Leading Fifth Circuit Cases on Dischargeability

This is an article that I did for this year's Advanced Consumer Bankruptcy Course.   I have attempted to summarize all of the published decisions on dischargeability from the Supreme Court, Fifth Circuit, Texas District Courts and Texas Bankruptcy Courts (since 2009 for the Bankruptcy Courts).   

Hopefully you will find this helpful.   I have placed an (*) by the cases that I have previously blogged about.   You can click on the title of the case to get to the prior blog post. 

Supreme Court Cases:

*Bullock v.BankChampaign, N.A., 133 S. Ct. 1754; 185 L. Ed. 2d 922; 2013 U.S. LEXIS 3521 (2013)  Intent required for defalcation in a fiduciary capacity was recklessness.

*United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) Chapter 13 plan which provided for discharge of student loan debt was entitled to res judicata effect.

Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440 (2004) Eleventh Amendment did not preclude suit to determine dischargeability of student loan debt.

Kontrick v. Ryan, 540 U.S. 443 (2004) Failure to file a timely objection to discharge could be waived.

Archer v. Warner, 538 U.S. 314 (2003)  Where creditors and debtors settled a fraud suit and the debtors defaulted on the resulting promissory note, the settlement did not bar the creditors from alleging that the debt was nondischargeable because it was for money obtained by fraud.

Young v. United States, 535 U.S. 43 (2002) Three year look-back period under 11 U.S.C. §507(a)(8) could be tolled by intervening bankruptcy case.

Cohen v. De La Cruz, 523 U.S. 213 (1998) Where claim arose from fraud, entire amount was non-dischargeable.

Kawaahau v. Geiger, 523 U.S. 57 (1998)  In order for a debt to be non-dischargeable under 11 U.S.C. §523(a)(6), debtor must have intended the injury.   Negligent and reckless debts do not fall under the exception.

Field v. Mans, 516 U.S. 59 (1995)  Standard for non-dischargeability for fraud was “justifiable reliance,” not reasonable reliance.

Grogan v. Garner, 498 U.S. (1991)  Burden of proof under 11 U.S.C. §523(a) is preponderance of the evidence.

Davis v. Aetna Acceptance Co., 293 U.S. 328, 55 S. Ct. 151, 153, 79 L. Ed. 393 (1934)  A willful and malicious injury does not follow as of course from every act of conversion without reference to the circumstances.

Neal v. Clark, 95 U.S. 704 (1877)  In order to establish non-dischargeable debt for fraud, it is necessary to establish moral turpitude as opposed to constructive fraud.

Fifth Circuit Cases

United States v. Coney, 689 F.3d 365 (5^th Cir. 2012)  Tax debt owed to IRS was non-dischargeable where debtor sought to evade or defeat collection of taxes.

Bandi v. Becnel (In re Bandi), 683 F.3d 671 (5^th Cir. 2012), cert. den., 2013 U.S. LEXIS 436 (2013)  False representation that debtors owned real property was not a statement of financial condition and therefore fell under 11 U.S.C. §523(a)(2)(A).    Oral representations of financial condition fall under 11 U.S.C. §523(a)(2)(B) and are dischargeable.

*Shcolnik v.Rapid Settlements Ltd. (In re Shcolnik), 670 F.3d 624 (5^th Cir. 2012)  Person who falsely claimed an ownership interest in certain corporations was not a fiduciary under 11 U.S.C. §523(a)(4).  Debtor created an objective substantial certainty of harm leading to non-dischargeability when he made claims to ownership of a company in bad faith as a pretense to extort money.   See persuasive dissent from Judge Haynes.

*McCoy v. Miss.State Tax Comm'n (In re McCoy), 666 F.3d 924 (5^th Cir. 2012), cert. den., 2012 U.S. LEXIS 6632 (2012).  Returns which were not timely filed did not qualify as “returns” under 11 U.S.C. §523(a)(1).   Tax debts for which returns were not filed could not be discharged.

