State Employees' Credit Union v. King

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
TONY FRANKLIN KING
JANA IRENE KING
DEBTORS
CASE NO.
04-02444-5-ATS
STATE EMPLOYEES’ CREDIT UNION
Plaintiff
v.
TONY FRANKLIN KING and
JANA IRENE KING
Defendants.
ADVERSARY PROCEEDING NO.
S-04-00115-5-AP
ORDER ALLOWING MOTION TO DISMISS
AS TO DEFENDANT JANA IRENE KING
The matter before the court is the defendants’ motion to dismiss
the complaint as to defendant Jana Irene King. A hearing took place in
Raleigh, North Carolina on April 27, 2005.
Tony Franklin King and Jana Irene King filed a petition for relief
under chapter 7 of the Bankruptcy Code on July 2, 2004. State
Employees’ Credit Union ("SECU") filed the instant adversary proceeding
against the debtors, seeking a determination that the debt to SECU is
nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (a)(2)(B).
The complaint alleges that Mr. King purchased a 2004 Ford Focus
on June 3, 2004, and borrowed the sum of $18,722.90 from SECU to
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finance the purchase. The complaint further alleges that Mr. King
executed and delivered a consumer credit application to SECU that did
not disclose all relevant information related to Mr. King’s financial
condition, and that SECU relied on these representations in extending
the loan. With respect to Mrs. King, the complaint alleges that both
debtors consulted with their counsel about filing bankruptcy prior to
the purchase of the 2004 Ford Focus and that the debtors falsely and
fraudulently failed to inform SECU of the true and accurate financial
condition of the debtors.
The Kings filed a motion to dismiss pursuant to Rule 7009(b) of
the Federal Rules of Bankruptcy Procedure, contending that the
complaint failed to plead fraud with particularity as to Mrs. King, as
the complaint provided no details as to how she engaged in any
fraudulent activity. SECU contends that the complaint establishes,
through notice pleading, sufficient facts to allege the perpetration of
actual fraud through the collusion of Mr. and Mrs. King.
Sections 523(a)(2)(A) and (a)(2)(B) except from discharge any debt
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;
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(iii) on which the creditor to whom the debtor is
liable for such money, property, services, or
credit reasonably relied; and
(iv) that the debtor caused to be made or published
with intent to deceive[.]
11 U.S.C. §§ 523(a)(2)(A) and (a)(2)(B).
The loan application is attached to the complaint and shows that
Mr. King was the sole applicant for the loan. There is no allegation
that Mrs. King presented any statement in writing to SECU, and the
complaint will be dismissed as to Mrs. King on the § 523(a)(2)(B)
claim.
The allegations in the complaint also establish that Mr. King is
the sole purchaser of the vehicle and the sole borrower on the loan.
Mrs. King is not liable on the debt, and she did not obtain "money,
property, services, or credit" from SECU. Accordingly, Mrs. King has
no debt to SECU to except from discharge under any provision of § 523.
Based on the foregoing, the motion to dismiss as to Mrs. King is
ALLOWED, and the complaint is DISMISSED as to defendant Jana Irene
King.
SO ORDERED.
DATED: April 28, 2005
s/ A. Thomas Small
A. Thomas Small
Bankruptcy Judge
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