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Café Hanah, Inc. v. Sung (In re Francisca J. and BJ Byungjoon Sung)

19 B 554, 19 A 604
Plaintiffs entered into a contract with Defendant’s construction company.  The contract required Plaintiffs to pay a percentage of the total contract price at “rough-in inspection approval.”  Over several months, Plaintiffs made payments constituting a portion of that percentage after Defendant told them that inspections had been approved with conditions.  Eventually the relationship soured, Plaintiffs stopped making payments and Defendant withdrew as general contractor.  Plaintiffs sought a finding that their claim against Defendant was nondischargeable under 11 U.S.C. § 523(a)(2)(A).  HELD: Defendant made a false statement to Plaintiffs.  Although there was no consensus about whether “rough-in inspection approval” meant full approval or approval with conditions, it was undisputed that Defendant had never requested or participated in a rough mechanical inspection.  Nevertheless, Plaintiffs did not establish that Defendant made that statement with a reckless disregard for the truth or with the intent to deceive them, or that they justifiably relied on it.  Moreover, there was no basis under Missouri law to pierce the corporate veil and hold Defendant responsible for the debts of his construction company.  Mere participation in a breach of contract is not sufficient to disregard the corporate form.

Monday, December 4, 2023