Matter of Brink, Adv. No. 82-0133.

• Decision Date: 04 February 1983
• Docket Number: Adv. No. 82-0133.
• Citation: 27 BR 377
• Parties: In the Matter of Curtis V. BRINK a/k/a Curtis Vaughn Brink f/d/b/a Brinkwood Builders, Debtor. David ZEUNERT, d/b/a David Zeunert & Associates, Plaintiff, v. Curtis V. BRINK, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Wisconsin

27 B.R. 377 (1983)

In the Matter of Curtis V. BRINK a/k/a Curtis Vaughn Brink f/d/b/a Brinkwood Builders, Debtor David ZEUNERT, d/b/a David Zeunert & Associates, Plaintiff, v. Curtis V. BRINK, Defendant.

Adv. No. 82-0133.

United States Bankruptcy Court, W.D. Wisconsin.

February 4, 1983.

Jonathan D. Jackson, Jr., Madison, Wis., for plaintiff.

Michael P. Erhard, Foley & Lardner, Madison, Wis., for defendant.

DECISION DENYING SUMMARY JUDGMENT

ROBERT D. MARTIN, Bankruptcy Judge.

Plaintiff has moved for summary judgment in the action under 11 U.S.C. § 523(a)(2) on the basis of a default judgment entered in an Illinois trial court on claims of fraud. No evidence of the alleged fraud was produced in that Illinois action and none has been made a part of the record on which this motion is to be decided.

This court has previously held that neither res judicata nor collateral estoppel is applicable to dischargeability questions, stating in In Re Trewyn, 12 B.R. 543, 545 (Bkrtcy.W.D.Wis.1981):

What is required is that the bankruptcy court consider all relevant evidence, including the state court proceedings, that is offered by the parties, or requested by the court, and on the basis of that evidence determine the nondischargeability of judgment debts which the creditors contend are described in section 17(a)(2), (4), and (8). (Citing In Re Houtman, 568 F.2d 651, 654 (9th Cir.1978).) The same procedure is applicable under § 17(a)(2)\'s successor, § 523(a)(2)(A).

The party objecting to dischargeability has the burden of proving the facts essential to his objection with clear and convincing evidence. In Re DeRosa, 20 B.R. 307, 310-311 (Bkrtcy.S.D.N.Y.1982); In Re Keppel, 14 B.R. 479, 481 (Bkrtcy.E.D.Pa.1981); Trewyn, supra 12 B.R. at 546. The evidence submitted must prove all elements required for nondischargeability under § 523(a)(2) (A), including: 1. The debtor must have obtained the property by means of false representations which he knew were false or which were made with reckless disregard of their truthfulness; 2. The debtor must have an intent to deceive, which may be inferred from the knowing or reckless misrepresentation made to induce another to transfer property to the debtor; and 3. The creditor must actually and reasonably rely on the misrepresentation. Carini v. Matera, 592 F.2d 378 (7th Cir.1979).

In Houtman, after examining the complete record and evaluating the facts in light of the elements listed above, the court found that the state court judgment based on fraud established a prima facie case to deny discharge. Whether prior proceedings are sufficient to establish the fraud required by § 523(a)(2)(A) is entirely dependent on the contents of the individual record. In Trewyn, for example, submission of a copy of the judgment alone was insufficient to bar discharge because the judgment provided only minimal evidence without revealing the factual basis for the circuit court's conclusions. Although plaintiff has apparently submitted the complete record of the Illinois case, its contents include only pleadings, judgment, and judgment following prove up. This record is too sparse to establish the required elements. The Illinois court documents establish no basis for the judgment other than defendant's default and provide no findings of fact to evaluate the elements of fraud required to bar discharge.

Plaintiff alleges that the award of attorney's fees under the fraud count of its state court complaint is sufficient to establish that the judgment was based on fraud. For this contention to be sustained, plaintiff must prove that the standard for establishing fraud to obtain attorney's fees was determined by a standard equivalent to the elements required to bar a discharge in bankruptcy. Brown...