Adversary No. 06-4018, Bankr. No. 05-42297.United States Bankruptcy Court, D. South Dakota.
June 1, 2006
Michael A. Henderson, Esq. Counsel for Plaintiff First Premier Bank Sioux Falls, South Dakota
IRVIN HOYT, Bankruptcy Judge
Dear Mr. Henderson:
The matter before the Court is the Motion for Entry of Default Judgment filed by Plaintiff on May 5, 2006, and the supporting affidavit filed by Plaintiff’s counsel on May 5, 2006. This is a core proceeding under 28 U.S.C. § 157(b)(2). This letter decision and accompanying order shall constitute the Court’s findings and conclusions under Fed.R.Bankr.P. 7052. As set forth below, the Motion will be denied, and Plaintiff will be given 15 days to amend its complaint.
Summary. Plaintiff First Premier Bank filed a nondischargeability complaint against Defendant-Debtor under 11 U.S.C. § 523(a)(2)(A). Plaintiff alleged Defendant-Debtor borrowed $2,000.00 from the Bank without an intention to repay. Contrary to Fed.R.Bankr.P. 7009 and Fed.R.Civ.p. 9(b), no specific facts were alleged. Defendant-Debtor failed to timely file an answer.
Discussion. Though Defendant-Debtor did not answer, the Court may only grant Plaintiff a default judgment if its allegations support the relief sought in Plaintiff’s complaint. See Ryan v. Homecomings Financial Network, 253 F.3d 778, 780-83 (4th Cir. 2001); Miller v. Kasden (In re Kasden), 209 B.R. 236 (B.A.P. 8th Cir. 1997) (both cited in LuAnn K. Pfeifle v. Bud H. Williams (In re Pfeifle), Bankr. No. 03-41580, Adv. No. 04-4031, slip op. at 2 (Bankr. D.S.D. Aug. 26, 2004)). Here, Plaintiff has not established a factual basis for a judgment of nondischargeability under § 523(a)(2)(A).
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As discussed in Frank Guliuzza v. Glenn E. Wood (In re Glenn E. and Janet L. Wood), Bankr. No. 03-50375, Adversary No. 03-5015, slip op. 3 (Bankr. D.S.D. March 15, 2004), § 523(a)(2)(A) is not applicable to a “statement respecting the debtor’s or an insider’s financial condition[.]” A representation regarding a debtor’s ability to pay is just such a statement respecting a debtor’s financial condition. Id. at 3-4.
Given the present record, it appears the same circumstances exist here as did in Wood. Though the facts pled by Plaintiff are sparse, Plaintiff apparently believes Defendant-Debtor fraudulently misrepresented her ability to repay the debt at the time the loan was made. That representation is a statement regarding Defendant-Debtor’s financial condition. Thus, it is not actionable under § 523(a)(2)(A).
The Court is not foreclosing the possibility Defendant-Debtor’s alleged intention not to repay involved something more than her ability to pay. Plaintiff, however, has not pled anything more. Accordingly, Plaintiff’s present Motion for Entry of Default Judgment will be denied. Plaintiff will be given 15 days to amend its complaint. If an amended complaint is not timely filed, Plaintiff’s complaint will be dismissed, and the adversary proceeding will be closed.
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