Judge C. Kathryn Preston
Chapter 7 ORDER DENYING MOTION FOR SUMMARY JUDGMENT
The Complaint (Doc. #1) initiating this adversary proceeding seeks a determination by the Court that the debt due Plaintiff Quality Acceptance, LLC ("Plaintiff") by Defendant Ashlee M. Champion ("Defendant") is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A). Section 523(a)(2)(A) excepts from discharge debts for money or credit "to the extent obtained by false pretenses, false representations or actual fraud." 11 U.S.C. § 523(a)(2)(A).
Defendant has filed a Motion for Summary Judgment (Doc. #12) (the "Motion"). Plaintiff has not filed a response. The Motion seeks entry of judgment in favor of Defendant on Plaintiff's Complaint. Federal Rule of Civil Procedure 56 (made applicable to bankruptcy proceedings by Federal Rule of Bankruptcy Procedure 7056) provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
A. The Motion is Unsupported by Evidence.
The Court reviewed the Motion and the record, and found that there are no affidavits, depositions, or other evidence to support the Motion. Nonetheless, the Motion recites facts not evident in the record.
It is difficult to discern the relevance of some of the recited facts to the Motion. For example, although the Motion does not expressly so state, the Motion seemingly suggests that Plaintiff has failed to make initial disclosures, has failed to respond to Defendant's discovery, and failed to cooperate in a Rule 26(f) settlement conference. See Fed. R. Civ. P. 26(f). These allegations, of course, have no bearing on the cause of action set forth in the Complaint. It appears that the Defendant may be attempting to seek imposition of a sanction for Plaintiff's failure to cooperate in discovery and failure to comply with the Court's Order Setting Deadlines (Doc. #9); however, Defendant fails to couch the Motion in terms of sanctions and fails to demonstrate her own compliance with the Local Bankruptcy Rules' conditions precedent to a request for sanctions. See Fed. R. Civ. P. 37, applicable to adversary proceedings by virtue of Fed. R. Bankr. P. 7037. See also Local Bankruptcy Rule 7026-1.
While affidavits are not required by Rule 56, something more than the movant's unsupported statements is required. Rule 56 states in pertinent part: "A party asserting that a fact cannot be . . . genuinely disputed must support the assertion by: (A) citing to particular parts of material in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." In the instant case, there are no depositions, answers to interrogatories, admissions, affidavits or other materials to establish the facts. Plaintiff's Complaint contains only a sparse recitation of facts and Defendant's Answer disputes the relevant facts alleged in the Complaint. The facts recited by the Motion are not established by the record, or by affidavit or other evidence submitted with the Motion.
The Court notes that attached to the Motion are copies of (1) emails purportedly sent by counsel for Defendant to counsel for Plaintiff, and (2) a letter purportedly sent by Plaintiff to Defendant. Both are discussed in the Motion; however, nothing in the record or the Motion authenticates or lays a foundation for the documents. Lacking that evidentiary support, the Court cannot properly consider the documents and they are of no benefit to Defendant.
The party seeking summary judgment bears the initial responsibility of informing the Court of the basis for its motion and identifying those portions of the record and materials which demonstrate the absence of a genuine issue of material fact and/or support for the position advanced by the motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, l06 S.Ct. 2548 (l986). See, Fed. R. Civ. P. 56(c)(1); 11 MOORE'S FEDERAL PRACTICE ¶ 56.22[1] (3d ed. 2014). The Motion fails to do this.
B. The Motion Does Not Illustrate that the Complaint Fails to State a Cause of Action.
The Motion also posits that the Complaint fails to state a cause of action under § 523(a)(2)(A). This prong of the Motion is, in reality, a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). A motion for judgment on the pleadings is considered under the same standard as a motion to dismiss a complaint under Rule 12(b): the Court "construes the complaint in a light most favorable to the plaintiff, accepts all factual allegations as true, and determines whether the complaint states a plausible claim for relief." HDC, LLC v. Ann Arbor, 675 F.3d 608, 611 (6th Cir. 2012) (citations omitted). A claim is plausible on its face if the complaint contains factual allegations sufficient to "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." HDC, 675 F.3d at 611; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007). "[T]he allegations in the complaint must permit the court to infer more than the mere possibility of misconduct, namely, that the pleader has show[n] entitlement to relief." See, HDC, 675 F.3d at 612-13; Ctr. for Bio-Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 369 (6th Cir. 2011) (citations and internal quotation marks omitted).
Fed. R. Civ. P. 12 is incorporated by reference in Fed. R. Civ. P. 7012 and thus applicable to adversary proceedings.
