Case Summary:
The plaintiffs filed an adversary proceeding requesting a declaration of nondischargeability under 11 U.S.C. § 523(a)(2) and seeking relief on three related counts. The debtor answered the complaint, but the joint debtor moved to dismiss the claims against her, arguing that the plaintiffs had not sufficiently alleged the existence of an underlying debt. The plaintiffs argued in response that the Supreme Court’s decision in Bartenwerfer v. Buckley, 598 U.S. 69 (2023), rendered the debt nondischargeable based on the agency relationship between the debtor and the joint debtor. The Court granted the motion to dismiss. The Court held that a claim under § 523(a)(2) requires a plaintiff to plead facts sufficient to support the existence of an underlying debt, in addition to facts sufficient to support the elements of nondischargeability under § 523(a)(2). In Bartenwerfer v. Buckley, a state court had already determined that the joint debtor was liable on an underlying debt, and the issue was whether the debt could be nondischargeable if the joint debtor was not the primary fraudster. In this case, in contrast, there was no determination as to the existence of an underlying prepetition debt, and the plaintiffs did not plead sufficient facts to establish that the joint debtor was liable to the plaintiffs on a prepetition debt.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) - Nondischargeability
Fed. R. Civ. P. 12(b)(6) - Motion to Dismiss

Key Terms:
Motion to Dismiss
Nondischargeable Debt