MEMORANDUM

SHELLEY D. RUCKER, Bankruptcy Judge.

Plaintiff Jared Smith ("Plaintiff") has filed this adversary proceeding against defendant debtors Vincent Perry Morse and Mary Lynn Morse (collectively "Defendants" or "Debtors") seeking a judgment from this court that a debt in the amount of $100,000 is non-dischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4), 523(a)(6) and 11 U.S.C. §§ 727(a)(3), 727(a)(4)(A), and 727(a)(5). [Doc. No. 1, Complaint].1 The Plaintiff further seeks interest and attorneys' fees. The Defendants have filed a motion to dismiss the entire Complaint pursuant to Fed. R. Civ. P. 12(b)(6), as incorporated into bankruptcy adversary proceedings by Fed. R. Bankr. P. 7012. [Doc. No. 7]. The Plaintiff opposes the motion to dismiss. [Doc. No. 11].

The court has reviewed the briefing filed by the parties, the pleadings at issue, and the applicable law and makes the following findings of fact and conclusions of law pursuant to Fed. R. Bankr. P. 7052. The court concludes that it will deny the motion to dismiss in part and grant it in part.

I. Background Facts

In his Complaint the Plaintiff alleges the following facts:

Complaint, ¶¶ 1-3, 6-15. Attached as Exhibit A to the Complaint are copies of two checks each made out to "Deck Masters, Inc." ("Deck Masters") in the amount of $50,000. [Doc. No. 1-1, Ex. A]. Exhibit B attached to the Complaint is a copy of an "Installment Note with Balloon Payment" ("Note") dated August 29, 2012 in the amount of $100,000. [Doc. No. 1-1, Ex. B]. The Note states in part that:

Id.

II. Jurisdiction

28 U.S.C. §§ 157 and 1334, as well as the general order of reference entered in this district provide this court with jurisdiction to hear and decide this adversary proceeding. The Plaintiff's action regarding the dischargeability of particular debts is a core proceeding. See 28 U.S.C. § 157(b)(2)(I).

III. Standard of Review

Federal Rule of Bankruptcy Procedure 7012(b) states that Federal Rule of Civil Procedure 12(b) applies to adversary proceedings. See Fed. R. Bankr. P. 7012(b). Federal Rule of Civil Procedure 12(b)(6) allows a party to move to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must "treat as true all of the well-pleaded allegations of the complaint." Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir. 1996)). In addition, a court must construe all allegations in the light most favorable to the plaintiff. Bower, 96 F.3d at 203 (citing Sinay v. Lamson & Sessions, 948 F.2d 1037, 1039 (6th Cir. 1991)).

The Supreme Court has explained "an accepted pleading standard" that "once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1969 (2007). The complaint "must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Allard v. Weitzman (In re DeLorean Motor Co.), 991 F.2d 1236, 1240 (6th Cir. 1993) (quotation omitted). The court will thus review the motion to dismiss by assuming the facts as alleged by the Plaintiffs.

IV. Analysis

A. The Plaintiff's Section 523(a) Claims

11 U.S.C. § 727 provides for the discharge of an individual from any specific debt unless that debt is excepted from discharge pursuant to 11 U.S.C. § 523. 11 U.S.C. § 727(a)-(b). The creditor must prove by a preponderance of the evidence that its debt is non-dischargeable under 11 U.S.C. § 523. See Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 659 (1991). Exceptions to discharge are narrowly construed in the debtor's favor. See Monsanto Co. v. Trantham (In re Trantham), 304 B.R. 298, 306 (B.A.P. 6th Cir. 2004).

1. Section 523(a)(2)(A)

11 U.S.C. § 523(a)(2)(A) prohibits discharges of debt based on "(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition; . . ." The Sixth Circuit has held that to demonstrate nondischargeability pursuant to 11 U.S.C. § 523(a)(2)(A), a creditor must prove four elements:

Rembert v. AT&T Universal Card Servs., Inc. (In re Rembert), 141 F.3d 277, 280-81 (6th Cir. 1998). A creditor bears the burden of demonstrating these elements by a preponderance of the evidence. Id. at 281 (relying on Grogan, 498 U.S. at 291, 111 S.Ct. at 661).

a. Section 523(a)(2)(A) Claim Against Mr. Morse

Here the court finds that a specific false statement has been alleged. Mr. Morse said he was not going to obtain a bank loan. He was going to use Mr. Smith's $100,000 to build the house at 902 Geswein Court.