FNFS, Ltd. v. Harwood (In re Harwood), 637 F.3d 615 (5^th Cir. 2011).  It was defalcation for a debtor to neglect to file deeds of trust on loans from partnership to himself where he owed fiduciary duty to partnership.

United States v. Martinez (In re Martinez), 564 F.3d 719 (5^th Cir. 2009).  Where tax matters partner contested assessments, time for assessments was tolled and taxes were non-dischargeable.

*Morrison v.Western Builders of Amarillo, Inc. (In re Morrison), 555 F.3d 473 (5^th Cir. 2009).  Where debtor was aware of error in company’s financial statement but did not disclose it, he was liable for a non-dischargeable debt under 11 U.S.C. §523(a)(2)(B) for a false financial statement.

Bankruptcy Court could enter a money judgment on non-dischargeable claim.

Aguiluz v. Bayhi (In re Bayhi), 528 F.3d 393 (5^th Cir. 2008).  Wife’s obligation to reimburse ex-husband for one-half of non-dischargeable student loan was itself a non-dischargeable debt under 11 U.S.C. §507(a)(8).

Schaffer v. La. State Bd. of Dentistry (In re Schaffer), 515 F.3d 424 (5^th Cir. 2008).  Costs assessed against a dentist in a license revocation proceeding were for actual pecuniary loss and were not non-dischargeable fines or penalties under 11 U.S.C. §523(a)(7).

Texas v. Soileau (In re Soileau), 488 F.3d 302 (5^th Cir. 2007)  Bail bondsman’s liability for forfeited bonds was for actual pecuniary loss and was not non-dischargeable fines or penalties under 11 U.S.C. §523(a)(7).

Egleston v. Egleston (In re Egleston), 448 F.3d 803 (5^th Cir. 2006).  Attorney’s fees incurred in enforcing non-dischargeable alimony award were themselves non-dischargeable.

Tummel & Carroll v. Quinlivan (In re Quinlivan), 434 F.3d 314 (5^th Cir. 2005).  Debt for fraud of agent was non-dischargeable even where principal was unaware of fraud.

General Electric Capital Corp. v. Acosta (In re Acosta), 406 F.3d 367 (5^th Cir. 2005).  Dumb but honest debtor did not meet intent standard for non-dischargeability of debt.

Raspanti v. Keaty (In re Keaty), 397 F.3d 264 (5^th Cir. 2005) State court sanctions award was non-dischargeable as a willful and malicious injury under 11 U.S.C. §523(a)(6).

Gupta v. Eastern Idaho Tumor Institute, Inc. (In re Gupta), 394 F.3d 347 (5^th Cir. 2004).  Relationship of trust and confidence will not give rise to a fiduciary relationship under 11 U.S.C. §523(a)(4).  Collateral estoppel will not attach to a non-existent finding.

United States Department of Education v. Gerhardt (In re Gerhardt), 348 F.3d 89 (5^th Cir. 2003).  Undue hardship standard under 11 U.S.C. §523(a)(8) was defined by Brunner standard.   (i) Current inability to maintain living standards are pay debt; (ii) likely to persist due to additional circumstances; and (iii) a good faith effort was made to pay the debt.

Williams v. IBEW Local 520 (In re Williams), 337 F.3d 504 (5^th Cir. 2003).  A contempt judgment against a debtor in bankruptcy is immune from discharge under 11 U.S.C.S. § 523(a)(6). Failure to obey a court order constitutes willful and malicious conduct, and a judgment against a defiant debtor is excepted from discharge.

Murphy v. Pa. Higher Educ. Assistance Agency (In re Murphy), 282 F.3d 868 (5^th Cir. 2002).  Loans for room and board facilitate an education and constitute non-dischargeable student loans under 11 U.S.C. §523(a)(8).

Hickman v. Texas (In re Hickman), 260 F.3d 400 (5^th Cir. 2001).  Debt for bail bond forfeitures is not excluded from discharge as a penalty or forfeiture under 11 U.S.C. §523(a)(7).

