Opinion
Case No. 18-54814 Adv. Pro. No. 18-2134
2022-03-25
IN RE: Chad CLINE, Debtor. Mark Helber, et al., Plaintiffs, v. Chad Cline, Defendant.
Abigail Dalesandro, Walter James McNamara, IV, Kristin E. Rosan, Madison & Rosan, LLP, Columbus, OH, Matthew J. Thompson, Nobile & Thompson Co., L.P.A., Reynoldsburg, OH, for Plaintiffs.
Abigail Dalesandro, Walter James McNamara, IV, Kristin E. Rosan, Madison & Rosan, LLP, Columbus, OH, Matthew J. Thompson, Nobile & Thompson Co., L.P.A., Reynoldsburg, OH, for Plaintiffs.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND MEMORANDUM OPINION
C. Kathryn Preston, United States Bankruptcy Judge
This cause came on for trial in the above-captioned adversary proceeding. Present were Matthew J. Thompson, Walter J. McNamara, IV, and Abigail N. Dalesandro representing the Plaintiffs Mark Helber and Patricia Helber (collectively "Plaintiffs"; individually sometimes "Mark" or "Patricia"). Debtor Chad Cline (the "Defendant") appeared pro se.
I. Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and Amended General Order 05-02 entered by the District Court for the Southern District of Ohio referring all bankruptcy matters to this Court. This is a core proceeding pursuant to 11 U.S.C. § 157(b)(2)(I). Venue is properly before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
II. Procedural History
On March 8, 2018, Plaintiffs filed a complaint (the "State Court Complaint") against the Defendant and his company in the Pickaway County, Ohio, Court of Common Pleas (the "State Court"), alleging breach of contract, fraud, intentional misrepresentation, and negligent misrepresentation. Additionally, Plaintiffs requested attorney fees for the Defendant's "bad faith" conduct. The Defendant did not answer the State Court Complaint. On June 11, 2018, upon the Defendant's default, the State Court entered a judgment (the "Default Judgment") in favor of Plaintiffs and found the Defendant and his company jointly and severally liable to the Plaintiffs for compensatory damages in the amount of $49,164.49. The State Court further held that Plaintiffs propounded sufficient evidence of the Defendant's bad faith, entitling them to attorney fees in the amount of $8,823.45.
Shortly thereafter, the Defendant filed a petition for relief under Chapter 7 of the Bankruptcy Code and sought discharge of Plaintiffs’ Default Judgment and other debts. Plaintiffs filed a complaint commencing this adversary proceeding, seeking a determination that the damage award in the Default Judgment is nondischargeable debt pursuant to 11 U.S.C. § 523(a)(2) and (6). At the conclusion of the trial, counsel for Plaintiffs orally withdrew their claims under 11 U.S.C. § 523(a)(6) and elected to proceed solely under § 523(a)(2)(A).
The Court afforded the parties an opportunity to file post trial briefs on the issue of whether the damages claimed by Plaintiff Mark Helber for his lost opportunity to work special duty as a police officer, use of his own equipment during the demolition of the retaining wall, and his time spent on manual labor, at the rate of $70.00 per hour, should be compensable as part of any debt deemed to be nondischargeable. Plaintiffs timely filed their Post Trial Brief (Doc. #71).
III. Findings of Fact
Upon consideration of the evidence presented, the Court finds and concludes as follows:
Plaintiffs live on a hillside lot. Their residence includes a swimming pool built in 2004. When their existing retaining wall began to fail, Plaintiffs retained an engineer, Robert Johnson of Jezerinac Geers Associates, to prepare structural drawings for a new concrete retaining wall. The drawings were quite detailed, illustrating the proper size of the wall, rebar spacing, structure and size of the foundation, width of the wall, quantity of gravel, etc. Of particular note was the depiction of rebar spacing: every 16" both horizontally and vertically in the wall. After receiving the structural drawings, Plaintiffs solicited bids for construction of the new retaining wall.
The Defendant had been a neighbor of the Plaintiffs since 1994, and Plaintiffs were aware that the Defendant operated a construction business. Plaintiff Mark Helber approached the Defendant about the project and gave him a set of the blueprints. The Defendant represented to Plaintiffs that his company, CMC Complete Construction LLC ("CMC"), had built a few retaining walls in the past. It turned out, however, that the walls previously built by CMC were basement walls where the rebar purportedly could be spaced several feet apart.
