Opinion
Case No. 16-32976 Adv. No. 17-3006
12-26-2018
In re: DIETMAR FELBER PAMELA J. FELBER, Debtors GERHARD JUNG, Plaintiff v. DIETMAR FELBER PAMELA J. FELBER, Defendants
Copies to: Gerhard Jung (Plaintiff) Harold Jarnicki (Counsel for the Defendants)
Chapter 7
Decision Determining Debt Owed to the Plaintiff is Dischargeable
On September 22, 2016 the Debtors, Dietmar and Pamela Felber (the "Felbers"), filed for relief under Chapter 7 of the Bankruptcy Code and obtained a Chapter 7 discharge on January 31, 2017. On January 20, 2017 Gerhard Jung ("Jung") filed a complaint alleging that a judgment he holds against the Felbers is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2), (a)(4), and (a)(6) and this judgment should be excepted from the Felbers' discharge. Following a trial, the court took this matter under advisement.
Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I) and there is no dispute as to the court having the constitutional authority to enter a final judgment.
Facts and Procedural Background
This dispute between the parties arises out of a former business relationship between them. The Felbers were operating an automobile repair business but had outgrown the location from which they operated the business in Summerville, South Carolina. Transcript at 21. They found a new location and wished to establish an automobile repair shop specializing in foreign automobiles at 144 Howe Hall Road, Goose Creek, South Carolina (the "Howe Hall Road Property"). However, they lacked the funding to acquire the real estate and related assets. That is how Jung entered the picture. The Felbers were friends of Jung and knew Jung was involved in real estate and asked Jung to assist them in securing the location and assets to be used in the repair business.
In 2008, the Howe Hall Road Property was owned by a woman named Lynda Warren, whose deceased husband had operated a car repair business at the property. Transcript at 107. In January 2008 Warren conveyed the real property to Jung for the consideration of $350,000. Defendants Exhibit B. See also Plaintiff Exhibit 2 at 1 (HUD-1 statement of sale of the Howe Hall Road Property).
Mr. Felber wrote a check, dated January 4, 2008, in the amount of $6,067, which he testified was to help Jung pay the closing costs associated with the purchase of the Howe Hall Road Property. However, on cross-examination, he clarified that the funds represented a $3,500 deposit and the first month of rent. Transcript at 87 and 88.
Jung purchased the Howe Hall Road Property after being approached by Mr. Felber ("Felber"). Id. Jung and Felber had been friends since meeting about 25 years earlier. Felber suggested that Jung could buy the property as an investment and then lease it to the Felbers until the Felbers could obtain a loan from the Small Business Administration. Id. See Defendants Exhibit D (SBA loan paperwork). The parties agreed that the Felbers would buy the Howe Hall Road Property from Jung when the Felbers secured financing. Id. In the meantime, the parties entered into a standard commercial real property lease, dated December 2, 2007, that was to terminate on June 30, 2008. Defendants Exhibit A. The lease payments were $3,500 each month. Id. The lease did not address any of the personal property on the Howe Hall Road Property. Transcript at 128. The agreement included a one-page addendum which stated that "[o]n June 2019 [the Felbers] will buy the property for the appraised value of the property on that date. When the appraisal comes back, the amount owed to Gerhard Jung will not exceed 50/50 not to exceed $30,000." Plaintiff Exhibit 3. Although this addendum is somewhat cryptic and confusingly written, Mr. Felber explained that it meant that if the Howe Hall Road Property increased in value from the time Jung purchased it to the time the Felbers purchased it from Jung, the Felbers would pay Jung 50 percent of that appreciation, up to a cap of $30,000. Transcript at 71.
Felber testified that he made various improvements to the Howe Hall Road Property. Among the repairs or improvements was the installation of a second breaker box, fixing the lights to meet building code requirements, installing a staircase to a storage area, and adding gravel to the property. Transcript at 77. Mrs. Felber testified similarly. Transcript at 150-51. In addition, Felber purchased two new lifts for vehicles, and leased two others. Transcript at 78, 83 and 93. Felber indicated that, including work done to obtain the SBA loan, such as soil samples, the Felbers spent "close to $40,000" on the Howe Hall Road Property Id. at 95.
