In re Speers, Bankruptcy No. 99-41105M. Adversary No. 99-4126.

• Decision Date: 02 February 2000
• Docket Number: Bankruptcy No. 99-41105M. Adversary No. 99-4126.
• Parties: In re Paul Edward SPEERS, Debtor. Mercantile Bank of Arkansas, N.A., Plaintiff, v. Paul Edward Speers, Defendant.
• Court: United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Eastern District of Arkansas

244 B.R. 142 (2000)

In re Paul Edward SPEERS, Debtor.
Mercantile Bank of Arkansas, N.A., Plaintiff,
v.
Paul Edward Speers, Defendant.

Bankruptcy No. 99-41105M. Adversary No. 99-4126.

United States Bankruptcy Court, E.D. Arkansas, Western Division.

February 2, 2000.

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COPYRIGHT MATERIAL OMITTED

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Floyd A. Healy, Little Rock, AR, for Debtor

Scott T. Vaughn, North Little Rock, AR, for Mercantile Bank of Arkansas, N.A.

MEMORANDUM OPINION

JAMES G. MIXON, Chief Judge.

On March 5, 1999, Paul Edward Speers ("Debtor") filed a voluntary petition for relief under the provisions of chapter 7 of the Bankruptcy Code. On July 29, 1999, Mercantile Bank of Arkansas, N.A. ("Bank") filed a complaint to determine dischargeability of a debt owed to the Bank in the sum of $40,367.36. The Bank alleged that the debt resulted from a willful and malicious injury committed by the Debtor and that the debt is thus nondischargeable under the provisions of 11 U.S.C. § 523(a)(6).

The matter was heard in Little Rock, Arkansas, on December 3, 1999, and the parties submitted the case upon stipulated facts and briefs.

This Court has jurisdiction under 28 U.S.C. § 1334 and § 157. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I), and the Court may enter a final judgment in the case. The following shall constitute the Court's findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052.

FACTS

On January 9, 1995, the Bank loaned Joe and Gloria Conklin the sum of $75,002.00. Payment of the debt was secured by a perfected first security interest in a 1994 Sun Voyager motorized home. The Debtor owns 100% of the stock in Woody's RV Sales, Inc. ("Woody's, Inc.") and is also president of the corporation. In July 1996 the Debtor, acting as an agent and officer of Woody's, Inc., agreed with the Conklins to undertake to sell the Sun Voyager on a consignment basis. At the time of the consignment agreement, the Debtor knew about the Bank's perfected security interest.

On January 10, 1997, the Debtor, on behalf of Woody's, Inc., sold the Sun Voyager to third parties for the trade in of a GMC motor home valued at $16,000.00 and cash in the sum of $41,000.00. The parties stipulated that none of the purchase price was remitted to the Bank and that "Speers used the money for his own personal use and for the use of his business, Woody's RV Sales, Inc."¹ (Joint ex. 1, Stipulation 16.)

After learning of the "conversion," the Bank filed suit against the Debtor and obtained a default judgment in the Circuit Court of Faulkner County. Arkansas, in the amount of $40,367.36 plus interest, attorneys fees, and costs. The Debtor testified at the 341(a) meeting that he used the money to pay the operating expenses and overhead of Woody's RV Sales, Inc.

DISCUSSION

The Bankruptcy Code excepts from discharge any debt "for willful and malicious injury by the debtor . . . to the property of another entity." 11 U.S.C. § 523(a)(6). The creditor has the burden of proving each element of the statute by a

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preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 285, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)

The conduct complained of must be both willful and malicious. Barclays Am./Bus. Credit, Inc. v. Long (In re Long), 774 F.2d 875, 881 (8th Cir.1985); National Bank of Commerce v. Hoffman (In re Hoffman), 70 B.R. 155, 161 (Bankr. W.D.Ark.1986). In the context of section 523(a)(6), "willful" means "intentional or deliberate." In re Long, 774 F.2d at 880. "Malicious" refers to conduct "targeted at the creditor . . . at least in the sense that the conduct is certain or almost certain to...