Court: United States Bankruptcy Court, D. Massachusetts; November 15, 2011; Us Bankruptcy; United States Bankruptcy Court
Defendant Carl W. Tucci filed a Motion for Summary Judgment, seeking a determination that Sampson Lumber Co., Inc.'s claim against him is dischargeable under 11 U.S.C. § 523(a)(2). The court determined that the Plaintiff's claim did not meet the required elements for nondischargeability and granted the Debtor's motion.
The procedural framework for summary judgment requires both parties to submit concise statements of material facts, with supporting documentation. The Debtor complied with this requirement, while the Plaintiff failed to file an opposing statement, resulting in the Debtor's facts being deemed admitted for the purposes of the motion.
The Plaintiff, a lumber seller in Pembroke, Massachusetts, had a business relationship with the Debtor prior to August 8, 2003, during which he paid via cash or check. On that date, the Debtor submitted a credit application for Star Realty Trust, incorrectly stating that he was the sole owner, despite only holding a 65% interest and failing to disclose co-owner Robert Carey Jr.'s 35% interest. After obtaining credit, the Debtor defaulted on payments, leading the Plaintiff to file a collection action in January 2007, which included claims for breach of contract, goods sold and delivered, and quantum meruit, but did not allege fraud.
The Plaintiff alleges that during the Plymouth Action, the Debtor's counsel claimed the Debtor was not liable for the Trust's debts. However, the Plymouth District Court determined that the Debtor lacked authority to act for the Trust when he submitted an application, rendering him liable for the Trust's debt to the Plaintiff, resulting in a judgment of $55,801.97 against the Debtor. Following this, the Debtor filed for Chapter 7 bankruptcy on February 16, 2010. On June 11, 2010, the Plaintiff initiated a complaint against the Debtor and his wife, Yvette Tucci, seeking to declare the judgment nondischargeable under 11 U.S.C. § 523(a). The Plaintiff cites three allegedly false statements by the Debtor as grounds for nondischargeability: a written Statement of Ownership, an oral representation about his inability to pay a credit account, and statements by his counsel during the Plymouth Action. The Complaint invokes both § 523(a)(2)(A) and § 523(a)(2)(B).
On September 14, 2011, the Debtors filed motions for summary judgment addressing both sections. The Plaintiff's opposition failed to contest the motion regarding § 523(a)(2)(A), effectively waiving that claim. A hearing on September 30, 2011, resulted in the granting of Yvette Tucci's motion, leaving Carl Tucci as the sole defendant. The Debtor argues that the Plaintiff cannot prove the elements for nondischargeability under § 523(a)(2)(B), asserting he made no false statements, that his beneficial interest in the Trust validates the Statement of Ownership, and that his counsel’s statements do not constitute personal falsehoods. He also claims that there is insufficient evidence of intent to deceive and that the Plaintiff's reliance on these statements was not justified. The Debtor disputes the Plaintiff's reliance on issue preclusion, stating that fraud was not addressed in the Plymouth Action. Conversely, the Plaintiff contends that the elements of § 523(a)(2)(B) are satisfied and that the Plymouth District Court's findings on fraud should preclude further examination of the Debtor’s statements.
Summary Judgment under Fed. R. Civ. P. 56 requires the movant to demonstrate the absence of any genuine dispute regarding material facts, entitling them to judgment as a matter of law. A genuine issue exists if reasonable evidence supports it, allowing a jury to rule in favor of the nonmoving party. Material facts are those that could influence the case's outcome. To contest the presence of a genuine dispute, parties must provide specific record materials or demonstrate that cited materials do not establish the existence of such a dispute. Unsupported speculation or conclusory allegations are insufficient. The court must interpret the record favorably for the nonmoving party.
Regarding 11 U.S.C. 523(a)(2)(B), debts incurred through fraud may not be discharged in bankruptcy. A debt is nondischargeable if it arises from a materially false written statement about the debtor's financial condition, which the creditor reasonably relied upon, and which the debtor made with intent to deceive. Courts differ on the definition of "financial condition." Some interpret it narrowly as per financial statements, while others adopt a broader view. The author maintains that the narrow definition applies, ruling that the Debtor's Statement of Ownership, being a statement about a single asset, does not constitute a statement of financial condition. Consequently, since the Plaintiff fails to allege any other written statements by the Debtor, the Plaintiff cannot meet the required element for nondischargeability under 11 U.S.C. 523(a)(2)(B), and further arguments need not be considered.
An order will be issued to grant the Motion for Summary Judgment. The applicable rules include LR, D. Mass. 56.1 and MLBR 7056-1. Judicial notice is taken of the current case docket and related cases, referencing Rodi v. Southern New England School of Law, 389 F.3d 5 (1st Cir. 2004). Key documents cited include the Statement of Material Facts (Docket No. 42), the Complaint (Docket No. 1), and various findings from the Plymouth District Court regarding case 200759CV00031 from August 1, 2008. The summary judgment motion was filed by Carl Tucci (Docket No. 41), with supporting briefs and opposition also referenced. Relevant legal standards include Fed. R. Civ. P. 56 and its application in bankruptcy proceedings via Fed. R. Bankr. P. 7056, alongside various case law precedents establishing the standards for summary judgment and the discharge of debts under 11 U.S.C. 727 and 523(a)(2). Multiple case citations from bankruptcy courts in the District of Massachusetts are provided to support the findings.
