Opinion
Case No. 01-35620, AP No. 01-3238
October 10, 2002
MEMORANDUM OPINION
Hearing was held on September 18, 2002, on defendant debtor Charlene Young's motion to dismiss the amended complaint filed by pro se plaintiff Orlando Morris to deny debtor's discharge or to determine the dischargeability of a debt. Debtor filed a motion to dismiss plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.
The court took the matter under advisement. Upon reviewing the amended complaint the court finds that plaintiff has failed to satisfy the requirements of Rule 12(b)(6) and now grants debtor's motion to dismiss the complaint.
Findings of Fact.
Plaintiff filed a warrant in debt against debtor in the General District Court of the City of Richmond on July 12, 2001, for debts totaling $13,791.73. Hearing was held on August 28, 2001, and plaintiff was awarded judgment against debtor in the amount of $13,420.31 at 9% interest until paid and costs of $30.00.
Debtor filed a voluntary petition under chapter 7 of the Bankruptcy Code on September 17, 2001. Plaintiff filed this adversary proceeding pro se on December 21, 2001, objecting to discharge of the judgment debt. Debtor filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on April 24, 2002. The court entered an order on May 28, 2002, granting the motion to dismiss and allowing the plaintiff leave to file an amended complaint. Plaintiff filed his amended complaint on June 18, 2002, and debtor filed a second motion to dismiss under Rule 12(b)(6) on August 14, 2002.
Complaint.
Plaintiff's June 18, 2002, amended complaint is the operative pleading in this case. The complaint on its face avers that debtor is not eligible for discharge of the judgment debt under § 727(a)(4)(A), § 523(a)(2)(A), § 523(a)(2)(B)(ii), and § 523(a)(6).
Plaintiff's complaint states the following:
1) Debtor's Schedule I incorrectly states her child support payments as $412.00 per month. Plaintiff claims the correct amount is $462.00 per month;
2) Debtor's Schedule J incorrectly lists her sewer and water bills at $73.00 per month. Plaintiff suggests that the amount is inflated;
3) Debtor's Schedule J lists car payments of $416.00 per month. Plaintiff claims the correct amount is $284.00 per month;
4) Debtor's statement of financial affairs indicates that debtor received $1,800.00 in child support payments in 1999 and $4,944.00 in 2000. Plaintiff claims that the correct amount is $2,451.00 for 1999 and $6,406.00 for 2000;
5) Debtor states that the date of plaintiff's judgment against her was August 13, 2002. Plaintiff avers that the correct date is August 28, 2002;
6) Debtor incorrectly states that the only financial institution in which she has a balance is Sun Trust Bank. Plaintiff claims that she has a savings account at Richmond Postal Credit Union with a balance of $441.93 at the time the amended complaint was filed;
7) Plaintiff alleges that debtor's annual salary increased to $41,155.00 as of January 1, 2002;
8) Plaintiff notes that debtor swore under oath that the information in her file was true. He alleges that this is a false statement due to the many inconsistencies in debtor's petition.
Conclusions of Law. Motion to Dismiss Under Rule 12(b)(6)
Debtor has filed a motion dismiss plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), made applicable to bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 7012(b). Rule 12(b)(6) allows a defendant to dismiss a complaint for "failure to state a claim upon which relief can be granted. . . ." Fed.R.Civ.P. 12(b)(6). In considering such a motion, the court is testing the sufficiency of the pleadings and not deciding the merits of the case. For that reason it "may not consider any material other than the pleadings." Demas v. Demas (In re Demas), 150 B.R. 323, 326 (Bankr.S.D.N.Y. 1993). All factual allegations will be presumed true and viewed in the light most favorable to the non-moving party. See id. at 327; see, e.g., Watson Brown, PC v. Mansel (In re Mansel), No. 99-A-00517, 2001 Bankr. LEXIS 877, at *25 (Bankr.N.D.Ill. July 19, 2001).
The movant bears the burden of proving that no claim has been stated in plaintiff's pleading. See In re Demas, 150 B.R. at 327. The complaint will fail to state a claim for relief "if the complaint does not adequately plead some theory upon which the plaintiff could recover." In re Mansel, 2001 Bankr. LEXIS at *24.
Section 727(a)(4)(A)
Under § 727(a)(4)(A) of the Bankruptcy Code, the court is required to grant a discharge unless "the debtor knowingly and fraudulently, in or in connection with the case — made a false oath or account. . . ." 11 U.S.C. § 727(a)(4)(A). A creditor moving to prevent discharge under this section "must demonstrate that the false statement was made regarding a material matter relating to the Debtor's business transactions or estate or which would lead to the discovery of assets, business dealings or existence or disposition of property." Rothman v. Beeber (In re Beeber) 239 B.R. 13, 28 (Bankr.E.D.N.Y. 1999).
Statements that relate to "matters so trivial in nature as to have but little effect on the estate and upon creditors have been treated as immaterial." Second Nat'l Bank v. Parker (In re Parker), 85 B.R. 384, 389 (Bankr.E.D.Va. 1988). In Parker the plaintiff's allegations of debtor's false statements included the following:
1) that the debtor failed to list in her statement of affairs a bank account that was in her and her mother's name; 2) that the debtor failed to list the account numbers of several bank accounts as required by the statement of affairs; 3) that the debtor failed to properly list and identify financial records; 4) that the debtor improperly stated that certain property was owned by another; 5) that the debtor failed to list the transfer of property to her former husband; 6) that the debtor failed to list household items in her bankruptcy schedules; 7) that the debtor testified at her meeting of creditors and at a deposition that she had listed all her personal property in her bankruptcy schedules; 8) that the debtor failed to list rent deposits; and 9) that the debtor failed to report payments on a debt.
