
    IN RE: Desiree Rebecca LEWIS, Debtor(s). J. Michael Hopper, Chapter 7 Trustee for the Bankruptcy Estate of Jack Burns, and Sally Wong, Plaintiff(s), v. Desiree Rebecca Lewis, Defendant(s).
    Case No. 14-21946-B-7
    Adversary No. 14-2126
    United States Bankruptcy Court, E.D. California.
    Signed April 25, 2016
    
      Ronald R. Roundy, J. Russell Cunningham, Sacramento, CA, for Plaintiffs.
    Gary Ray Fraley, Brian H. Turner, Sacramento, CA, for Defendant.
   DECISION AFTER TRIAL

Christopher D. Jaime, UNITED STATES BANKRUPTCY JUDGE

Introduction

This is an adversary proceeding (1) to have a debt excepted from discharge under 11 U.S.C. § 523 and (2) objecting to discharge under 11 U.S.C. § 727. The plaintiffs are the chapter 7 trustee appointed in In re Jack Burns, Case No. 10-22742, and Sally Wong. The defendant is Desiree Rebecca Lewis. Lewis is a debtor in the underlying chapter 7 case filed and pending in this court as In re Desiree Rebecca Lewis, Case No. 14-21946. The Petition, Schedules, and Statement of Financial Affairs were filed in Lewis’ chapter 7 case on February 27, 2014.

The complaint in this adversary proceeding was filed .on May 9, 2014. It alleges five “Counts” as claims for relief: a claim under § 523(a)(2)(A) in Count I; a claim under § 523(a)(4) in Count II; a claim under § 523(a)(6) in Count III; a claim under § 727(a)(3) in Count IY; and a claim under § 727(a)(4)(A) in Count V. The summons was reissued on July 18, 2014, and, together with a copy of the complaint, was served on July 23, 2014. Lewis answered the complaint on August 15, 2014.

A trial in this matter was held on April 11, 2016. Ronald Roundy, Esq., appeared for the Burns trustee and Wong. Brian Turner, Esq., appeared for Lewis. The court made several pretrial rulings on the record in open court which are incorporated herein by this reference. The court also takes judicial notice of the docket in this adversary proceeding-and in the underlying chapter 7 case.

The court has heard and considered the testimony of witnesses and has also considered the documents admitted into evidence. The court now enters its findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a) made applicable in this adversary proceeding by Federal Rule of Bankruptcy Procedure 7052.

Jurisdiction and Venue

Federal subject-matter jurisdiction is founded on 28 U.S.C. § 1384. This matter is a core proceeding that a bankruptcy judge may hear and determine. See 28 U.S.C. §§ 157(b)(2)(A), (I), (J), and (0). To the extent it may ever be determined to be a matter that a bankruptcy judge may not hear and determine without consent, the parties nevertheless consent to such determination by a bankruptcy judge. See 28 U.S.C. § 157(c)(2). Venue is proper under 28 U.S.C. § 1409.

Findings of Fact

Lewis worked for Brown at the King of Curls in Sacramento, California, in the months preceding and into March of 2006. Lewis discussed her financial problems with other employees and with Brown during that time. Specifically, Lewis made it known that the mortgage on her residence at 4822 Mission Beach Court, Elk Grove, California, was in default and that the property was in foreclosure.

Lewis asked Brown for a loan to avoid foreclosure on the Mission Property. Lewis told Brown that she could repay the loan by refinancing another property she owned located at 3229 Babson Drive, Elk Grove, California. Lewis did not tell Brown that the Babson Property was previously refinanced numerous times. Lewis and Brown also discussed other ways that Lewis could make money to repay the loan such as by operating a daycare or laundry business out of one of her properties, or by selling the Mission Property. In any event, Brown was fully aware of Lewis’ financial condition, he was aware that the Mission Property was in foreclosure, and he endeavored to help Lewis nonetheless.

