## Facts

- Merlin Merton Mitchell, Jr. and Candice Kruse Mitchell filed a Chapter 7 petition in February 2012.
- The debtors were educated and financially sophisticated; Mr. Mitchell had owned multiple businesses, and Ms. Mitchell held advanced degrees and received a substantial inheritance in 2008.
- While under creditor pressure and considering bankruptcy, the debtors sold stocks and mutual funds in 2010 totaling nearly $341,000.
- The debtors’ original schedules and Statement of Financial Affairs (SOFA) omitted or understated multiple items, including:
  - Nearly $341,000 in 2010 securities sales.
  - A $16,000 transfer by Ms. Mitchell to the couple’s adult daughter in July 2011 (disclosed only after questioning).
  - Personal property values that were initially listed as extremely low (e.g., $1,455 total personal property and two boats valued at $100 each), later increased by more than $10,000 through amendments after creditor inquiry.
- The debtors prepared a later “home inventory” reflecting additional property, but did not amend schedules to include those items.
- The debtors admitted inaccuracies but claimed they were innocent mistakes, due to forgetfulness, misunderstanding of value, or reliance on counsel to prepare accurate filings.

## Issues

1. Whether omissions and implausible valuations in bankruptcy schedules and the SOFA constituted false oaths under 11 U.S.C. § 727(a)(4)(A).
2. Whether the false oaths were made knowingly and fraudulently, rather than through negligence or mistake.
3. Whether the false oaths were material to the administration of the bankruptcy estate and creditor recovery.
4. Whether denial of discharge was appropriate on summary judgment given the undisputed omissions and valuations.

## Decision

- The court granted the creditor’s motion for summary judgment.
- The court denied the debtors a discharge under 11 U.S.C. § 727(a)(4)(A).
- The court found the schedules and SOFA contained false oaths through significant omissions and unrealistic valuations.
- The court inferred knowing and fraudulent intent from the debtors’ sophistication, the magnitude and pattern of inaccuracies, the timing of transactions, and incomplete, belated amendments.
- The court held the misstatements were material because they related to assets, transfers, and valuations affecting estate administration and the discovery or recovery of property.

## Legal Principles

- Discharge may be denied under 11 U.S.C. § 727(a)(4)(A) when a debtor makes a materially false statement under oath, knowing it is false, and with fraudulent intent.
- Bankruptcy schedules and the SOFA are sworn statements; both omissions and knowingly unrealistic valuations can constitute false oaths.
- Fraudulent intent may be proven by circumstantial evidence and inferred from a pattern of nondisclosure, reckless indifference to truth, and the debtor’s overall course of conduct.
- Materiality is broadly defined; a false oath is material if it relates to the debtor’s transactions or estate, including the discovery, existence, disposition, or value of assets, regardless of proof of actual creditor harm.
- Reliance on counsel does not excuse false schedules and SOFA; the debtor bears a personal duty to review, ensure completeness, and correct inaccuracies.
- Although denial of discharge is a severe remedy and often fact-intensive, summary judgment is permissible when the record permits only one reasonable inference on knowing, fraudulent falsity and materiality.

## Conclusion

The court denied the debtors’ Chapter 7 discharge because undisputed, repeated omissions and implausible valuations in their schedules and SOFA amounted to material false oaths made knowingly and fraudulently, and the debtors’ claimed mistakes and reliance on counsel did not create a genuine dispute of material fact.


SunTrust Bank v. Mitchell (In re Mitchell), 496 B.R. 625 (Bankr. N.D. Fla. 2013)