Office of Thrift Supervision v. Felt (In re Felt), 255 F.3d 220 (5^th Cir. 2001).  Savings & Loan President who sold stock pursuant to unapproved offering memorandum was guilty of a willful breach of fiduciary duty and debt was non-dischargeable under 11 U.S.C. §523(a)(4).

AT&T Universal Card Servs. v. Mercer (In re Mercer), 246 F.3d 391 (5^th Cir. 2001)(en banc).  Use of credit card constitutes a representation of intent to pay.   Debt could be non-dischargeable if debtor has no present intent to pay at time card is used under 11 U.S.C. §523(a)(2)(A).  En banc court reversed panel holding that creditor could not prove reliance on a preapproved credit card.

Deodati v. M.M. Winkler & Assocs. (In re M.M. Winkler & Assocs.), 239 F.3d 746 (5^th Cir. 2001).  Liability for the fraud of a general partner is not discharged under 11 U.S.C. §523(a)(2)(A) under principles of agency.

Woods v. United Student Aid Funds, Inc. (In re Woods), 233 F.3d 324 (5^th Cir. 2000).  General discharge in chapter 13 case does not discharge student loan claim.

Louisiana Dep't of Revenue & Taxation v. Lewis (In re Lewis), 199 F.3d 249 (5^th Cir. 2000).  Debt for state income tax assessed 156 days before bankruptcy was non-dischargeable.

Caton v. Trudeau (In re Caton), 157 F.3d 1026 (5^th Cir. 1998), cert. den. 1999 U.S. LEXIS 2633 (1999).  Default judgment for libel per se under Illinois law was non-dischargeable under 11 U.S.C. §523(a)(6).  Note:  case relies upon Illinois law which differs from Texas law.

Miller v. J.D. Abrams Inc. (In re Miller), 156 F.3d 598 (5^th Cir. 1998).  In order to be non-dischargeable under 11 U.S.C. §523(a)(6), act must be taken with subjective intent to harm or objective substantial certainty of harm.    Summary judgment based on collateral estoppel was reversed where state court did not determine intent.

Texas Lottery Comm'n v. Tran (In re Tran), 151 F.3d 339 (5^th Cir. 1998).  Whether a person is a fiduciary under 11 U.S.C. §523(a)(4) is determined by federal law.   Seller of lottery tickets was not a federal fiduciary despite state statute defining seller as a fiduciary.

Johnson v. IRS (In re Johnson), 146 F.3d 252 (5^th Cir. 1998).  Interest on non-dischargeable taxes was also non-dischargeable.

Texas by & Through Board of Regents of the Univ. of Tex. Sys. v. Walker, 142 F.3d 813 (5^th Cir. 1998).  Neither a claim for breach of contract nor conversion necessarily involves an intentional injury under 11 U.S.C. §523(a)(6).    Where professor retained fees earned from outside employment in violation of university by-laws, there was a fact issue precluding summary judgment.

Hardee v. IRS (In re Hardee), 137 F.3d 337 (5^th Cir. 1998).  Interest on non-dischargeable taxes was also non-dischargeable.

Schwager v. Fallas (In re Schwager), 121 F.3d 177 (5^th Cir. 1997).  Collateral estoppel did not apply where judgment was supported by two alternate findings, only one of which supported non-dischargeability.

Hudson v. Raggio & Raggio, Inc. (In re Hudson), 107 F.3d 355 (5^th Cir. 1997).  Court ordered attorney’s fees incurred during child-support suit were non-dischargeable as support.

Pancake v. Reliance Insurance Co. (In re Pancake), 106 F.3d 1242 (5^th Cir. 1997).  Res judicata is inapplicable to dischargeability but collateral estoppel may apply.

Fielder v. King (In re King), 103 F.3d 17 (5^th Cir. 1997), cert. den., 117 S.Ct. 2754.  Res judicata does not apply in dischargeability proceedings but collateral estoppel may apply if findings are identical.

Gober v. Terra & Co. (In re Gober), 100 F.3d 1195 (5^th Cir. 1996).   Post-answer default entered as a sanction could give rise to collateral estoppel.

Corley v. Delaney (In re Delaney), 97 F.3d 800 (5^th Cir. 1996).  Debtor who tapped shotgun on window but did not intend for it to go off was not subject to non-dischargeable debt under 11 U.S.C. §523(a)(6).

Faden v. Insurance Co. of N. Am. (In re Faden), 96 F.3d 792 (5^th Cir. 1996).  Debt was non-dischargeable under 11 U.S.C. §523(a)(3) where debtor gave notice to bad address and could not show absence of fraud.   A court should not discharge a debt under Bankruptcy Code § 523(a)(3), 11 U.S.C.S. § 523(a)(3), if the debtor's failure to schedule that debt was due to intentional design, fraud, or improper motive. If the failure is attributable solely to negligence or inadvertence, however, equity points toward discharge of the debt. The burden is on the debtor to demonstrate absence of fraud or intentional design.

Perdue v. Cantrell (In re Cantrell), 88 F.3d 344 (5^th Cir. 1996).  Debt which was barred by limitations could not be excepted from discharge.

Norris v. First Nat'l Bank (In re Norris), 70 F.3d 27 (5^th Cir. 1995).  Debt was non-dischargeable where financial statements contained material discrepancies, bank relied upon statement and reliance was objectively reasonable.

Garner v. Lehrer (In re Garner), 56 F.3d 677 (5^th Cir. 1995).  Post-answer default could give rise to collateral estoppel.

Bruner v. United States (In re Bruner), 55 F.3d 195 (5^th Cir. 1995).  Debtor who attempted to hide assets and income and failed to file returns or pay taxes was subject to non-dischargeable debt for willfully evading a tax under 11 U.S.C. §523(a)(1)(C).

Recoveredge, L.P. v. Pentecost, 44 F.3d 1284 (5^th Cir. 1995).  Where jury found that doctor did not engage in a conspiracy to defraud, creditor was barred from pursuing non-dischargeable debt due to collateral estoppel.

Dennis v. Dennis (In re Dennis), 25 F.3d 274 (5^th Cir. 1994).  Federal law governed whether debt constituted alimony for purposes of dischargeability.

Omni Mfg., Inc. v. Smith (In re Smith), 21 F.3d 660 (5^th Cir. 1994).  In order to determine whether debt omitted from schedules is non-dischargeable under 11 U.S.C. §523(a)(3), court must look to reason for omission and prejudice to creditors.

Joseph v. J. Huey O'Toole, P.C. (In re Joseph), 16 F.3d 86 (5^th Cir. 1994).  Obligation to pay wife’s attorneys’ fees constituted non-dischargeable support.

Stone v. Caplan (In re Stone), 10 F.3d 285 (5^th Cir. 1994).  Failure to schedule debt will not render it non-dischargeable if there is not a deadline to file claims in the case.

Quenzer v. United States (In re Quenzer), 19 F.3d 163 (5^th Cir. 1993).  Penalties and interest on dischargeable taxes were dischargeable.

Coston v. Bank of Malvern (In re Coston), 991 F.2d 257 (5^th Cir. 1993).  Factual finding of reasonable reliance was not clearly erroneous.

Bennett v. Bennett (In re Bennett), 98 F.2d 779 (5^th Cir. 1993).  Debts owed as a result of managing partner’s willful neglect of fiduciary duty to limited partners was non-dischargeable under 11 U.S.C. §523(a)(4).

In re Dvorak, 986 F.2d 940 (5^th Cir. 1993).  Attorney’s fees incurred as a result of child custody litigation were non-dischargeable support obligations.

In re Martin, 963 F.2d 809 (5^th Cir. 1992).  Where debtor credibly explained financial statements and other representations, debt was dischargeable.

In re Allison, 960 F.2d 481 (5^th Cir. 1992).   Debt was not dischargeable where it was obtained through misrepresentations that were knowing and fraudulent, described past or current facts, and were actually relied upon by the creditor.

In re Luce, 960 F.2d 1277 (5^th Cir. 1992).  Partner’s fraud could be imputed to innocent partner for purposes of non-dischargeability.