Brown discussed extending a loan to Lewis with his wife, Wong, and they agreed to loan Lewis over $18,000 to help Lewis avoid foreclosure on the Mission Property. Lewis provided Brown with her bank information and Brown gave that information to Wong. During her lunch break on March 30, 2006, and at Brown’s direction, Wong made a series of Western Union wire transfers to Lewis’ bank. The funds for those transfers came from Wong’s separate property account. Those funds were used to bring Lewis’ mortgage current which allowed Lewis to avoid foreclosure on the Mission Property.

Wong had not met or talked with Lewis before she wired funds to Lewis’ bank. Wong did not speak with Lewis until after the wire transfers were made. Wong spoke with Lewis afterwards because of transposed numbers on the account to which the funds were wired and to obtain the correct account information for Lewis’ account.

Before she transferred funds from her separate property account to Lewis’ bank, Wong did not inquire about Lewis’ financial condition. Wong relied entirely on Brown’s statements that one of his newer employees needed a loan to save her house from foreclosure. Wong also testified that she knew that real property values were depressed in 2006.

Five days after Wong transferred funds to Lewis’ bank, on April 4, 2006, Brown met with Lewis and asked her to prepare a written agreement regarding the loan made on March 30, 2006, and repayment of that loan. Lewis provided Brown with a hand-written document, which she refused to sign. The document confirmed the loan, included Lewis’ statement that she had a purchase agreement on the Mission Property, and also included Lewis’ statement that she would repay the loan with proceeds from the sale of the Mission Property.

Several months later, on or about August 21, 2006, Brown and Wong sued Lewis in Sacramento County Superior Court. The complaint filed in that state court action alleged breach of contract and fraud claims. Three days later, on August 24, 2006, a deed of trust securing a $36,000 promissory note executed by Lewis was recorded against the Babson Property. Those funds were not used to repay the loan.

The state court case was tried on April 20, 2007. On April 24, 2007, Lewis recorded a homestead declaration on the Babson Property. Fourteen days later, on May 8, 2007, the state court entered judgment in favor of Brown and Wong and against Lewis in the amount of $18,715.79. The extent of the state court judgment is as follows:

Evidence was presented by plaintiffs that funds in the amount of $18,715.79 were paid by them to defendant’s lender to stop the foreclosure on her home. Defendant contended that said funds were a gift. After considering the evidence, the court finds that said funds were not a gift to defendant.

The state court judgment was recorded with the Sacramento County Recorder on May 21, 2007. Shortly thereafter, Brown and Wong attempted to enforce the judgment by garnishing Lewis’ wages. They were unsuccessful because they did not have Lewis’ social security number.

Brown and Wong made no other efforts to enforce or collect the state court judgment until seven years later when, oh or about February 7, 2014, they initiated a debtor’s examination in the state court. That debtor’s examination surprised Lewis because, as she told Wong at the time, she believed that the absence of any collection activity or enforcement of the judgment meant that the loan was forgiven. Wong confirmed Lewis’ belief during trial.

During the debtor’s examination, Lewis asked for a continuance. That request was granted; however, the state court judge also ordered Lewis to provide documents to Brown and Wong by February 11, 2014, and to return for further examination on February 28, 2014. Lewis did neither. Instead, on February 27, 2014, Lewis filed a voluntary petition in the underlying chapter 7 case.

Brown and Wong now seek to have their debt arising out of the state court judgment excepted from discharge under §§ 523(a)(2)(A), (a)(4), and (a)(6). They also object to Lewis’ discharge under §§ 727(a)(3) and (a)(4)(A).

