IN The MATTER of DOUGLAS WAYNE BAUGHMAN v. BAUGHMAN, CASE NO. 10-30022 HCD

• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
• Writing for the Court: HARRY C. DEES, JR., JUDGE
• Parties: IN THE MATTER OF DOUGLAS WAYNE BAUGHMAN, DEBTOR. KATHY L. LYNCH, PLAINTIFF vs. DOUGLAS WAYNE BAUGHMAN, DEFENDANT.
• Docket Number: CASE NO. 10-30022 HCD,PROC. NO. 10-3040
• Decision Date: 15 March 2011

IN THE MATTER OF DOUGLAS WAYNE BAUGHMAN, DEBTOR.
KATHY L. LYNCH, PLAINTIFF
vs.
DOUGLAS WAYNE BAUGHMAN, DEFENDANT.

CASE NO. 10-30022 HCD
PROC. NO. 10-3040

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION

March 15, 2011.

Appearances:

Catherine Molnar-Boncela, Esq., counsel for plaintiff, Gordon E. Gouveia & Associates ,and

Thomas E. Panowicz, Esq., counsel for defendant, Voltz-Miller & Panowicz, P.C.

MEMORANDUM OF DECISION

At South Bend, Indiana, on March 15, 2011.

Before the court is the Motion to Dismiss ("Motion") filed by the defendant Douglas Wayne Baughman, chapter 13 debtor. It seeks to dismiss the Amended Complaint to Determine Dischargeability ("Complaint") filed by the plaintiff Kathy L. Lynch, creditor of the debtor.¹ The plaintiff did not respond to the Motion. For the reasons that follow, the court grants the Motion to Dismiss.²

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The defendant asks the court to dismiss the plaintiffs' Complaint pursuant to Rule 7012(b) of the Federal Rules of Bankruptcy Procedure and Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted.³ To state a claim for relief, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief."⁴ Fed. R. Civ. P. 8(a)(2). However, the Supreme Court no longer reviews the sufficiency of a complaint by asking whether "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the test established more than half a century ago in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L.Ed.2d 80 (1957). After the Court recently criticized Conley's "no set of facts" language in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007), in Erickson v. Pardus, 551 U.S. 89, 127 S. Ct. 2197, 167 L.Ed.2d 1081 (2007), and in Ashcroft v. Iqbal, _U.S._ , 129 S. Ct. 1937, 173 L.Ed.2d 868 (2009), courts of appeals wrestled with what "higher bar" the Supreme Court had set in its place. The Seventh Circuit succinctly stated the new test:

The Supreme Court has described the bar that a complaint must clear for purposes of Rule 12(b)(6) as follows: "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" [Iqbal, 129 S. Ct. at 1949.] A "formulaic recitation of the elements of a cause of action will not do." Id. Nonetheless, a plaintiff must provide "only 'enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests, and, through his allegations, show that it is plausible, rather than merely speculative, that he is entitled to relief.'" Tamayo [v. Blagojevich], 526 F.3d 1074, 1083 [7th Cir. 2008)]. Furthermore, plaintiffs must plead their accusations of fraud with particularity. Fed. R. Civ. P. 9(b); Arazie v. Mullane, 2 F.3d 1456, 1465 (7th Cir. 1993) (stating that particularity requires the party to specify the "who, what, when, where and how" of the alleged fraudulent act).

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Reger Development, LLC v. National City Bank, 592 F.3d 759, 763-64 (7th Cir.), cert. denied, 130 S. Ct. 3507 (2010); see also Swanson v. Citibank, N.A., 614 F.3d 400, 403-04 (7th Cir. 2010) ("[T]he plaintiff must give enough details about the subject matter of the case to present a story that holds together. In other words, the court will ask itself could these things have happened, not did they happen."); Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011) (stating that, after Twombly and Iqbal, a complaint must have "enough substance to warrant putting the defendant to the expense of discovery"). With these guidelines, the court turns to the defendant's Motion to Dismiss.

The defendant asserted that the allegations of the Complaint were insufficient to support a claim of nondischargeability and that the allegations based upon fraud did not state with particularity the circumstances constituting fraud. In addition, he pointed out, the plaintiff filed no response to the defendant's Motion; she amended the Complaint, but did not address the defendant's reasons for dismissing the Complaint. The court could grant the Motion simply on the ground that the plaintiff failed to respond to the defendant's Motion. But it instead will examine the plaintiff's Amended Complaint to determine whether the amendments provided any meaningful response to the defendant's reasons for dismissal and whether it can survive the defendant's dismissal motion under the standards set by Twombly, Pardus, and Iqbal.

The three-count Complaint alleged that the defendant's debt to the plaintiff was excepted from discharge under three subsections of 11 U.S.C. § 523. Count I was brought pursuant to § 523(a)(2)(A).⁵ To prevail on a § 523(a)(2)(A) claim, a creditor must establish that: "(1) the debtor made a false representation or omission, (2) that...