In re Nicholas, 956 F.2d 110 (5^th Cir. 1992).  Affirmative defense to liability for trust funds misapplication applied since appellant subcontractor did not prove that debtor paid funds to non-beneficiaries for items other than actual expenses directly related to projects.   Case applied earlier version of Texas Construction Trust Fund Act.

In re Davidson, 947 F.2d 1294 (5^th Cir. 1991).  Debtor was estopped to deny that payments were alimony because he had claimed them as such on his tax return.

In re Lacy, 947 F.2d 1276 (5^th Cir. 1991).  State court consent judgment was entitled to collateral estoppel effect.

In re Pierce, 935 F.2d 709 (5^th Cir. 1991).  Debt for unemployment taxes was non-dischargeable where return was required to be filed within three years of date of bankruptcy.

In re Bercier, 934 F.2d 689 (5^th Cir. 1991).  Debt was dischargeable where representations regarding collateral were true at the time they were made.

In re Fields, 926 F.2d 501 (5^th Cir. 1991).  Surety that paid taxes was subrogated to non-dischargeable claim of governmental entity.

In re Modicue, 926 F.2d 452 (5^th Cir. 1991).  Non-dischargeable debt for willful and malicious injury was measured by amount of injury caused by debtors rather than amount of debt.

FDIC v. Mmahat, 907 F.2d 546 (5^th Cir. 1990).  Judgment against attorney who breached fiduciary duty was non-dischargeable under 11 U.S.C. §523(a)(4).

In re Biggs, 907 F.2d 503 (5^th Cir. 1990).  Whether debt was alimony was determined by federal law rather than state law.

Grossie v. Sam (In re Sam), 894 F.2d 778 (5^th Cir. 1990).  Untimely dischargeability complaint dismissed where creditor had actual knowledge of bar date eighteen days before deadline.

Moreno v. Ashworth (In re Moreno), 892 F.2d 417 (5^th Cir. 1990).  Corporate officer who transferred assets to himself without proper documentation was subject to non-dischargeable debt under 11 U.S.C. §523(a)(4).

In re Compton, 891 F.2d 1180 (5^th Cir. 1990).  Sending notice to bad address was not sufficient to give creditor notice, but actual notice was sufficient for debt to be discharged.

In re Allman, 735 F.2d 863 (5^th Cir. 1984).   Court did not err in refusing to apply collateral estoppel where nothing in the judgments suggested that debtors obtained funds by false pretenses.

In re Poston, 735 F.2d 866 (5^th Cir. 1984).  Collateral estoppel did not apply where state court did not make specific factual findings of fraud to support its default judgment.

In re Quezada, 718 F.2d 121 (5^th Cir. 1983).  Negligently allowing pit bull to escape was not willful and malicious injury.

Carey Lumber Co. v. Bell, 615 F.2d 370 (5^th Cir. 1980).  Debt under Oklahoma lien trust statute was non-dischargeable as a defalcation in a fiduciary capacity.

Fifth Circuit Cases That Are No Longer Good Law:

Gamble v. Gamble (In re Gamble), 143 F.3d 223 (5^th Cir. 1998).  Debt was non-dischargeable under balancing test of 11 U.S.C. §523(a)(15).   Balancing test was deleted by BAPCPA.    Now, property settlement debts are non-dischargeable without an additional showing.

Boyce v. Greenway (In re Greenway), 71 F.3d 1177 (5^th Cir. 1996), cert. den., 116 S.Ct. 2499. Drunk boating debt was not excluded from discharge under 11 U.S.C. §523(a)(9).    BAPCPA added aircraft and vessels to exception.

In re Foreman, 906 F.2d 123 (5^th Cir. 1990).  Burden of proof for dischargeability cases is clear and convincing evidence.  Overruled by Grogan v. Garner.

In re Boyle, 819 F.2d 583 (5^th Cir. 1987).  Non-fraudulent diversions of construction trust funds are dischargeable.   Case was decided under prior version of Texas Construction Trust Fund Act.