Conclusion of Law

I. The Nondischargeability Counts

A. Count I — § 523(a)(2)(A)

Count I of the complaint alleges a claim under § 523(a)(2)(A). Section 523(a)(2)(A) states as follows:

(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by — (A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;

11 U.S.C. § 523(a)(2)(A).

A creditor seeking to except a debt from discharge under § 523(a)(2)(A) bears the burden of proving by a preponderance of the evidence five elements: (1) misrepresentation(s), fraudulent omissions), or deceptive conduct; (2) knowledge of the falsity or deceptiveness of such representation(s), omission(s), or conduct; (3) an intent to deceive; (4) justifiable reliance by the creditor on the subject representation(s), omission(s), or conduct; and (5) damage to the creditor proximately caused by its reliance on such representations), omission(s), or conduct. Ghomeshi v. Sabban (In re Sabban), 600 F.3d 1219, 1222 (9th Cir.2010) (citation omitted); Oney v. Weinberg (In re Weinberg), 410 B.R. 19, 35 (9th Cir. BAP 2009) (citations omitted). The Burns trustee and Wong have failed to meet their burden of proof on several of the § 523(a)(2)(A) elements.

Among other things, § 523(a)(2)(A) renders nondischargeable a debt for money “to the extent obtained by” misrepresentation, fraudulent omission, or deceptive conduct. The operative phrase here is “to the extent obtained by.” To be actionable under § 523(a)(2)(A), the prescribed conduct must have occurred before the debtor obtains the money. In other words, the prescribed conduct must induce the creditor to act. See Shah v. Chowdaury (In re Chowdaury), 2014 WL 2938274 at *3 (9th Cir. BAP 2014) (“a creditor must establish that it was induced ... to enter-into” the subject contract “by means of ‘false pretenses, a false representation, or actual fraud.’ ”). Prescribed conduct that occurs after the debtor obtains money does not count and will not support a nondis-chargeability claim under § 523(a)(2)(A). Houng v. Tatung, Co., Ltd. (In re Hounq), 499 B.R. 751, 766 at n. 49 (C.D.Cal.2013) (“Although the arbitrator found that Houng engaged in fraudulent transfers and diversions of funds from WDE, that conduct occurred after the parties had entered into the PSA. As a result, the arbitrator’s findings of fraudulent transactions do not establish that Tatung relied on Houng’s statements or conduct when it agreed to enter into the PSA.”), aff'd, 636 Fed.Appx. 396 (9th Cir.2016). Here, only two , events fall within these parameters and neither support the § 523(a)(2)(A) claim.

The first is Lewis’ representation that she could repay the loan by refinancing the Babson Property. Lewis made that representation to Brown, not Wong. However, Lewis did not obtain money from Brown. Inasmuch as the funds for the loan to Lewis came from Wong’s separate property account, Lewis obtained money from Wong. Lewis and Wong did not speak before Wong loaned Lewis money from her separate property account. That means Lewis did not (and could not have) obtained money from Wong by a false statement or misrepresentation made to Wong.

The second is the failure to disclose — or omission of information regarding — the Babson Property’s refinance history. Under California law, an omission is fraudulent only if there is a duty on the party making the omission to disclose. SCC Acquisitions Inc. v. Cent. Pac. Bank, 207 Cal.App.4th 859, 864, 143 Cal.Rptr.3d 711 (Cal.Ct.App.2012) (quoting Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 868, 76 Cal.Rptr.3d 325 (Cal.Ct.App.2008)). Here, the Burns trustee and Wong produced no evidence that Lewis was under any duty to disclose the refinance history of the Bab-son property to Brown or Wong.

California law also recognizes that in transactions that do not involve fiduciary or confidential relations, and thus a duty to disclose, a cause of action for nondisclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render the disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff. Marketing West, Inc. v. Sanyo Fisher (USA) Corp., 6 Cal.App.4th 603, 613, 7 Cal.Rptr.2d 859 (1992) (citation omitted).

There was no need for Lewis to qualify for Wong any facts regarding the Babson Property as a possible source of repayment for the loan Lewis obtained from Wong because Lewis did not speak with Wong before Wong made the loan to Lewis. In other words, before Lewis obtained money from Wong she made no statements to Wong that required qualification in the first instance.

