ORDERED in the Southern District of Florida on March 1, 2016.

Size: px

Start display at page:

Download "ORDERED in the Southern District of Florida on March 1, 2016."

Arthur Williams
5 years ago
Views:

Case 15-01424-JKO Doc 32 Filed 03/02/16 Page 1 of 6 ORDERED in the Southern District of Florida on March 1, 2016. John K.

Anthony Mancini, Debtor. / Francis Jay, vs. Plaintiff, Case No.: 14-36709-JKO Chapter 7 Adv. Proc. No.: 15-1424-JKO John Anthony Mancini, Defendant.

1 Case JKO Doc 32 Filed 03/02/16 Page 1 of 6 ORDERED in the Southern District of Florida on March 1, John K. Olson, Judge United States Bankruptcy Court UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION In re: John Anthony Mancini, Debtor. / Francis Jay, vs. Plaintiff, Case No.: JKO Chapter 7 Adv. Proc. No.: JKO John Anthony Mancini, Defendant. / ORDER GRANTING DEFENDANT S MOTION TO DISMISS [ECF 8] AS TO COUNT I OF THE COMPLAINT THIS ADVERSARY PROCEEDING came before the court on November 18, 2016, upon

2 Case JKO Doc 32 Filed 03/02/16 Page 2 of 6 John Anthony Mancini s (the Defendant ) Motion to Dismiss Adversary Proceeding (the Motion ) [DE 8]. Upon review of the pleadings, the Motion is granted. FACTS 1. Procedural history On June 23, 2015, Francis Jay (the Plaintiff ) commenced this adversary proceeding against the Defendant [ECF 1]. On August 17, 2015, Defendant filed a Motion to Dismiss the Adversary Proceeding [ECF 8]. On August 19, 2015, The Court entered an Order [ECF 10] Setting a Briefing Schedule on the Motion [ECF 8]. On September 1, 2015, Plaintiff timely filed an Opposition Response [ECF 13] to the Motion [ECF 8]. On September 15, 2015, Defendant timely filed a Reply [ECF 14]. The Motion [ECF 8] was heard by the Court on October 1, On October 15, 2015, the Court entered an Order Granting in Part the Defendant s Motion to Dismiss as to Count II of the Complaint with Prejudice [ECF 16]. The Court s Order [ECF 16] deferred ruling on Count I and set a further briefing schedule with respect to Count I of the Complaint. On October 30, 2015, the Plaintiff timely filed a Supplemental Memorandum of Law [ECF 27], and on November 13, 2015, the Defendant, likewise, timely filed his Supplemental Memorandum of Law [ECF 28]. Pursuant to this Court s Scheduling Order [ECF 16], further oral argument on the Motion [ECF 8] was heard by the Court on November 18, Facts as alleged by Plaintiff The Plaintiff and Defendant discussed the potential purchase of certain real property located at 500 North Birch Road, Fort Lauderdale, FL and further defined as Unit 8 of Building A of the [sic] Marbella Townhomes (the Property ). See [ECF1] at 11. The Defendant was selling the -2-

3 Case JKO Doc 32 Filed 03/02/16 Page 3 of 6 Property on behalf of Magna Casa Development, LLC ( Magna ). Plaintiff and Magna Casa entered into a contract (the contract ) for the sale of the Property. See [ECF 1] at Ex. 2. Plaintiff paid Magna Casa a $350,000 deposit, pursuant to the contract, towards the purchase of the Property. However, the Property was in foreclosure at the time the Plaintiff entered into the contract with Magna Casa. The Defendant made no effort to make the Plaintiff aware of the foreclosure, and indeed, the Plaintiff alleges that he was unaware of the foreclosure at the time the Plaintiff entered into the contract with Magna Casa. DISCUSSION 1. Legal standard for dismissal of adversary complaint When a defendant files a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), made applicable under Bankruptcy Rule 7012, the Court must determine if the Plaintiff in the complaint has alleged enough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546 (2007) (abrogating Conley v. Gibson, 355 U.S. 41 (1957)). Plaintiffs must raise a right to relief above the speculative level and nudge[] their claims across the line from conceivable to plausible. Twombly, 550 U.S. at 569. A court weighing a motion to dismiss asks not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Twombly, 550 U.S. at 583 n.8 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). The allegations of the claim must be taken as true and must be read to include any theory on which the plaintiff may recover. See Linder v. Portocarrero, 963 F.2d 332, 336 (11th Cir. 1992) (citing Robertson v. Johnston, 376 F.2d 43 (5th Cir. 1967)). Along with the complaint itself, the Court may consider exhibits attached to the complaint that are central to the plaintiff s claim. -3-