Seven Elves, Inc. v. Eskenazi, 704 F.2d 241 (5^th Cir. 1983).   Willful and malicious meant an intentional act done without just cause or excuse.  Overruled by Kawaahua and Miller.

In re Angelle, 610 F.2d 1335 (5^th Cir. 1980).  Contractor’s debt for misapplication of construction trust funds was dischargeable.   Case was decided under prior version of Texas Construction Trust Fund Act.

Selected District Court Opinions:

Carroll v. Farooqi, 486 B.R. 718 (N.D. 2013).  Bankruptcy court could constitutionally determine dischargeability and liquidate amount of debt under Stern v. Marshall.

Turbo Aleae Invs., Inc. v. Borschow (In re Borschow), 467 B.R. 410 (W.D. Tex. 2012).  Bankruptcy Court did not err in finding that assignee of debt stepped into shoes of original creditor for purposes of determining reliance and other fraud issues.

Madison v. Williamson, 410 B.R. 481 (S.D. Tex. 2008).  Debt for injury to a child was non-dischargeable as willful and malicious injury.

T.D. Farrell Construction, Inc. v. Schreiber, 2008 U.S. Dist. LEXIS 89438 (S.D. Tex. 2008).  Collateral estoppel did not render debt nondischargeable under 11 U.S.C. §523(a)(4) or (a)(6) where it was unclear whether debt misapplied funds or intended harm.

Wissen v. Aguado Stone, Inc., 2008 U.S. Dist. LEXIS 12453 (W.D. Tex. 2008).  Knowing misapplication of construction trust funds rendered debt non-dischargeable.   Fraudulent intent was not required.

Educ. Credit Mgmt. Corp. v. Young, 376 B.R. 795 (E.D. Tex. 2008).  Because debtor was making payments to a retirement fund and did not increase payments on student loan when his income increased, bankruptcy court’s partial discharge of student loan debt was reversed.

Holder v. Tex. Dep't of Pub. Safety (In re Holder), 376 B.R. 802 (S.D. Tex. 2007).  License surcharges for driving while intoxicated and driving without a license were non-dischargeable fines, penalties or forfeitures.

Jones v. Bank One Texas, N.A., 376 B.R. 130 (W.D. Tex. 2007).  Student loan debt was nondischargeable where debtor’s financial condition was not likely to continue into future and she had not made good faith effort to repay loans.

Educ. Credit Mgmnt. v. Pratt, 375 B.R. 753 (S.D. Tex. 2007).  Stay at home mom who cared for six children was not entitled to hardship discharge since “this was a voluntary decision made by the Pratts with full knowledge of their financial obligations and the additional financial responsibilities that accompany having more children.”

Range v. United States, 245 B.R. 266 (S.D. Tex. 1999).  Bankruptcy court was within its discretion in accepting oral testimony that contradicted the transcripts and certificates of assessment offered by the IRS.

Hardie v. United States, 204 B.R. 944 (S.D. Tex. 1996).  Taxes assessed within 240 days of bankruptcy were non-dischargeable.   Definition of “assess” contained in Internal Revenue Code controlled.

Stokes v. Ferris, 150 B.R. 388 (W.D. Tex. 1992).  Where debt was found to be willful and malicious, entire debt including punitive damages and attorneys’ fees was non-dischargeable.

A Few Bankruptcy Court Opinions:

Lowry v. Croft (In re Croft), 500 B.R. 823 (Bankr. W.D. Tex. 2013).  Debtor who posted credit report on website for purposes of discrediting plaintiff was subject to nondischargeable debt under 11 U.S.C. §523(a)(6).

Countrywide Home Loans, Inc. v. Cowin (In re Cowin), 492 B.R. 858 (Bankr. S.D. Tex. 2013).  Debtor who engaged in scheme to acquire condominium assessments and foreclose out prior liens was subject to nondischargeable debt for larceny.

Bui v. Do (In re Do), 2013 Bankr. LEXIS 1463 (Bankr. W.D. Tex. 2013).  Defamation damages for alleging that creditor was a mole or spy for Communist Party in Vietnam were nondischargeable.

