Date of Decision:
February 10, 2009
Whether Debtors were entitled to summary judgment on Plaintiff Bank's complaint seeking a determination that: (1) the debt owed the Bank was nondischargeable under 11 U.S.C. § 523(a)(2)(B); (2) the debt owed the Bank was nondischargeable under 11 U.S.C. § 523(a)(6); and (3) Debtors should be denied a discharge under 11 U.S.C. § 727(a)(2)?
Yes. (1) The Bank showed the record established one of the debtors used a written statement that was materially false with respect to her financial condition. However, Debtors showed the record established the Bank did not reasonably rely on that written statement, and the Bank did not show there was a genuine issue of material fact regarding that element of § 523(a)(2)(B). Consequently, the debt owed the Bank was not excepted from discharge under § 523(a)(2)(B). (2) All but one of the acts about which the Bank complained were at most simple breaches of contract, not intentional torts that would implicate § 523(a)(6). With respect to the one act that could be considered an intentional tort, the Bank did not point the Court to anything in the record that would support either a finding that Debtors desired to cause the Bank not to receive payment in full on its claim or a finding that Debtors were substantially certain the Bank would not receive payment in full as a consequence of their acts. Consequently, the debt owed the Bank was not excepted from discharge under § 523(a)(6). (3) The Bank showed the record established each of the acts about which it complained was done either within one year before, or on or after, the petition date and each of those acts was that of Debtors. The property involved (Debtors' former home) was Debtors' property prior to the petition date and was property of the estate thereafter. However, the Court concluded the flooding and mold about which the Bank complained did not "destroy" or "mutilate" Debtors' home within the meaning of § 727(a)(2), so Debtors could not be found to have destroyed or mutilated their home or to have allowed it to be destroyed or mutilated. Moreover, the Bank did not point the Court to anything in the record that would constitute direct evidence that Debtors actually intended to hinder, delay, or defraud the Bank, another creditor, or the case trustee or that would permit the Court to infer such intent. Consequently, Debtors were not barred from receiving a discharge by § 727(a)(2).
Full Bankruptcy Court Decision: