Mohammed v. Garcia (In re Garcia)
| Decision Date | 25 August 2021 |
| Docket Number | Adversary Proceeding No. 19-1027,Case No. 19-10634-FJB |
| Citation | 630 B.R. 691 |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
| Parties | IN RE Leoncio GARCIA, Debtor. Anesha Mohammed, Plaintiff v. Leoncio Garcia, Defendant |
Carl Brugnoli, Boston, MA, for Plaintiff.
Preston L. Clinton, Mark T. Stopa, Stopa & Associates, LLC, Foxborough, MA, for Defendant.
Frank J. Bailey, United States Bankruptcy Judge By the remaining count in this adversary proceeding, the plaintiff seeks a determination that a judgment debt owed to her by the defendant and chapter 7 debtor, Leoncio Garcia, is excepted from discharge in this bankruptcy case by operation of Bankruptcy Code § 523(a)(2)(A). After a trial, I now enter the following findings of fact and conclusions of law under Fed. R. Civ. P. 52(a)(1), made applicable by Fed. R. Bankr. P. 7052. On the basis thereof, I find that the Plaintiff has failed to carry her burden of establishing the requirements of nondischargeability under § 523(a)(2)(A), and accordingly, dismiss this adversary complaint.
On February 28, 2019, Leoncio Garcia ("Garcia" or the "Debtor") filed a petition for relief under chapter 7 of the Bankruptcy Code. In the bankruptcy case thereby commenced, Anesha Mohammed ("Mohammed" or the "Plaintiff") filed the complaint commencing the present adversary proceeding. It seeks relief in two counts. At the start of the trial, the Plaintiff stated her basis for relief relies entirely on a determination of nondischargeability under § 523(a)(2)(A), thereby waiving Count II of the adversary complaint, which sought similar relief under § 523(a)(6). In the remaining count, the Plaintiff seeks a determination that Garcia's debt is excepted from the discharge under 11 U.S.C. § 523(a)(2)(A). The Plaintiff contends that her judgment against the Debtor is one for money obtained by false representations. After trial, the parties submitted proposed findings of fact and conclusions of law.
The parties together introduced a total of twenty-three exhibits and offered the testimony of two witnesses: the Plaintiff and the Debtor. I found both parties were credible witnesses; however, I found the Debtor more credible on the critical issues before me. My findings of fact are stated as follows or included in my analysis as appropriate.
The Plaintiff resides at 103 Gordon Avenue, Hyde Park, Massachusetts. In or around May 2018, the Plaintiff had discussions with the Debtor about hiring his company, G.S. Construction Corp., and him to perform some home improvement work, specifically remodeling a second-floor bathroom. Prior to engaging the Debtor, the Plaintiff found and reviewed his company's website, which stated that he was a licensed and insured contractor. The Debtor, an immigrant to the United States, told the Plaintiff that he was a civil engineer when he lived in Brazil and that he was taking classes at Northeastern University so he could get his home improvement contractor's license. The Debtor sent the Plaintiff a proposal for the work on her bathroom that included a proposed cost of $3,900. He further requested a down payment so he could purchase materials. The Plaintiff delivered to the Debtor a check dated June 13, 2018, in the amount of $1,950 as a deposit for the bathroom renovation.
The parties later met at the Debtor's home so the Plaintiff could see examples of other work the Plaintiff was considering. On June 16, 2018, the parties discussed and agreed that the Debtor would perform additional work, including insulating the Plaintiff's porch; fixing and replacing certain outdoor stairs, walkway, and landing; installing a fence; rebuilding a deck and possibly installing a second-floor deck; rewiring her home; installing new lighting fixtures; and removing and replacing numerous windows and skylights for a total contract amount of $100,000. The Debtor told the Plaintiff that he would complete all of this work by the Fall of 2018. The Plaintiff wrote the Debtor a second check dated June 16, 2018, in the amount of $30,666 as a deposit for the additional work and the Debtor agreed to begin the renovation work on Monday, June 18, 2018.