The Defendant made an initial bid based on the blueprints in the neighborhood of $29,000. Mark asked the Defendant if there was any way to save money on the project and offered the use of his own equipment and labor to cut costs. The Defendant consulted with an acquaintance who is an engineer, Chris Sekol, by telephone regarding retaining walls. Mr. Sekol suggested there might be some more cost-effective ways to build a retaining wall provided that the wall was not too tall. They did not discuss the subject of the rebar. The Defendant drew what the parties have referred to as a "napkin sketch" based on his conversation with Mr. Sekol.
Prior to execution of the contract, the Defendant met with Plaintiff Mark Helber at Plaintiffs’ home and told Mark that he believed he could save the Plaintiffs some money by narrowing the foundation, building the wall in one concrete pour, and reducing the amount of rebar. The Defendant shared that he had consulted with his own engineer prior to coming up with the proposed modifications and had sketched out what he understood his engineer had suggested. At the meeting, the Defendant said his engineer could review the Defendant's plan and provide a writing that the plan would work. Notably, he did not represent that his engineer had already done so. Plaintiffs believed that the engineer consulted by the Defendant would provide something in writing to them indicating the new proposal would work. However, Plaintiffs did not receive anything, and apparently did not insist on receiving anything from the Defendant's engineer prior to execution of the contract. The Defendant did provide at some point, at Mark's request, a photograph of the "napkin sketch." Plaintiffs trusted the Defendant because he was their neighbor and a pastor.
The parties entered into the contract on September 26, 2017, for the construction of the new retaining wall at a cost of $24,000.00. The project completion date was November 1, 2017. The contract called for a down payment of 50%, another payment of 25% upon installation of the gravel, and a final payment of 25% when the project was complete. Plaintiffs paid the Defendant $12,000.00 once the contract was signed. The $12,000 would be the only money received by the Defendant. The Defendant asked for more money after the project commenced, but Plaintiffs refused.
Notwithstanding their discussions, the contract stated that it was for a "Pool Wall Reinforcement according to blueprints." The contract stated the following description of the retaining wall to be built: "91', 10" retaining wall with 18" footings 3'6" into the undisturbed soil with 10" support walls at center on north wall 47 yards concrete 4000 PSI, pipe, 5/8 rebar." Although the words "according to blueprints" appear near the top of the contract, Plaintiffs understood that the Defendant and his company did not intend to strictly follow the structural drawings prepared by their engineer, and the description of the wall illustrates this where it states that the foundation would be 18" rather than the foundation of 6' set forth in the drawings obtained by Plaintiffs. Nevertheless, Plaintiffs contemplated that the rebar spacing would be as set forth in the blueprints despite the discussion had with the Defendant in which the Defendant shared his ideas about changing the design to reduce costs.
Plaintiffs maintain that they did not become aware of this rebar modification until the Defendant's son brought the rebar to the job site and told them that the Defendant had changed the rebar specifications. CMC installed the rebar on October 31, 2017. The rebar was spaced every 8', instead of every 16", as specified in the Plaintiffs’ structural drawings. Plaintiff Patricia Helber brought this to the Defendant's attention in a text and said if he was altering their structural drawings that she needed a copy of the Defendant's drawing to take to their engineer. The Defendant texted back that it was his structural engineer (Mr. Sekol) who designed it that way and that he (the Defendant) would not change the plan unless Plaintiffs were willing to take responsibility. The Defendant offered to provide new drawings from his engineer showing the modified placement of the rebar. However, when he informed the Plaintiffs that the drawings would cost an additional $1,500.00, they were unwilling to pay the added cost.
The concrete work began on November 2, 2017. The concrete was supposed to be done in one pour according to the Defendant's revised plan, but the persons pouring the concrete had difficulty pumping it up the hill to Plaintiff's home, and some of the concrete spilled out onto the driveway. By the time the mess was cleaned up, there was not enough time left in the day to complete the pour. The Defendant returned on November 10, 2017, to complete the job. More difficulties ensued. The plywood forms he used were not strong enough, and the concrete was bursting out of the forms. The Defendant used Plaintiffs’ excavator to push the concrete back into the forms. The Defendant later returned to the job site and removed the plywood forms.
Plaintiffs were very dissatisfied with the retaining wall built by CMC. Photographs of the wall show cracking in the foundation, cold joints caused when the first batch of concrete had begun to set before the second pour was added, and cracks and holes of various sizes and lengths in the wall. Overall, the wall was jagged and bulging. The Defendant admitted that the project fell apart on him, starting with the concrete mishap on the day of the first pour.
