer borrow any more money from her credit cards because her credit cards were "maxed out". There were no more funds available on her credit cards from which cash advances could be taken. As she had no money available to keep the payments up to date, she became delinquent on payments on the various credit cards that the Defendants had in their name.
Records which were provided during their declaration of insolvency reveal that the Defendant's total monthly income was One Thousand Eight Hundred Seventy-four and 87/100 Dollars ($1,874.87). A little more than One Thousand One Hundred Dollars ($1,100.00) came from Bonnie Pursley's monthly wages earned at her place of employment and Seven Hundred Seventy-two and 87/100 Dollars ($772.87) was derived from disability checks received by Benie Pursley, Sr. according to figures listed in Schedule I. At the deposition, Bonnie Pursley testified that the figures put forth in Schedule J involving the current monthly expenditures were accurate to the best of her knowledge and did not include any credit card payments (Depo. Transcript pg. 38, lines 18-24). The total monthly expenses were listed as One Thousand Eight Hundred Sixty and 71/100 Dollars ($1,860.71), leaving less than Fifteen Dollars ($15.00) available for credit card payments. As such, it is clear that their expenses, including their monthly required credit card payments, were significantly larger than their monthly income. The only Creditor scheduled on that list to receive installment payments was one for a car. With less than Fifteen Dollars ($15.00) disposable income provided in Schedule J, the Defendants were unable to remain current on their credit card payments.
The Defendants ultimately found themselves insolvent and filed a Petition for Relief under Chapter 7 of the United States Bankruptcy Code on June 29, 1992. The debt owed to First Deposit was included in Pursley's Schedule of Creditors Holding Unsecured Nonpriority Claims. The First Meeting of the Creditors was held on August 24, 1992. The Plaintiff in this case timely filed a Complaint to Determine Dischargeability of Defendant's Debt to First Deposit pursuant to 11 U.S.C. § 523(a)(2)(A). During discovery, the Plaintiff took the Defendants' Depositions. In regard to Discharge of the Debtors from their debts to all Creditors, the Court released the Debtor from all dischargeable debts on November 16, 1992. However, this suit continued as the debt in this case is alleged to be excepted from discharge under clause (2) of 11 U.S.C. Section 523. The Plaintiff filed a Motion for Summary Judgment on the instant issue. The Defendants filed a Motion in Opposition to Plaintiff's Motion for Summary Judgment.
The relevant section of 11 U.S.C. Section 523 reads as follows:
Section 523. Exceptions to Discharge.
The Plaintiff seeks a determination that Defendants' indebtedness of Five Thousand Two Hundred Forty-five and 67/100 Dollars ($5,245.67) is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A). The determination of dischargeability of a particular debt is a core proceeding under 28 U.S.C. § 157(b)(2)(I).
The standard of proof in determining dischargeability of debts obtained by false pretenses or a false representation under 11 U.S.C. § 523(a) is preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). In order to prove the debt is nondischargeable under 11 U.S.C. § 523(a)(2)(A) the creditor must prove by a preponderance of the evidence that (1) that the debtor made representations; 2) that at the time he knew they were false; 3) that he made them with the intent to deceive the creditor; 4) that the creditor relied on the representations; and 5) that the creditor's loss was proximate result of the misrepresentations having been made. See, In re Satterfield, 25 B.R. 554 (Bkrtcy.N.D.Ohio 1982); In re Tipple, 80 B.R. 93 (Bkrtcy. N.D.Ohio 1987); and In re Victorian, 8 B.R. 196 (Bkrtcy.N.D.Ohio 1981).
According to Federal Rule of Civil Procedure 56, Summary Judgment can only be properly granted when the Movant can show that there is no genuine issue of material fact and that the Movant is entitled to judgment as a matter of law. Yet, the Movant must be able to prove all the elements of the cause of action in order to succeed in his case. In re Tipple, supra at 95. Furthermore, a Motion for Summary Judgment must be construed in a light most favorable to the opposing party. In re Chech, 96 B.R. 781, 783 (Bkrtcy. N.D.Ohio 1988)
Before a decision can be made on the Motion for Summary Judgment, the Court must first decide if the Plaintiff is able to meet its burden of proof in determining a debt to be nondischargeable. The first element to be considered is representation. The evidence provided unequivocally shows that the money the Defendants borrowed from the Plaintiff was obtained through false pretenses and a false representation. Generally, it has been recognized that by using a credit card to purchase goods or take cash advances constitutes an implied representation to the merchant and card issuer that the buyer has the financial means and intention to pay for such expenses. In re Satterfield, supra at 557. Through use of the Visa Gold Card, the Debtors impliedly represented to First Deposit that they had the financial ability to pay back the Five Thousand Dollar ($5,000.00) cash advance they took in March of 1992. The testimony provided in the deposition and the available records clearly demonstrates the Pursley's inability to pay back this debt as it was incurred. With less than Fifteen Dollars ($15.00) left after monthly expenses, there is no way that the Defendants could have thought that they had the ability to repay First Deposit.
In her deposition, Bonnie Pursley admitted to being delinquent with all other creditors. She also testified that all their credit cards were basically "maxed out" when they took the cash advance in March of 1992. She admitted in...
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