4 Case JKO Doc 32 Filed 03/02/16 Page 4 of 6 Brooks v. Blue Cross & Blue Shield of Florida, Inc., 116 F.3d 1364, (11th Cir. 1997). 2. Section 523(a)(2) of the Bankruptcy Code Generally speaking, exceptions to dischargeability are construed strictly against the creditor and liberally in favor of the debtor, in order to accomplish the fresh start goal of bankruptcy. In re Walker, 48 F.3d 1161 (11th Cir. 1995). However, this liberal application of the Bankruptcy Code is meant to protect debtors only in those cases where there is no intent to violate its provisions. In re Garman, 643 F.2d 1252, 1257 (7th Cir.1980). With this principle in mind, the Court must interpret the statute (11 U.S.C. 523(a)(2)) upon which the Plaintiff bases its claim. The Complaint seeks to state a claim for nondischargeability under 11 U.S.C. 523(a)(2)(A). The pertinent part of section 523(a)(2) reads as follows: A discharge under...this title does not discharge an individual debtor from any debt... to the extent obtained by-- (A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor s or an insider s financial condition; (B) use of a statement in writing (i) that is materially false; (ii) respecting the debtor s or an insider s financial condition (Iii) on which the creditor...reasonably relied 11 U.S.C. 523(a)(2). It is stated clearly in the Congressional Record of the floor discussion in contemplation of the 1978 Bankruptcy Code enactment, that sections 523(a)(2)(A) and (B) are intended to be mutually exclusive. In re Seabourne, 106 B.R. 711, (Bankr. M.D. Fla. 1989) (citing 124 Cong. Rec. H (daily ed. Sept. 28, 1978)). That is to say, if a debtor s particular false representation is deemed to be respecting [his] financial condition, the claim can only be -4-

5 Case JKO Doc 32 Filed 03/02/16 Page 5 of 6 raised under section 523(a)(2)(B), and consequently must show a writing. It cannot be brought under section 523(a)(2)(A) in the alternative. Because of this relationship, the broadness or narrowness with which one defines financial condition will determinably grow or shrink the world of representations that would require a writing in order to qualify for nondischargeability under section 523(a)(2). As a threshold issue, this Court must determine whether the alleged fraudulent misrepresentations in this case fall under the financial condition exception to section 523(a)(2)(A). If they do, then they must be brought as claims under section 523(a)(2)(B) and not (A), and, consequently, must show a writing. Because no writing has been alleged in this case, if I determine the representations in this case to be respecting the Debtor s financial condition, the Complaint would fail to adequately state a claim under section 523(a)(2), and the Motion would therefore be granted. 3. Section 523(a)(2)(A) of the Bankruptcy Code To construe the elements of section 523(a)(2)(A), courts have looked to the common law of torts. See Alicea v. Alicea, 230 B.R. at 500 (citing Field v. Mans, 516 U.S. 59, 70 (1995); Palmacci v. Umpierrez, 121 F.3d 781, 786 (1st Cir. 1997); In re Apte, 96 F.3d 1319, 1325 (9th Cir. 1996)). Section 551 of the Restatement on Torts states: One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of a matter that he has failed to disclose, if, but only if, he was under a duty to the other to exercise reasonable care to disclose the matter in question. Restatement (Second) of Torts 551. Here, the Plaintiff has failed to show that the Defendant owed the Plaintiff a duty to disclose the pending foreclosure with respect to the Property. The case law cited by the Plaintiff -5-

6 Case JKO Doc 32 Filed 03/02/16 Page 6 of 6 supports the claim that debts related to real estate transactions can be found nondischargeable in circumstances where the Debtor fails to disclose material terms to the contract. See Greater Ill. Title Co. v. Terranova (In re Terranova), 301 B.R. 509 (Bankr. N.D. Ill. 2003). However, in the Terranova case, the Court found that Terranova did have a duty to disclose the junior mortgage; a duty that arose from specific contractual obligations in the sales contract and also statutory duties upon its conveyance by warranty deed. See Terranova, 301 B.R Neither the Complaint nor subsequent pleadings indicate why such a duty would arise under the current set of facts. Accordingly, this Court finds that neither a statutory nor contractual duty arose such that the Defendant was legally bound to disclose the pending foreclosure to the Plaintiff. Federal Rule of Bankruptcy Procedure 7012, adopting Federal Rule of Civil Procedure 12, authorizes the court to dismiss a complaint that fails to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). As a result, since the Complaint fails to state facts sufficient to support a claim of relief pursuant to 11 U.S.C. 523(a)(2), it is ORDERED that: 1. The Defendant s Motion [ECF 8] is GRANTED with respect to the 11 U.S.C. 523(a)(2) claim. 2. The status conference, noticed for hearing by [ECF 31] to be held on March 15, 2016 at 9:30 A.M. is CANCELED. ### Copies furnished to: All parties in interest -6-

Case 0:17-cv WPD Document 16 Entered on FLSD Docket 12/11/2017 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

Case 0:17-cv WPD Document 16 Entered on FLSD Docket 12/11/2017 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case 0:17-cv-61266-WPD Document 16 Entered on FLSD Docket 12/11/2017 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA SILVIA LEONES, on behalf of herself and all others similarly situated,