Eppright v. Hill

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
In re:
JOSHUA CARL HILL,
Debtor.
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§
Case No. 24-10492-cgb
Chapter 7
MATTHEW EPPRIGHT,
Plaintiff,
v.
JOSHUA CARL HILL,
Defendant.
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Adv. No. 24-01044-cgb
MEMORANDUM OPINION ON DISCHARGEABILITY OF DEBTS
Introduction
In this adversary opinion, the Court first considers a judgment creditor’s
global objection to the debtor’s discharge on several different grounds and then the
judgment creditor’s objection to the discharge of its particular claim. Ultimately, the
Dated: August 06, 2026.
__________________________________
CHRISTOPHER G. BRADLEY
UNITED STATES BANKRUPTCY JUDGE
________________________________________________________________
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Court rules against the creditor and determines that the debtor is entitled to his
discharge both generally and on this particular claim.
Factual and Procedural Background
This case arises from an incomplete vehicle restoration project. From 2020 to
2024, Debtor Joshua Carl Hill owned and operated a vehicle restoration company
called Exotic Power & Performance (“Exotic”). 1 In 2021, Plaintiff Matthew
Eppright, a car collector, purchased a 1985 Ferrari 308 GTS through an online
auction.2 Mr. Eppright hired Mr. Hill and Exotic to restore the Ferrari because
Mr. Hill had worked on Mr. Eppright’s brother’s Ferrari.3 In May 2021, Mr. Hill
began by performing an eight-hour paid inspection of the vehicle.4
Mr. 	Hill’s 	original 	quote 	for 	the 	restoration 	was 	$55,007.52 	for
“Mechanical/Electrical Restoration,” “Exterior Refinish,” and “Interior Update.”5
This quote was higher than Mr. Eppright expected, as he wanted the project to be
“budget-conscious.”6 Mr. Eppright testified that Mr. Hill explained that the quote
was high because the project would require a lot of labor, but “with sourcing parts
better,” it may end up costing less.7 Mr. Eppright ultimately agreed to the quote.8
The relationship between the parties quickly broke down, and here is where
their versions of events start to differ. According to Mr. Hill, the project was delayed
due to 1) Mr. Eppright’s failure to make payments or respond to messages in a timely
manner and 2) unforeseeable complications with the mechanical work on the project.
According to Mr. Eppright, Mr. Hill not only far outspent the budget from the
original quote, he continued to ask for more money despite doing little work. Mr.
Eppright also alleged that in fact, Mr. Hill was incapable of doing the required work
in the requested time frame.
By January 2023, the parties were at a standstill. Mr. Hill stopped working
due to Mr. Eppright’s refusal to pay. Mr. Eppright refused to pay because Mr. Hill
kept asking for money beyond the initial estimated amount. The parties could not
1 Transcript of Trial, ECF No. 64, at 58:19–21, 83:18–21, 194:19–21.
2 Id. at 13:20, 22; Pl.’s Ex. 2.
3 Transcript of Trial, ECF No. 64, at 12:15–13:17.
4 Pl.’s Ex. 3 at 4–5.
5 Id. at 3–4.
6 Transcript of Trial, ECF No. 64, at 16:23–25, 17:11–18.
7 Id. at 17:3–5.
8 Id. at 19:11–13.
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reach an agreement on completing the project, and Mr. Eppright agreed to pick up
the vehicle. It was to some degree disassembled, and parts of it were in boxes.9 Mr.
Eppright’s initial testimony was that he had “no clue” what was in the boxes, but
later, he agreed that there were “inventory and parts” in the boxes.10
In April 2023, Mr. Eppright sued Mr. Hill and his company, Exotic, in state
court for deceptive trade practices under the Texas Deceptive Trade Practices–
Consumer Protection Act11 (the “DTPA”), fraud, breach of contract, money had and
received and unjust enrichment.12 Mr. Eppright’s state court petition also asked for
treble, punitive, and exemplary damages under the DTPA and attorney’s fees
pursuant to the DTPA and Chapter 38 of the Texas Civil Practice & Remedies
Code.13 Neither Mr. Hill nor Exotic filed an answer or appeared in state court.14
Mr. Eppright filed a motion for default judgment in the state court lawsuit,
which was granted on July 14, 2023.15 The state court entered judgment in favor of
Mr. Eppright on all counts, and awarded damages, including exemplary damages,
treble damages, attorney’s fees, court costs, collection costs, contingent appellate
fees, and post judgment interest at 8%.16 In October 2023, an abstract of judgment
was recorded in Burnet County, Texas, against Mr. Hill and Exotic in the amount of
$388,564.86.17 Collection efforts were generally unsuccessful.18 In February 2024,
the state court entered an Order Requiring Turnover and Appointing Receiver
against Mr. Hill and Exotic.19
On May 3, 2024, Mr. Hill commenced his voluntary individual chapter 7 case.
On July 29, 2024, Mr. Eppright timely objected to Mr. Hill’s discharge by filing his
adversary complaint [ECF No. 1], which asserts causes of action under 11 U.S.C.
9 Some of the “boxes” likely contained new parts that Mr. Hill had ordered on Mr. Eppright’s
behalf but had not yet installed. See, e.g., id. at 144:9–14.
