THOMAS J. TUCKER, United States Bankruptcy Judge.
Defendant, Stanley R. Kozlowski, III, is a debtor in a Chapter 13 bankruptcy case who allegedly owes a debt to the Plaintiff, the State of Michigan Unemployment Insurance Agency (the "Agency"). The debt includes a statutory penalty for fraud. The alleged fraud was in Defendant knowingly making false statements to the Agency in order to obtain unemployment benefits for which he was not eligible.
Plaintiff alleges that Defendant owes a total of $14,838.68 for unemployment benefit overpayments, interest on the overpayments, and the statutory penalty. The Agency alleges that the entire debt is non-dischargeable in Defendant's pending Chapter 13 bankruptcy case, under 11 U.S.C. § 523(a)(2)(A), as a debt for "false pretenses, a false representation, or actual fraud."
Currently before the Court is Defendant's motion to dismiss (Docket # 4, the "Motion"). In the Motion, Defendant argues that § 523(a)(2)(A) does not apply to the statutory penalty portion of the debt, because the penalty constitutes a noncompensatory debt payable to a governmental unit that is covered by 11 U.S.C. § 523(a)(7). Defendant's theory is that if the penalty is covered by § 523(a)(7), it cannot also be covered by § 523(a)(2), even
Recently, in a case decided by Bankruptcy Judge Randon in this district, a Chapter 13 debtor prevailed on this theory. Mich. Unemployment Ins. Agency v. Andrews (In re Andrews), No., Adv. Pro. No. 15-04724 (Docket # 11), 2015 WL 5813418 (Bankr.E.D.Mich. Oct. 2, 2015). That case is presently on appeal to the district court.
The Court held a hearing on Defendant's Motion, and took it under advisement. For the reasons stated below, the Court respectfully disagrees with the decision in Andrews, and rejects Defendant's argument.
The Court has subject matter jurisdiction over this adversary proceeding under 28 U.S.C. §§ 1334(b), 157(a), and 157(b)(1), and Local Rule 83.50 (E.D.Mich.). This is a core proceeding under 28 U.S.C. § 157(b)(2)(I), because it seeks a "determination[] as to the dischargeability of particular debts." This adversary proceeding also is a core proceeding because it falls within the definition of a proceeding "arising under title 11," and of a proceeding "arising in" a case under title 11, within the meaning of 28 U.S.C. § 1334(b). Matters falling within either of these categories are deemed to be core proceedings. See Allard v. Coenen (In re Trans-Indus., Inc.), 419 B.R. 21, 27 (Bankr.E.D.Mich. 2009) (citing Mich. Emp. Sec. Comm'n v. Wolverine Radio Co., Inc., 930 F.2d 1132, 1144 (6th Cir.1991)).
This is a proceeding "arising under title 11," because it is created or determined by statutory provisions of title 11, including 11 U.S.C. § 523(a)(2)(A). This is a proceeding "arising in" a case under title 11, because it is a proceeding that "by [its] very nature, could arise only in bankruptcy cases." See Allard, 419 B.R. at 27 (internal quotation marks and citation omitted).
Defendant brings the Motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that the Agency's complaint fails to state a claim upon which relief can be granted. Rule 12(b)(6) applies in this adversary proceeding under Federal Rule of Bankruptcy Procedure 7012.
A motion under Rule 12(b)(6) tests the "sufficiency of [a] complaint." Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A court must examine the plaintiff's allegations and determine whether, as a matter of law, "the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993). "[A] court considering a motion to dismiss under Rule 12(b)(6) `must accept all well-pleaded factual allegations of the complaint as true and construe the complaint in the light most favorable to the plaintiff.'" Benzon v. Morgan Stanley Distribs., Inc., 420 F.3d 598, 605 (6th Cir.2005) (quoting Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir.2002)).
A plaintiff must provide "more than labels and conclusions .... Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173
In short, "a complaint must contain (1) `enough facts to state a claim to relief that is plausible,' (2) more than `a formulaic recitation of a cause of action's elements,' and (3) allegations that suggest a `right to relief above a speculative level.'" Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir.2009) (quoting Twombly, 550 U.S. at 545, 127 S.Ct. 1955).