On November 20, 2017, Patricia met with the Defendant and Chris Sekol at the job site. This was the first time Chris Sekol became aware that the Defendant was attempting construction of a retaining wall and the specifics of the project. The Defendant had never asked Mr. Sekol to prepare any drawings for Plaintiffs’ project, and Mr. Sekol denied he had designed the wall. Mr. Sekol had never seen a drawing for a retaining wall of this type where the rebar was spaced more than 16" apart and he was unaware that the Defendant was spacing the rebar at 8' intervals. According to Mr. Sekol, rebar is necessary for strength and stability, and to prevent cracks. Based on the difficulties with the concrete pour, the cold joint issues, the holes and cracks, and the bulging wall, Mr. Sekol concluded that the wall could not be saved. Plaintiffs’ engineer, Mr. Johnson, agreed that the wall needed to be torn down.
The Defendant told Plaintiffs that he would make things right, but once it became clear that Plaintiffs intended to tear down the retaining wall, the Defendant knew that he did not have the funds to complete this task. He turned to his attorney who advised him to file bankruptcy. After filing bankruptcy, the Defendant, on the advice of his attorney, cut off any further contact with Plaintiffs. Ohio Concrete eventually cut the wall down at a cost to Plaintiffs of $5,900.00.
IV. Conclusions of Law
Because the overarching purpose of the Bankruptcy Code is to provide a fresh start to those in need of relief from the efforts of creditors, exceptions to discharge are to be strictly construed against the complaining party. Rembert v. AT&T Universal Card Servs., Inc. (In re Rembert) , 141 F.3d 277, 281 (6th Cir. 1998). However, the relief provided by the Bankruptcy Code is intended only for the "honest but unfortunate" debtor and not to protect perpetrators of fraud or those who engage in egregious conduct. Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991).
Plaintiffs brought their complaint under 11 U.S.C. § 523(a)(2)(A). Section 523(a)(2)(A) states in pertinent part:
(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt–
....
(2) for money, [or] property, ... 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.
11 U.S.C. § 523(a)(2)(A) (emphasis added).
Plaintiffs bear the burden of establishing an exception to the Defendant's discharge under 11 U.S.C. § 523(a)(2)(A). The standard of proof is the "ordinary preponderance-of-the-evidence standard." Lawrence Bank v. Brent (In re Brent) , 539 B.R. 788, 796 (Bankr. S.D. Ohio 2015) (quoting Grogan , 498 U.S. at 291, 111 S.Ct. 654 ). A preponderance of the evidence burden requires the judge to determine that the existence of a fact is more probable than the nonexistence of that fact. The party bearing the burden of establishing that fact must, therefore, introduce evidence that is more convincing than the opposing evidence offered by the other party. If the evidence is evenly balanced, the party having the burden of persuasion, must lose.
As indicated by the plain language of the statute, the misrepresentations must be made or the fraud perpetrated at or before the time that the money or property is delivered to the debtor. Fraud or false representations made after the property is delivered will have no effect on dischargeability. See e.g., Melton v. Moore (In re Moore) , No. 14-3261, 2015 WL 1541840, at *3 (Bankr. D. Ore. Apr. 1, 2015) ; ITT Fin. Servs. v. Hulbert (In re Hulbert), 150 B.R. 169, 175 (Bankr. S.D. Texas 1993) ; Barch v. Cokkinias (In re Cokkinias), 28 B.R. 304, 307 (Bankr. Mass. 1983) (collecting cases); Middletown City Employees Federal Credit Union, Inc. v. Shepherd (In re Shepherd) , 13 B.R. 367, 372 (Bankr. S.D. Ohio 1981) ("[ Section] 523 (a)(2)(A) requires that the false representations be the reason for the creditor's extension of credit ...."); Long v. Armstrong (In re Armstrong) , No. 06-3062, 2009 WL 2461364, at *3 (Bankr. N.D. Ohio Aug. 10, 2009) ("To be actionable under § 523(a)(2)(A) ... any misrepresentation must have been made at or before the time the debt ... was incurred.")