Dickson v. HORSLEY

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UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE DIVISION
In re:
FRENCHEE LATRESE HORSLEY,
Debtor,
TANGIA DICKSON,
Plaintiff,
vs.
FRENCHEE LATRESE HORSLEY,
Defendant.
Case No.: 6:10-bk-13963-TD
Adversary No.: 6:10-ap-01366-TD
Chapter: 7
MEMORANDUM OF DECISION AFTER
TRIAL AND DISPOSING OF DEFENDANT’S
WRITTEN MOTION FOR JUDGMENT ON
THE PLEADINGS
Date: September 30 and October 29, 2010
Location: Courtroom 1345, Los Angeles
This dispute arose between two half-sisters. Tangia Dickson (“Dickson”), the plaintiff,
loaned Frenchee Latrese Horsley (“Horsley”) money in 2008. Dickson timely sued Horsley
seeking nondischargeability claiming that the debt was incurred fraudulently and also that
FILED & ENTERED
JAN 28 2011
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY DEPUTY CLERK	toliver
Case 6:10-ap-01366-SC Doc 20 Filed 01/28/11 Entered 01/28/11 10:35:54 Desc
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Horsley “is precluded from discharge because she has made numerous material false oaths
and accounts in her bankruptcy petition.”
Horsley, through her attorney, moved to dismiss Dickson’s initial complaint for lack of
specificity pursuant to Federal Rule of Bankruptcy Procedure Rule 7009. In response, Dickson
filed her First Amended Complaint, Horsley filed an Answer and the lawsuit was set for trial.
At trial, Horsley moved for judgment, first orally, on September 30, then in writing filed
on October 1, 2010. I deferred ruling on Horsley’s motion until conclusion of the trial. Both
sides rested at the end of the second day of trial, closing statements were made and the
matter was taken under advisement.
Based on my review of the oral and documentary evidence of the parties and Horsley’s
written motion, the following are my findings of fact and conclusions of law.
Dickson’s § 523(a)(2)(A) claims have been proven by a preponderance of the evidence.
There was no dispute that Dickson loaned Horsley $21,341.45 between June and August
2008. The loans were made partly in justifiable reliance by Dickson on Horsley’s promise
made at the time of the first of several advances that Horsley expected to receive “retroactive”
payment from her employer as a result of a pending union negotiation. Although Horsley did
not know the timing or the amount of the payment she might receive, she represented to
Dickson that she would turn over to Dickson the “retroactive” check that she expected to
receive in partial repayment of the loans to be made by Dickson. (Trial Transcript, October 29,
2010, 49:19-52:12, including Exhibit 12).
The evidence established that Horsley reasonably expected a retroactive payment from
her employer. Even though the amount to be received was uncertain, Dickson’s evidence was
sufficient to support an inference and conclusion that Horsley reasonably expected to be paid
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“retroactively” and that she promised to give Dickson the retroactive check in order to induce
Dickson to loan Horsley money. (Id.)
Horsley also promised Dickson at the time of Dickson’s first advance that in further
partial repayment Horsley would turn over to Dickson federal and state tax refunds that
Horsley expected to receive based on 2008 tax withholdings for her earnings and later 2008
tax returns. The evidence supports the inference and conclusion that Horsley reasonably
expected substantial future tax refunds based on her 2008 earnings and income tax
withholding payments. (Id.)
Horsley’s promises as set forth above were both false and material. Both promises
were made by Horsley with an intent to deceive Dickson. Dickson justifiably relied on both
promises and was proximately damaged as a result in the sum of $7,772.36, the approximate
total sum of the retroactive payment from Horsley’s employer and Horsley’s tax refunds
received after filing her state and federal tax returns. As a result, Dickson is entitled to
judgment against Horsley in the sum of $7,772.36, nondischaregeable under § 523(a)(2)(A).
As for Dickson’s claims under § 727(a)(4)(A), Horsley’s motion for judgment filed herein
on October 1 is granted. Dickson’s initial Complaint alleged vaguely, as to § 727(a)(4)(A), that
“Debtor is precluded from discharge because she has made numerous false oaths or accounts
in her bankruptcy petition.” Horsley responded by moving to dismiss Dickson’s suit for lack of
specificity under Rule 7009. Dickson, in her First Amended Complaint, added allegations that
Horsley’s [Schedule I] deductions of $336.36 per month for health insurance were overstated
since her health insurance deduction actually was only $166.68 per month. Thus, Dickson
claimed, “She lied in order to indicate that she had no net disposable . . . a fraud upon the
court.” Secondly, Dickson’s First Amended Complaint alleged that Horsley “failed to list her
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[credit union] bank account [one of four overdrawn bank accounts Horsley had] in her
Schedules. . . . She has an account which she did not list.”