Defendant filed his Chapter 13 bankruptcy petition on July 23, 2015. On November 16, 2015, the Agency filed this adversary proceeding. In the Complaint, the Agency alleges that for the weeks ending between January 8, 2011 through March 26, 2011, Defendant falsely and fraudulently certified that he was not employed, and thereby collected $4,344.00 in unemployment benefits for which he was not eligible under Michigan law.
Under Michigan law, when a claimant seeking unemployment benefits "makes a false statement or representation knowing it to be false, or knowingly and willfully with intent to defraud fails to disclose a material fact, to obtain or increase a benefit," the Agency is entitled to collect restitution for any overpayment, plus what the Agency refers to as a "fraud penalty." See Mich. Comp. Laws § 421.54(b). In cases where a claimant fraudulently obtains benefits of $500 or more, the fraud penalty is equal to four times the amount of the overpayment. Mich. Comp. Laws § 421.54(b)(ii). In this case, after the Agency discovered Defendant's alleged fraud in October 2011, it assessed a penalty of $16,669.00. Before filing bankruptcy, Defendant repaid $7,666.00 to the Agency. The Agency alleges that:
Defendant alleged in his Motion that the Agency applied the $7,666.00 collected from him first to the restitution principal and interest, so that the debt remaining is "unpaid interest and penalties, or just the penalties."
The Agency's position is that the entire debt, including the fraud penalty, is non-dischargeable under 11 U.S.C. § 523(a)(2)(A). Defendant contends that § 523(a)(2) does not apply to the fraud penalty, because it is covered by § 523(a)(7).
In relevant part, § 523(a)(2) applies to debts for "money, property, [or] services... to the extent obtained, by ... false pretenses, a false representation, or actual fraud." 11 U.S.C. § 523(a)(2)(A). Such debts are nondischargeable not only in Chapter 7 cases, but also in Chapter 13 cases. See 11 U.S.C. § 1328(a)(2) (listing specific debts described in § 523(a) that are nondischargeable in Chapter 13, including § 523(a)(2) debts); see also D & M
The United States Supreme Court held in Cohen v. de la Cruz, 523 U.S. 213, 219, 118 S.Ct. 1212, 140 L.Ed.2d 341 (1998) that the debts covered by § 523(a)(2) are not limited to the "value of the money, property, or services received by the debtor" through fraud. Instead, the provision renders nondischargeable
Cohen involved a landlord-debtor who had overcharged his tenants in violation of a rent control ordinance in Hoboken, New Jersey. Cohen, 523 U.S. at 215, 118 S.Ct. 1212. The bankruptcy court awarded the tenants the overpaid rent, plus attorney fees, court costs, and treble damages under a New Jersey consumer protection statute, and held that the entire judgment was nondischargeable under § 523(a)(2). Id. at 215-16, 118 S.Ct. 1212. The Supreme Court ultimately affirmed the bankruptcy court's decision, finding that the "most straightforward reading" of § 523(a)(2) "is that it prevents discharge of
Id. at 219, 223, 118 S.Ct. 1212.
Section 523(a)(7) covers debts for a "fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, [that is] not compensation for actual pecuniary loss," other than certain specified tax penalties. 11 U.S.C. § 523(a)(7). These debts are excepted from discharge in a Chapter 7 case. But such debts are not excepted from discharge in a Chapter 13 case, except in the unusual case of a debtor who fails to make all the payments required by a confirmed plan and obtains a more limited discharge, known as a "hardship discharge," under 11 U.S.C. § 1328(b). See 11 U.S.C. §§ 1328(a)(2) and 1328(c)(2).
Defendant does not concede that he committed fraud, or that he actually owes
First, the Court rejects Defendant's argument that the holding in Cohen, about the broad scope of § 523(a)(2), does not apply to debts covered by § 523(a)(7). Defendant relies on the following passage in Cohen:
Cohen, 523 U.S. at 222, 118 S.Ct. 1212.
