Mitev et al v. Haas

OCR transcription for search; preserved printed pages are authoritative

The court incorporates by reference in this paragraph and adopts as the findings and orders
of this court the document set forth below.

Russ Kendig
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO

EASTERN DIVISION
IN RE: ) CHAPTER 7
)
JOHN HAAS AND KRISTEN HAAS, ) CASE NO. 10-65025
)
Debtors. ) ADV.NO. 11-6014
)
VIOLTE MITEV AND ) JUDGE RUSS KENDIG
MICHAEL MITEV, )
)
Plaintiffs, )
)
Vv. ) MEMORANDUM OF OPINION
) (NOT INTENDED FOR
JOHN HAAS, ) PUBLICATION)
Defendant.

Defendant John Haas’ unopposed motion for summary judgment is before the court.
To succeed on his motion, Defendant must prove there are no genuine issues of material fact
and that he is entitled to judgment as a matter of law pursuant to Federal Rule of Bankruptcy
Procedure 7056.

The court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334 and the
general order of reference entered in this district on July 16, 1984. Venue in this district and
division is proper pursuant to 28 U.S.C. § 1409. This is a core proceeding under 28 U.S.C.

§ 157(b)(1).

This opinion is not intended for publication or citation. The availability of this
opinion, in electronic or printed form, is not the result of a direct submission by the Court.

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BACKGROUND

The court’s ability to make factual findings is limited by the paucity of
information provided. The lack of information may be spurred by the fact that the
parties’ relationship involved illegal gambling activity, so all parties are traipsing through
a patch of poison ivy trying to avoid contamination. Therefore, the following background
is provided merely for context and not as findings of fact.

At some point prior to October 18, 2010, Plaintiffs allegedly provided “certain
personalty to be used commercially by Defendant.” (Compl. 3) That personalty was
gambling equipment. Plaintiffs contend that ownership of the equipment was never
transferred to Defendant, but they do not offer any information on the nature of the
agreement or the terms. Defendant avers that the agreement was illegal. (Answer | 10)

According to Defendant, “the sheriff confiscated units that were used in gambling
activities and released them to Defendant with court ordered instructions to have them
removed from the State of Ohio within 24 hours with which Defendant complied as the
alleged owner of the units.” (Answer § 8) Plaintiffs’ version of the events is “Defendant,
without notice to or permission of Plaintiffs, converted and sold all of that personalty to
an unidentified third party and retain for himself alone all sale proceeds therefrom.”

(Compl. { 3)

Plaintiffs then sued Defendant in Stark County Common Pleas Court “seeking
damages for... fraudulent inducement and conversion and seeking replevin of
personalty.” (Compl. § 2) They filed the state court complaint on October 18, 2010.
Shortly after that complaint was filed, Defendant and his wife filed for bankruptcy relief.
Plaintiffs filed this nondischargeability action under § 523(a)(2)(A). They claim that
when Defendant entered into the agreement with them, he had “no then-present intention
to honor that agreement, thereby fraudulently inducing Plaintiffs to enter into the subject
verbal agreement.” (Compl. § 5) Defendant denies the allegation.

LAW AND ANALYSIS

Motions for summary judgment are governed by Federal Rule of Bankruptcy
Procedure 7056, which incorporates Federal Rule of Civil Procedure 56 into bankruptcy

practice, and states, in applicable part:

The court shall grant summary judgment if 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. The court should state on the record the reasons for
granting or denying the motion.

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Fed. R. Bankr. P. 7056. The movant bears the initial burden of proof, being tasked with
the “responsibility of informing the . . . court of the basis for its motion, and identifying
those portions [of the record] . . . which it believes demonstrate the absence of a genuine
issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

Defendant submitted an affidavit with his motion for summary judgment, stating
and averring “[a]t no time in my life have I entered into an agreement with Violet Mitev,
Michael Mitev, MM Management, individually or as a group, with the intention of not
completely performing said agreement.” (Def’s Aff. 2) Intent is a required element of a
§ 523(a)(2)(A) claim:

In order to except a debt from discharge under § 523(a)(2)(A),
a creditor must prove the following elements: (1) the debtor
obtained money through a material misrepresentation that, at
the time, the debtor knew was false or made with gross reck-
lessness as to its truth; (2) the debtor intended to deceive the
creditor; (3) the creditor justifiably relied on the false represen-
tation; and (4) its reliance was the proximate cause of loss.

Rembert v. AT&T Universal Card Serv., Inc. (In re Rembert), 141 F.3d 277, 280-81 (6"
Cir, 1998) (footnote omitted) (citing Longo v. McLaren (In re McLaren), 3 F.3d 958, 961

(6" Cir, 1993).

Defendant’s affidavit establishes a lack of intent to deceive Plaintiffs and
constitutes a properly supported factual position under Rule 56(c)(1). Plaintiffs’ failed to
respond and counter his lack of intent to deceive. Defendant therefore established not
only an absence of a question of material fact on his intent, but also the absence ofa
required element of proof on Plaintiffs’ § 523(a)(2)(A) claim. Consequently, the court
will grant Defendant’s motion for summary judgment.

An appropriate order shall be entered concurrently with this opinion.

# # #

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Service List:

Craig T Conley
220 Market Ave S
#604

Canton, OH 44702

Jessica Ann Hoffman
Hoffman Law Offices, LLC
116 Cleveland Ave NW
Suite 700

Canton, OH 44702

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