Lin v. Hunt (In re Hunt), 20-00137-TLM

Decision Date17 August 2021
Docket NumberAdversary Proceeding 20-06015-JDP,20-00137-TLM
PartiesIn Re: Rinaldo E. Hunt and Maile N. Hunt, Debtors. v. Rinaldo E. Hunt and Maile N. Hunt, Defendants. Dennis Lin and Alisha Lin, Plaintiffs,
CourtU.S. Bankruptcy Court — District of Idaho

Sean N. Egan, Salt Lake City, Utah, counsel for Plaintiffs.

Matthew Todd Christensen, ANGSTMAN JOHNSON, PLLC, Boise Idaho, counsel for Defendants.

MEMORANDUM OF DECISION

Jim D Pappas U.S. Bankruptcy Judge

Introduction

This adversary proceeding focuses upon the dischargeability of a debt owed to Plaintiffs Alisha and Dennis Lin by Defendants Rinaldo and Maile Hunt.

On September 23, 2020, Defendants filed a motion for summary judgment ("the First Motion") which Plaintiffs opposed. Dkt. Nos 29; 31. After a hearing, the First Motion was denied without prejudice on November 10, 2020, in part to allow the parties to conduct additional discovery. See Memorandum of Decision at p. 15, Dkt. No. 35.

Defendants have now renewed their summary judgment motion ("the Renewed Motion"), which Plaintiffs again oppose. Dkt. Nos. 51; 55. Argument concerning the Renewed Motion took place on July 27, 2021, at the conclusion of which the Court orally granted the Renewed Motion with respect to all claims by Plaintiffs against Defendant Maile Hunt; the Court took the issues respecting Plaintiffs' claims against Defendant Rinaldo Hunt ("Rinaldo")[1] under advisement. Dkt. No. 57.

The Court has considered the record and parties' submissions and arguments. This Memorandum constitutes the Court's findings, conclusions, and reasons for its disposition of the Renewed Motion. Rules 7052; 9014.[2]

Facts

From the parties' submissions, the following facts appear.

Plaintiffs loaned $130, 000 to Defendants on July 12, 2017 to assist Defendants in their purchase of a residence in California. Plaintiff's Opp. to Renewed Motion for Summary Judgment at p. 4, Dkt. No. 55. The parties executed no documents to evidence the loan terms, but Plaintiffs understood Defendant would repay the money within sixty days. Id. at p. 5. It is undisputed that Defendants had, or would have, access to approximately $110, 000 at the time the loan was extended. Id. Prior to asking for or receiving the loan proceeds from Plaintiffs, Defendants had completed and submitted at least one residential home loan application to a lender, the results of which are not in the record. Dkt. No. 59, Ex. 3.

Rinaldo, a real estate broker, represented to Plaintiffs that he had two pending real estate deals in the works that, when closed, would enable Defendants to promptly repay the loan. Dkt. No. 51 at ¶ 4. More precisely, in a text massage Rinaldo sent to Plaintiffs, he stated:

I understand the money you are going to bridge us has a cost. I need to ensure the optics are there for the lender and we have enough to cover the basics. I am closing two deals early 4th quarter and should be more than able to repay any remaining obligations…At a minimum the majority of your dough will be back in your pocket shortly after we close in CA from the Utah proceeds[.]

Dkt. No. 55, Ex. 2.

Plaintiffs now contend that Rinaldo's statements that Defendants needed the loan funds to favorably impress a lender, i.e., for "optics", and that Defendants would quickly repay the debt, were not true at the time Rinaldo made them, and that he intended to deceive Plaintiffs all along by using the loan money as a down payment on the home Defendants were purchasing, not to pay back the loan. Dkt. No. 55.

Defendants offer a different version of the facts. They contend that, at the time Rinaldo made these statements to Plaintiffs, they were in fact true, and it was only because the real estate deals fell through that the purpose and use of the loan proceeds changed, and consequently, Defendants were unable to repay the loan. Def. Memo. in Support of Renewed Summary Judgment Motion, Dkt. No. 51, Ex. 2.

In addition to the one mentioned above, Defendants submitted another Residential Home Loan application to a different lender on September 25, 2017, about two and a half months after receiving the loan from Plaintiffs. Dkt. No. 59, Ex. 7. At that time, the real estate deals that Rinaldo alleges would have provided him with a substantial amount of money, had not yet, nor would they ever, close.[3] The Residential Home Loan application represents that Defendants would be paying $173, 372.37 down on the house purchase, of which approximately $130, 000 came directly from the money Plaintiffs had loaned to them. Dkt. No. 59, Exs. 3 & 7.