It appeared from the testimony of Mrs. Felber that the Felbers may have purchased these lifts by completing the lease payments. Transcript at 162.
Felber testified that during the first year of the lease between Jung and the Felbers, business "actually wasn't doing too bad." Transcript at 72. However, the financial crisis of 2008 hurt the Felbers' business but, nevertheless, the Felbers made payments on the lease, and subsequent leases for about 4 years, until 2011. Certain checks bounced during that time period, but Felber testified those payments were paid a few days late. Transcript at 75.
An SBA loan was initially approved for the Felbers' purchase of the property in 2008, but due to the market downturn that year, all SBA loans were stopped and the Felbers never obtained the SBA loan or other financing necessary to purchase the Howe Hall Road Property. Transcript at 79.
The Felbers continued to use the property to operate its business, European Motorsports and Imports, Inc. ("European Motor"), long after the initial lease expired. It was only in January 2012 that Jung obtained a Warrant of Ejectment from a South Carolina magistrate. Jung testified that other ejectment proceedings had occurred, or at least other notices of ejectment were issued, but this was never documented in evidence. Plaintiff Exhibit H (January 4, 2012 Notice of Ejectment) and Transcript at 161. Jung entered into a separate lease for the Howe Hall Road Property with European Motor that covered the period between March 25, 2011 and March 24, 2012. Defendants Exhibit F. It was signed by Jung and Felber. In March 2012, Jung entered into a new lease with the Felbers' son, Chris Felber, although Jung still considered the Felbers part of the business. Transcript at 135 and 136. In any event, the locks were changed at the Howe Hall Road Property by Jung shortly thereafter, specifically on June 12, 2012. Transcript at 133 and 138. In July 2012, Jung, as a representative of his own business, G.F.J. Rentals, Inc, quickly entered into a new lease with a different party that commenced in July 2012. Defendants Exhibit P. Jung then sold the Howe Hall Road Property for $355,000 in 2016. Defendants Exhibit Q.
A key focus of the trial was the sale of a tow truck, a 2005 Chevrolet (the "Tow Truck"), located on the Howe Hall Road Property when Jung purchased the real property. Jung contended that the Felbers sold the Tow Truck without permission and misappropriated the funds. The Tow Truck was never titled to Jung, any of the Felbers, nor any entity related to those parties. Rather, it was titled to Warren, and then sold to a third-party, Davis Towing. Transcript at 81. Felber testified that the proceeds from the sale of the Tow Truck were to be used, and in fact were used, to reimburse the Felbers for the funds they spent improving the Howe Hall Road Property. Id. Apparently, the Tow Truck was, despite the title, to be included in the Howe Hall Road Property sale from Jung to Warren. In a separate legal proceeding, Jung had accused Warren of taking the Tow Truck. Defendants Exhibit O and Transcript at 141-42. Jung testified that he wanted to know why Warren signed the title when she received no funds for the Tow Truck. Transcript at 141-42. Mrs. Felber testified that a representative from the buyer, Davis Towing, wanted to know who to write out the check for to pay for the Tow Truck. Transript at 153. According to Mrs. Felber, Jung told the Davis Towing representative to write out the check to "EMI." Id. Jung told Mrs. Felber to deposit the funds for improvements on the property and also to pay back the $6,000 paid by Felber to Jung at the time of the closing on the Howe Hall Road Property. Jung did not want the title of the Tow Truck in his name during the transaction to avoid property and sales taxes. Transcript at 154.
Jung filed a complaint against the Felbers and their son, Chris Felber, and the Felbers' business, European Motor, in the Court of Common Pleas, Ninth Judicial Circuit (the "State Court") for breach of a real property lease and fraudulent conversion. Plaintiff Exhibits 1 and 8. The named defendants were properly served and failed to file an answer or other response to the complaint. Consequently, upon affidavits of default, the State Court entered an Order of Default as to liability. Plaintiff Exhibit 1. Following the default order, the State Court scheduled a damages hearing. The Felbers and their State Court counsel attended the damages hearing. The Felbers were precluded from testifying or otherwise presenting any evidence at that hearing, but their counsel was permitted to cross-examine Jung on his testimony concerning his damages. After that hearing, the State Court entered an Order for Judgment finding the defendants were liable to Jung in the amount of $150,000, including $75,000 in actual damages and $75,000 in punitive damages. The Order for Judgment included findings of both intentional conversion and willful actions by the defendants. See Plaintiff Exhibit 1 (¶5 of the Findings of Fact, and ¶9 of the Conclusions of Law).