On June 28, 2018, the Plaintiff again added to the work. The parties agreed that the Debtor would install central air conditioning in the Plaintiff's home. The Debtor stated that if the Plaintiff paid the full amount of $15,000 for an air conditioning unit, he could have it installed that weekend. The Plaintiff wrote the Debtor a third check dated June 28, 2018, in the amount of $15,000 for the full amount of the air conditioning installation. The Debtor testified that when he attempted to hire a subcontractor to install the air conditioning system, he was unable to line up the subcontractor for that weekend. After a few weeks, when the air conditioning was not installed, the Plaintiff cancelled her request for it and asked the Debtor for her $15,000 back. The Debtor did not return the $15,000 to the Plaintiff; rather, he applied it to certain of the other renovations he was performing at her home.
The Plaintiff made two more payments to the Debtor during this time period. She delivered a check dated June 28, 2018, in the amount of $1,950, as a final payment for the bathroom remodel, and a check dated July 3, 2018, in the amount of $6,000, to complete the electrical work. The Debtor continued to work on the Plaintiff's home until August 2018 when the Plaintiff fired him.
During the period the Debtor was working on the Plaintiff's home, he did not obtain any municipal renovation or construction permits. The parties discussed the Plaintiff's previous experience with contractors not obtaining permits for work on her house. It is uncontested that the Plaintiff told the Debtor that she did not want him to get any building permits for any of the work.
In total, the Plaintiff paid the Debtor $55,566. Though none of the projects were completed, the Debtor testified that he provided labor and materials valued at $70,700 on the project.
In or about January 2019, the Plaintiff had the City of Boston inspect her home. According to the Plaintiff, the inspector stated that the city may suspend the Debtor's home improvement license because he did not obtain necessary permits for the work. According to the Plaintiff, because the Debtor failed to complete the construction projects, the home was damaged by rain. The inspector also raised concerns that the Debtor had caused structural damage to the Plaintiff's house. Subsequently, the Plaintiff says she hired an architect, a structural engineer, and other contractors to repair and complete the work on her house.
The matter before the court is a complaint under 11 U.S.C. § 523(a) to determine the dischargeability of a debt. The matter arises under the Bankruptcy Code and in a bankruptcy case and therefore falls within the jurisdiction given the district court in 28 U.S.C. § 1334(b) and, by standing order of reference, referred to the bankruptcy court pursuant to 28 U.S.C. § 157(a). It is a core proceeding. 28 U.S.C. § 157(b)(2)(I) (). This court accordingly has authority to enter final judgment in the matter. 28 U.S.C. § 157(b)(1).
As noted above, the remaining count in this proceeding is the Plaintiff's assertion that her judgment against the Debtor is nondischargeable under 11 U.S.C. § 523(a)(2)(A). It is axiomatic that exceptions to discharge are to be narrowly construed and that all genuine doubts should be resolved in favor of the Debtor and against the Plaintiff. Under section 523(a)(2)(A), a "discharge under ... this title does not discharge an individual debtor from any debt — 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." The Plaintiff bases her § 523(a)(2)(A) claim entirely on false representations.
The First Circuit applies a six-part test for establishing nondischargeability under § 523(a)(2)(A), the so-called Palmacci test:
in order to establish that a debt is nondischargeable because obtained by "false pretenses, a false representation, or actual fraud," we have held that a creditor must show that 1) the debtor made a knowingly false representation or one made in reckless disregard of the truth, 2) the debtor intended to deceive, 3) the debtor intended to induce the creditor to rely upon the false statement, 4) the creditor actually relied upon the misrepresentation, 5) the creditor's reliance was justifiable, and 6) the reliance upon the false statement caused damage.
McCrory v. Spigel (In re Spigel) , 260 F.3d 27, 32 (1st Cir. 2001) (citing Palmacci v. Umpierrez , 121 F.3d 781, 786 (1st Cir. 1997) ). A party seeking to except a debt from discharge bears the burden of proving each element by a preponderance of evidence. Grogan v. Garner , 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). A mere breach of a contract alone does not establish fraud or misrepresentation for the purposes of section 523(a)(2)(A). Vaks et al v. Grenier (In re Grenier) , 2009 WL 763352, at *21 (Bankr. D. Mass. 2009).
Intent to deceive refers to the Debtor's mental state and specifically requires a mental state embracing an intent to deceive, manipulate, or defraud. Palmacci , 121 F.3d at 786-87 (citing Ernst & Ernst v. Hochfelder , 425 U.S. 185, 193, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976) ). Danvers Savings Bank v. Alexander (In re Alexander) , 427 B.R. 183, 195 (Bankr. D. Mass. 2010) (citing Palmacci , 121 F.3d at 789 ).
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