Defendant argues that this passage shows the Supreme Court's intent to carve out § 523(a)(7) debts—such as noncompensatory penalties owed to governmental agencies—from the reach of § 523(a)(2), even if those penalties arise from fraud. But this passage in Cohen does not say or imply that. Rather, it merely points out the way in which § 523(a)(2) does not have as limited a scope as § 523(a)(7). The Court cited § 523(a)(7) as proof that Congress could distinguish in § 523(a)'s subsections between types of debt—restitutionary, compensatory, and punitive—and make some types nondischargeable and other types dischargeable when it chose to do so. Congress chose to make such a distinction in § 523(a)(7), but it did not do so in § 523(a)(2). The above passage from Cohen simply is meant to support the Supreme Court's conclusion that § 523(a)(2) covers not only restitutionary debt, but also compensatory and punitive debt—i.e.,
One would expect that, had the Supreme Court meant in Cohen to exclude punitive debts, like statutory penalties—or any type of debt arising from fraud—from the reach of § 523(a)(2), the Court would have said so explicitly. But it did not. Nothing in Cohen suggests that any type of fraud debt is excluded from coverage under § 523(a)(2), whether it is covered by § 523(a)(7) or not.
Defendant argues that Cohen is distinguishable from this case, because the debts owed in Cohen were owed to private parties rather than to a governmental unit. This is not a meaningful distinction. The
In sum, this Court is bound to follow Cohen, and apply it to the Agency's § 523(a)(2) claim in this case.
Defendant argues that other Supreme Court cases show that debts covered by § 523(a)(7) are dischargeable in Chapter 13, even if they arise from fraud. But that is not correct.
Defendant cites Kelly v. Robinson, 479 U.S. 36, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986) and Pennsylvania Dep't of Pub. Welfare v. Davenport, 495 U.S. 552, 110 S.Ct. 2126, 109 L.Ed.2d 588 (1990) for the proposition that § 523(a)(7) covers all non-compensatory, non-tax debts owed to governmental agencies, including those arising from fraud. By its plain language, § 523(a)(7) applies to the fraud penalty at issue in this case, and Kelly and Davenport support this conclusion. See Kelly, 479 U.S. at 51, 107 S.Ct. 353; Davenport, 495 U.S. at 562, 110 S.Ct. 2126. But these cases do not establish that § 523(a)(2) does not also apply, particularly in light of Cohen, which was decided well after Kelly and Davenport.
In Kelly, the Supreme Court held that criminal restitution ordered because of welfare fraud is nondischargeable under § 523(a)(7) in a Chapter 7 case. 479 U.S. at 38-39, 51-52, 107 S.Ct. 353. The Court concluded that neither the phrase, "to and for the benefit of a governmental unit," nor the phrase "not compensation for actual pecuniary loss" excludes criminal restitution from coverage under § 523(a)(7).
The Supreme Court in Kelly did not mention or discuss § 523(a)(2), except to note the district court's finding that the creditor failed to object to discharge of the debt on § 523(a)(2) grounds within the deadline applicable to claims listed in 11 U.S.C. § 523(c). See Kelly, 479 U.S. at 42, nn. 3 & 4, 107 S.Ct. 353. (As discussed in more detail later in this opinion, debts covered by § 523(a)(7) are not subject to the filing deadline that applies to § 523(a) debts of the type listed in § 523(c)).
In Davenport, another pre-Cohen case, the Supreme Court held that criminal restitution ordered because of welfare fraud could be discharged in a Chapter 13 case. 495 U.S. at 555, 110 S.Ct. 2126. In that case, the Supreme Court decided an issue it avoided in Kelly: whether criminal restitution falls within the definition of a "debt" in 11 U.S.C. § 101 (if not, it could never be discharged in bankruptcy).
But the Supreme Court did not mention § 523(a)(2) in Davenport. The creditor apparently did not raise § 523(a)(2) in that case. But it is clear that if the creditor had raised a § 523(a)(2) objection in Davenport, it would not have made a difference in the outcome of that case. This is because at that time (1990), neither § 523(a)(2) debts nor § 523(a)(7) debts were excepted from discharge in Chapter 13. See 11 U.S.C. § 1328(a) (1988).