The court concludes that the Plaintiff has adequately stated a claim of nondischargeability of a debt pursuant to Section 523(a)(2)(A). The Plaintiff has alleged that he extended credit to the Defendant Mr. Morse. He has provided an exhibit demonstrating the provision of credit in the amount of $100,000 to Deck Masters and the Morses. [Doc. No. 1-1, Ex. A]. He has further alleged that the Defendant Mr. Morse obtained the credit by making a false representation about the intent to use the $100,000 to build a residence at 902 Geswein Court. The Plaintiff has attached a copy of the Note relating to building a home at 902 Geswein Court to his Complaint as Exhibit B. [Doc. No. 1-1, Ex. B]. Further, the Plaintiff has asserted that instead of using the $100,000 to fund the construction of the residence at Geswein Court, Mr. Morse obtained a construction loan for the Geswein Court property. See Complaint, ¶ 12. The Complaint further alleges that "[u]nbeknownst to Smith, Defendant Vincent Morse did not use the loaned funds to build 902 Geswein Court. Instead, Defendant Vincent Morse transferred funds immediately to himself and also used funds to pay debts of Deck Masters, Inc. on projects other than the house at 902 Geswein Court, and for personal expenditures." Complaint, ¶ 11. The Complaint finally alleges that the lender foreclosed, thereby destroying any prospect for Mr. Smith to recover any funds from Mr. Morse's sale of the house.

The Complaint also sufficiently alleges that the Plaintiff relied on Mr. Morse's representations. It states that "[b]ased upon the representations of Defendant Vincent Morse, Plaintiff Smith loaned $100,000.00 to Defendant Morse for Deck Masters, Inc. for the sole purpose to build the house located at 902 Geswein Court, Chattanooga, Tennessee 37412." Complaint, ¶ 10. This allegation is sufficient to satisfy the third element of a Section 523(a)(2)(A) claim. The Plaintiff further asserts that his reliance on the Defendant Mr. Morse's statements regarding the financing for the house and the Defendants' willingness to provide the Plaintiff with the Note was the proximate cause of the loss of $100,000. This satisfies the fourth element of the Section 523(a)(2)(A) claim. The court therefore will deny the Defendants' motion to dismiss the Plaintiff's Section 523(a)(2)(A) claim against Mr. Morse.

b. Section 523(a)(2)(A) Claim Against Mrs. Morse

The court concludes that with respect to the Section 523(a)(2)(A) claim against Mrs. Morse, the Plaintiff has failed to allege facts sufficient to support the elements of such claim against her. The only evidence of Mrs. Morse's involvement in the loan from the Plaintiff is her signature on the Note. There is no allegation of any representations that she made, any knowledge of a scheme to deceive the Plaintiff or even her presence at any of the discussions involving the loan. Therefore, the court will dismiss the Section 523(a)(2)(A) claim against Mrs. Morse. The Defendants' motion will be granted with respect to this claim against Mrs. Morse.

2. Non-dischargeability Pursuant to 523(a)(4)

11 U.S.C. § 523(a)(4) states in relevant part: "A discharge under section . . . 727 of this title does not discharge an individual debtor from any debt — . . . (4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny; . . . ." 11 U.S.C. § 523(a)(4). Federal common law will determine the meaning of the terms in Section 523(a)(4). See SmithKline Beecham Corp. v. Lam (In re Lam), No. 06-68805-MGD, 2008 WL 7842072, at *3 (Bankr. N.D. Ga. Mar. 27, 2008) (citing Kaye v. Rose (In re Rose), 934 F.2d 901 (7th Cir. 1991); In re Wallace, 840 F.2d 762 (10th Cir. 1988)) (other citations omitted). The creditor must prove by a preponderance of the evidence that a debt is nondischargeable under 11 U.S.C. § 523. See Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 659 (1991).

