Adv. Case No. 16-79, Bankr. Case No. 16-13134-11
The Debtor filed this adversary proceeding seeking a declaratory judgment that he was not liable to the Defendants and that the Defendants' claims were disallowed against him and the bankruptcy estate. The Debtor's father ran a Ponzi scheme through his insurance business, where Debtor had been an employee and director. The Defendants represent a small portion of the total number of individuals and families who were defrauded in that Ponzi scheme. The Defendants filed a counterclaim for a determination that their claims were nondischargeable on the ground that the Debtor was involved in the Ponzi scheme and therefore owed them a nondischargeable debt under 11 U.S.C. §§ 523(a)(2)(A) and 523(a)(6). The court granted summary judgment to the Debtor on the section 523(a)(2)(A) claim on the grounds that: (1) the Defendants failed to allege the Debtor "obtained" money through fraud, and (2) the Defendants failed to produce evidence that would show that the Debtor made any false representations, intended to commit fraud, or committed "actual fraud." The court granted summary judgment to the Debtor on the section 523(a)(6) claim on the ground that Defendants failed to produce evidence that the Debtor acted willfully and maliciously.
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - fraud
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury