Jarrett et al v. Balagamwala

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
In re: 	:
:
MOHAMMAD ASIF BALAGAMWALA, 	: 	CASE NO. 25-60595-PMB
:
Debtor. 	: 	CHAPTER 7
:
:
FRANCIS JARRETT 	:
and DAMEATRA JARRETT, 	:
:
Plaintiffs, 	:
: 	ADVERSARY PROCEEDING
v. 	:
: 	NO. 25-5167
MOHAMMAD ASIF BALAGAMWALA, 	:
:
Defendant. 	:
ORDER GRANTING IN PART AND DENYING
IN PART DEBTOR’S MOTION TO DISMISS COMPLAINT
This matter is before the Court on the Defendant’s Rule 12(b)(6) Motion to Dismiss
Complaint and Memorandum in Support filed by the Debtor-Defendant Mohammad Asif
Balagamwala (the “Debtor”) on October 16, 2025 (Docket No. 3)(the “Motion to Dismiss”). 	The
_______________________________________________________________
IT IS ORDERED as set forth below:
________________________________
Paul Baisier
U.S. Bankruptcy Court Judge
Date: December 22, 2025
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Plaintiffs herein, Francis Jarrett and Dameatra Jarrett (the “Plaintiffs”), filed Plaintiff’s Response
to Defendant’s Motion to Dismiss on November 3, 2025 (Docket No. 4)(the “Response”). 	The
Plaintiffs commenced this Adversary Proceeding (the “Adversary Proceeding”) through the filing
of a Complaint for Determination of Dischargeability of Debt and Objection to Discharge against
the Debtor on September 15, 2025 (Docket No. 1)(the “Complaint”).1
Standard of Review for Dismissal2
Dismissal of a complaint is appropriate under Federal Rule of Civil Procedure (“F.R.C.P.”)
12(b)(6) (applied herein through Federal Rule of Bankruptcy Procedure (“F.R.B.P.”) 7012(b)) if
it fails “to state a claim upon which relief can be granted.” 	F.R.C.P. 12(b)(6) is viewed through
F.R.C.P. 8(a), which requires that a pleading set forth a “short and plain statement of the claim
showing that the pleader is entitled to relief.” 	See F.R.C.P. 8(a)(2) and F.R.B.P. 7008. 	Under
this standard, “to survive a motion to dismiss, a complaint must now contain factual allegations
that are ‘enough to raise a right to relief above the speculative level.’”3 	In addition, pursuant to
F.R.C.P. 9(b), applicable through F.R.B.P. 7009, fraud must be pled with particularity and,
1 The Court previously had a hearing in this case on a Motion to Extend the Automatic Stay (Main Case Docket No.
11) on October 6, 2025 (the “October Hearing”), that was granted. 	See Main Case Docket No. 18. 	This Motion was
filed in connection with the Plaintiffs’ efforts to prosecute a contempt action against the Debtor as related to certain
state court litigation for failure to turnover various stock certificates, and to allow time for this Adversary Proceeding
to move forward to an adjudication on the issue of nondischargeability.
2 The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b). This matter is a core proceeding under
28 U.S.C. § 157(b)(2)(I).
3 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), quoted in Berry v. Budget Rent A Car Systems, Inc., 497
F.Supp.2d 1361, 1364 (S.D. Fla. 2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009); Almanza
v. United Airlines, Inc., 851 F.3d 1060, 1066 (11th Cir. 2017); American Dental Ass’n v. Cigna Corp., 605 F.3d 1283,
1290 (11th Cir. 2010).
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although malice and intent may be alleged generally, facts regarding time, place, and content of
any alleged misrepresentations must be provided.4
Evaluating a motion to dismiss, the Court’s inquiry is limited “to the legal feasibility of the
complaint and whether it contains facts and not just labels or conclusory statements.” 	In re
Lafayette, 561 B.R. 917, 922 (Bankr. N.D. Ga. 2016). 5 	The Court “must take the factual
allegations of the complaint as true and make all reasonable inferences from those facts to
determine whether the complaint states a claim that is plausible on its face.” 	In re American
Berber, Inc., 625 B.R. 125, 128 (Bankr. N.D. Ga. 2020)(citations omitted); see also In re Adetayo,
2020 WL 2175659, *1 (Bankr. N.D. Ga. May 5, 2020), citing Ashcroft, supra, 556 U.S. at 678,
quoting Twombly, supra, 550 U.S. at 570. 	“When there are well-pleaded factual allegations, a
court should assume their veracity and then determine whether they plausibly give rise to an
entitlement to relief.” 	Ashcroft, supra, 556 U.S. at 679. 	A claim has “facial plausibility” when
the facts alleged permit a reasonable inference that the defendant is liable on the grounds asserted.
