Batoosingh v. Kunkle

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
AARON J. KUNKLE, No. 07-10049
Debtor(s).
______________________________________/
BRIAN BATOOSINGH,
Plaintiff(s),
v. A.P. No. 07-1025
AARON J. KUNKLE,
Defendant(s).
_______________________________________/
Memorandum After Trial
_________________
In late 2005, debtor and defendant Aaron Kunkle was a general contractor in need of cash. Plaintiff
Brian Batoosingh was a young man with a brand-new equity line of credit burning a hole is his pocket.
Introduced through a mutual friend, Batoosingh agreed to lend Kunkle $30,000.00 for 30 days for
$3,000.00. A week or so later, Batoosingh loaned Kunkle an additional $5,000.00 for 30 more days in
return for another $3,000.00. Aside from the two $3,000.00 payments, Kunkle did not repay the two loans.
Kunkle filed his Chapter 7 petition on January 16, 2007. By this adversary proceeding, Batoosingh seeks a
Entered on Docket
December 10, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-01025 Doc# 9 Filed: 12/10/07 Entered: 12/10/07 14:18:54 Page 1 of 3

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declaration that his claims against Kunkle are nondischargeable pursuant to § 523(a)(2)(A) of the
Bankruptcy Code.
During their oral discussions leading up to the loans, Kunkle told Batoosingh that he need the money
for just a short term until a $500,000 loan from a testamentary trust was funded. The loan had been
approved by the sole beneficiary of the trust, Kunkle’s mother, plus the two other residual beneficiaries,
Kunkle’s brother and sister, plus his mother’s financial advisor, so the representation to Batoosingh was
truthful and Kunkle believed he would get the loan very soon.
Also during the discussion, Kunkle made reference to “his trust.” Both Kunkle and Batoosingh were
completely ignorant as to how trusts worked. Until things were explained to him by his bankruptcy lawyer,
Kunkle thought the trust was “his” because it had paid for some of his expenses in the past. To this day,
Kunkle still refers to “my trust” even though he now knows he is just a residual beneficiary. The court doubts
Kunkle has very much understanding of what a “residual beneficiary” is.
Anyway, the bank which is the trustee of the trust (established by Kunkle’s maternal grandfather)
refused to authorize the loan even after written request by Kunkle’s mother and siblings. Kunkle was unable
to repay Batoosingh and eventually filed his bankruptcy petition.
Batoosingh, who is perhaps the most naive of any of the many unhappy creditors who have ever
testified before this court, bases his accusation of fraud on Kunkle’s oral representations that he had a trust
when in fact he did not have one. While there is some question in the court’s mind as to whether such
representations had to be in writing pursuant to § 523(a)(2)(A) to be the basis for nondischargeability, the
court need not address this issue as it finds no fraudulent intent. Kunkle, hardly less naive than Batoosingh,
actually thought he had a present interest in the trust. In order to sustain a judgment of nondischargeability
pursuant to § 523(a)(2)(A), the debtor must have intended to deceive the creditor. In re Harmon, 250
F.3d 1240, 1248n10 (9th Cir. 2001). Thus, Kunkle’s belief the trust was in part his negates any finding of
fraud.
In addition, the court is sure that Batoosingh understood very little of what Kunkle told him at their
meetings. Batoosingh appears very young, in his twenties or early thirties at the most, and clearly has no
Case: 07-01025 Doc# 9 Filed: 12/10/07 Entered: 12/10/07 14:18:54 Page 2 of 3

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knowledge of business or finance as well as very little common sense. The court finds that the shared
ignorance of Batoosingh and Kunkle led them to this day, not any guile by Kunkle.
For the foregoing reasons, Batoosingh shall take nothing by his complaint. Kunkle shall recover his
costs of suit.
This memorandum constitutes the court’s findings and conclusions pursuant to FRCP 52(a) and
FRBP 7052. Counsel for Kunkle shall submit an appropriate form of judgment forthwith.
Dated: December 10, 2007
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 07-01025 Doc# 9 Filed: 12/10/07 Entered: 12/10/07 14:18:54 Page 3 of 3