As to Brown, Lewis obtained no money from him which means that any statement Lewis made to Brown about the use of the Babson Property as a source of repayment was not material. Lewis’ statement to Brown about the potential use of the Bab-son Property is also immaterial for two additional reasons. First, Brown testified that he is the type of person that likes to help people. Second, in her testimony, Lewis alluded to an “affair” between her and Brown at the time the loan was made, and that testimony was unchallenged. Thus, the court is persuaded that Brown would have facilitated Wong’s loan to Lewis regardless of any statement or omission about the Babson Property’s refinance history.

As to both Brown and Wong, neither the Burns trustee nor Wong introduced any evidence that the Babson Property’s refinance history was actively concealed. In fact, as the Burns trustee and Wong readily established through the introduction of numerous deeds of trust recorded against the Babson Property, the property’s refinance history was a matter of public record. And that means that information was not solely available to or accessible by Lewis.

Finally, the court is not persuaded that reliance by Brown or Wong on the representation that the Babson Property could be used to repay the loan to Lewis, even in the absence of any disclosure of the property’s refinance history, was justifiable. See Field v. Mans, 516 U.S. 59, 74-75, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995). Reliance falls below the justifiable standard when “red flags” are ignored. Anastas v. Am. Sav. Bank (In re Anastas), 94 F.3d 1280, 1286 (9th Cir.1996) (citation omitted); see also Giovanni v. Grayson, Kubli & Hoffman (In re Giovanni), 324 B.R. 586, 594 (E.D.Va.2005) (citation omitted); Copper v. Lemke (In re Lemke), 423 B.R. 917, 924-925 (10th Cir. BAP 2010) (holding that reliance was not justifiable because plaintiff continued to lend money “after various red flags arose”). And here, numerous “red flags” were ignored.

Brown only knew Lewis for several months. Brown knew that Lewis had financial problems. He also knew that Lewis owned two houses, that one of those houses was on the brink of foreclosure, and that Lewis could not afford to cure that default and prevent foreclosure. Under those circumstances, the court is not persuaded that facilitating a last minute loan made to a new and financially distressed employee based solely on the representation of repayment from a refinance on one property knowing that the borrower’s other property is pending foreclosure is justifiable.

Wong’s reliance falls even further below the justifiable threshold. Wong relied entirely on Brown’s representation that one of his newer employees who she did not know needed a loan of over $18,000 to prevent a foreclosure on her home. Brown instructed Wong to wire funds to Lewis’ bank. And without any question, Wong complied by leaving work on her lunch break to purchase and wire her own separate property funds to Lewis’ bank through Western Union.

In sum, Count I of the complaint fails in at least three respects. First, the Burns trustee and Wong have failed to cany their burden of proving that the loan to Lewis was “obtained by” a false representation, false pretenses, or actual fraud. Second, they have failed to carry their burden of proving a fraudulent misrepresentation or omission. And third, they have failed to prove their reliance on any omission, even if material, was justifiable. Therefore, based’ on the foregoing, judgment on Count I of the complaint will be entered in favor of Lewis and against the Burns trustee and Wong. The debt created by the state court judgment entered against Lewis will not be excepted from discharge under § 523(a)(2)(A).

B. Count II — § 523(a)(1)

Count II of the complaint alleges a claim under § 523(a)(4). Section 523(a)(4) states as follows:

(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt—
(4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny[J

11 U.S.C. § 523(a)(4).

There is no issue of a fiduciary relationship between Wong and/or Brown, on the one hand, and Lewis, on the other hand. Nor is there any issue regarding embezzlement. Therefore, Count II of the complaint must stand on whether there was “larceny.”

A debt can be nondischargeable for larceny under § 523(a)(4) without the existence of a fiduciary relationship. Littleton, 942 F.2d at 555. Bankruptcy courts look to the federal common law to define larceny for purposes of § 523(a)(4). Ormsby v. First Am. Title Co. of Nev. (In re Ormsby), 591 F.3d 1199, 1205 (9th Cir.2010). Federal common law defines larceny as a “felonious taking of another’s personal property with intent to convert it or deprive the owner of the same.” Id. (Quotation omitted). “Larceny is distinguished from embezzlement in that the original taking of the property was unlawful.” Lucero v. Montes (In re Montes), 177 B.R. 325, 331 (Bankr.C.D.Cal.1994).

