First National Bank in Fleetwood v. Kavusak

1. To explain, Plaintiff filed this Motion for Summary Judgment with a brief on January 17, 2006. The
Honorable Thomas M. Twardowski entered on Order on January 19, 2006, directing Defendant to file a brief
within thirty days. Defendant has not filed a brief and we therefore enter this Order granting Plaintiff’s
Motion for Summary Judgment due to Defendant’s failure to defend.
2. Motions for summary judgment are governed by Fed. R. Civ. P. 56, which is made applicable to adversary
proceedings in bankruptcy cases by Fed. R. Bankr. P. 7056. A motion for summary judgment should be
granted if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is
UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re:
JOHN A. KAVUSAK, JR., 	: 	Case No. 03-22771REF
Debtor(s)
:
--------------------------------------------------------
:
FIRST NATIONAL BANK
IN FLEETWOOD, 	:
Plaintiff(s)
:
v. 	Adv. No. 04-2024
:
JOHN A. KAVUSAK, JR., 	:
Defendant(s)
:
ORDER
AND NOW, this 14 th day of March, 2006, it is ORDERED that Plaintiff’s Motion
for Summary Judgment is GRANTED and JUDGMENT on the complaint is ENTERED IN FAVOR
OF 	PLAINTIFF 	and 	the 	debt 	owed 	by 	Defendant 	to 	Plaintiff 	is 	hereby 	found 	to 	be
NONDISCHARGEABLE under 11 U.S.C. §523(a)(2)(A) due to both Defendant’s failure to defend1
and on the merits.2
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entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). Plaintiff, as the moving party, bears the
initial burden of demonstrating the absence of any genuine issues of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). If the non-moving party, however, fails to produce sufficient evidence in
connection with an essential element of the case for which it bears the burden of proof at trial, then the
moving party is entitled to summary judgment in its favor as a matter of law. Celotex, 477 U.S. at 322; J.F.
Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990).
Here, Plaintiff bases its request for summary judgment upon the fact that Defendant failed to respond
to the Request for Admissions Plaintiff served upon Defendant on October 19, 2005. 	Pursuant to Fed. R.
Civ. P. 36(a), which is made applicable to adversary proceedings in bankruptcy cases by Fed. R. Bankr. P.
7036, a matter set forth in a request for admissions is admitted “unless, within 30 days after service of the
request, ... the party to whom the request is directed serves upon the party requesting the admission a written
answer or objection addressed to the matter... .” Because Defendant failed to respond to the Requests for
Admission, and because more than thirty days have elapsed since the Requests for Admission were served
upon Defendant, Defendant is deemed to admit the matters alleged therein.
Turning to the merits of the Complaint, we first note that Plaintiff requests that the debt owed to it
by Defendant be found nondischargeable under 11 U.S.C. §523(a)(2)(A) and (B), which state:
A discharge under section 727 ... of this title does not discharge an individual debtor from
any debt -
(2) for money, property, services, or an extension, renewal, or refinancing of credit, 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 to whom the debtor is liable for
such money, property, services or credit reasonable relied;
and
(iv) that the debtor caused to be made or published with
intent to deceive.
Plaintiff first maintains that the debt owed to it by Defendant should be found nondischargeable under
section 523(a)(2)(A) because, based upon Defendant’s failure to respond to the Requests for Admission,
Defendant is deemed to admit that he fraudulently obtained the loan proceeds from Plaintiff. We agree.
Turning to the Requests for Admission, we note that Plaintiff requested that Defendant admit that he was
charged with committing certain crimes in connection with the loan he obtained from Plaintiff, that the facts,
circumstances and allegations set forth in the criminal complaint and affidavit of probable cause are the same
facts and circumstances alleged by Plaintiff in this adversary complaint, that the criminal case against
Defendant was resolved on or about July 15, 2005, when Defendant pled guilty to theft by deception and that
2
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Defendant admitted in his guilty plea that he fraudulently obtained the loan proceeds from Plaintiff. See
Plaintiff’s Request for Admissions, ¶¶1, 3, 10, 11. By failing to respond to the Requests for Admission,
Defendant is deemed to admit these matters, including the allegation that he fraudulently obtained the loan
proceeds from Plaintiff. See Fed. R. Civ. P. 36. Accordingly, based upon Defendant’s failure to respond to
the Requests for Admission, we find that no genuine issue of material fact exists concerning the issue of
whether Defendant obtained the loan proceeds from Plaintiff by false pretenses, a false representation or
actual fraud, and that therefore, Plaintiff is entitled to summary judgment on the portion of the Complaint
which seeks to have the debt in issue found nondischargeable under section 523(a)(2)(A).
Having found the debt nondischargeable under section 523(a)(2)(A), we need not address the
question of whether the debt should also be found nondischargeable under section 523(a)(2)(B) as well. We
note, however, that our review of the allegations contained in the Complaint and Requests for Admission
leads us to believe that the statement in writing in issue is not actionable under section 523(a)(2)(B) because
it does not constitute “a statement in writing ... respecting the debtor’s or an insider’s financial condition.”
Accordingly, we conclude that summary judgment would not be warranted on that portion of the Complaint
that seeks a ruling that the debt is also nondischargeable under section 523(a)(2)(B). This conclusion is not
fatal to Plaintiff’s motion for summary judgment, however, because we have already found that summary
judgment must be entered in favor of Plaintiff on the section 523(a)(2)(A) count of the Complaint and the
debt is therefore nondischargeable regardless of the outcome of Plaintiff’s section 523(a)(2)(B) cause of
action.
3
BY THE COURT
RICHARD E. FEHLING
United States Bankruptcy Judge
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