(citations omitted); 4 Collier Bankruptcy Manual ¶ 523.08[1][a] (Richard Levin & Henry J Sommer, eds., 16th ed. 2018). In other words, the conveyance of money or property by Plaintiffs must have been precipitated by the false representations or fraud of the Defendant. See Miller v. Grimsley (In re Grimsley) , 449 B.R. 602, 620 (Bankr. S.D. Ohio 2011). A corollary to this requirement is that, for the purposes of § 523(a)(2)(A), "a representation must be one of existing fact and not merely an expression of opinion, expectation, or declaration of intention." Lawson v. Conley (In re Conley) , 482 B.R. 191, 209 (Bankr. S.D. Ohio 2012) ; Strait & Lamp Group v. Moldovan (In re Moldovan) , No. 20-2120, 2021 WL 5764778, at *5 (Bankr. S.D. Ohio Nov. 9, 2021) ; Peoples Sec. Fin. Co., Inc. v. Todd (In re Todd) , 34 B.R. 633, 635 (Bankr. W.D. Ky. 1983) ("False representations... encompass statements that falsely purport to depict current or past facts."). A promise to do something in the future or a statement of future intention is generally not sufficient to make a debt nondischargeable. Moldovan , 2021 WL 5764778, at *5 ; Allison v. Roberts (Matter of Roberts) , 960 F.2d 481, 484 (5th Cir. 1992) ; Gcap Holdings, L.L.C. v. Bodley , No. 21-10337, 2022 WL 565585, at *3 (E.D. Mich. Feb. 24, 2022) ; Goldberg Securities, Inc. v. Scarlata (In re Scarlata) , 127 B.R. 1004, 1011 (N.D. Ill.1991), aff'd on other grounds , 979 F.2d 521 (7th Cir. 1992). Plaintiffs focused almost exclusively on representations made by the Defendant, but also mentioned fraud at the end of closing arguments.
False pretenses are distinguishable from false representations in that "false pretenses involve an implied misrepresentation or conduct that is intended to create and foster a false impression," Jennings v. Bodrick (In re Bodrick) , 509 B.R. 843, 855 (Bankr. S.D. Ohio 2014) (citations omitted), while a false representation involves an express representation. There was no evidence presented which could support a finding of false pretenses. Indeed, Plaintiffs did not even mention false pretenses in closing arguments.
A. FALSE REPRESENTATIONS
Plaintiffs highlight three representations allegedly made by the Defendant which they believe were material: (1) that the Defendant told Plaintiffs that Mr. Sekol had approved the changes made to the structural drawings prepared by Mr. Johnson; (2) that the Defendant promised to provide drawings or a letter from Mr. Sekol but never did; and (3) that, after the retaining wall failed, the Defendant promised "to make it right," but never returned to do so.
"In order to except a debt from discharge [for use of false representations] under § 523(a)(2)(A), a creditor must prove the following elements: (1) the debtor obtained money through a material misrepresentation that, at the time, the debtor knew was false or made with gross recklessness as to its truth; (2) the debtor intended to deceive the creditor; (3) the creditor justifiably relied on the false representation; and (4) its reliance was the proximate cause of loss." Rembert v. AT&T Universal Card Serv. (In re Rembert) , 141 F.3d 277, 280-81 (6th Cir. 1997) (footnote and citations omitted).
The first element comprises three sub-elements that must be satisfied: (a) the Defendant received money; (b) the money was obtained by use of a material misrepresentation by the Defendant to Plaintiffs; and (c) the Defendant knew at the time of the representation that the representation was not true or was reckless in failing to determine its veracity. See Haney v. Copeland (In re Copeland) , 291 B.R. 740, 760 (Bankr. E.D. Tenn. 2003). The representation must state a fact and not merely express an opinion or predict the future. Ott v. Somogye (In re Somogye) , 2020 WL 1519315 at *4 (Bankr. N.D. Ohio Mar. 30, 2020). The representation must also have been material. The test for materiality is "whether the statement was capable of influencing , or had a natural tendency to influence the [Plaintiffs’] decision." United States v. Keefer , 799 F.2d 1115, 1127 (6th Cir. 1986) (emphasis in original). The Court will address these in order.
First, the Defendant received $12,000 from Plaintiffs upon execution of the contract. Assuming that the Defendant made each of the misrepresentations alleged by Plaintiffs, the false statements must have been material. The Defendant represented to Plaintiffs on October 31st, and again later to Plaintiff Patricia Helber by cell phone texts, that Mr. Sekol had approved the changes made to the structural drawings. The Court concludes that these representations were material. Although the timing is problematic, the statements clearly could have influenced Plaintiffs to allow the Defendant's work to continue. At the time the Defendant made these statements, he knew that the statements were false. The undisputed evidence was that Mr. Sekol knew nothing regarding the structural drawings and had not approved any changes to them.
