KSB

Judge Berger

10-06117 Nebraska Furniture Mart v. Justis (Doc. # 16)

Nebraska Furniture Mart v. Justis, 10-06117 (Bankr. D. Kan. Feb. 17, 2011) Doc. # 16

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The relief described hereinbelow is SO ORDERED.

Signed February 17, 2011.

United States Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS


In re:

GARY D. JUSTIS, Case No. 10-21178
Chapter 7
Debtor.

__________________________________
ROBERT D. BERGER
NEBRASKA FURNITURE MART,
Plaintiff,

v. Adv. No. 10-6117
GARY D. JUSTIS,
Defendant.

ORDER DENYING DEFENDANT’S MOTION TO DISMISS

Defendant/Debtor Gary Justis moves to dismiss a complaint objecting to discharge of a
$23,000 debt under 11 U.S.C. §523(a)(2)(A).1 Plaintiff Nebraska Furniture Mart alleges Debtor
incurred credit charges for merchandise used for his business on his personal charge account,

1

Doc. No. 10.

11.02.16 NFM v Justis MTD Denied.wpd

thereby misrepresenting the nature of his purchases and defeating NFM’s security interest in the
collateral.

Background

Debtor filed for bankruptcy on April 14, 2010. On the petition date, Debtor held a
personal revolving credit account with NFM with a balance owing of $22, 956.54. NFM alleges
Debtor purchased on his personal credit account merchandise which was actually used, installed
or sold for his business, LAM Development, LLC. LAM Development had its own commercial
account with NFM. NFM filed UCC financing statements as needed to protect its security
interest in collateral sold on credit to LAM Development. NFM alleges that pursuant to the
Revolving Charge Agreement, Debtor represented items purchased on the personal account were
for his personal, family, and household purposes. NFM alleges Debtor obtained merchandise by
false pretenses by charging merchandise for his business on his personal account and thereby
defeating NFM’s ability to perfect its lien against subsequent purchasers of the merchandise.

Discussion

In considering a motion to dismiss, the court accepts all well-pleaded factual allegations,
as opposed to conclusory legal allegations, as true and construes them in the light most favorable
to the plaintiff.2 A complaint must contain sufficient factual allegations to state a plausible claim
to relief.3 A claim is plausible when plaintiff pleads sufficient facts to allow the court to
reasonably infer the defendant is liable for the alleged misconduct. Still, the complaint need not
contain detailed factual allegations; the allegations must be enough to raise a right to relief above

2 Lawrence Nat’l Bank v. Edmonds (In re Edmonds), 924 F.2d 176, 180 (10th Cir. 1991).
3 Ashcroft v. Iqbal, – U.S. –, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550


U.S. 544, 570 (2007)).
-211.02.16
NFM v Justis MTD Denied.wpd

the speculative level. The issue is not whether the plaintiff will ultimately prevail, but whether
the claimant is entitled to offer evidence to support the claims.4 In determining whether facts are
sufficiently pled, the court may consider exhibits attached to the complaint.5 “[A]n exhibit to a
pleading is a part of the pleading for all purposes.”6

In order to state a claim under §523(a)(2)(A), the plaintiff must allege the defendant
made a false representation or a material omission with an intent to deceive, and the plaintiff
justifiably relied upon it to his detriment.7 Complaints for nondischargeability for fraud under
§523(a)(2) also have heightened pleading requirements under Fed R. Bankr. P. 7009. Alleging
fraud with Rule 9’s required particularity means (1) identifying who made the misrepresentation;

(2) stating the time, place and content of the misrepresentation; and (3) describing how the
misrepresentation was communicated and its consequences.8 Rule 7009 requires simple,
concise, and direct averments which are construed so as to do substantial justice.9 The result
should allow the defendant fair and reasonable notice of plaintiff’s claims and the factual
grounds upon which the claims are based.10
Plaintiff’s complaint sufficiently sets forth allegations asserting a §523(a)(2) objection to
dischargeability. The complaint alleges Debtor represented items purchased on his personal
charge account would be for his personal use. The complaint alleges Debtor charged business
items to the personal account, knowing such purchases violated his revolving charge agreement.

4

Id.
5 Thompson v. Illinois Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir. 2002).


6

Fed. R. Bankr. P. 7010.
7 Field v. Mans, 516 U.S. 59 (1995).
8 Koch v. Koch Industries, Inc., 203 F.3d 1202, 1236 (10th Cir. 2000).
9 In re Panem, 352 B.R. 269, 281 (Bankr. D. Colo. 2006).


10

Id.

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The complaint alleges NFM lost its interest in the merchandise because of Debtor’s
representations. NFM has alleged sufficient facts to survive dismissal.

Conclusion

IT IS ORDERED Defendant’s Motion to Dismiss is DENIED.
###
ROBERT D. BERGER

U.S. BANKRUPTCY JUDGE
DISTRICT OF KANSAS
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11.02.16 NFM v Justis MTD Denied.wpd

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