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DN Enter. v. John J. Navarro (In re Navarro), Ch. 7, BK19-81567-TLS, A19-8034-TLS (Aug. 11, 2020)

This adversary proceeding was filed by a creditor holding a judgment in a state-court lawsuit finding that the debtor had committed tortious conversion. The complaint seeks a denial of discharge under § 727(a)(4)(A) because the debtor failed to disclose certain assets in his bankruptcy schedules and at his § 341 meeting, or, alternatively, an exception from discharge based on § 523(a)(4).

The debtor filed a motion for partial judgment on the pleadings as to the denial of discharge. The court denied the motion, stating that while “there is no dispute that certain information was omitted from Navarro’s initial set of bankruptcy schedules, although they were later amended, and that testimony he gave at his § 341 meeting was not factually accurate[, t]he key issue is whether those statements were knowingly and fraudulently made. It is difficult for the court to determine whether a debtor’s actions were intentional without the opportunity to hear from the debtor and gauge his credibility.”

The creditor filed a motion for summary judgment regarding the exception from discharge under § 523(a)(4) for larceny, on the basis that the state court judgment is res judicata. Had that judgment been made part of the record in the bankruptcy court, the summary judgment motion likely would have been granted. However, the court denied it on the grounds that the lack of evidence rendered it impossible to determine what facts, if any, concerning dischargeability under § 523(a)(4) were in dispute.

Tuesday, August 11, 2020
Judge Thomas L. Saladino