For these reasons, Davenport cannot be read as implying that § 523(a)(2) did not, or could not, apply to the criminal restitution debt at issue in that case, in addition to § 523(a)(7). Kelly and Davenport merely tend to confirm that the fraud penalty at issue in this case is covered by § 523(a)(7). They do not establish that the fraud penalty also is not covered by § 523(a)(2).
Defendant also focuses on legislative changes to 11 U.S.C. § 1328(a), the Chapter 13 discharge provision, after the Supreme Court's decision in Davenport. There were three changes. First, in 1990 Congress reacted to Davenport by enacting § 1328(a)(3), which made criminal restitution debts nondischargeable in Chapter 13. See Hardenberg v. Va. Dep't of Motor Vehicles (In re Hardenberg), 42 F.3d 986, 992 (6th Cir.1994) ("[S]ubsequent to the Davenport decision, Congress enacted a bill to amend section 1328(a), specifically exempting restitution orders from discharge in Chapter 13 bankruptcies and thereby superseding the Court's holding in Davenport."); see also Criminal Victims Protection Act of 1990, Pub.L. No. 101-581, § 3, 104 Stat. 2865.
Second, in 1994 Congress amended § 1328(a)(3) to also except criminal fines from discharge in Chapter 13. See Bankruptcy Reform Act of 1994, Pub.L. No. 103-394, § 302, 108 Stat. 4106 ("Section 1328(a)(3) of title 11, United States Code, is amended by inserting `, or a criminal fine,' after `restitution.'").
Third, in 2005 Congress amended § 1328(a) to except from discharge in Chapter 13 all § 523(a)(2) debts, as well as debts listed in several other subsections of § 523(a), but not § 523(a)(7) debts. See Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.L. No. 108-9, § 314, 119 Stat. 23.
Defendant argues that this statutory history of § 1328(a)—pecifically, Congress's failure to explicitly list governmental civil fraud penalties as nondischargeable in Chapter 13 like Congress did for criminal restitution in 1990 and criminal fines in 1994, and the fact that § 523(a)(7) debts were not added to the list of nondischargeable
The Court finds Defendant's view of the statutory history unpersuasive, and views the history quite differently. It is true that Congress did not specifically list civil fraud penalties owed to governmental units as nondischargeable in Chapter 13, when it amended § 1328(a) in 1990, 1994, or 2005. But instead, in 2005 Congress made
This is very telling, because the Court must presume that Congress was aware of the very broad scope Cohen had given to § 523(a)(2), when Congress amended § 1328(a) in 2005. As the Supreme Court has held:
Lorillard v. Pons, 434 U.S. 575, 580-81, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978) (citations omitted); see also Shapiro v. United States, 335 U.S. 1, 16, 68 S.Ct. 1375, 92 L.Ed. 1787 (1948) (citations omitted) ("In adopting the language used in the earlier act, Congress `must be considered to have adopted also the construction given by this Court to such language, and made it a part of the enactment.'"); see generally Cannon v. Univ. of Chicago, 441 U.S. 677, 696-97, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979) ("It is always appropriate to assume that our elected representatives, like other citizens, know the law[.]").
In 2005, Congress knew that because of Cohen,
This history shows that Congress intended that
The Court rejects Defendant's remaining arguments. Defendant argues that holding the fraud penalty nondischargeable under § 523(a)(2) creates "an absurd result;"
To a large extent, Defendant's arguments reflect an assumption that more than one subsection of § 523(a) can never apply to the same debt. As discussed below, that assumption is not correct.
Defendant contends that § 523(a)(7) makes the statutory fraud penalty in this case "dischargeable" while under the Agency's view § 523(a)(2) makes the same penalty nondischargeable, and that this is an "absurd result." But Defendant's characterization of the effect of § 523(a)(7) is not accurate. Section 523(a)(7) does not affirmatively make the penalty "dischargeable" in Chapter 13; rather,
11 U.S.C. § 1328(a). Section 1328(a)(2) is clearly a list of nondischargeable debts. If a given debt meets the definition of one of the subsections of § 523(a) listed in § 1328(a)(2), it is nondischargeable, regardless of whether the debt also meets the definition of another subsection which is not listed.