At trial, Horsley’s evidence demonstrated that both the health insurance deductions and
the failure to list one of four overdrawn bank accounts were careless oversights that had no
material effect on the administration of Horsley’s bankruptcy estate and no adverse effect on
Dickson’s claim against assets of the estate. As the evidence here demonstrated, Horsley’s
chapter 7 Schedule I payroll deductions from earned income postpetition did not affect
creditors of her estate.
Horsley also testified and the evidence established that when Horsley filed her
bankruptcy petition the omitted bank account had a negative balance. In the first place, the
account was overdrawn and, secondly, Horsley claimed the account was negligently, not
fraudulently, overlooked by both Horsley and her lawyer.
Dickson failed to demonstrate the materiality of either error, especially given Dickson’s
extensive, detailed knowledge of Horsley’s financial affairs and records throughout the period
in dispute, as demonstrated by Dickson’s exhaustive display of evidence, and her knowledge
of Horsley’s financial affairs through her testimony and cross examination of Horsley.
Dickson’s allegations and evidence do not establish a basis for a finding of “knowing” or
“fraudulent” wrongdoing within the meaning of § 727(a)(4)(A).
Consistent with the foregoing, Horsley’s written motion for judgment, as presented in
court on September 30, and filed on October 1, is granted.
Dickson identified many other documents and offered testimony about numerous other
issues she had concerning Horsley’s conduct and asserted other omissions from Horsley’s
bankruptcy schedules. Horsley’s attorney’s oral objections to such issues, testimony and
documents were sustained countless times, and I had to admonish Dickson numerous times
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after Horsley’s objections were sustained that Dickson’s comments and questions went
beyond the scope of Dickson’s First Amended Complaint and raised issues that were irrelevant
and not properly before the court for determination in light of Horsley’s motions and objections.
Judgment will be entered in favor of Horsley on Dickson’s claims for denial of Horsley’s
discharge pursuant to § 727(a)(4)(A).
United States Bankruptcy Judge
DATED: January 28, 2011
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This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
August 2010 F 9021-1.1.NOTICE.ENTERED.ORDER
NOTE TO USERS OF THIS FORM:
1) Attach this form to the last page of a proposed Order or Judgment. Do not file as a separate document.
2) The title of the judgment or order and all service information must be filled in by the party lodging the order.
3) Category I. below: The United States trustee and case trustee (if any) will always be in this category.
4) Category II. below: List ONLY addresses for debtor (and attorney), movant (or attorney) and person/entity (or attorney)
who filed an opposition to the requested relief. DO NOT list an address if person/entity is listed in category I.
NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify) MEMORANDUM OF DECISION
was entered on the date indicated as AEntered@ on the first page of this judgment or order and will be served in
the manner indicated below:
I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (ANEF@) B Pursuant to controlling General
Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following person(s) by the
court via NEF and hyperlink to the judgment or order. As of 1/3/11, the following person(s) are currently on the
Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF transmission at the
email address(es) indicated below.
David A Akintimoye on behalf of Defendant FRENCHEE HORSLEY
attorneydavidakintimoye@yahoo.com
Sandra L Bendon (TR)
sandra.bendon@att.net, sbendon@ecf.epiqsystems.com
United States Trustee (RS)
ustpregion16.rs.ecf@usdoj.gov
Service information continued on attached page
II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or order was
sent by United States Mail, first class, postage prepaid, to the following person(s) and/or entity(ies) at the
address(es) indicated below:
Plaintiff
Tangia Dickson
507 Lassa Way
Perris, CA 92571
Debtor/Defendant
FRENCHEE LATRESE HORSLEY
24732 Moontide Lane
Moreno Valley, CA 92537
Service information continued on attached page
III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order
which bears an AEntered@ stamp, the party lodging the judgment or order will serve a complete copy bearing an
AEntered@ stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a proof of service of the
entered order on the following person(s) and/or entity(ies) at the address(es), facsimile transmission number(s),
and/or email address(es) indicated below:
Service information continued on attached page
Case 6:10-ap-01366-SC Doc 20 Filed 01/28/11 Entered 01/28/11 10:35:54 Desc
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This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
August 2010 F 9021-1.1.NOTICE.ENTERED.ORDER
Case 6:10-ap-01366-SC Doc 20 Filed 01/28/11 Entered 01/28/11 10:35:54 Desc
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