Defendants failed to repay the loan. Plaintiffs sued them in state court in Utah, and on June 26, 2019, the state court granted judgment to Plaintiffs against Defendants for the $130, 000. Defendants appealed. Dkt. No. 29 at ¶¶ 6-7; Dkt. No. 31 at pp. 4-5. On February 6, 2020, Defendants filed a chapter 7 bankruptcy petition. In re Hunt, 20-00137-TLM at Dkt. No. 1. On May 4, 2020, Plaintiffs commenced this adversary proceeding in which they seek to have the debt represented by the state court judgment against Defendants excepted from discharge under §§ 523(a)(2)(A) & (B). [4] Dkt. Nos. 1; 20.

On May 27, 2021, Defendants filed the Renewed Motion for Summary Judgment, Dkt. No. 51, [5] which Plaintiffs oppose. Dkt. No. 55. The Court conducted a hearing on July 27, 2021, and orally granted the Renewed Motion with respect to any claims against Ms. Hunt. The Court took Defendants' Renewed Motion under advisement with respect to Plaintiffs' claims against Mr. Hunt.

Summary Judgment Standard

This Court has explained the applicable summary judgment standard in its prior decision denied the First Motion:

Summary judgment is properly granted when no genuine and disputed issues of material fact exist, and, when viewing the evidence most favorably to the non-moving party, the movant is entitled to judgment as a matter of law. Civil Rule 56, incorporated by Rule 7056; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001). In resolving a motion for summary judgment, the Court does not weigh the evidence, but rather determines only whether a material factual dispute remains for trial. Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834 (9th Cir. 1997). An issue of fact is "genuine" if there is sufficient evidence for a reasonable finder of fact to find in favor of the non-moving party, and a fact is "material" if it might affect the outcome of the case. Far Out Prods., 247 F.3d at 992 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986)).
The moving party bears the initial burden of showing there is no genuine issue of material fact. Esposito v. Noyes (In re Lake Country Invs.), 255 B.R. 588, 597 (Bankr. D. Idaho 2000) (citing Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998)). If the non-moving party bears the ultimate burden of proof on an element at trial, however, that party must show the existence of that element in order to survive a motion for summary judgment. Id. (citing Celotex, 477 U.S. at 322-23).

Lin v. Hunt (In re Hunt), 2020 WL 6821784, at *2 (Bankr. D. Idaho Nov. 10, 2020); Memorandum of Decision at pp. 6-7, Dkt. No. 35. Once the movant has satisfied its burden, the nonmovant "must show more than the mere existence of a scintilla of evidence" or "some 'metaphysical doubt' as to the material facts at issue." Pac. Gulf Shipping Co. v. Vigorous Shipping & Trading S.A., 992 F.3d 893, 897-98 (9th Cir. 2021) (citing Nursing Home Pension Fund, et al. v. Oracle Corp., et al. (In re Oracle Corp. Sec. Litig.), 627 F.3d 376, 387 (9th Cir. 2010) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986))). The nonmovant must "go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Id. (citing Celotex, 477 U.S. at 324 (quoting former Fed.R.Civ.P. 56(e) (1963))).

Additionally, "[f]ailure to sustain this burden as to any required element of a cause of action is fatal to that cause, even if issues are shown to exist as to other elements. A complete failure on one element necessarily renders the other elements 'Immaterial' whether factually disputed or not." Esposito v. Noyes (In re Lake Country Invs.), 255 B.R. at 597 (citing Celotex, 477 U.S. at 323).

Assertions that a fact is either undisputed or is genuinely in dispute must be supported through citation to specific portions of the record, "including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials" or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Cheirett v. Biggs (In re Biggs), 563 B.R. 319, 322 (Bankr. D. Idaho 2017) (citing Civil Rule 56(c)(1); (quoting Celotex, 477 U.S. at 323).

Analysis and Disposition

Plaintiffs' Amended Complaint asks this Court to declare the debt owed to them by Defendants is excepted from discharge pursuant to §§ 523(a)(2).[6] This statute provides that an individual debtor will not be discharged from any debt:

(2) for money, property, services, or an extension, renewal or refinancing of credit, to the extent obtained by-
(A) false pretenses, a false representation, or actual fraud other than a statement respecting the debtor's or an insider's financial condition;
(B) use of a statement in writing-
(i) that is materially false;
(ii) respecting the debtor's or an insider's financial
...

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