Thus, a ruling that both § 523(a)(2) and § 523(a)(7) apply to the statutory fraud penalty at issue in this case does not create an absurd result, or any statutory conflict. The penalty is not simultaneously "dischargeable" and nondischargeable. The fact that § 523(a)(7) does not make the statutory penalty nondischargeable in Chapter 13 does not mean or imply that § 523(a)(2) cannot make the penalty non-dischargeable in Chapter 13. The two provisions function independently of one another.
Defendant makes a similar "absurd result" argument, relating to the procedure
Section 523(c) provides, in pertinent part:
11 U.S.C. § 523(c). Federal Rule of Bankruptcy Procedure 7001(6) requires that the creditor's request must be filed as an adversary proceeding, and Federal Rule of Bankruptcy Procedure 4007(c) requires that the adversary proceeding be filed "no later than 60 days after the first date set for the meeting of creditors under § 341(a)," unless the court grants an extension of time. Section 523(c) and the time limit of Rule 4007(c) do not apply to an action to determine dischargeability under § 523(a)(7).
Defendant's "absurd result" argument is without merit. Government agencies, like any creditor, have the choice of relying on any one or more of the subsections of § 523(a) to object to the discharge of a particular debt. To the extent the agency chooses to rely on § 523(a)(2) as to all or part of the debt, it must file an adversary proceeding within the time limit applicable to such a claim, because of § 523(c) and Federal Rule of Bankruptcy Procedure 4007(a). To the extent the agency relies on § 523(a)(7), the time limit under § 523(c) does not apply. There is nothing "absurd" about this. And in a Chapter 7 case, in which both §§ 523(a)(2) and 523(a)(7) apply, the agency can join in a single adversary proceeding both nondischargeability theories.
Nor does the Court's holding today render § 523(a)(7) superfluous, as Defendant argues.
There is some overlap in the coverage of the two sections—both sections cover non-compensatory penalties payable to and for the benefit of a governmental unit that arise from fraud.
But the existence of such overlap is not an "absurd" result, and it does not make either section superfluous. Rather, according to the Supreme Court, this type of statutory overlap is not unusual. The Supreme Court dealt with such a case of statutory overlap in Connecticut Nat'l. Bank v. Germain, 503 U.S. 249, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992), and the Court's reasoning applies here:
503 U.S. at 253, 112 S.Ct. 1146 (emphasis added).
The existence of the statutory overlap in this case is the result of two things that this Court simply is not free to ignore: (1) the broad reading the Supreme Court gave to § 523(a)(2) in its 1998 Cohen decision; and (2) the unambiguous language of § 523(a)(7). The Court's decision today is compelled by these two things.
In support of his argument about superfluousness, Defendant cites Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998), and Berkson v. Gulevsky (In re Gulevsky), 362 F.3d 961 (7th Cir.2004). In Geiger, the Supreme Court held that § 523(a)(6), which excepts from discharge debts for "willful and malicious injury" by the debtor, does not apply to a debt arising from a tort when the debtor did not intend to cause injury. 523 U.S. at 61-62, 118 S.Ct. 974. The Supreme Court reasoned that to interpret § 523(a)(6) otherwise would render wholly superfluous § 523(a)(9), which makes certain tort-based debts arising from a debtor's intoxication nondischargeable, but does not require proof of intent to cause injury. See Geiger, 523 U.S. at 62, 118 S.Ct. 974. Geiger is distinguishable—here, this Court is not interpreting § 523(a)(2) any more broadly than the Supreme Court held it must be interpreted in Cohen. Moreover, under this Court's holding today, neither § 523(a)(2) nor § 523(a)(7) is rendered superfluous, as explained above.
In Gulevsky, the Seventh Circuit Court of Appeals held that because oral misrepresentations regarding a debtor's financial condition were not "actionable" under any part of § 523(a)(2), they could not be actionable under § 523(a)(6). 362 F.3d at 963-64. The court reasoned that allowing a creditor to proceed under § 523(a)(6) under such circumstances would "render the writing requirement of § 523(a)(2)(B) superfluous." Id. at 963. But the same problem does not exist in this case, where the Court holds that
And to the extent Gulevsky is inconsistent with the Court's ruling in this case,
In any event, Geiger and Gulevsky do not stand for a broad general rule that more than one subsection of § 523(a) can never apply to the same debt. Nor is there any language in § 523(a), or elsewhere in the Bankruptcy Code, that suggests such a broad general rule. And in the Kelly v. Robinson case, discussed above, the Supreme Court clearly indicated that there is no such broad general rule.