The Sixth Circuit has explained that:

Brady v. McAllister (In re Brady), 101 F.3d 1165, 1172-73 (6th Cir. 1996), abrogated on other grounds as explained in National Devel. Servs. v. Denbleyker (In re Denbleyker), 251 B.R. 891 (Bankr. D. Colo. 2000) (quoting Gribble v. Carlton (In re Carlton), 26 B.R. 202, 205 (Bankr. M.D. Tenn. 1982) and Moore v. United States, 160 U.S. 268, 269, 16 S.Ct. 294, 295 (1895)) and (citing Ball v. McDowell (In re McDowell), 162 B.R. 136, 140 (Bankr. N.D. Ohio 1993)). To demonstrate embezzlement a creditor must prove all three elements: "(1) `that he entrusted his property to the debtor,' (2) that `the debtor appropriated the property for a use other than that for which it was entrusted,' and (3) that `the circumstances indicate fraud.'" Cash America Fin. Servs., Inc. v. Fox (In re Fox), 370 B.R. 104, 116 (B.A.P. 6th Cir. 2007) (quoting In re Brady, 101 F.3d at 1173). With respect to the third element, the Sixth Circuit has noted:

In re Fox, 370 B.R. at 116 (quotations and citations omitted). Circumstantial evidence of fraud is sufficient, but the court must have some evidence of the deceit or scheme to find fraudulent intent. In re Fox, 370 B.R. at 116-117. In In re Fox the 6th Circuit Bankruptcy Appellate Panel provided helpful guidance regarding the analysis of what is required to prove fraudulent intent for purposes of embezzlement under 11 U.S.C. § 523(a)(4):

Id. (quoting In re Vitanovich, 259 B.R. at 877 and In re Weber, 892 F.2d 534 (7th Cir. 1989), abrogated on other grounds by Grogan, 498 U.S. 279, 111 S.Ct. 654) (other quotations and citations omitted).

a. Section 523(a)(4) Claim Against Mr. Morse

The court concludes that the Plaintiff has also alleged the elements of embezzlement under Section 523(a)(4) against Mr. Morse. The Plaintiff has sufficiently alleged that he loaned $100,000 to Deck Masters, thereby entrusting it with the Plaintiff's funds. The funds were entrusted to the Defendant Mr. Morse to construct a residence at Geswein Court. The Plaintiff alleges that instead, Mr. Morse, through Deck Masters, transferred the funds to himself for personal expenses and authorized Deck Masters to use the funds to pay pre-existing debts unrelated to the Geswein Property. The Plaintiff alleges that Mr. Morse misrepresented to the Plaintiff the purpose of the loan and that he never intended to use the Plaintiff's funds for the construction at Geswein Court. The Plaintiff has alleged that Mr. Morse immediately transferred the funds to himself and that he obtained a construction loan for Geswein Court only days after obtaining the Plaintiff's money. Therefore, the court concludes that the Plaintiff has stated a claim for embezzlement under Section 523(a)(4) against Mr. Morse. Defendants' motion to dismiss the Section 523(a)(4) claim against Mr. Morse will be denied.

b. Section 523(a)(4) Claim Against Mrs. Morse

The court concludes that, as with the Section 523(a)(2)(A) claim against Mrs. Morse, the Plaintiff has failed to allege the elements of a Section 523(a)(4) embezzlement claim against Mrs. Morse. There is no allegation in the Complaint that Mrs. Morse took the Plaintiff's money or even that she benefited from it. The court will grant the Defendants' motion to dismiss the Section 523(a)(4) claim against Mrs. Morse.