Bank of Am. v. Seligman (In re Seligman), 478 B.R. 497, 501 (Bankr. N.D. Ga. 2012)(citations
omitted).
When “the well-pleaded facts do not permit the court to infer more than the mere possibility
of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled
to relief.’” 	Ashcroft, supra, 556 U.S. at 679, quoting F.R.C.P. 8(a)(2). 	In addition, dismissal is
4 United States v. Baxter Intern., Inc., 345 F.3d 866, 833 (11th Cir. 2003); Brooks v. Blue Cross and Blue Shield of
Florida, Inc., 116 F.3d 1364, 1370-71 (11th Cir. 1997); Eden v. Eden (In re Eden), 584 B.R. 795, 803-04 (Bankr. N.D.
Ga. 2018).
5 A complaint must “contain either direct or inferential allegations respecting all the material elements necessary to
sustain a recovery under a viable legal theory.” Almanza, supra, 851 F.3d at 1066.
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proper “when, on the basis of a dispositive issue of law, no construction of the factual allegations
will support the cause of action.” 	Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d
1171, 1174 (11th Cir. 1993).
Factual Allegations
In the Complaint, the Plaintiffs seek a determination that a certain obligation in the total
amount of $790,186 owed to them by the Debtor (the “Obligation”) should be excepted from the
Debtor’s discharge in this case under 11 U.S.C. § 523(a)(2)(A).6 	The Obligation is based on entry
of an Amended Final Order and Judgment as to Defendant Asif Balagamwaca [sic]7 Only by the
Superior 	Court 	of 	Fulton 	County, 	Georgia (the “Superior 	Court”), 	in 	Civil 	Action 	No.
2018CV314564 	(the 	“Civil 	Action”) 	on 	August 	26, 	2019 	(the 	“Superior 	Court
Judgment”)(attached to Complaint as Exhibit D) awarding damages, including punitive damages,
The Plaintiffs initiated the Civil Action by filing a Complaint on December 21, 2018 (the “Superior
Court Complaint”)8 in connection with the Debtor’s alleged role in a fraudulent transfer of
6 The Plaintiffs also appear to assert an objection to discharge (Complaint, ¶ 6), which is addressed below, and seek
attorneys’ fees under O.C.G.A. § 13-6-11.
7 The Debtor corrected the spelling of his name in the Defendants’ Joint Answer and Defenses (the “Defendants’
Answer”), attached to Complaint as Exhibit B.
8 The Civil Action was styled Francis Jarrett and Dameatra Jarrett v. Green Parts International Inc., and Asif
Balagamwaca [sic]. 	The Superior Court Complaint contained the following counts: (I) Alter Ego; (II) Actual
Fraudulent Transfer Under O.C.G.A. § 18-2-74(a)(1); (III) Constructive Fraudulent Transfer Under O.C.G.A. § 18-2-
74(a)(2); (IV) Action to Set Aside Fraudulent Transfer; (V) Punitive Damages; and (VI) Attorney’s Fees and
Expenses. 	See Superior Court Complaint, attached to the Complaint as Exhibit A. 	The defending parties in the Civil
Action filed Defendants’ Answer therein on February 4, 2019.
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property from Greenparts, Inc. to Green Parts International, Inc. to evade liability from another
judgment that had previously obtained by the Plaintiffs.9
Specifically, the Plaintiffs allege that as the president of Greenparts, Inc., the Debtor
devised and executed a fraudulent scheme by transferring the assets of Greenparts, Inc. to Green
Parts International, Inc. as an alter ego, which he created for this purpose. 	The Debtor also served
as president of Green Parts International, Inc. and owns one hundred (100%) percent of the shares
of its stock. 	In perpetrating this allegedly fraudulent scheme, which was not supported by any
consideration, the Plaintiffs contend that the Debtor caused an abuse of the corporate form between
these two (2) corporate entities and himself resulting in economic injury to the Plaintiffs. 	See
Complaint, ¶¶ 28-30.
Default judgment was entered against the Debtor and Green Parts International Inc. in the
Civil Action on April 24, 2019, through an Order and Rule Nisi (attached to the Complaint as
Exhibit C)(the “Superior Court Order”). 	In the Superior Court Order, the Superior Court ordered
that the Defendants’ Answer be stricken due to their unexcused absence from a case management
conference as scheduled by the Superior Court. 	As mentioned above, following a hearing on
liquidated damages as set by the Superior Court Order, the Plaintiffs received a monetary award
against the Debtor on August 26, 2019, through entry of the Superior Court Judgment.
9 Based on a complaint for personal injury filed in the Fulton County State Court on August 6, 2014, the Plaintiffs
entered into a Consent Judgment with Greenparts, Inc. on February 16, 2018 (the “Prior Judgment”). This suit was
styled Francis Jarrett and Dameatra Jarrett v. Greenparts, Inc. d/b/a Samson Auto Parts (Civil Action File No.