The court refused to deny debtor's discharge and found that "because of the incidental value and nature of the above mentioned matters" they did not have a material effect on the debtor's bankruptcy estate. Id. at 390.
In addition, the movant must show that the omission or misstatement was intentional, knowing, or fraudulent in order to bar discharge. See Riumbau v. Colodner (In re Colodner) 147 B.R. 90, 94 (Bankr.S.D.N.Y. 1992). The size and value of the errors or omissions are relevant in determining debtor's intent. In reviewing minor omissions in debtor's schedules, this court has ruled that "most of debtor's omissions may be disregarded since their nature renders them inconsequential in the context of this bankruptcy case or as an indication of a fraudulent intent." Bishop Wall Sys. v. Stowe (In re Stowe), No. 93-4055, 1994 Bankr. LEXIS 2268, at *11 (Bankr.E.D.Va. Sept. 21, 1994). In that case I acknowledged that the schedules had been prepared with a "disgraceful inattentiveness to the reporting requirements of the Code" but found that the errors were insubstantial, lacked any general pattern, and fell short of serving as circumstantial evidence of fraudulent intent. Id. at *9, *11.
Plaintiff's amended complaint lists a number of items on debtor's lists and schedules that he claims are incorrect. Plaintiff's allegations are similar to those made in the Parker case, and as in Parker the alleged errors are not material to the administration of debtor's estate.
Further, the complaint does not state with particularity that these errors were made with debtor's knowledge and intent. In addition, plaintiff does not provide specific facts indicating circumstantial evidence of debtor's knowledge or intent to defraud plaintiff or another creditor.
A motion to dismiss under Rule 12(b)(6) is based only on the pleadings and the court may not consider other materials in determining whether to dismiss the complaint. Viewing the complaint in the light most favorable to the debtor the court does not find that plaintiff has stated a claim upon which relief may be granted under § 727(a)(4)(A). The motion to dismiss will be granted as to the claim for relief under § 727(a)(4)(A).
Section 523(a)(2)(A)
Section 523(a)(2)(A) states that a debt will not be discharged "to the extent [it was] obtained by — false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition. . . ." 11 U.S.C. § 523(a)(2)(A). In order to except a debt from discharge under § 523(a)(2)(A) a plaintiff must prove the following by a preponderance of the evidence:
(1) that the debtor made misrepresentation or committed other fraud;
(2) that at the time the debtor knew the conduct was fraudulent;
(3) that the debtor's conduct was with the intention and purpose of deceiving or defrauding the creditor;
(4) that the creditor relied on the debtor's representations or other fraud; and
(5) that the creditor sustained loss and damage as the proximate result of the representations or fraud.
Western Union Corp. v. Ketaner (In re Ketaner), 154 B.R. 459, 464-65 (Bankr.E.D.Va. 1992); see also KMK Factoring, LLC v. McKnew (In re McKnew), 270 B.R. 593, 617 (Bankr.E.D.Va. 2001). Plaintiff's complaint applies the same facts presented in his claim for relief under § 727(a)(4)(A) to his claim under § 523(a)(2)(A). However, a mere recitation of inconsistencies in debtor's schedules is not sufficient to justify relief under § 523(a)(2)(A). Plaintiff provides no facts to support a claim that debtor acted fraudulently or with a deceitful purpose. The motion to dismiss will be granted as to the claim for relief under § 523(a)(2)(A).
Section 523(a)(2)(B)(ii)
A plaintiff may except a debt from discharge under 11 U.S.C. § 523(a)(2)(B)(ii) where the value was obtained by "use of a statement in writing — respecting the debtor's or an insider's financial condition. . . ." Plaintiff does not mention subsections (I), (iii), or (iv) in the amended complaint. All four must be plead and proved for relief under § 523(a)(2)(B).
This court has required that the following five elements be proved in order for a debt to be excepted from discharge under § 523(a)(2)(B):
(1) the debt was obtained by the use of a writing;
(2) that was materially false;
(3) respecting the debtor's or an insider's financial condition;
(4) on which the creditor to whom the debtor is liable for money, property, services, or credit reasonably relied; and
(5) that the debtor caused to be published with the intent to deceive.
Global Express Money Order v. Davis (In re Davis), 262 B.R. 673, 679 (Bankr.E.D.Va. 2001). The complaint clearly deals with debts relating to debtor's financial condition. However, there is no indication in the complaint that debtor obtained any value from any party, including the plaintiff, through the use of a writing. Without satisfying this threshold requirement further analysis of § 523(a)(2)(B) is unnecessary. The motion to dismiss will be granted as to the claim for relief under § 523(a)(2)(B).
Section 523(a)(6)
Under 11 U.S.C. § 523(a)(6), a debtor may not discharge any debt "for willful and malicious injury by the debtor to another entity or to the property of another entity. . . ." For the plaintiff to except this debt from discharge under § 523(a)(6), he "must plead and ultimately prove by a preponderance of the evidence three elements: (1) that the Debtor caused an injury; (2) that the Debtor's actions were willful; and (3) that the Debtor's actions were malicious." Watson Brown, PC v. Mansel (In re Mansel), No. 99-A-00517, 2001 Bankr. LEXIS 877, at *25 (Bankr.N.D.Ill. July 19, 2001).
Plaintiff did not plead any facts to support his allegation that the debt in question was nondischargeable under § 523(a)(6). The pleading simply included a notation that plaintiff wished to add § 523(a)(6) to his amended complaint. Plaintiff provided no facts to support his allegation that debtor acted willfully and with malice in causing injury to plaintiff's property. The motion to dismiss will be granted as to the claim for relief under § 523(a)(6).
A separate order will be entered.