Legal Analysis
Preclusive Effect of the State Court Default Judgment and Damages Decision
Before proceeding any further, this court will first address what preclusive effect, if any, the State Court judgment has on this dischargeability proceeding. See Plaintiff Exhibit 1. The question is whether any of the findings contained in the Order for Judgment have preclusive effect in determining whether the $150,000 debt owed to Jung is non-dischargeable in the Felbers' bankruptcy.
The court admitted the Felbers' exhibits A through Q. Jung had the following exhibits admitted: Exhibit 1 (pages 1-15 and 31-42 only); Exhibit 2 (pages 1-4 only); 3, 4, and 8. Jung's remaining exhibits were not admitted for the reasons stated by the court during the trial. Transcript at 29-66.
Of course, the State Court's determination as to the existence of the debt and the amount of that debt is entitled to preclusive effect. Clark v. Springhart (In re Springhart), 450 B.R. 725, 734 n.3 (Bankr. S.D. Ohio 2011) (citing Heckert v. Dotson (In re Heckert), 272 F.3d 253, 357 (4th Cir. 2001)).
Jung's State Court judgment is entitled to the same preclusive effect that it would have in the South Carolina state courts. Bay Area Factors v. Calvert (In re Calvert), 105 F.3d 315, 317 (6th Cir. 1997); 28 U.S.C. § 1738. See also Voss v. Pujdak (In re Pujdak), 462 B.R. 560, 568 (Bankr. D. S.C. 2011) ("In determining whether the preclusion doctrine applies, '[f]ederal courts are required to refer to the preclusion law of the state in which the judgment was rendered.' ") (citation omitted). Default judgments in South Carolina may not be used for collateral estoppel or issue preclusion purposes because, under South Carolina law, a default judgment was not "actually litigated." State v. Bacote, 503 S.E.2d 161, 163 (S.C. 1998), cert. denied 523 U.S. 1112 (1999) ("In the context of a default judgment, collateral estoppel or issue preclusion does not apply because an essential element of that doctrine requires that the claim sought to be precluded actually have been litigated in the earlier litigation."). Nevertheless, a legal question remains about whether the findings in the Order for Judgment may be given preclusive effect as to any of the elements of dischargeability pled in Jung's complaint. See also Voss, 460 B.R. at 571 (court must determine whether issue preclusion applies).
The preclusive effect of findings from a damages hearing following a default judgment was addressed in a reported decision of the Court of Appeals of South Carolina, which stated:
[W]e find the circuit court erred in holding that Bacote and the current case were factually distinguishable. The circuit court found that, unlike Bacote in which the State did not participate in the administrative hearing resulting in default, Kunst actively took part in the damages hearing in the Gaby Action. The circuit court determined this participation in the damages hearing afforded him a "full and fair opportunity to be heard." We disagree.Kunst v. Loree, 746 S.E.2d 360, 364 (S.C. App. 2013) (emphasis added and footnote omitted). See also Clark v. Springhart (In re Springhart), 450 B.R. 725, 732 (Bankr. S.D. Ohio 2011) (citing Sill v. Sweeney (In re Sweeney), 276 B.R. 186 (B.A.P. 6th Cir. 2002) (noting that Ohio preclusion law is similar to South Carolina and that a default judgment does not mean the state court made actual fraud findings in rendering a default judgment)).
Some courts adhering to the general rule that default judgments cannot be used to establish collateral estoppel have recognized an exception when a party extensively participated in litigation. See, e.g., In re Ragucci, 433 B.R. 889, 895 (Bankr.M.D.Fla.2010) ("[When] a party has substantially participated in an action in which he had a full and fair opportunity to defend on the merits, but subsequently [chose] not to do so, it is not an abuse of discretion to apply the doctrine of collateral estoppel to prevent further litigation of the issues resolved by the default judgment in the prior action." (alterations and internal quotation marks omitted)); Insituform Techs., Inc. v. AMerik Supplies, Inc., 850 F.Supp.2d 1336, 1362 (N.D.Ga.2012) (finding when a defendant has substantially participated in a lawsuit and "is defaulted as a sanction for dilatory or obstructive conduct," the "actually litigated" requirement is met, and it is within the court's discretion to apply collateral estoppel). However, this exception has not been recognized under South Carolina case law.