Hutton v. Ferguson (In re Hutton), 463 B.R. 819 (Bankr. W.D. Tex. 2011).   Attorneys’ fees awarded as a sanction in child custody proceedings were nondischargeable support.

Smart Fin. Credit Union v. Williams (In re Williams), 466 B.R. 95 (Bankr. S.D. Tex. 2011).   Where creditor failed to close $3,000 line of credit and instead allowed debtors unlimited credit, debtors did not make a false representation that could lead to a nondischargeable debt.   Debtors’ conduct in borrowing $133,000 was not willful and malicious.

Fire Safe Prot. Servs., LP v. Jamal Abdalla Ayesh (In re Jamal Abdalla Ayesh), 465 B.R. 443 (Bankr. S.D. Tex. 2011).   Where state court found that debtor signed contract under false name, elements of false representation and intent to deceive were established.   Creditor established remaining issues on motion for summary judgment.

Randall v. Atkins (In re Atkins), 458 B.R. 858 (Bankr. W.D. Tex. 2011).    Debtor breached fiduciary duty when he used loan proceeds for non-business purposes.   Misuse of loan proceeds also constituted willful and malicious injury.   Note:   This case relies on the special trust or confidence definition of fiduciary duty which was rejected by the Fifth Circuit in Matter of Gupta.

Wise v. Peterson (In re Peterson), 452 B.R. 203 (Bankr. S.D. Tex. 2011).   Punching other person in the mouth was a willful and malicious injury.

Ward Family Found. v. Arnette (In re Arnette), 454 B.R. 663 (Bankr. N.D. Tex. 2011).   Where debtor misrepresented his experience and expertise in the real estate business and made false promises about how he would use investor money, debt was nondischargeable for fraud.

Posey v. Kinkaid (In re Kinkaid), 445 B.R. 731 (Bankr. N.D. Tex. 2011). Sum of $78,400 owed under divorce decree was nondischargeable under 11 U.S.C. §523(a)(15).

Mullen v. Jones (In re Jones), 445 B.R. 677 (Bankr. N.D. Tex. 2011).   Debtor who controlled corporation that was general partner of partnership was found to have used partnership funds for personal expenses.   Debt was nondischargeable as defalcation in a fiduciary capacity under 11 U.S.C. §523(a)(4).          

Smith v. Wells Fargo Educ. Fin. Servs. (In re Smith), 442 B.R. 550 (Bankr. S.D. Tex. 2010), aff’d, Educ. Credit Mgmt. Corp. v. Smith, 2011 U.S. Dist. LEXIS 113592 (S.D. Tex., Sept. 30, 2011).   Debtor was allowed to re-open bankruptcy to seek determination of undue hardship on student loans.   Fact that loans were consolidated post-bankruptcy did not constitute a new post-bankruptcy debt.   Where each of pre-consolidation loans was dischargeable, consolidated loan was dischargeable.

Schubert Osterrieder & Nickelson PLLC v. Bain (In re Bain), 436 B.R. 918 (Bankr. S.D. Tex. 2010).   In order for debt to be non-dischargeable for fraud, someone must have received something through fraud.   Where debtor ordered magazine subscriptions in attorneys’ name, there was not a non-dischargeable debt for fraud because neither debtor nor anyone acting on his behalf received any money, property, services or credit.

Bale v. Ryan (In re Ryan), 443 B.R. 395 (Bankr. N.D. Tex. 2010).   Where corporation failed to complete house, president (who was a chapter 13 debtor) was allowed discharge where creditors failed to establish grounds for piercing corporate veil or fraud.

*Material Prods.,Int'l, Ltd. v. Ortiz (In re Ortiz), 441 B.R. 73 (Bankr. W.D. Tex. 2010).   Debtor was not entitled to judgment on the pleadings where complaint did not allege a verbal statement of financial condition.