3. Section 523(a)(6)

11 U.S.C. § 523(a)(6) states in relevant part:

11 U.S.C. § 523(a)(6).

Whether a debt is dischargeable pursuant to 11 U.S.C. § 523(a)(6) is determined by analyzing federal law. See, e.g., J & A Brelage, Inc. v. Jones (In re Jones), 276 B.R. 797, 800-01 (Bankr. N.D. Ohio 2001) (citing Call Federal Credit Union v. Sweeney (In re Sweeney), 264 B.R. 866, 870 (Bankr. W.D. Ky. 2001); Hinze v. Robinson (In re Robinson), 242 B.R. 380, 388 (Bankr. N.D. Ohio 1999)). 11 U.S.C. § 523(a)(6) provides that a debt that is both willful and malicious is nondischargeable. See 11 U.S.C. § 523(a)(6). "[T]he judgment must be for an injury that is both willful and malicious. The absence of one creates a dischargeable debt." Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 463 (6th Cir. 1999). The U.S. Supreme Court has addressed the meaning of "willful" within the context of § 523(a)(6). Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974 (1998). As summarized by the Sixth Circuit:

In re Markowitz, 190 F.3d at 464 (quoting Geiger, 523 U.S. at 61-62, 118 S.Ct. at 977).

Following the lead of the Supreme Court in Geiger, the Sixth Circuit held that "unless `the actor desires to cause consequences of his act, or . . . believes that the consequences are substantially certain to result from it,' he has not committed a `willful and malicious injury' as defined under § 523(a)(6)." In re Markowitz, 190 F.3d at 464. Proof of willful behavior must often be demonstrated through the use of circumstantial evidence. See In re Jones, 276 B.R. at 802. The bankruptcy court in In re Jones noted that "willful" behavior can "be indirectly established by the creditor demonstrating the existence of two facts: (1) the debtor knew of the creditor's lien rights; and (2) the debtor knew that his conduct would cause injury to those rights." Id.

As to the element of malice, a malicious injury occurs "when a person acts in conscious disregard of their duties or without just cause or excuse." In re Jones, 276 B.R. at 803 (citing Gonzalez v. Moffitt (In re Moffitt), 254 B.R. 389, 396 (Bankr. N.D. Ohio 2000)). A finding of maliciousness does not require a determination of ill-will or specific intent. See In re Trantham, 304 B.R. at 308. However, malice requires the finding of a level of conduct beyond negligent or reckless behavior. West Michigan Community Bank v. Wierenga (In re Wierenga), 431 B.R. 180, 185 (Bankr. W.D. Mich. 2010) (citation omitted); see also, JP Morgan Chase Bank, NA v. Algire (In re Algire), 430 B.R. 817, 823 (Bankr. S.D. Ohio 2010); Geiger, 523 U.S. at 64, 118 S.Ct. 974. A creditor may prove the element of maliciousness by demonstrating that "(1) the debtor has committed a wrongful act, (2) the debtor undertook the act intentionally, (3) the act necessarily causes injury, and (4) there is no just cause or excuse for the action." In re Algire, 430 B.R. at 823 (citing Vulcan Coals, Inc. v. Howard, 946 F.2d 1226, 1228 (6th Cir. 1991), abrogated on other grounds by Geiger, 523 U.S. 57).

In National Sign and Signal v. Livingston the district court explained that the § 523(a)(6) exception applies where the injury invades a creditor's legal rights. 422 B.R. 645, 653 (W.D. Mich. 2009) (citing Steier v. Best (In re Best), 109 F. App'x 1, 6 (6th Cir. 2004)). The district court quoted the Sixth Circuit decision in In re Best noting:

a. Section 523(a)(6) Claim Against Mr. Morse

In this case the court concludes that the Plaintiff has alleged the requisite elements of his Section 523(a)(6) claim against Mr. Morse. He asserts that the Defendant Mr. Morse intentionally deceived him regarding the purpose of the $100,000 loan. The Plaintiff contends that Mr. Morse misrepresented the intended usage of the $100,000 and instead of using the funds to build the property at Geswein Court, he used the $100,000 for his own personal use. The Plaintiff alleges Mr. Morse was without just cause or excuse to use the $100,000 for purposes other than those outlined in the Note and that the Plaintiff suffered injury in the form of a loss of his $100,000. These allegations are sufficient to satisfy the elements of Section 523(a)(6). Defendants' motion to dismiss the Plaintiff's Section 523(a)(6) claim against Mr. Morse will be denied.

b. Section 523(a)(6) Claim Against Mrs. Morse

Again, the court concludes that the Plaintiff has failed to allege elements sufficient to satisfy a Section 523(a)(6) claim against Mrs. Morse. There is no allegation that she caused an injury to the Plaintiff or even conspired to do so. The court will grant the Defendants' motion to dismiss the Section 523(a)(6) claim against Mrs. Morse.

