Case Summary:
Creditor filed an adversary proceeding seeking a determination that a Chapter 7 Debtor's debt to creditor is nondischargeable under 11 U.S.C. § 523(a)(2)(B) and 523(a)(6). Following the close of evidence at trial, the creditor moved to amend to include a claim under 11 U.S.C. § 523(a)(2)(A) to conform to the evidence. As a preliminary matter, the Court permitted the creditor to amend its complaint to conform to the evidence and add a claim against the Debtor under section 523(a)(2)(A) because the Debtor had a full and fair opportunity to defend against this potential claim and there was nothing on the record that suggests the Debtor would have presented additional evidence had he known sooner the substance of the amendment. Further, the Court found the debt owed to the creditor was nondischargeable under both sections 523(a)(2)(A) and (a)(6). Specifically, the Court found the debt was nondischargeable under 523(a)(2)(A) because the Debtor intentionally misrepresented to the creditor that funds loaned to Debtor by creditor would be used to expand the Debtor's business, purchase new equipment, and upgrade catering equipment, when in actuality Debtor's bank records and testimony showed that the money was used to pay payroll, vendors, and other operating expenses including tax liabilities that were not disclosed to the creditor. The Court also found the Debtor's intentional failure to make daily required payments to the creditor, instead using the funds to make payments to other creditors, constituted willful and malicious behavior making the debt nondischargeable under section 523(a)(6) as well. But, the Court ruled for Trapp on the section 523(a)(2)(B) count, finding that the written materials provided to creditor were not materially false or that the statements about prior months' earnings were made with intent to deceive.

Statute/Rule References:
11 U.S.C. § 523(a)(2)(A) -- Nondischargeability - false pretenses, false representation, or fraud
11 U.S.C. § 523(a)(2)(B) -- Use of a statement in writing
11 U.S.C. § 523(a)(6) -- Nondischargeability - willful and malicious injury

Key Terms:
Intent
Materiality