The Burns trustee and Wong produced no evidence that Lewis obtained the loan from Wong by unlawful means. Brown knew that Lewis’ mortgage was in default, he decided to help bring the mortgage current, he directed Wong to wire funds to Lewis’ bank account, and Wong complied. Lewis used the funds for their intended and authorized purpose, ie., to bring her mortgage current and avoid foreclosure of the Mission Property. There is nothing unlawful about that.

In sum, the Burns trustee and Wong have failed to carry their burden of proving the debt created by the state court judgment entered against Lewis is nondis-chargeable under § 523(a)(4) based on larceny. Therefore, judgment on Count II of the complaint will be entered in favor of Lewis and against the Burns trustee and Wong. The debt created by the state court judgment entered against Lewis will not be excepted from discharge under § 523(a)(4).

C. Count III — § 523(a)(6)

Count III of the complaint alleges a claim under § 523(a)(6). Section 523(a)(6) states as follows:

(а) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt—
(б) for willful and malicious injury by the debtor to another entity or to the property of another entity[.]

11 U.S.C. § 523(a)(6).

Both willfulness and maliciousness must be proven to block discharge under section § 523(a)(6). Kawaauhau v. Geiger, 523 U.S. 57, 61-62, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998). Each element is analyzed separately. See Barboza v. New Form, Inc. (In re Barboza), 545 F.3d 702, 706 (9th Cir.2008) (citation omitted).

“A willful injury is a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury.” Id. (Quotation, internal emphasis, and quotations omitted). In other words, the “wilful injury requirement is met only when the debtor has a subjective motive to inflict injury or when the debtor believes that injury is substantially certain to result from his own conduct.” Ormsby, 591 F.3d at 1206. A malicious injury is (1) a wrongful act, (2) done intentionally, (3) which causes injury, and (4) is done without just cause or excuse. Ormsby, 591 F.3d at 1207; Barboza, 545 F.3d at 706. Malice may be inferred from the wrongful act. See Ormsby, 591 F.3d at 1207 (citation omitted). However, to infer malice it must first be established that the act was willful. Thiara v. Spycher Bros. (In re Thiara), 285 B.R. 420, 434 (9th Cir. BAP 2002).

The Burns trustee and Wong have failed to carry their burden of proving that Lewis obtained a loan — and then failed to repay it — with the specific intent of causing financial injury or that she believed that financial injury was substantially certain to result from the loan or its non-repayment. Brown, Wong, and Lewis all testified that Lewis obtained the loan in order to bring the mortgage on her home current and avoid foreclosure, and the loan proceeds were used for that purpose. Lewis and Wong also testified that Lewis did not repay the loan because she believed that the absence of • collection or enforcement activity for seven years meant the loan and debt created by the state court judgment was forgiven. The court believes Lewis and finds her testimony credible. Thus, inasmuch as the reason for the loan was to avoid foreclosure and the reason for its non-payment was a legitimate and corroborated belief that repayment was no longer necessary, the Burns trustee and Wong have failed to prove a willful injury by Lewis under § 523(a)(6).

In sum, the Burns trustee and Wong have failed to carry their burden of proving the debt created by the state court judgment entered against Lewis is nondis-chargeable under § 523(h)(6). Therefore, judgment on Count III of the complaint will be entered in favor of Lewis and against the Burns trustee and Wong. The debt created by the state court judgment entered against Lewis will not be excepted from discharge under § 523(a)(6).

II. The Discharge Objection Counts

The party objecting to a debt- or’s discharge under § 727(a) bears the burden of proving by a preponderance of the evidence that the debtor’s discharge should be denied. Retz v. Samson (In re Retz), 606 F.3d 1189, 1196 (9th Cir.2010). Courts are to “construe § 727 liberally in favor of debtors and strictly against parties objecting to discharge.” Id. (Quotation and internal quotation marks omitted).