B. The Plaintiff's Section 727 Denial of Discharge Claims

11 U.S.C. § 727 provides that a debtor shall receive a discharge of all his debts, except in certain limited circumstances. The Plaintiff asserts that several of those exceptions to the right of discharge apply to the Debtor. A plaintiff must prove the elements of 11 U.S.C. § 727(a) by a preponderance of the evidence, and courts generally construe Section 727(a) liberally in favor of the debtor. Keeney v. Smith (In re Keeney), 227 F.3d 679, 683 (6th Cir. 2000); see also, Roberts v. Oliver (In re Oliver), 414 B.R. 361, 373 (Bankr. E.D. Tenn. 2009).

1. Section 727(a)(3)

11 U.S.C. § 727(a)(3) precludes a discharge if:

11 U.S.C. § 727(a)(3).

Although exceptions to discharge are narrowly construed in the debtor's favor, "`[b]road discretion is vested in the referee to grant or deny a bankruptcy petition based on a determination that books or records are adequate under the terms of the statute and the facts of each case . . . .'" Dolin v. Northern Petrochemical Co. (In re Dolin), 799 F.2d 251, 253 (6th Cir. 1986) (quoting McBee v. Sliman, 512 F.2d 504, 506 (5th Cir. 1975)); see also In re Trantham, 304 B.R. at 306; CM Temporary Servs., Inc. v. Bailey (In re Bailey), 375 B.R. 410, 415 (Bankr. S.D. Ohio 2007) ("statute is to be liberally construed in favor of the Debtor").

Courts in this Circuit have interpreted 11 U.S.C. § 727(a)(3) "to apply a shifting burden of proof":

CM Temporary Servs., Inc. v. Bailey (In re Bailey), 375 B.R. 410, 415-16 (Bankr. S.D. Ohio 2007) (quoting Turoczy Bonding Co. v. Strbac (In re Strbac), 235 B.R. 880, 882 (B.A.P. 6th Cir. 1999)) (other citations omitted). In addition, "`[t]he adequacy of debtor's records must be determined on a case by case basis. Considerations to make this determination include debtor's occupation, financial structure, education, experience, sophistication and any other circumstances that should be considered in the interest of justice.'" In re Strbac, 235 B.R. at 882 (quoting United States v. Trogdon (In re Trogdon), 111 B.R. 655, 658 (Bankr. N.D. Ohio 1990)). Further, "intent is not an element under § 727(a)(3)." See Hendon v. Lufkin (In re Lufkin), 393 B.R. 585, 593 (Bankr. E.D. Tenn. 2008). Bankruptcy courts in this Circuit have created a standard for assessing the adequacy of recordkeeping that recommends that "the Debtor's records should be measured `against the type of books and records kept by a reasonably prudent debtor with the same occupation, financial structure, education, and experience.'" Ayers v. Babb (In re Babb), 358 B.R. 343, 354 (Bankr. E.D. Tenn. 2006) (quoting Wazeter v. Michigan Nat'l Bank (In re Wazeter), 209 B.R. 222, 227 (W.D. Mich. 1997) (internal quotation omitted)).

a. Section 727(a)(3) Claim Against Mr. Morse

In support of this claim, the Plaintiff alleges in the Complaint:

Complaint, ¶ 15. The Complaint asserts that the Defendant Mr. Morse was a businessman who owned a construction business and who developed property. The Complaint further alleges that given his experience, Mr. Morse failed to keep adequate records regarding how he disposed of the Plaintiff's $100,000. Two distributions totaling $60,000 were made from Deck Masters to Mr. Morse by cashier's check for which no explanation has been provided. These distributions were made shortly after the Plaintiff's funds were deposited into the Deck Masters' account. Mr. and Mrs. Morse were officers and the sole shareholders of Deck Masters. When questioned at his Section 341 meeting, Mr. Morse could not provide any records regarding his companies, Deck Masters, and North Chattanooga Enterprises, LLC, or explain transfers of funds between those two companies.

