Oberg v. Chrispin (In re Chrispin), Bankruptcy No. 10 B 47833

• Decision Date: 31 July 2012
• Docket Number: Bankruptcy No. 10 B 47833,Adversary No. 11 A 00443
• Parties: In re: GARRY CHRISPIN, Debtor. KRISTI OBERG, Plaintiff, v. GARRY CHRISPIN, Defendant.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

IN RE: GARRY CHRISPIN, Debtor.
KRISTI OBERG, Plaintiff,
v.
GARRY CHRISPIN, Defendant.

Bankruptcy No. 10 B 47833
Adversary No. 11 A 00443

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

Dated: July 31, 2012

Chapter 7 Judge Donald R. Cassling
MEMORANDUM OPINION

This matter comes before the Court on the complaint filed by Kristi Oberg (the "Plaintiff") to determine the dischargeability of an alleged debt against Garry Chrispin (the "Defendant") under 11 U.S.C. § 523(a)(2)(A) and (a)(6). The Plaintiff also seeks to bar the Defendant's discharge under 11 U.S.C. § 727(a)(4)(A). For the reasons set forth herein, the Court finds that the Plaintiff's claim under § 523(a)(2)(A) fails. The Court further finds that the Plaintiff has demonstrated that a $20,764.58 debt owed to her by the Defendant is nondischargeable under § 523(a)(6). In addition, the Plaintiff has established that the Defendant violated § 727(a)(4)(A) when he failed to list withdrawals from a joint bank account totaling $20,764.58 as income on his Statement of Financial Affairs. Moreover, the Defendant's failure to list this joint bank account on his Statement of Financial Affairs is also a violation of § 727(a)(4)(A). As a result, the Court denies the Defendant's discharge.

Page 2

I. JURISDICTION AND PROCEDURE

The Court has jurisdiction to entertain this matter under 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. It is a core proceeding under 28 U.S.C. § 157(b)(2)(I) and (J).

II. FACTS AND BACKGROUND

For the past ten years the Plaintiff has owned and operated a home-based hair-styling business named It's All About Hair, Inc. (Trial Tr. at p. 143, lines 12-19.) The Defendant works as a computer software analyst for Walgreen Company. (Id. at p. 43, lines 12-16; p. 294, lines 8-11.) Both parties were previously married to, and divorced from, other people. They met in August 2007, began a romantic relationship, and agreed to marry on February 14, 2008. The marriage never took place. The parties' romance ended in bitter acrimony, but not before their financial affairs had become entangled. That financial entanglement lies at the core of the Plaintiff's complaint, and making sense of it is not made easier by the many discrepancies between the parties' testimony. But understanding the financial interplay between the parties is necessary to a proper resolution of the Plaintiff's complaint. What follows is a summary of the main threads of the parties' financial entanglement.

The Plaintiff Sells a Car to the Defendant

In August or September 2007, the Plaintiff sold the Defendant a Chrysler 300 vehicle (the "Vehicle") and transferred title to him pursuant to an oral agreement of sale. (Def. Ex. B; see also Pl. Ex. No. 7.) The Plaintiff testified that the purchase price was $20,000, while the Defendant testified that it was $10,000. Kim Koutny, the Plaintiff's friend of approximately ten years, testified that she was present during a conversation between the Plaintiff and the

Page 3

Defendant in the summer of 2007 in which the Defendant agreed to purchase the Vehicle for $20,000. (Trial Tr. at p. 38, lines 19-25; p. 39, lines 1-20.)

The Defendant testified that he paid the Plaintiff $10,000 for the Vehicle. (Id. at p. 346, lines 11-15.) The Plaintiff, on the other hand, testified that she received nothing from the Defendant. (Id. at p. 242, lines 14-16; p. 243, lines 1-4.) According to the Defendant, in February 2008, he traded in the Vehicle and received a credit of $11,500 towards the purchase of a new car. (Id. at p. 373, lines 3-7; p. 374, lines 7-10.)

The Parties Set Up a Joint Bank Account

On November 5, 2007, the parties agreed to open a joint checking account at TCF Bank (the "Joint Account"). (Pl. Ex. No. 4.) The parties dispute the original purpose of the Joint Account. The Plaintiff testified that the Defendant wanted the Joint Account for joint investments in real estate. (Trial Tr. at p. 151, lines 4-12; p. 251, lines 3-6.) The Defendant denied that this was the purpose of the Joint Account and testified that it was opened to share expenses. (Id. at p. 52, lines 12-16; p. 297, lines 8-12; p. 299, lines 10-17; p. 324, lines 11-17; p. 356, lines 13-25.) Whatever the original purpose of the Joint Account, it is undisputed that both parties in fact used it to pay their individual personal expenses. (Id. at p. 251, lines 7-11; p. 299, lines 10-17.) When the parties set up the Joint Account, they directed that the monthly statements be sent solely to the Defendant's home address. (Id. at p. 74, lines 3-9; p. 158, lines 10-16.)