In Kelly, the Supreme Court noted that not only was the criminal fraud restitution debt in that case nondischargeable under § 523(a)(7)(as the Court held), but also such debt could have been found non-dischargeable under 11 U.S.C. § 523(a)(4), as a debt for "larceny,"
The Court also rejects Defendant's argument that, to find these fraud penalties
Defendant appeals to the often-repeated rule that "exceptions to discharge are to be strictly construed against the creditor." See, e.g., Rembert v. AT & T Universal Card Servs., Inc. (In re Rembert), 141 F.3d 277, 281 (6th Cir.1998). But that rule does not resolve the issue in this case. Whatever that rule means in other contexts, in the context of this case, it does not mean that the Court may ignore Cohen or the fact that § 523(a)(2) debts are non-dischargeable in Chapter 13. If anything, one might argue that in Cohen the Supreme Court did not construe § 523(a)(2) strictly against the creditor. But even if that is so, it is water under the bridge—this Court is bound to follow Cohen.
Finally, the Court rejects Defendant's argument that § 523(a)(7) is more specific with respect to the fraud penalty at issue than § 523(a)(2). First, because the Court finds that both provisions clearly apply, and that this creates no conflict and there is no ambiguity, it is unnecessary to address this "specific versus general" argument any further. See Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) ("It is well established that `when the statute's language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.'" (quoting Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6, 120 S.Ct. 1942, 147 L.Ed.2d 1 (2000)); POM Wonderful LLC v. Coca-Cola Co., ___ U.S. ___, 134 S.Ct. 2228, 2238, 189 L.Ed.2d 141 (2014) (citation omitted) ("When two statutes complement each other, it would show disregard for the congressional design to hold that Congress nevertheless intended one federal statute to preclude the operation of the other.").
Second, as is shown by the Court's discussion in Section V.C.5.b above, about Defendant's superfluousness argument,
As noted earlier, the Court's ruling in this case is contrary to the recent decision by Judge Randon of this Court, in the case of Michigan Unemployment Ins. Agency v. Andrews (In re Andrews), No., Adv. Pro. No. 15-04724, 2015 WL 5813418 (Bankr.E.D.Mich. Oct. 2, 2015). Counsel for Defendant, who also represented the defendant in the Andrews case, urges the Court to follow Judge Randon's decision, which is currently on appeal to the district court. The Court is not bound by Judge Randon's decision, of course, and does not find his reasoning in Andrews persuasive. Among other things, this Court disagrees with Judge Randon's reading of Cohen v. de la Cruz, 523 U.S. 213, 118 S.Ct. 1212, 140 L.Ed.2d 341 (1998), and his view of the import of the Supreme Court's citation to § 523(a)(7) therein. Compare Mich. Unemployment Ins. Agency v. Andrews, 2015 WL 5813418, at *4, with discussion in section V.C.1 of this opinion, above. The Court is persuaded that its ruling in this case is correct, for all the reasons discussed in this opinion. So the Court respectfully disagrees with Judge Randon's decision in Andrews.
For the reasons stated in this opinion, the Court will enter an order denying Defendant's Motion to Dismiss this adversary proceeding.
Defendant also cites a case from the Western District of Michigan bankruptcy court in which the Agency itself relied on § 523(a)(7) to argue that the fraud penalties were nondischargeable. See Compl. at 5, ¶ 29, No. 14-01038, Adv. Pro. No. 14-80126 (filed May 27, 2014) (Docket # 1). However, that case was a Chapter 7 case, and was resolved by a consent judgment entered on March 27, 2015, which states that the debt for the restitution and penalties "is nondischargeable under 11 U.S.C. § 523(a)(2)(A) and § 523(a)(7)." See Consent Judgment, Adv. Pro. No. 14-80126 (Docket # 18).
791 F.3d at 682.