The Complaint further asserts:

Complaint, ¶ 37.

The court concludes that, based on the allegations of the Complaint, the Plaintiff has adequately stated the elements of his Section 727(a)(3) claim against Mr. Morse. The court finds that the Plaintiff has alleged that Defendant Mr. Morse failed to keep documentation of how he spent the Plaintiff's funds and that the lack of records has not been adequately explained. The Plaintiff has also alleged that Mr. Morse was a businessman whose experience would not justify the inexplicable lack of financial records. Therefore, the Defendants' motion to dismiss the Plaintiff's Section 727(a)(3) claim against Mr. Morse will be denied.

b. Section 727(a)(3) Claim Against Mrs. Morse

The court concludes that the Plaintiff has alleged sufficient elements of a Section 727(a)(3) claim against Mrs. Morse. The Note reflects that Mrs. Morse is the corporate secretary of Deck Masters. [Doc. No. 1-1, Ex. B]. As such, she should be aware of where the proceeds of the loan from the Plaintiff went. However, there is no indication that she ever provided any explanation of the use of the funds. When viewing the Complaint in the light most favorable to the Plaintiff, Mrs. Morse is an officer and 49% shareholder of the Debtors' primary business who should have knowledge regarding a business transaction as large as the loan represented by the Note. Therefore, the court will deny the Defendants' motion to dismiss the Section 727(a)(3) claim against Mrs. Morse.

2. Non-Dischargeability Pursuant to 11 U.S.C. § 727(a)(4)(A)

The Bankruptcy Code provides that a debtor shall receive a discharge from the court unless "the debtor knowingly and fraudulently, in or in connection with the case — (A) made a false oath or account; . . ." 11 U.S.C. § 727(a)(4)(A). Courts in this Circuit have determined that to state a claim pursuant to § 727(a)(4)(A), a plaintiff must demonstrate by a preponderance of the evidence the following five elements:

Clippard v. Jarrett (In re Jarrett), 417 B.R. 896, 903 (Bankr. W.D. Tenn. 2009) (citing In re Keeney, 227 F.3d at 685).

Statements made by a debtor in his bankruptcy schedules, his personal statement of financial affairs, and at 341 meetings are all statements made under oath. Noland v. Johnson (In re Johnson), 387 B.R. 728, 743 (Bankr. S.D. Ohio 2008) (citing Hamo v. Wilson (In re Hamo), 233 B.R. 718, 725 (B.A.P. 6th Cir. 1999)) (other citations omitted). Whether a false statement under oath has been made pursuant to 11 U.S.C. § 727(a)(4)(A) is a question of fact. In re Jarrett, 417 B.R. at 903. In In re Hamo, the Bankruptcy Appellate Panel for the Sixth Circuit quoted a bankruptcy court regarding the purpose of § 727(a)(4)(A):

233 B.R. at 725-726 (quoting Hillis v. Martin, Martin v. Martin (In re Martin), 124 B.R. 542, 545, 547-48 (Bankr. N.D. Ind. 1991)).

The Sixth Circuit explained in In re Keeney how courts should analyze section 727(a)(4)(A) claims:

227 F.3d at 685-86 (citing In re Chavin, 150 F.3d 726, 728 (7th Cir. 1998)) (quoting Williamson v. Fireman's Fund Ins. Co., 828 F.2d 249, 251 (4th Cir. 1987); Beaubouef v. Beaubouef (In re Beaubouef), 966 F.2d 174, 178 (5th Cir. 1992)).

a. Section 727(a)(4)(A) Claim Against Mr. Morse

The Plaintiff alleges that in his Section 341 meeting Mr. Morse "testified under oath that Plaintiff Smith loaned him $100,000.00 as an investment in Deck Masters, Inc. in general and not for any certain project or property." This allegation sufficiently alleges a claim under Section 727(a)(4)(A). The Plaintiff contends that Mr. Morse made a false statement regarding the purpose of the $100,000 loan, under oath in his Section 341 meeting, the Defendant knew the statement was false when he made it based on the Note, the statement was made with fraudulent intent to obscure the purpose of the loan, and it related materially to the bankruptcy. The Defendants' motion to dismiss this claim against Mr. Morse will therefore be denied.

b. Section 727(a)(4)(A) Claim Against Mrs. Morse

The court will grant the Defendants' motion to dismiss the Plaintiff's Section 727(a)(4)(A) claim against Mrs. Morse. There is no allegation in the Complaint that Mrs. Morse made any false statement under oath at the Section 341 meeting. Nor are there any other false statements by Mrs. Morse that the Plaintiff alleges. Accordingly, the court will dismiss this claim against Mrs. Morse.

3. Section 727(a)(5)

Section 727(a)(5) allows a court to deny a discharge where "the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities." 11 U.S.C. § 727(a)(5). With respect to a Section 727(a)(5) claim:

Roberts v. Debusk (In re Debusk), No. 08-3015, 2008 WL 3904448, at *8 (Bankr. E.D. Tenn. Aug. 19, 2008) (citing Schilling v. O'Bryan (In re O'Bryan), 246 B.R. 271, 279 (Bankr. W.D. Ky. 1999) and quoting Baker v. Reed (In re Reed), 310 B.R. 363, 368 (Bankr. N.D. Ohio 2004)).

a. Section 727(a)(5) Claim Against Mr. Morse

As noted supra with respect to his Section 727(a)(3) claim, the Plaintiff has alleged that Mr. Morse has failed to explain what happened to the Plaintiff's $100,000, and he has failed to explain adequately the transfers between himself, Deck Masters and North Chattanooga Enterprises, LLC. The Plaintiff asserts that "[t]he Debtors specifically failed to explain satisfactorily where the funds they received from Plaintiff Smith went, why funds were transferred to Defendant Vincent Morse, and what Defendant Vincent Morse used the funds for once transferred. Defendant Vincent Morse could not explain several other transactions involving the funds or the disposition of the funds after receipt." Complaint, ¶ 46. The court concludes that these allegations adequately state a claim for denial of discharge against Mr. Morse pursuant to Section 727(a)(5). Defendants' motion to dismiss the Plaintiff's Section 727(a)(5) claim against Mr. Morse will be denied.

b. Section 727(a)(5) Claim Against Mrs. Morse

With respect to the Section 727(a)(5) claim against Mrs. Morse, the court notes that the Complaint alleges that she is the secretary and a 49% shareholder of Deck Masters. Complaint, ¶ 3. She also signed the Note. [Doc. No. 1-1, Ex. B]. Viewed in the light most favorable to the Plaintiff, these three allegations lead the court to an inference that she benefited from the money transferred to Mr. Morse. The Complaint alleges that both Debtors fail to explain satisfactorily where such funds went. Complaint, ¶ 46. The court notes that part of the problem for the Plaintiff is that the Debtors have provided little or no information regarding what happened to monies deposited with Deck Masters. In addition, a Section 727(a)(5) claim does not require any level of fraudulent intent on behalf of Mrs. Morse. The court concludes that because of the early stage of the case before much discovery has occurred and the need to view the facts in the light most favorable to the Plaintiff, the court will deny the motion to dismiss the Section 727(a)(5) claim against Mrs. Morse.

V. Conclusion

As explained supra, the court has determined that it will GRANT in part and DENY in part the Defendants' motion to dismiss.

The court concludes that the Plaintiff has adequately alleged the elements of his Section 523(a)(2)(A), 523(a)(4), 523(a)(6), 727(a)(3), 727(a)(4)(A), and 727(a)(5) claims against Mr. Morse. The Defendants' motion to dismiss these claims against Mr. Morse will therefore be DENIED.

The court concludes that the Plaintiff has failed adequately to allege the elements of his 523(a)(2)(A), 523(a)(4), 523(a)(6), and 727(a)(4)(A) claim against Mrs. Morse. The court will therefore GRANT the Defendants' motion to dismiss these claims against Mrs. Morse. However, the court concludes that the Plaintiff has adequately alleged the elements of his Section 727(a)(3) and 727(a)(5) claim against Mrs. Morse. The court will therefore DENY Defendants' motion to dismiss these claims against Mrs. Morse.

A separate order will enter.