Berger v. Jacobson (In re Jacobson), 433 B.R. 183 (Bankr. S.D. Tex. 2010).   Wife’s claim for defalcation in a fiduciary capacity failed because trust created by Texas Family Code was a constructive trust and did not establish a fiduciary relationship under federal law.

Szostek v. Tex. Comptroller of Pub. Accounts (In re Szostek), 433 B.R. 611 (Bankr. W.D. Tex. 2010).   Sales taxes which the debtors were required to collect but did not were nondischargeable under 11 U.S.C. §523(a)(1).

Eric D. Fein, P.C. v. Young (In re Young), 425 B.R. 811 (Bankr. E.D. Tex. 2010).   Attorneys’ fees owed to debtor’s own divorce attorney were not excluded from discharge as support obligations.

*Wallace v. Perry(In re Perry), 423 B.R. 215 (Bankr. S.D. Tex. 2010).   Damages for breach of contract and defamation were found to be non-dischargeable under 11 U.S.C. §523(a)(6).   Among other claims found non-dischargeable was a claim that debtor forwarded anonymous blog postings which were defamatory.   Case contains an excellent discussion of credibility of witnesses.

Am. Bank of Commerce v. Powell (In re Powell), 423 B.R. 201 (Bankr. N.D. Tex. 2010).   Bank’s claim against debtor who was found to be short 5,000 head of cattle was dischargeable.   Bank did not prove that debtor ever diverted cattle or sold them out of trust.   Bank could not establish fraud where it had right to inspect cattle but instead chose to rely on debtor’s log books which it knew were not based on actual inspections.

Mann Bracken, LLP v. Powers (In re Powers), 421 B.R. 326 (Bankr. W.D. Tex. 2009).   Attorney who had never successfully obtained class certification had Rule 11 sanctions awarded against him.   Bankruptcy court denied summary judgment under 11 U.S.C. §523(a)(6) because District Court’s Rule 11 order did not contain required findings for willful and malicious injury.  (Note:  Debt was found non-dischargeable after trial on the merits).  

Gamble-Ledbetter v. Andra Group, L.P. (In re Gamble-Ledbetter), 419 B.R. 682 (Bankr. E.D. Tex. 2009).   Bookkeeper who embezzled from creditor was entitled to nondischargeable judgment under 11 U.S.C. §523(a)(4).

Rucker v. Kercheval (In re Kercheval), 416 B.R. 293 (Bankr. N.D. Tex. 2009).   Transfer of accounts was not intended to harm creditor.   Therefore debt was dischargeable.

Woo, Inc. v. Donelson (In re Donelson), 410 B.R. 495 (Bankr. S.D.Tex. 2009).   Where debtor purchased business with three post-dated checks but business did not earn sufficient funds to cover the checks, debtor did not commit fraud.   Delivery of checks was not a fraudulent representation.

PNK (Lake Charles), LLC v. Guevara (In re Guevara), 409 B.R. 442 (Bankr. S.D. Tex. 2009).   Where gambling debt was unenforceable in Texas, lack of a valid debt precluded non-dischargeable debt.

Levine v. Blake (In re Blake), 401 B.R. 839 (Bankr. S.D. Tex. 2009).   Debt was non-dischargeable where debtor misrepresented his qualifications to perform work.

Universal Card Servs. Corp. v. Akins (In re Akins), 235 B.R. 866 (Bankr. W.D. Tex. 1999).  Creditor’s position was not substantially justified when it issued a pre-approved credit card to debtor, did not conduct discovery or attend the 341 meeting and did not plead fraud with particularity.   As a result, debtor was entitled to recover his attorneys’ fees.

Ragupathi v. Bairrington (In re Bairrington), 183 B.R. 754 (Bankr.W.D. Tex. 1995).  Summary judgment based on collateral estoppel was denied where jury charge in DTPA action could be answered without finding fraud.

Wright v. Moffitt (In re Moffitt), 1992 Bankr. LEXIS 2581 (Bankr. S.D. Tex. 1992).  Former chapter 11 trustee was fiduciary to estate and was found liable for non-dischargeable debt when he could not pay amounts which court ordered him to repay.