This being the case, decisional law construing or applying the standards for a motion to dismiss are relevant and persuasive in analyzing a motion for judgment on the pleadings.
Defendant asserts that the Complaint fails to allege fraud with particularity, as is required by Federal Rule of Civil Procedure 9. Defendant stresses that the Complaint neglects to allege that Defendant made misrepresentations which induced Plaintiff to act and on which Plaintiff relied, resulting in harm to Plaintiff. Defendant's point is true. However, the elements articulated by Defendant are applicable only to a cause of action brought for the false representations prong of § 523(a)(2)(A). Section 523(a)(2)(A) also excepts from the discharge debts obtained by false pretenses and actual fraud.
Fed. R. Civ. P. 9 is applicable to adversary proceedings in bankruptcy by virtue of Fed. R. Bankr. P. 7009. --------
False pretenses are distinguishable from false representations in that "[a] false pretense involves an implied misrepresentation or conduct that is intended to create and foster a false impression while a false representation involves an express representation." Goldberg Securities, Inc. v. Scarlata (In re Scarlata), 127 B. R. 1004, 1009 (N.D. Ill. 1991). See also Sprague, 205 B. R. at 859; Wings & Rings, Inc. v. Hoover (In re Hoover), 232 B. R. 695, 700 (Bankr. S.D. Ohio 1999). For purposes of § 523(a)(2)(A), actual fraud is defined broadly - "any deceit, artifice, trick or design involving a direct and active operation of the mind, used to circumvent and cheat another - something said, done or omitted with the design of perpetrating a cheat or deception." 4 Collier on Bankruptcy ¶ 523.08[1][e] (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2010). See also McClellan v. Cantrell, 217 F.3d 890, 899 (9th Cir. 2000) ("[B]y distinguishing between 'a false representation' and 'actual fraud,' the statute makes clear that actual fraud is broader than misrepresentation.") (citing 4 Collier on Bankruptcy ¶ 523.08[1][e] (Lawrence P. King ed., 15th ed. 2000)). "Fraud is a generic term, which embraces all the multifarious means which human ingenuity can devise and which are resorted to by one individual to gain an advantage over another by false suggestions or by the suppression of truth. No definite and invariable rule can be laid down as a general proposition defining fraud, and it includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated." McClellan, 217 F.3d at 899 (citations omitted). Actual fraud has also been defined as "deception intentionally practiced to induce another to part with property or to surrender some legal right, and which accomplishes the end designed." Blascak v. Sprague (In re Sprague), 205 B. R. 851, 859 (Bankr. N.D. Ohio 1997).
In the instant case, the Complaint is sparse on facts, but contains sufficient facts to infer false pretenses or actual fraud on the part of Defendant. The Complaint alleges that Defendant obtained financing from Plaintiff in order to purchase a vehicle, but never made a single payment on the loan and filed a petition for relief under the Bankruptcy Code in less than 30 days after obtaining the credit. Taking the allegations of the Complaint in a light most favorable to Plaintiff, and given the time periods described in the Complaint, the Court can infer that (1) Defendant knew that she would be unable to meet the financial commitment of the financing contract, and (2) Defendant was contemplating bankruptcy at the time she obtained the credit and did not intend to pay the debt. If proven, either could satisfy the requirements of § 523(a)(2)(A). Ohio Citizens Bank v. Satterfield (In re Satterfield), 25 B.R. 554 (Bankr. N.D. Ohio 1982); Maas Brothers, Inc. v. Ratajczak (In re Ratajczak), 5 B. R. 583 (M.D. Fla 1980).
Moreover, the Complaint alleges facts sufficient to implicate the presumption of nondischargeability provided by 11 U.S.C. § 523(a)(2)(C). The Motion attempts to refute the allegations of the Complaint with statements of fact, but, as discussed above, fails to point to evidence in support of the facts on which the Motion rests.
C. Conclusion
Anticipating the Motion, the Court has not set this matter for trial. Although the Motion fails today, circumstances alluded to in the Motion indicate that it is appropriate to reset the deadline for dispositive motions.
Accordingly, it is
ORDERED that the Motion for Summary Judgment by Defendant (Doc. #12) is DENIED. It is further
ORDERED that dispositive motions may be filed on or before March 30, 2015. All other provisions of the Order Setting Deadlines (Doc. #9) remain in full force and effect.
IT IS SO ORDERED.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: February 26, 2015
/s/ _________
C. Kathryn Preston
United States Bankruptcy Judge Copies to: Attorney for Plaintiff, Linda Kendrick (Electronic Service)
Attorney for Defendant, Ronald Wittel (Electronic Service)
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