Further, we find this exception would not apply to the facts of this case. Although Kunst participated in the damages hearing by cross-examining witnesses called by the Gabys, it appears he was not afforded the opportunity to testify or to call witnesses to testify on his behalf. Kunst was also not allowed to participate in any discovery on this matter. In addition, because Kunst was in default, the circuit court "start[ed] with the premise that all facts relating to the pertinent causes of action [were] admitted." Accordingly, we hold Kunst was not presented with a fair opportunity to "actually litigate" the veracity of Loree's alleged statements to others.
Accordingly, we hold the doctrine of collateral estoppel cannot be applied to default judgments because the essential element requiring the claim sought to be precluded actually have been litigated in the earlier action is not met. Therefore, we find the circuit court erred in ruling Kunst's defamation claim was precluded under the doctrine of collateral estoppel based upon the default judgment rendered in the Gaby Action. Accordingly, we reverse the circuit court's grant of summary judgment on Kunst's defamation claim.
The evidence in this proceeding relating to Jung's and Felbers' State Court case was remarkably similar to the facts in Kunst. Mrs. Felber testified at the dischargeability trial that the damages hearing was very abbreviated, with no opportunity for the Felbers to present evidence. Doc. 41; Transcript at 155. She testified that "[s]o we went in and Mr. Jung testified. Our attorney got to ask him a few questions, and that was the end of the hearing. It was over in like ten minutes." Transcript at 170. Jung agreed that the hearing was very short. He appeared to perceive the lack of an opportunity for the Felbers to present evidence as relating to the issues being "clear cut." Transcript at 179.
The court is not aware of any decision taking a different view of South Carolina law than Kunst. For this reason, the court finds that South Carolina law, which this court is obliged to follow, does not give issue preclusive effect to factual findings from a one-sided damages hearing following a default judgment. This court's decision as to dischargeability is therefore based upon the evidence presented at the dischargeability trial, without giving any preclusive effect to the findings in the Order for Judgment.
Analysis of the Evidence to the Dischargeability Counts
Jung plead in his complaint that the State Court judgment is non-dischargeable pursuant to 11 U.S.C. § 523(a)(2)(A) or (B), (a)(4), 0r (a)(6). Exceptions to discharge are construed narrowly. Rembert v. AT & T Universal Card Svcs., Inc. (In re Rembert), 141 F.3d 277, 281 (6th Cir. 1998); Perry v. Ichida (In re Ichida), 434 B.R. 852, 859 (Bankr. S.D. Ohio 2010) (quoting Ker v. Ker (In re Ker), 365 B.R. 807, 812 (Bankr. S.D. Ohio 2007) ("In order to afford the honest but unfortunate debtor a fresh start, the Court narrowly construes exceptions to discharge.")). In order for the debt to be non-dischargeable, the creditor must show it can meet one of these standards by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 291 (1991). Although Jung, acting pro se, did not argue any of the specific subsections in his opening statement or closing argument, the court is considering all the subsections plead in the complaint.
Jung Failed to Prove the Debt Arising Out of the State Court Judgment is
Non-dischargeable Under any Theory of Non-Dischargeability
A. Section 523(a)(2) of the Bankruptcy Code
Section 523(a)(2)(A) provides, in relevant part, that: "A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt . . . for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by . . . false pretenses, a false misrepresentation, 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).
The elements of a fraudulent misrepresentation claim under § 523(a)(2)(A) are "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 justifiability relied on the false representation; and (4) its reliance was the proximate cause of loss." Rembert v. AT & T Univ. Card Svcs., Inc. (In re Rembert), 141 F.3d 277, 280-81 (6th Cir. 1998) (footnote omitted). False pretenses refer to an implied misrepresentation or conduct rather than an express representation. DeMarco Roofing, Inc. v. Coyle (In re Coyle), 519 B.R. 194, 204 (Bankr. S.D. Ohio 2014).