14EV001735Y). 	The Debtor does not appear to have been a named party to that lawsuit. 	Green Parts International,
Inc. filed its own bankruptcy case under Chapter 11 on March 5, 2019, Case No. 19-53617-PMB. 	An Order and
Final Decree were entered on May 26, 2021, and that case has been closed.
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Discussion
On proper proof, “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” may
be excepted from discharge under 11 U.S.C. § 523(a)(2)(A).10 	A debt is excepted from discharge
under this provision when it occurs “in relation to the commission of ‘positive or actual fraud
involving moral turpitude or intentional wrongdoing.’” 	Invest Atlanta Reg’l Center, LLC v. Smith
(In re Smith), 578 B.R. 866, 875 (Bankr. N.D. Ga. 2017)(citations omitted). 	Further, “‘legal or
constructive fraud, which involves an act contrary to a legal or equitable duty that has a tendency
to deceive, yet not originating in an actual deceitful design, is insufficient.’” 	Id. at 876 (citations
omitted). 	To succeed on a claim under Section 523(a)(2)(A), a creditor must show that the debtor
“‘obtained money, property or credit from the Plaintiff: (1) by false representation, pretense, or
fraud; (2) knowingly made or committed; (3) with the intent to deceive or to induce acting on
same; (4) upon which the Plaintiff actually and justifiably relied; and (5) from which the Plaintiff
suffered damages, injury or loss as a proximate result.’” 	Id. at 876 (citations omitted).
In the Motion to Dismiss, the Debtor argues that irrespective of whether the underlying
debt arises from the personal injury claim whose disposition is set forth in the Prior Judgment, or
from the subsequent voidable transfer claim described in the Superior Court Order and Superior
Court Judgment, such claims are not of the type that support an action for nondischargeability
10 Based on the presumption under 11 U.S.C. § 727(b) that all debts are dischargeable, a party contending to the
contrary under an exception to dischargeability bears the burden of proof and must establish its claim by a
preponderance of the evidence. 	Grogan v. Garner, 498 U.S. 279, 287-88, 291 (1991).
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under 11 U.S.C. § 523(a)(2)(A). 	Further, the Debtor contends that the Plaintiffs have failed to
plead fraud with sufficient particularity as required by F.R.C.P. 9(b).
In essence, the Debtor asserts that, even assuming the debt at issue derives from the transfer
of assets from Greenparts, Inc. to Green Parts International, Inc. and that same was fraudulent
and/or voidable under Georgia law, “that debt would arise from liability after a voidable transfer
of corporate assets in an attempt to evade liability under a personal injury judgment of a
corporation controlled by the Defendant, not from a false statement of the Defendant to the
Plaintiffs.” 	Debtor’s Response, p. 6 (emphasis supplied). 	Moreover, since the Superior Court
Order and Superior Court Judgment were entered in a circumstance of default, the voidable transfer
claim was not actually litigated. 	Because a personal injury claim arises not from fraud but
negligence, and since any voidable transfer claim “did not have its origin in a false statement of
the Defendant to the Plaintiffs,” it is the Debtor’s position that no plausible claim for relief in the
form of a finding of exception to discharge has been made and indeed, could not be made even if
the Complaint was amended. 	Motion to Dismiss, p. 7.
First, the Plaintiffs are correct that in proper circumstances, findings of fact in a state court
default judgment can support a claim for relief under Section 523(a)(2) under the doctrine of issue
preclusion. 	As the Defendants’ Answer was stricken in the Civil Action, the allegations in the
Superior Court Complaint are taken as admitted and the Debtor is collaterally estopped from
relitigating those allegations in this Adversary Proceeding. 	Secondly, this Court also agrees that
the Debtor appears to conflate the Prior Judgment and the Superior Court Order and Superior Court
Judgment in describing the claim that the Plaintiffs are seeking to be excepted from discharge. 	It
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is apparent from the pleadings that although they bear some relation, the debt at issue herein is set
forth in the latter and sounds in fraud as opposed to the former.
Thirdly, it is not necessary for the Plaintiffs to allege the Debtor made a false statement
regarding the fraudulent transfers or assets transferred, or entered into an agreement on which the
Plaintiffs relied to their harm, to assert a plausible claim for relief under Section 523(a)(2)(A) since
this discharge exception must be construed more broadly. 	As held by the United States Supreme
Court, “‘actual fraud’ in § 523(a)(2)(A) encompasses forms of fraud, like fraudulent conveyance
schemes, that can be effected without a false representation.” 	Husky Int’l Elecs., Inc. v. Ritz, 578
U.S. 355, 359 (2016). 	See also In re Vandeford, 2015 WL 1736486, at *2 (Bankr. N.D. Ga. Apr.
