Robert J. Faris, United States Bankruptcy Judge.
On August 31, 2016, Defendant Debtor Anthony Daniel filed this motion for summary judgment on the First Amended Complaint ("FAC") which seeks to make Plaintiff Mark Fukuda's claim nondischargeable pursuant to section 523, deny discharge under section 727,
As stated in my previous order,
Mr. Fukuda was the real estate agent for Mr. Daniel in Mr. Daniel's attempt to purchase the property located at 360 Puuikena Drive, Honolulu, Hawaii 96821 (the "Property"), from Nitto Tsushinki Co., Ltd. ("Seller"). Mr. Daniel's letter appointing Mr. Fukuda as his agent is dated May 25, 2006. Mr. Fukuda also acted as mortgage solicitor for Mr. Daniel to obtain financing for the proposed purchase. Mr. Fukuda opened an escrow account with Title Guaranty to close a sale transaction under a Deposit Receipt, Offer, and Acceptance ("DROA") between the Seller and Mr. Daniel dated May 24, 2006.
Mr. Fukuda did not obtain a loan to finance the purchase. The transaction evidenced by the DROA dated May 24, 2006, did not close.
Mr. Fukuda did not renew his mortgage solicitor's license, so it expired on December 31, 2006.
Mr. Daniel eventually obtained financing and purchased the property on December 7, 2007, without Mr. Fukuda's involvement.
Mr. Daniel seeks summary judgment on Counts 1 through 6 in the FAC. Counts 1 and 3 of the FAC seek nondischargeability pursuant to section 523(a)(2) and (a)(6), respectively. Counts 5 and 6 seek denial of the Mr. Daniel's discharge under section 727(a)(3) and (a)(4).
Count 2, the section 523(a)(4) claim, was previously withdrawn.
Count 4 seeks "termination, annulment, or modification of the automatic stay."
Summary judgment is proper when "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."
Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.
Although federal courts must generally construe pro se pleadings liberally,
Section 523 of the Bankruptcy Code provides that certain kinds of "debt" are not dischargeable in bankruptcy. "Debt" means a "liability on a claim,"
Section 523(a)(2)(A)
A debtor's silence or concealment of a material fact can constitute a false representation which is actionable under § 523(a)(2)(A).
Mr. Fukuda alleges that Mr. Daniel misrepresented or failed to disclose material facts regarding the sale.
Mr. Fukuda alleges that Mr. Daniel failed to disclose that the May 2006 sale of the Property was a "straw sale" for which the Seller was going to provide Mr. Daniel with funding for the down payment. Mr. Fukuda has failed, however, to offer any evidence that the Seller was in fact going to provide down payment financing to Mr. Daniel; he submits evidence of wire transfers between the Seller and Mr. Daniel, but no evidence that any of those transfers was intended to be used for the down payment. Thus, there is no proof that the sale was going to be a "straw sale." Further, Mr. Fukuda has failed to offer any evidence that Mr. Daniel intended to deceive
Mr. Fukuda contends that Mr. Daniel falsely represented that he had sufficient funds to purchase the Property. Mr. Fukuda has failed, however, to offer any evidence that Mr. Daniel knew this representation was false, that he intended to deceive Mr. Fukuda, or that Mr. Fukuda suffered any damages as a result.
Mr. Fukuda alleges that Mr. Daniel initially represented that he held an interest in the Sonia Daniel store (where he worked during the time of the transaction) that would qualify him to obtain a loan to purchase the Property, then later stated that he held no interest in the store.
Mr. Fukuda claims that Mr. Daniel failed to disclose that the transaction was a short sale. Mr. Fukuda, as a licensed real estate agent and a mortgage solicitor, should have been able to determine the nature of the sale without Mr. Daniel disclosing it; thus, there is no evidence that Mr. Fukuda justifiably relied on Mr. Daniel's statements (or silence) on this topic. Further, Mr. Fukuda offers no evidence that Mr. Daniel knew his statements were false, that he intended to deceive Mr. Fukuda, or that the omission injured Mr. Fukuda.
Finally, Mr. Fukuda claims there was a tree encumbrance that the Seller failed to pay prior to listing the Property. Mr. Fukuda does not establish, however, that Mr. Daniel had a duty to disclose any encumbrances on the Property to his real estate agent, or that Mr. Fukuda justifiably relied on Mr. Daniel's silence; rather, one would expect the real estate agent to ascertain the state of title from a title report. Also, Mr. Fukuda offers no evidence that Mr. Daniel intended to deceive Mr. Fukuda, or that the omission injured Mr. Fukuda.
Mr. Daniel is entitled to summary judgment on the section 523(a)(2) claims.
A debt "for willful and malicious injury by the debtor to another entity or to the property of another entity" is not dischargeable.
Mr. Fukuda claims that Mr. Daniel willfully and maliciously injured him by making a death threat and jabbing him with a sharp object. (Mr. Daniel denies that these things occurred.) Mr. Fukuda has failed, however, to offer any evidence of any actual mental or physical injury that Mr. Daniel inflicted on him or of any compensable loss that he suffered. Therefore, Mr. Daniel is entitled to summary judgment under section 523(a)(6).
Under § 727(a)(3), the court shall grant the debtor discharge unless:
A creditor states a prima facie case under § 727(a)(3) by showing:
After showing inadequate or nonexistent records, the burden of proof then shifts to the debtor to justify the inadequacy or nonexistence of the records.
Mr. Fukuda argues that Mr. Daniel failed to produce all of the documents requested during discovery. Mr. Fukuda offers no evidence, however, that the absence of those documents "makes it impossible to ascertain [Mr. Daniel's] financial condition and material business transactions."
Further, I have previously ruled that Mr. Daniel made adequate efforts to produce the documents requested.
Therefore, Mr. Daniel is entitled to summary judgment under section 727(a)(3).
The court may not grant a discharge if the debtor knowingly and fraudulently made a false oath or account in connection with the bankruptcy case.
A fact is material if it bears a relationship to the debtor's business transactions or estate, or concerns the discovery of assets, business dealings, or the existence and disposition of the debtor's property.
Mr. Fukuda alleges that Mr. Daniel (1) falsely represented that he had no interest in the Sonia Daniel store; (2) failed to identify the person who is currently paying his rent; (3) failed to disclose his entire telephone bill; (4) failed to disclose that Mr. Fukuda recovered sanctions against Mr. Daniel in the state court litigation; (5) failed to list the Seller as a co-debtor in his schedules; and (6) failed to identify his current employer. But Mr. Fukuda offers no evidence whatsoever that these alleged falsehoods and omissions had any effect on the bankruptcy case. Therefore, Mr. Fukuda has failed to establish materiality.
Mr. Fukuda also claims that Mr. Daniel failed to list a car that he owns. Mr. Daniel has testified that he does not own a car but rather drives a car belonging to another person. Mr. Fukuda has offered no evidence that this testimony is false.
Mr. Daniel is therefore entitled to summary judgment under section 727(a)(4).
Mr. Daniel also seeks summary judgment on his four-count counterclaim.
The third count (incorrectly labeled as "Count IV") alleges that Mr. Fukuda's complaint is frivolous and seeks recovery of attorneys' fees and damages. The prayer of the complaint cites section 523(d)
A separate final judgment shall enter providing that Mr. Fukuda shall take nothing on his complaint and Mr. Daniel shall take nothing on his counterclaim.
SO ORDERED.