The justifiable reliance standard assesses reliance on a subjective basis rather than an objective one. Thus, the creditor's reliance need not necessarily be reasonable from an objective standpoint. Field v. Mans, 516 U.S. 59, 74-75 (1995). Under the justifiable reliance standard, a party 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 he had utilized his opportunity to make a cursory examination or investigation." Id. at 71 (citation omitted). However, a party generally is under no duty to do an investigation for justifiable reliance to be found even if such an investigation might have revealed the fraud. Willens v. Bones (In re Bones), 395 B.R. 407, 432 (Bankr. E.D. Mich. 2008); Haney v. Copeland (In re Copeland), 291 B.R. 740, 767 (Bankr. E.D. Tenn. 2003).
Actual fraud refers to "any deceit, artifice, trick, or design involving direct and active operation of the mind, used to circumvent and cheat another." Mellon Bank, N.A. v. Vitanovich (In re Vitanovich), 259 B.R. 873, 877 (B.A.P. 6th Cir. 2001). A debtor that "intentionally engages in a scheme to deprive or cheat another of property or a legal right" has committed actual fraud. Id. "Actual fraud is broader than misrepresentation." Id. Just like the other forms of fraud in § 523(a)(2)(A), "a debtor's subjective intent at the time the debt is incurred is critical in proving fraud." Id. However, actual fraud does not require evidence of a "misrepresentation or misleading omission" or reliance. Cash Am. Fin. Svcs., Inc. v. Fox (In re Fox), 370 B.R. 104, 116 (B.A.P. 6th Cir. 2007).
Finally, § 523(a)(2)(B) would apply to a written financial statement, used to obtain property, services, or credit, that is materially false respecting the debtor's financial condition that was reasonably relied on by Jung and which the debtor made or published with an intent to deceive. Buckeye Ret. Co. v. Kakde (In re Kakde), 382 B.R. 411, 419 (Bankr. S.D. Ohio 2008).
"A discharge under section 727 . . . of this title does not discharge an individual from any debt . . . for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by— ...
(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 reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive[.]"
The record does not support a finding of fraud under any theory of § 523(a)(2). The record showed Felber and Jung entered into a real estate transaction in which the Felbers were going to purchase the Howe Hall Road Property that Jung was leasing to them. The Felbers never received the SBA loan or other financing that they needed to purchase the Howe Hall Road Property. Although they continued to lease the property, the business failed by 2012 and Jung ejected the Felbers from the Howe Hall Road Property. Jung entered into a new lease with Chris Felber but ultimately padlocked the Howe Hall Road Property by June of 2012. A new lessee was found by July 2012. Although various accusations were made about the Felbers absconding with personal property or the proceeds of the sale of such property, nothing of the sort was ever proven at the trial. Further, it was never shown that the Felbers used the funds from the Tow Truck sale for any improper purpose. Perhaps some misunderstanding may have occurred as to the extent of the use of certain funds for improvements, but the Felbers gave a credible explanation of the transaction. Jung had no independent evidence to corroborate any allegation of fraud and, even in his own testimony, did not articulate the fraud with any specificity. Therefore, the court finds that no actual fraudulent scheme was proven. Further, to show false pretenses or a misrepresentation, Jung needed to prove the Felbers mislead Jung with certain statements or acts at the time of the transaction through which they obtained Jung's property, money, or services to his deprivation. Jung never did so. Finally, for the sake of completeness, the court also determines that Jung did not introduce into evidence any written financial statement regarding the Felbers' financial condition that could even be considered under § 523(a)(2)(B). See generally Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752, 1755 (2018) (finding that "[a] statement about a single asset . . . can be a statement respecting the debtor's financial condition").
B. Section 523(a)(4) of the Bankruptcy Code
Section 523(a)(4) contains three separate bases for non-dischargeability. DeWine v. Dudley (In re Dudley), 582 B.R. 708, 727 (Bankr. S.D. Ohio 2017).
