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Ga.App.,2010.
Harman v. McAfee
302 Ga.App. 698, 691 S.E.2d 586, 10 FCDR 784
March 8, 2010.
Background: Payee of promissory note brought action against maker for misapplication of funds and fraud after
holder defaulted. Payee died and his wife was substituted. The State Court, Fulton County, Cole, J., denied maker's
motion for summary judgment. Maker appealed.
Affirmed.
West Headnotes
[1] Bankruptcy 51 2062
Trial court had authority to find that the debt from promissory note was not discharged in maker's bankruptcy, in
action against maker for misapplication of funds and fraud after holder defaulted; trial court explicitly found that
payee made out more than a colorable claim on her complaint of guaranty violation and implicitly found sufficient
evidence on fraud count. 11 U.S.C.A. § 523(a)(2, 4, 6).
51k2062 k. Bankruptcy courts and state courts. Most Cited Cases
State court can decide whether the creditor has a colorable or viable claim that debt is nondischargeable for fraud,
for fraud or defalcation while acting in fiduciary capacity, or for willful and malicious injury without intruding on
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© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
payment in the event of “any act of conversion, misappropriation, theft or embezzlement with respect to any money
or other property of Maker by the undersigned in his capacity as an employee, officer, director, agent or employees
of Maker.”
Carter Oaks defaulted on the promissory note and McAfee filed a complaint against Harman contending that the
guaranty was triggered by misapplication of funds that should have been used to repay him. McAfee also alleged
fraud, claiming that Harman fraudulently misrepresented that Carter Oaks had authority to enter into the promissory
note when, in fact, the terms of the refinancing prohibited it; and, that in order to circumvent this prohibition, Carter
Oaks's payments to McAfee were to be disguised as “management fees.” McAfee also claimed that Harman failed to
disclose that $400,000 was not the full amount needed to close on the refinancing and Harman was himself putting
asset Chapter 7 bankruptcy case which was filed after the date of the note and guaranty giving rise to McAfee's
claims. Harman acknowledged that McAfee was not listed as a creditor in the bankruptcy case. But Harman argued
that it must be determined by the bankruptcy court whether McAfee's claims fell within the exceptions to discharge.
McAfee responded, pointing out that, as Harman acknowledged, all of the claims fell under 11 USC § 523(a)(2), (4)
and malicious injury ...” (523(a)(6)). Section 523(a)(3)(B) excepts from discharge “intentional tort” debts
that were not listed.
In re Keenom, 231 B.R. 116, 120 (Bankr.M.D.Ga.1999).
The trial court denied Harman's motion for summary judgment, holding that the claims were not discharged in bank-
[1] 1. In his first enumeration of error, Harman claims that the trial court erred in holding that McAfee's claims had
not been discharged in the bankruptcy case. Harman argues that the trial court's order states only that the debt was
not discharged in the bankruptcy proceeding because McAfee had no notice of the bankruptcy filing. According to
Harman, the trial court should also have stated that McAfee's claims fell under the exceptions to discharge of section
523(a)(2), (4), or (6). Harman also argues that before the trial court could find that the claims were not discharged in
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© 2010 Thomson Reuters. No Claim to Orig. US Gov. Works.
payment in the event of “any act of conversion, misappropriation, theft or embezzlement with respect to any money
or other property of Maker by the undersigned in his capacity as an employee, officer, director, agent or employees
of Maker.”
Carter Oaks defaulted on the promissory note and McAfee filed a complaint against Harman contending that the
guaranty was triggered by misapplication of funds that should have been used to repay him. McAfee also alleged
fraud, claiming that Harman fraudulently misrepresented that Carter Oaks had authority to enter into the promissory
note when, in fact, the terms of the refinancing prohibited it; and, that in order to circumvent this prohibition, Carter
Oaks's payments to McAfee were to be disguised as “management fees.” McAfee also claimed that Harman failed to
disclose that $400,000 was not the full amount needed to close on the refinancing and Harman was himself putting
asset Chapter 7 bankruptcy case which was filed after the date of the note and guaranty giving rise to McAfee's
claims. Harman acknowledged that McAfee was not listed as a creditor in the bankruptcy case. But Harman argued
that it must be determined by the bankruptcy court whether McAfee's claims fell within the exceptions to discharge.
McAfee responded, pointing out that, as Harman acknowledged, all of the claims fell under 11 USC § 523(a)(2), (4)
and malicious injury ...” (523(a)(6)). Section 523(a)(3)(B) excepts from discharge “intentional tort” debts
that were not listed.
In re Keenom, 231 B.R. 116, 120 (Bankr.M.D.Ga.1999).
The trial court denied Harman's motion for summary judgment, holding that the claims were not discharged in bank-
[1] 1. In his first enumeration of error, Harman claims that the trial court erred in holding that McAfee's claims had
not been discharged in the bankruptcy case. Harman argues that the trial court's order states only that the debt was
not discharged in the bankruptcy proceeding because McAfee had no notice of the bankruptcy filing. According to
Harman, the trial court should also have stated that McAfee's claims fell under the exceptions to discharge of section
523(a)(2), (4), or (6). Harman also argues that before the trial court could find that the claims were not discharged in

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