Wollack v. Sharmba

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
(Greenbelt Division)
In re: 	*
ELIJAH EL-HAJJ SHARMBA, 	* 	Case No. 05-41299-WIL
Chapter 7
Debtor. 	*
* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	*
JAMES M. WOLLACK, 	*
Movant, 	*
v. 	* 	Adv. No. 06-1147-WIL
ELIJAH EL-HAJJ SHARMBA, 	*
Respondent. 	*
* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	* 	*
MEMORANDUM IN SUPPORT OF ORDER GRANTING MOTION [20] OF
JAMES M. WOLLACK FOR ENTRY OF JUDGMENT BY DEFAULT
On February 8, 2006, James M. Wollack (the “Plaintiff”) filed a Complaint Objecting to
Discharge Based Upon 11 U.S.C. §523(a)(2)(A) (the “Complaint”) against Elija El-Hajj
Sharmba (the “Debtor”). On May 15, 2006, the Debtor filed an Answer. However, this pleading
was stricken by Order [18] entered on October 4, 2006 as sanctions for Debtor’s failure to appear
at the pretrial conference held on September 11, 2006, and for his failure to respond to this
Signed: January 10, 2007
SO ORDERED
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Court’s Order [14] directing him to show cause why he did not appear. On October 11, 2006,
the Plaintiff filed a Request [20] for entry of judgment by default (the “Motion”). In addition, on
September 14, 2006, this Court entered an Order [13] granting, in part, the Plaintiff’s motion for
summary judgment. In that Order [13], $700.00 of the Plaintiff’s claim was determined to be
non-dischargeable pursuant to 11 U.S.C. §523(a)(2)(A). At the time, the Debtor’s Answer had
yet to be stricken and raised facts in dispute. The Court now considers whether the Complaint,
by itself, states a cause of action sufficient for a finding that the remainder of the Plaintiff’s
claim is not dischargeable under the standard of default. The Court finds that the Motion will be
granted.
The Court assumes the facts asserted in the Complaint to be true for purposes of the
request for judgment by default. See DeBarros v. Nat’l. City Bank (In re DeBarros), 275 B.R.
251 (Bankr. D. Md. 2002) (the effect of default is that the facts of the complaint, but not the
conclusions, are deemed admitted by the defaulting party and are assumed by the court to be
true); Cunningham v. Homecomings Financial Network (In re Cunningham), 246 B.R. 241, 243
(Bankr. D. Md. 2000); Sears, Roebuck & Co. v. Goycochea (In re Goycochea), 192 B.R. 847
(Bankr. D. Md. 1996). The Court must review the complaint to determine whether the
unchallenged facts constitute a legitimate cause of action. In re Cunningham, 246 B.R. at 243.
If the facts stated in the complaint, on its face, do not support the relief sought, the motion for
judgment by default will not be granted. In re Goycochea, 192 B.R. at 848.
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Facts
The Plaintiff alleged in the Complaint that he responded to an Ebay online auction for the
custom manufacture of a motorcycle by the Debtor. The Plaintiff also alleged that sometime in
May 2004, he paid $24,300.00 for the purchase of a custom-built motorcycle and that the Debtor
promised to deliver it within 65-75 days. The Plaintiff further alleged that, despite having paid
for it in advance, the Debtor used the funds to meet his household expenditures rather than build
the motorcycle as promised. The Plaintiff also alleged that the motorcycle is now being offered
for sale to others, and that the purchase money was not returned to him. He finally alleged that
the Debtor’s promise to build the motorcycle was a false and material representation of fact, that
the Debtor knew the representation was false when he made it, that he had no intention of
honoring any commitment to provide the custom-made motorcycle to Plaintiff, that the Plaintiff
reasonably relied on the false representation, and that he suffered damages as a result of that
reliance.
Conclusions of Law
A debtor’s misconduct under Section 523(a) need only be shown by a preponderance of
the evidence. First Nat’l. Bank of Md. v. Stanley (In re Stanley), 66 F. 3d 664, 667 (4th Cir.
1995) (citing Grogan v. Garner, 498 U.S. 279, 111 S. Ct. 654 (1991). However, exceptions to
discharge are strictly construed against creditors in order to protect a debtor’s fresh start.
Spinoso v. Heilman (In re Heilman), 241 B.R. 137, 148 (Bankr. D. Md. 1999) (internal citations
omitted). 	11 U.S.C. §523(a)(2)(A) excepts from discharge certain debts for money,
property, services, or an extension of credit to the extent it was obtained by: “false pretenses, a
false
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representation, or actual fraud, other than a statement in writing respecting the debtor’s or an
insider’s financial condition.” 11 U.S.C. § 523(a)(2)(A). The Plaintiff must allege facts against
the Debtor to support the following elements in order to sustain an action under Section
523(a)(2)(A) of the Bankruptcy Code: (1) the Debtor made a representation; (2) the Debtor knew
at the time he made the representation that it was false; (3) the Debtor made the representation
with the intent and purpose to deceive the Plaintiff; (4) the Plaintiff justifiably relied on the false
representation; and (5) the Plaintiff suffered damages as a proximate result of the representation.
Id. at 149.
Based upon the facts alleged, which are assumed to be true for purposes of the Plaintiff’s
request for judgment by default, the Court finds that the Complaint states a legitimate cause of
action against the Debtor pursuant to 11 U.S.C. §523(a)(2)(A). Therefore, the Court finds that
the debt owed to the Plaintiff is not dischargeable. The Plaintiff’s Motion [20] will be granted.
A separate Order will issue.
cc: 	Debtor
Plaintiff
Counsel for Plaintiff - E. David Hoskins, Esq.
Chapter 7 Trustee
U.S. Trustee
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