A. ■ Count IV— § 727(a)(3)

Count IV of the complaint is an objection to Lewis’ discharge under § 727(a)(3). Section 727(a)(3) states as follows:

(a) The court shall grant the debtor a discharge, unless—
(3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debt- or’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case[.]

11 U.S.C. § 727(a)(3).

In addressing the burdens of proof under § 727(a)(3), the Ninth Circuit has stated:

, [T]he purpose of [section 727] is to make the privilege of discharge dependent on a true presentation of the debtor’s financial affairs. The initial burden of proof under § 727(a)(3) is on the plaintiff. In order to state a prima facie case under section 727(a)(3), a creditor objecting to discharge must show (1) that the debtor failed to maintain and preserve adequate records, and (2) that such failure makes it impossible to ascertain the debtor’s financial condition and material business transactions. Once the objecting party shows that the debtor’s records are absent or are inadequate, the burden of proof then shifts to the debtor to justify the inadequacy or nonexistence of the records.

Lansdowne v. Cox (In re Cox), 41 F.3d 1294, 1296 (9th Cir.1994) (citations, internal quotation marks, and quotations omitted).

Records that Lewis supposedly failed to maintain were not identified. They were not identified in the conclusory allegations of the complaint, they were not identified in the brief the Burns trustee and Wong filed shortly before trial, and they were not established by evidence at trial.

Failure to identify the operative records means the Burns trustee and Wong cannot demonstrate difficulty in ascertaining Lewis’ financial condition. That means the Burns trustee and Wong have not established a prima facie case under § 727(a)(3). That also means burden of proof never shifted to Lewis to explain or justify the inadequacy or non-existence of any of her records. Therefore, judgment on Count IV of the complaint will be entered in favor of Lewis and against the Burns trustee and Wong. Lewis will not be denied a discharge under § 727(a)(3).

B. Count V — § 727(a)(4)(A)

Count V of the complaint alleges a claim under § 727(a)(4)(A). Section 727(a)(4)(A) states:

(a) The court shall grant the debtor a discharge, unless—
(4) the debtor knowingly and fraudulently, in or in connection with the case—
(A) made a false oath or account;

11 U.S.C. § 727(a)(4)(A).

Under § 727(a)(4)(A), the objector must show: “(1) the debtor made a false oath in connection with the case; (2) the oath related to a material fact; (3) the oath was made knowingly; and (4) the oath was made fraudulently.” Retz, 606 F.3d at 1197 (citation omitted); In re Hoblitzell, 223 B.R. 211, 215 (Bankr.E.D.Cal.1998).

Schedules, Statements of Financial Affairs, and Petitions are all executed under oath and penalty of perjury. See Fed. R. Bankr.Pro. 1008; Hamo v. Wilson (In re Hamo), 233 B.R. 718, 725 (6th Cir. BAP 1999). Thus, “[a] false statement or an omission in the debtor’s bankruptcy schedules or statement of financial affairs can constitute a false oath.” Khalil v. Developers Sur. & Indem. Co. (In re Khalil), 379 B.R. 163, 172 (9th Cir. BAP 2007); Wills v. Wills (In re Wills), 243 B.R. 58, 62 (9th Cir. BAP 1999). However, even where a debtor concedes a petition contains false statements, the court must still find the debtor acted with the requisite knowledge and intent, and that -the false statements were material in order to deny a discharge. Wills, 243 B.R. at 62.

The complaint identifies income from employment represented on Lewis’ Statement of Financial Affairs filed in the underlying chapter 7 case as the false statement upon which the § 727(a)(4)(A) claim in Count V is based. In Question 1 ■of the Statement of Financial Affairs, Lewis stated that she made $1,642.30 year-to-date in 2014, $9,718.00 in 2013, and $90,253.00 in 2012. Lewis was questioned about the $90,253.00 in the Statement of Financial Affairs. Lewis testified that she received that income from her former airline employer as a buy-out of her employment. The court finds Lewis’ testimony credible, unchallenged, and consistent with what she stated in Question 1 of the Statement of Financial Affairs. In other words, Lewis did not falsely state her income.

