“Signature-Only” Settlements Are Not Fraud:
A Detailed Commentary on Matthew Lucas v. Eric Miller, B.A.P. 6th Cir. (2025)

Introduction

Matthew Lucas v. Eric Miller is a Bankruptcy Appellate Panel (BAP) decision that clarifies the boundaries of nondischargeability under 11 U.S.C. § 523(a)(2)(A). The case arose from a contribution dispute between boyhood friends turned co-guarantors after they settled a judgment with an assignee of Fifth Third Bank. When Eric Miller filed Chapter 13, Lucas sought to except Miller’s half of the settlement debt from discharge, alleging fraud. The bankruptcy court granted summary judgment for Miller; the Sixth Circuit BAP affirmed. The ruling cements two core propositions: (1) mere execution of a settlement agreement—without an accompanying promise or factual misstatement—does not, by itself, constitute a “false representation” or “false pretenses,” and (2) the parol-evidence rule does not shield a creditor from adverse extrinsic evidence when the creditor pleads fraud.

Summary of the Judgment

The Panel (Judges Croom, Gregg, Merrill; opinion by Judge Gregg) affirmed the bankruptcy court’s grant of summary judgment to the debtor, holding:

• No material misrepresentation existed; the written settlement agreement contained no promise by Miller to reimburse Lucas, and deposition testimony confirmed Miller repeatedly disclaimed any ability to pay.
• Because Lucas knew Miller lacked resources and had contemplated bankruptcy, any reliance on an implied promise to pay was not justifiable.
• Parol evidence was properly considered; the fraud exception to the parol-evidence rule and the need to examine the “making” of the contract allowed the court to look beyond the four corners of the settlement.
• Absent misrepresentation and reliance, the remaining § 523(a)(2)(A) elements failed as a matter of law. The debt therefore was dischargeable.

Analysis

1. Precedents Cited and Their Influence

• Rembert v. AT&T Universal Card Servs., 141 F.3d 277 (6th Cir. 1998) – Established the four-part test (misrepresentation, intent, justifiable reliance, proximate cause) applied by the BAP.
• Field v. Mans, 516 U.S. 59 (1995) – Adopted “justifiable,” not “reasonable,” reliance for § 523(a)(2)(A); the BAP emphasized that Lucas could not “shut his eyes” to obvious red flags.
• Husky Int’l Elecs. v. Ritz, 578 U.S. 355 (2016) – Clarified “actual fraud” may extend beyond misrepresentation, but Lucas did not plead an “actual fraud” theory independent of misrepresentation.
• Bartenwerfer v. Buckley, 598 U.S. 69 (2023) – Recognized nondischargeability balances debtor-relief with creditor protection; quoted by the Panel in its policy backdrop.
• Galmish v. Cicchini, 734 N.E.2d 782 (Ohio 2000) & Ed Schory & Sons v. Francis, 662 N.E.2d 1074 (Ohio 1996) – Ohio parol-evidence cases explaining merger clauses; relied on for why extrinsic testimony was admissible to probe alleged fraud.
• Other Sixth Circuit authorities on summary judgment (Blasingame, Hostettler, etc.) guided the de novo review standard.

2. Court’s Legal Reasoning

a) No Misrepresentation
The Panel parsed the settlement agreement: it addressed only joint obligations to the creditor (TBF), made no allocation between Lucas and Miller, and contained a standard merger clause. Signing such an agreement, by itself, is not a statement “to” Lucas that Miller will reimburse him. Deposition testimony corroborated that no such statement was ever made. Without an affirmative or implied representation capable of influencing Lucas, the first Rembert element failed.

b) Lack of Justifiable Reliance
Even assuming arguendo some representation existed, Lucas could not satisfy justifiable reliance because: (i) Miller had openly said he lacked funds; (ii) Lucas knew Miller had contemplated bankruptcy; (iii) attorney Heck confirmed Miller’s non-payment stance before the settlement. Under Field v. Mans, one cannot ignore known facts that undercut reliance.

c) Parol Evidence Admissibility
Lucas argued the merger clause barred deposition testimony. The Panel noted: (i) fraud is an exception to the parol-evidence rule, and (ii) the testimony went to whether a representation was made at all, not to vary a contract term. Thus the bankruptcy court properly considered extrinsic evidence.

3. Potential Impact

• Lenders and co-obligors: Creditors seeking nondischargeability must isolate a clear, deceptive statement or conduct; bare signatures on debt instruments or settlements will not suffice.
• Bankruptcy litigation: Debtors may invoke extrinsic evidence, even against merger clauses, to defeat § 523(a)(2)(A) claims rooted in supposed promises.
• Transactional drafting: If parties intend cross-contribution rights or personal reimbursement promises, these should be spelled out expressly; absence of an explicit clause undermines future fraud claims.
• Future § 523 cases in the 6th Circuit: The Panel’s insistence on a “statement to the creditor” and strict application of justifiable reliance will likely discourage borderline fraud pleadings based on implied obligations.

Complex Concepts Simplified

• § 523(a)(2)(A): A Bankruptcy Code section that prevents discharge of certain debts if the debtor tricked the creditor when obtaining the money. Think of it as a “no fresh start for fraudsters” rule.
• Material Misrepresentation: A significant lie or half-truth that would normally affect the listener’s decision. Minor or obvious exaggerations (“puffery”) usually don’t count.
• Justifiable Reliance: The creditor’s trust must be sensible for that creditor, given what the creditor already knew or should have noticed. It’s less demanding than “reasonable” but not blind faith.
• Parol-Evidence Rule: A contract law doctrine saying you generally cannot use prior verbal statements to contradict a final written agreement. Exception: when you claim the writing itself was induced by fraud.
• Summary Judgment: A procedural device letting a court decide a case without trial when there are no real disputes about important facts.

Conclusion

Lucas v. Miller reinforces that nondischargeability under § 523(a)(2)(A) is fact-intensive and demands clear proof of deception and reliance. The Sixth Circuit BAP made three takeaways unmistakable:

1. Signing a contract is not a representation to a co-signer about future payment unless the writing or separate statements say so.
2. Courts will look beyond merger clauses when adjudicating fraud; parol-evidence objections cannot mask the absence of misrepresentation.
3. Creditors who know a debtor is cash-strapped or considering bankruptcy cannot later claim they “justifiably relied” on the debtor’s silent commitment to pay.

Practitioners should counsel clients that if contributive expectations exist between co-obligors, those expectations must be explicitly drafted and, ideally, secured; otherwise, the bankruptcy discharge may wipe them away. By emphasizing substance over formalities, the BAP’s decision advances the fresh-start policy while preserving a clear, predictable standard for fraud exceptions.