The second and third representations made by the Defendant – that he would provide a drawing or a letter from Mr. Sekol and, after the debacle of the wall construction, that he would "make it right" – could not be material in this instance. True, the Defendant never requested any drawings or letter from Mr. Sekol, but these "representations" were a promise to do something in the future. As stated above, a breached promise to do something in the future or a statement of future intention not met is generally insufficient to make a debt nondischargeable.
But the biggest problem with these representations is that they were all made after Plaintiffs had remitted the down payment to the Defendant. The first element in this cause of action is that the money was obtained from Plaintiffs by use of misrepresentations. The parties executed the contract September 26, 2017. The Defendant's statements that Mr. Sekol had approved the Defendant's wall design were made on and after October 31st. Plaintiff Mark Helber testified vaguely that they had requested drawings or something in writing from the Defendant's engineer numerous times, but the only specifics came from Patricia's testimony: that on and after October 31st the Defendant texted that he would provide them something. Any sense that the Defendant made such a commitment before receiving the down payment is belied by Mark's testimony: Mark conceded that at the meeting with the Defendant at Plaintiff's home, the Defendant said his engineer could review, not already had reviewed, the Defendant's plan and provide something in writing confirming that the plan would work. Mark further stated that he relied on the Defendant's representation that he would have an engineer look at the plan, not that an engineer had already done so. Moreover, at the time that the contract was executed, Plaintiffs contemplated that the rebar spacing would be as set forth in the blueprints, so there could be no expectation that a writing was forthcoming at that time, despite the discussion had with the Defendant about changing the rebar design to reduce costs. Finally, the Defendant's commitment to "make it right" was made after the Defendant's work on the retaining wall had ceased, and it was apparent that the wall would need to be torn down. Plaintiffs could not, therefore, have been influenced by any of the Defendant's statements.
To establish the third element of a § 523(a)(2)(A) claim, Plaintiffs must show that they justifiably relied on the Defendant's false representations. "[T]he standard of ‘justified reliance’ is not whether a reasonably prudent man would be justified in relying, but whether the particular individual had the ability and right to so rely." Columbiana Cnty Sch. Emp. Cr. Union, Inc. v. Cook (In re Cook) , No. 05-8034, 2006 WL 908600 at *4 (B.A.P. 6th Cir. Apr. 3, 2006) (citations omitted). "Justifiable reliance ‘is a matter of the qualities and characteristics of the particular [creditor], and the circumstances of the particular case, rather than of the application of a community standard of conduct....’ " Lawrence Bank v. Brent (In re Brent) , 539 B.R. 788, 802 (Bankr. S.D. Ohio 2015) (quoting Field v. Mans , 516 U.S. 59, 71, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995) ).
Justifiable reliance means that a creditor is ‘required to use his senses, and cannot recover if he blindly relies upon a misrepresentation the falsity of which would be patent to him if had utilized his opportunity to make a cursory ex-amination or investigation.’
Jennings v. Bodrick (In re Bodrick) , 509 B.R. 843, 855 (Bankr. S.D. Ohio 2014) (quoting Field , 516 U.S. at 71, 116 S.Ct. 437 ). Plaintiffs could not have justifiably relied on any of the Defendant's representations regarding Mr. Sekol's approval of the changes to their structural drawings, or any of the Defendant's other representations of which Plaintiffs complain, because the representations were made after the parties had entered into their contract and after Plaintiffs had paid the Defendant the $12,000. As discussed above, a subsequent misrepresentation has no effect on the dischargeability of a debt, and the claimed fraud must have been extant at the inception of the debt. See supra Part IV pp.8-9. It was at least as likely that Plaintiffs relied at the outset on the fact that the Defendant was a neighbor and a pastor as it is that they relied on any representations the Defendant may have made.
The Plaintiffs, having failed to satisfy the first and third elements of a cause of action for false representations under § 523(a)(2)(A), cannot prevail on this prong of their complaint.
B. ACTUAL FRAUD
Plaintiffs’ closing arguments focused almost exclusively on false representations, mentioning fraud almost in passing at the conclusion of their remarks. The Court could take the appellate courts’ position that theories or issues "adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived." United States v. Johnson , 440 F.3d 832, 845-56 (6th Cir. 2006) (internal quotation marks omitted) (citing United States v. Elder , 90 F.3d 1110, 1118 (6th Cir. 1996) ). But in the interest of complete analysis of this case, the Court will review whether the Defendant engaged in actual fraud.
