Case Summary:
Associated Bank erroneously deposited $64,467.67 into the Debtors’ personal account, and the Debtors spent the funds. The Bank alleged that the amount the Debtors owed was non-dischargeable under 11 U.S.C. § 523(a)(2)(A) and 11 U.S.C. § 523(a)(6). The Bankruptcy Court held that the elements of 11 U.S.C. § 523(a)(2)(A) were not met because the money was not obtained by false pretenses. The Bank also failed to meet its burden of proof under 11 U.S.C. § 523(a)(6). While the evidence supported an inference that the Debtors knew the deposit was made in error, it also supported an inference that the Debtors believed the deposit was part of an expected inheritance. The Bank failed to establish the time period when the Debtors knew they were spending money that did not belong to them. It was therefore impossible to determine what portion of debt was based on a willful and malicious injury. The Court held that the debt owed to the Bank was dischargeable.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - Fraud
11 U.S.C. § 523(a)(6) -- Nondischargeability - Willful and Malicious Injury

Key Terms:
Willful and Malicious - Defined
Deposit
Error