13, 2015)(citations omitted)(under this exception, ‘actual fraud’ reaches any attempt by someone
to trick, cheat, or gain an unfair advantage over another to their detriment); Plaintiffs’ Response,
p. 5. 	In cases such as these, “the fraudulent conduct is not in dishonestly inducing a creditor to
extend a debt. 	It is in the acts of concealment and hindrance.” 	Husky, supra, 578 U.S. at 362.
Two recent cases by the Eleventh Circuit discussing Husky, supra, further clarify the proper
application of this discharge exception. 	First, in the case of In Re Gaddy, 977 F.3d 1051, 1057
(11th Cir. 2020), in contrast to the facts in Husky, the Eleventh Circuit was careful to draw a
distinction between the fact that the transferor-debtor in Gaddy already owed the creditor via a
loan guaranty, and the allegation that the debtor fraudulently transferred assets to frustrate its
collection did not convert the underlying obligation into a debt obtained by fraud. 	Subsequently
reviewing both Husky and Gaddy, supra, in PRN Real Estate & Inv., Ltd. v. Cole, 85 F.4th 1324,
1346 (11th Cir. 2023), the Eleventh Circuit concluded that “[i]n short, the [Supreme] Court agreed
that § 523(a)(2)(A) cannot apply to the party who fraudulently transferred money because his debt
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preexisted the fraud.” 	However, “while it ‘may be rare,’ id., § 523(a)(2)(A) can apply to the party
who received the money because his debt resulted from the fraudulent transfer.” 	PRN Real
Estate, supra, citing Husky, supra, 578 U.S. at 365.
As explained in PRN Real Estate, when a state law alter ego claim is proven, the debtor-
defendant who participated in the transfer to hinder collection on a corporate debt becomes
personally liable on the obligation of the corporate transferee. 	Because the resulting debt is
created through the individual’s role in the fraudulent transfer on behalf of the transferee, it is
obtained by actual fraud and can support a viable Husky claim under Section 523(a)(2)(A). 	PRN
Real Estate, supra, 85 F.4th at 1347-49.
Factually speaking, this case is more closely aligned with PRN Real Estate because the
Debtor’s Obligation or debt to the Plaintiffs can be plausibly traced to his fraudulent receipt of
money or creation of a debt through corporate entities he controlled. 	See Complaint, ¶ 25.11
Here, the Debtor was not judged liable in the Prior Judgment and was not even a party to that
litigation. 	See Exhibit E, attached to the Complaint. 	Under the language of the statute, he only
took on or possessed a debt for money obtained by fraud when he was found liable for violating
Georgia’s corporate veil-piercing law in connection with the transfer at issue.
Based on the foregoing, the Plaintiffs have alleged a plausible claim that the Obligation
created by the Superior Court Order and Superior Court Judgment was obtained by fraud and is
subject to exemption from discharge herein under Section 523(a)(2)(A).
11 During the October Hearing, counsel for the Plaintiffs indicated there may be a separate claim for the Debtor’s
transfer of his own property or income to Green Parts International. 	These would be matters for the Chapter 7 Trustee
to investigate.
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Finally, with respect to Plaintiffs’ objection to the Debtor’s discharge, other than a brief
conclusory reference to same in the Complaint, Plaintiffs cite no statutory basis or specific factual
allegations on which to support such a claim on any plausible grounds, and thus the claim should
be dismissed.12
Conclusion
Based on the foregoing discussion, it is
ORDERED that the Motion to Dismiss is DENIED as to the Plaintiffs’ claim for
nondischargeability of debt in the Complaint under 11 U.S.C. § 523(a)(2)(A).
It is further
ORDERED that the Motion to Dismiss is GRANTED as to Plaintiffs’ a claim for
objection to discharge in the Complaint under 11 U.S.C. § 727(a), and this claim for relief is
DISMISSED.
It is further ORDERED that the parties will be allowed thirty (30) days from the date of
entry of this Order to file any dispositive motions. 	If no such motions are filed, the Court will
hold a status conference on separate notice to determine whether a discovery schedule is needed
or whether this matter should be set for trial on the remaining issue of nondischargeability.
The Clerk is directed to serve a copy of this Order upon counsel for the Plaintiffs, counsel
for the Debtor, the Chapter 7 Trustee, and the United States Trustee.
[END OF DOCUMENT]
12 It appears that the Plaintiffs solely intended to pursue a claim under Section 523(a), rather than Section 727(a),
which is what counsel stated at the October Hearing. 	In any event, this purported claim for relief has not been
formally withdrawn and will be dismissed because the Plaintiffs have not pleaded a plausible claim for relief under
the provisions of Section 727(a).
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