|Title||State of Maryland Department of Labor v. Thomas E. Sulser Adv. Pro. No. 19-00355 Lead Case: Thomas E. Sulser Lead Case No. 19-18710|
Michelle M. Harner
The matter before the Court is a Motion to Dismiss the Plaintiff’s Complaint, which seeks to hold debt relating to unemployment benefits nondischargeable under section 523(a)(2)(A). In support of the Motion to Dismiss, the Defendant argues that his under- and overreporting of income in connection with his request for unemployment benefits was, among other things, a statement respecting his financial condition. The Defendant further argues that, under the U.S. Supreme Court’s holding in Lamar, Archer & Cofrin, LLP v. Appling, 138 S. Ct. 1752 (2018), his income is an asset and that statements concerning even a single asset fall within the scope of section 523(a)(2)(B). The Plaintiff disagrees with the Defendant’s position, relying primarily on dicta in Appling that certain debts, such as those arising from fraud in the context of social security benefits, remain subject to the lower standard of section 523(a)(2)(A).
The Defendant’s act of providing information to the Plaintiff constitutes a “statement” according to common usage and the Appling decision. The Court further acknowledges that, under Appling, a debtor’s statement about a single asset may implicate the debtor’s “financial condition” for purposes of section 523(a)(2). Based on the record before the Court, and at this early stage of the litigation, however, the Court cannot conclude that the Defendant’s alleged reporting of his wages was in the context of providing information regarding his overall financial condition. The Defendant may offer evidence during this proceeding that supports such a determination, but it is not evident from the current record. The Complaint thus states a plausible claim for nondischargeability under section 523(a)(2)(A) that withstands challenge under Federal Rule of Civil Procedure 12(b)(6). The Court will deny the Motion on that basis.