The Burns trustee and Wong also maintain in their trial brief (but not in the complaint) that Lewis committed perjury during the state court debtor’s examination in January 2014. Specifically, Lewis asked for a continuance to obtain counsel and gather documents when, in fact, she did neither and, instead, filed the petition in the underlying chapter 7 case. The court has doubts as to whether Lewis’ statement in that context even qualifies as a false oath under § 727(a)(4)(A). That statement was made before Lewis filed her chapter 7 petition and, thus, before a chapter 7 case existed. Put another way, Lewis’ statement in the state court proceeding was not made “in connection” with her bankruptcy case because no bankruptcy case existed when Lewis made the state court statement.

The Burns trustee and Wong further maintain in their trial brief (and, again, not in the complaint) that Lewis committed perjury during her deposition in July 2015 when she denied knowing Wong. This too will not support an actionable § 727(a)(4)(A) claim for two reasons. First, Lewis’ deposition testimony was not admitted into evidence. Second, even if the deposition testimony was admitted, the Burns trustee and Wong failed to establish how this statement was material. Only an omission or misstatement that “detrimentally affects administration of the estate” is material. Wills, 243 B.R. at 63 (citation omitted). There is no evidence how, if at all, this statement had any impact on the administration of Lewis’ chapter 7 case.

In sum, the Burns trustee and Wong have failed to carry their burden of proving a claim under § 727(a)(4)(A). Therefore, judgment on Count V of the complaint will be entered in favor of Lewis and against the Burns trustee and Wong. Lewis will not be denied a discharge under § 727(a)(4)(A).

Conclusion

For the reasons stated hereinabove, judgment on each and every Count alleged in the complaint will be entered in favor of Lewis and against the Burns trustee and Wong. The debt created by the judgment entered against Lewis by the Sacramento County Superior Court on or about April 20, 2007, shall be discharged in Lewis’ chapter 7 case and Lewis will not be denied a discharge in that chapter 7 case.

A separate judgment shall issue. 
      
      . The original plaintiffs were John O. Brown and Sally Wong. Pursuant to an order filed in this adversary proceeding on November 20, 2015, the chapter 7 trustee appointed in the Bums case referenced above was substituted as the plaintiff and real party in interest for John O. Brown.
     
      
      . The trial brief filed by the Burns trustee and Wong states that relief is sought under §§ 727(c), (d), and (e). Section 727(d) and (e) are inapplicable because they concern the revocation of a discharge, which has not yet been'entered in the underlying chapter 7 case. Section 727(c) permits a creditor to object to a debtor's discharge under § 727(a). The only objections to Lewis’ discharge under § 727(a) alleged in the complaint are, as noted, §§ 727(a)(3) and 727(a)(4)(A).
     
      
      . Even assuming Lewis.’ statement to Brown regarding the use of the Babson Property could be imputed to Wong, the statement was neither false, a misrepresentation, nor deceptive. Refinancing the Babson Property was only one potential source of repayment. Brown and Lewis discussed several other options, Thus, while refinancing the Babson Property was discussed as a means of repayment it was not discussed as the only means of repayment,
     
      
      . There is no evidence that Lewis used funds with which she was lawfully entrusted for an unauthorized purpose. See Transam. Comm’l Fin. Corp. v. Littleton (In re Littleton), 942 F.2d 551, 555 (9th Cir.1991). In fact, Lewis used the loan proceeds she received from Wong for the very purpose for which they were intended to be used, i.e., to bring the mortgage on the Mission Property current. Thus, Lewis used the loan proceeds for an authorized purpose.
     
      
      . In the absence of a willful injury, the court need not reach the malice issue.
     
      
      . The court notes that, based on the entry made on the docket in the underlying chapter 7 case on April 8, 2014, the chapter 7 trustee had no difficulty determining Lewis' financial condition from the financial records she provided.
     