Within the first few months of opening the Joint Account, both parties made deposits and withdrawals. (Pl. Ex. Nos. 4 & 5; Def. Exs. Q, R, S, T, U, & V.) The two largest deposits were for $65,341.82 (made in December 2007) and for $76,000 (made in November 2007). (Pl. Ex. No. 4.) The parties agree that the Plaintiff made the December 2007 deposit of $65,341.82.

Page 4

However, each party claims responsibility for making the November 2007 deposit of $76,000. (Id.; Def. Ex. R.) The Defendant testified that the money came from the estate of his deceased father as the result of a sale of real property in Haiti. (Trial Tr. at p. 306, lines 22-25; p. 307, lines 1-14; p. 360, lines 8-18; see also Def. Ex. A.) On the other hand, the Plaintiff testified that she made the deposit from cash she had in her sister's safe from an inheritance she received from her deceased father's estate. (Trial Tr. at p. 160, lines 15-25; pp. 161-164.)

The Parties Sign Contracts to Purchase Condominium Units

On November 13, 2007, the parties jointly signed contracts for the purchase of two condominium units as investment property. (Pl. Ex. No. 1.) The contracts stated that the purchase price for each unit was $93,900. (Id.) The condominium units were to be partially financed by mortgage loans. (Id.) As part of the purchase agreement, the seller agreed to rent the units for the parties for a period of twenty-three months at a monthly rate of $939 per unit. (Pl. Ex. No. 2.)

The Parties Break Up

During the course of their relationship, the Plaintiff and the Defendant had two serious arguments. The first, a verbal altercation, occurred in January 2008. In the wake of this fight, the Plaintiff withdrew $150,000 from the Joint Account on January 25, 2008. (Pl. Ex. No. 4; Def. Ex. V.) However, because the parties reconciled, the Plaintiff deposited $150,303 back into the Joint Account three days later, on January 28, 2008. (Id.) Their reconciliation was short-lived. On February 3, 2008, while on a trip, the parties had another disagreement while the Plaintiff was driving a car and the Defendant was the passenger in the front seat. The Plaintiff testified that the Defendant was talking on his cell phone and became enraged when she asked him whom he was talking to. She further testified that the Defendant became violent and

Page 5

repeatedly punched her in the arm. According to the Plaintiff, she then drove to a fire station, where the police were called, and the parties were advised to go their separate ways.

The Parties Argue Over the Joint Account

In the early morning hours of the next day, February 4, 2008, the Plaintiff checked the balance in the Joint Account and discovered that the Defendant had withdrawn approximately $142,000 shortly after their fight. The Defendant does not dispute that he withdrew the $142,000 and that he did not return the funds.

On February 7, 2008, the Plaintiff had her attorney send the Defendant a letter demanding return of the funds. (Pl. Ex. No. 14.) Four days after that, on February 11, 2008, the Plaintiff personally sent an e-mail to the Defendant, again demanding return of the funds. (Pl. Ex. No. 15; see also Trial Tr. at p. 62, lines 11-14.) The Defendant refused. A week later, on February 18, 2008, the Plaintiff filed a lawsuit against the Defendant in Illinois state court for return of the funds. (Pl. Ex. No. 19.)

Approximately one month later, on March 18, 2008, the Defendant used the funds he had withdrawn from the Joint Account to complete the purchase of one of the two condominium units (the "Condo"), for $93,900 in cash and took title in his name alone. (Pl. Ex. Nos. 22, 23, & 24.) On October 17, 2008, the Defendant mortgaged the Condo for $65,000. (Pl. Ex. No. 25.) During 2009, the Defendant received $10,566 in rental income from the Condo. (Pl. Ex. No. 31.)

The Parties Settle Their Dispute Over the Joint Account

Eventually, the parties agreed to settle the state court lawsuit pursuant to an agreement requiring the Defendant to pay the Plaintiff $72,500 in two equal payments of $36,250. (Pl. Ex. No. 26.). The first payment of $36,250 was due on December 31, 2008 (id.) and was timely

Page 6

made by the Defendant. He was unable to make the second payment, due on February 28, 2009. (Id.) The state court case, which had previously been dismissed under the terms of the settlement, was reinstated on April 21, 2009. (Pl. Ex. No. 27.) On November 24, 2009, in...