For purposes of § 523(a)(2)(A), actual fraud is defined broadly – "any deceit, artifice, trick or design involving a direct and active operation of the mind, used to circumvent and cheat another – something said, done or omitted with the design of perpetrating a cheat or deception." 4 Collier on Bankruptcy ¶ 523.08[1][e] (Richard Levin & Henry J. Sommer, eds., 16th ed. 2018). See also McClellan v. Cantrell , 217 F.3d 890, 893 (7th Cir. 2000) ("[B]y distinguishing between ‘a false representation’ and ‘actual fraud,’ the statute makes clear that actual fraud is broader than misrepresentation.") (citing 4 Collier on Bankruptcy ¶ 523.08[1][e] (Lawrence P. King, ed., 15th ed. 2000)). "Fraud is a generic term, which embraces all the multifarious means which human ingenuity can devise and which are resorted to by one individual to gain an advantage over another by false suggestions or by the suppression of truth. No definite and invariable rule can be laid down as a general proposition defining fraud, and it includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated." McClellan , 217 F.3d at 899 (citations omitted). Actual fraud has also been defined as "deception intentionally practiced to induce another to part with property or to surrender some legal right, and which accomplishes the end designed." Blascak v. Sprague (In re Sprague) , 205 B. R. 851, 859 (Bankr. N.D. Ohio 1997). In order to prevail under § 523(a)(2)(A), the Plaintiff must illustrate the existence of an actual or positive fraud; fraud implied by law is not sufficient. Rembert v. AT&T Universal Card Serv. (In re Rembert) , 141 F.3d 277, 280-81 (6th Cir. 1997).
Because few individuals will admit to deceitful intent and other direct evidence of fraud is rarely available, the party seeking to except a debt from discharge may rely on circumstantial evidence or the debtor's course of conduct. Fahey Bank v. Benton (In re Benton), 367 B.R. 592, 597 (Bankr. S.D. Ohio 2006) ; Kaylor v. Holsinger (In re Holsinger ), 437 B.R. 260, 267-68 (Bankr. S.D. Ohio 2010). The standard for ascertaining a debtor's intent is subjective and depends on the totality of the circumstances. Lawrence Bank v. Brent (In re Brent) , 539 B.R. 788, 801 (Bankr. S.D. Ohio 2015). A finding of fraudulent intent may be inferred "if the totality of the circumstances presents a picture of deceptive conduct by the debtor which indicates an intent to deceive or cheat the creditor." Holsinger, 437 B.R. at 268. If, however, a reasonable inference can be made of honest intent, the determination of dischargeability must be resolved in favor of the debtor. Fortman v. Crowe (In re Crowe) , 2014 WL 4723084 at *7 (Bankr. N.D. Ohio Sep. 26, 2014) (citing ITT Financial Servs. v. Szczepanski (In re Szczepanski) , 139 B.R. 842, 844 (Bankr. N.D. Ohio 1991).
The Court simply cannot find fraud in this case. True, the Defendant's conduct was at times disingenuous. He conceded that he was not totally accurate in his communications with Plaintiffs. But as explained in detail above, any misconduct occurred after Plaintiffs made the down payment on the contract. Additionally, the Court found the Defendant credible and was impressed with the Defendant's candor and honesty in his testimony. Plaintiffs failed to show that the Defendant harbored fraudulent intent at the time that they remitted the down payment to him. The evidence instead showed that the Defendant had built numerous basement walls and thought that he could undertake Plaintiffs’ project. He had over 30 years of construction experience, and it appears that he had had a successful construction business in the past. It is apparent, however, that he was naive about Plaintiff's project; he did not have the knowledge required to understand the engineer's drawings and to build the retaining wall. The Defendant was simply in over his head. Had he had fraudulent intent, it is unlikely that he would have expended the cost and energy to build the plywood forms for the wall, hire a concrete truck to pour the wall, clean up the mess when the concrete truck dumped concrete in Plaintiffs’ driveway, return ten days later to complete the pour of the wall, or meet with the engineers to review the failed project. Moreover, the Defendant was remorseful about the outcome of the project. It was only after realizing that the wall needed to be torn down and that he did not have the financial resources to undertake this work that he stopped communicating with Plaintiffs and abandoned any attempt to remedy the situation.
The Court is unable to find fraud in this case, and Plaintiffs cannot prevail on this prong of their complaint.
V. Conclusion
Plaintiffs failed to satisfy all of the elements of a cause of action under 11 U.S.C. § 523(a)(2)(A). The Court must enter judgment in favor of the Defendant and dismiss Plaintiffs’ Complaint. A separate final judgment will be entered in accordance with the foregoing.