Opinion
In Bankruptcy Case No. 03-74325, Adversary No. 03-7353
April 7, 2004
OPINION
On September 15, 2003, Debtors filed a voluntary Chapter 7 petition in bankruptcy. Plaintiff subsequently filed a complaint to determine dischargeability of debt under 11 U.S.C. § 523(a)(2)(A) and (a)(4) against Mr. and Mrs. Maurer. The undisputed facts show that Mrs. Maurer, while employed by the Plaintiff between October, 2002, and July, 2003, stole large sums of money from the Plaintiff by forging checks. She made checks payable to herself, her husband, her children, and others. Defendants concede that the debt is nondischargeable as to Mrs. Maurer. The dispute is whether Mrs. Maurer's conduct can be imputed to Mr. Maurer.
As a general rule, the acts and omissions of one spouse may not be imputed to another spouse by virtue of their marital status. In re Harris, 107 B.R. 210, 215 (Bankr. D. Neb. 1989); In re Grimm, 82 B.R. 989, 994 (Bankr. W.D. Wis. 1988); In re Mart, 75 B.R. 808, 810 (Bankr. S.D. Fla. 1987). The relevant exception is where a plaintiff can show that the passive spouse had "significant involvement, contact or control, implied or express" over the perpetrator of the fraud. In re Shane, 80 B.R. 240, 241 (Bankr. S.D. Fla. 1987). This Court has previously ruled that, in order to impute the actions to the passive spouse, the passive spouse must have actual knowledge of the actions against the plaintiff, encouraged those actions, benefitted from those actions, or have been personally involved with them. In re Sager, Case No. 91-33700 (Bankr. S.D. Fla. Aug. 26, 1993). Other courts have held that even if the passive spouse benefitted from the fraud and possibly had knowledge of it, that passive spouse prevails unless actually participated in the fraud. In re Reed, 700 F.2d 986 (5th Cir. 1983).
Plaintiff's main arguments are (i) that Mr. Maurer knew or should have known about Mrs. Maurer's fraudulent actions and (ii) that Mr. Maurer benefitted from her actions and, thus, should be held accountable for them.
Addressing the second argument first, the preponderance of the evidence indicates that Mrs. Maurer was the sole beneficiary of the fraudulent scheme. The fraudulently obtained money was utilized primarily to fund Mrs. Maurer's gambling activities. She spent the rest primarily on personal items for herself, including clothing and jewelry. No significant purchases were made for or on behalf of Mr. Maurer. The testimony indicated that the only significant household purchase was that of a chair. Under these circumstances, the Court cannot find that Mr. Maurer should have Mrs. Maurer's fraud imputed to him because he was a beneficiary of her fraudulent actions.
In this case the evidence shows that the fraudulent scheme was entirely that of Mrs. Maurer. There was certainly no evidence that Mr. Maurer encouraged Mrs. Maurer to pursue the fraudulent scheme; the testimony demonstrated quite the opposite. As to whether Mr. Maurer knew or should have known about Mrs. Maurer's actions, the Court believes that Mr. Maurer did not know about the fraud until it was revealed to him on July 3, 2003, which was after the fact. That was his testimony; it was unrebutted, and the Court found him credible. Inasmuch as the outcome of this case rests largely on Mr. Maurer's testimony, his credibility is key. Based upon what he said, how it was said, and how his testimony related to the other evidence in the case, the Court found Mr. Maurer to be highly credible.
As to whether he should have known about the fraud, the evidence indicated that, because of Mrs. Maurer's prior conduct regarding household finances, Mr. Maurer was distrustful of Mrs. Maurer to the extent that he tried to keep his checkbook from her. He was also aware of a previous criminal issue involving a credit card misuse or misappropriation which occurred prior to their marriage, although he wasn't sure of the specifics. The Maurers' counsel repeatedly conceded in his closing argument that Mr. Maurer was "stupid" as to the fraud. The Court indicated then and reasserts now that it does not believe Mr. Maurer is or was "stupid". However, there were clearly some good reasons for Mr. Maurer to be somewhat distrustful of his wife. However, that is as much as the Plaintiff proved, and it would be a huge logical leap from some vague sense of distrust to a finding that Mr. Maurer should have known that his wife was systematically stealing large sums of money from her employer.
In any case, the majority of the case law requires even more than a finding that the passive spouse should have known about the fraud. The prevailing precedent requires at least actual knowledge; some cases even go so far as to say that actual knowledge without participation is not enough. Hence, under any standard, Plaintiffs failed to produce enough evidence to impute Mrs. Maurer's fraud to Mr. Maurer. Therefore, the Court will enter an Order finding the debt nondischargeable as to Mrs. Maurer and dischargeable as to Mr. Maurer.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure. See written Order.
ORDER
For the reasons set forth in an Opinion entered this day,
IT IS HEREBY ORDERED that the debt owed to Plaintiff be and is hereby determined to be nondischargeable as to Lisa C. Maurer.
IT IS FURTHER ORDERED that the debt, if any, owed to Plaintiff be and is hereby determined to be dischargeable as to Gaylan C. Maurer.