"A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt . . . for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny[.]" 11 U.S.C. § 523(a)(4). --------
Fraud in a fiduciary capacity is defined narrowly in the Sixth Circuit, limiting it to situations in which an express or technical trust exists. Bd. of Trustees of the Ohio Carpenters' Pension Fund v. Bucci (In re Bucci), 493 F.3d 635 (6th Cir. 2007). Accord Cash Amer. Fin. Svcs., Inc., 370 B.R. at 114. To establish such a trust, a creditor must prove "(1) an intent to create a trust; (2) a trustee; (3) a trust res; and (4) a definite beneficiary." Bucci, 493 F.3d at 640. Further, the trustee must have duties that pre-exist the act which created the debt. Id. at 643.
For purposes of § 523(a)(4), embezzlement is defined by federal common law as "the fraudulent appropriation of property by a person to whom such property has been entrusted or into whose hands it has lawfully come." Brady v. McAllister (In re Brady), 101 F.3d 1165, 1172-73 (6th Cir. 1996) (quoting Gribble v. Carlton (In re Carlton), 26 B.R. 202, 205 (Bankr. M.D. Tenn. 1982)). Embezzlement is proven "by showing that [the creditor] entrusted his property to the debtor, the debtor appropriated the property for a use other than that for which it was entrusted, and the circumstances indicate fraud." Id. at 1173 (citation omitted). Larceny refers to a situation in which the debtor never had lawful possession of the property. See In re Pomainville, 254 B.R. 699, 705 (Bankr. S.D. Ohio 2000) ("Embezzlement differs from larceny in that the debtor's original acquisition of possession of the property was lawful.") (citation omitted).
Concerning § 523(a)(4), Jung and the Felbers entered into an arms-length business transaction which essentially involved a real property lease, with an option to purchase the underlying real estate and related assets. No express or technical trust existed at any time, nor did any party act as a fudiciary for the other. No embezzlement or larceny was proven either as to any personal property or funds. The Felbers ran an automobile repair business and Jung leased the Howe Hall Road Property to them. Again, Jung tried to prove that the Felbers stole funds from him, particularly as to the Tow Truck sale. However, Jung did not meet his burden of proof that the Felbers committed embezzlement or larceny by expending funds to improve the Howe Hall Property. Although none of the parties ever documented the extent to which the improvements could be made from the Tow Truck sale, Jung had the burden to show fraud or embezzlement occurred. He never showed any funds were entrusted to the Felbers that they embezzled for personal gain. Nor did the evidence show larceny of any of Jung's personal property or funds. Even if funds had been misapplied pursuant to what amounted to an oral agreement, the record was devoid of evidence establishing that the Felbers had a bad intent in using the funds from the sale of the Tow Truck to make improvements or to reimburse themselves for the improvements they made to the Howe Hall Road Property.
C. Section 523(a)(6) of the Bankruptcy Code
Section 523(a)(6) of the Code provides in relevant part that "[a] discharge under section 727 . . . of this title does not discharge an individual debtor from any debt . . . for willful and malicious injury by the debtor to another entity or to the property of another entity." An injury is not willful unless the debtor "desires to cause [the] consequences of his act, . . . or believes that the consequences are substantially certain to result from it[.]" Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 464 (6th Cir. 1999); See also Dardinger v. Dardinger (In re Dardinger), 566 B.R. 481, 493 (Bankr. S.D. Ohio 2017) (quoting Wheeler v. Laudani, 783 F.2d 610, 615 (6th Cir. 1986) ("And for an injury to be 'malicious,' the debtor must have acted 'in conscious disregard of [his] duties or without just cause or excuse.' ")) .
The evidence presented is bereft of any indication that the Felbers intended to cause Jung harm. Instead, the trial record showed a business transaction, between old friends, that simply did not work out. Jung never showed that the Felbers intended any specific intentional act that caused harm, much less that the Felbers knew such an act was substantially certain to cause Jung harm. The evidentiary record does not support a § 523(a)(6) claim.
Conclusion
For all these reasons, the debt owed to Jung by the Felbers is dischargeable. The court will enter a separate order consistent with this decision.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
/s/ _________
Guy R. Humphrey
United States Bankruptcy Judge Dated: December 26, 2018 Copies to: Gerhard Jung (Plaintiff) Harold Jarnicki (Counsel for the Defendants)