10 Id. at 44:21–23, 52:14–16.
11 Tex. Bus. & Com. Code § 17.41 et seq.
12 Def.’s Ex. 7.
13 Id.
14 Pl.’s Ex. 24 at 1.
15 Pl.’s Ex. 24 (motion for default judgment); Pl.’s Ex. 5 (“Default Judgment Against Joshua Hill
and Exotic Power & Performance, LLC”).
16 Pl.’s Ex. 5 at 3–4.
17 Pl’s Ex. 23.
18 See, e.g., Pl.’s Ex. 10; Transcript of Trial, ECF No. 64, at 26:10–17.
19 Pl.’s Ex. 7.
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§§ 523(a)(2)(A), (a)(6),20 and §§ 727(a)(2)(A), (a)(3), and (a)(4). Mr. Hill filed a
motion for partial judgment on the pleadings, which the Court denied.21 The Court
held a trial in this case on March 5, 2026, and closing arguments took place on
April 1, 2026.
Jurisdiction and Authority
The determination of whether a debtor should be denied discharge either of a
particular debt or of all debts is a core proceeding over which this Court has
jurisdiction under 28 U.S.C. § 157.22 This matter has been referred to this Court
pursuant to the District Court’s Standing Order of Reference.23 All parties filed
statements consenting to the Court’s authority to enter a final judgment in this
adversary proceeding.24 Therefore, this Court has both jurisdiction and authority to
decide this case.
Legal Standards
Certain 	prebankruptcy 	debts 	are 	excepted 	from 	discharge 	when, 	“in
Congress’s 	judgment, 	the 	creditor’s 	interest 	in 	recovering 	a 	particular 	debt
outweighs the debtor’s interest in a fresh start.”25 Among these particular debts are
“any debt for money, property, services . . . to the extent obtained by false pretenses,
a false representation, or actual fraud, other than a statement respecting the debtor’s
or an insider’s financial condition.”26
Creditors can also object to the debtor’s discharge entirely. Under 11 U.S.C.
§ 727, “[t]he court shall grant the debtor a discharge” unless certain elements are
proven by the creditor by a preponderance of the evidence27 Here, Mr. Eppright
objected to Mr. Hill’s discharge under §§ 727(a)(2)(A), (a)(3), and (a)(4).
20 Counsel for Mr. Eppright advised the Court on the record at closing arguments that he no longer
wishes to pursue the § 523(a)(6) claim. Audio of 4/1/26 Hr’g.
21 ECF No. 31.
22 28 U.S.C. § 157(b)(1); see also 28 U.S.C. § 1334.
23 Order of Reference of Bankruptcy Cases and Proceedings (W.D. Tex. Oct. 4, 2013).
24 ECF Nos. 10, 11.
25 Bartenwerfer v. Buckley, 598 U.S. 69, 72 (2023).
26 11 U.S.C. § 523(a)(2)(A).
27 See Beaubouef v. Beaubouef (In re Beaubouef), 966 F.2d 174, 177–78 (5th Cir. 1992) (citing
Grogan v. Garner, 498 U.S. 279, 287–88 (1991)).
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Discussion
A. Mr. Hill did not transfer property to hinder, delay, or defraud creditors
in violation of section 727(a)(2)(A).
Under 11 U.S.C. § 727(a)(2)(A), a debtor cannot receive a discharge if “the
debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate
charged with custody of property under this title, has transferred, removed, destroyed,
mutilated, or concealed, or has permitted to be transferred, removed, destroyed,
mutilated, or concealed–property of the debtor, within one year before the date of
the filing of the petition.”28
Here, Mr. Eppright alleges that Mr. Hill transferred property within one year
of filing for bankruptcy with the intent to hinder, delay, or defraud Mr. Eppright
from collecting on the state court judgment.29 Specifically, Mr. Eppright alleges that
Mr. Hill improperly transferred vehicles to a storage unit, his own money to different
bank accounts, his non-filing wife’s money to a different savings account, and that
he improperly paid his wife’s debts.30
Mr. Hill’s bankruptcy petition was filed on May 3, 2024.31 Necessarily, then,
the Court looks to Mr. Hill’s transactions starting on May 3, 2023.32
Transfer is defined broadly by the Bankruptcy Code as “the creation of a lien,
the retention of title as a security interest, the foreclosure of a debtor’s equity of
redemption, or each mode, direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing with or parting with property or an interest in property.”33
Of course, a creditor can also allege that the debtor “removed, destroyed, mutilated,
or concealed” property.34
28 See also Cadle Co. v. Duncan (In re Duncan), 562 F.3d 688, 698 (5th Cir. 2009) (“To establish
a claim under § 727(a)(2)(A), the plaintiff must prove the following four elements: ‘(1) a transfer
of property; (2) belonging to the debtor; (3) within one year of the filing of the petition; (4) with
intent to hinder, delay, or defraud a creditor or officer of the estate.’” (quoting Pavy v. Chastant
(In re Chastant), 873 F.2d 89, 90 (5th Cir. 1989))).
29 Pl.’s Compl., ECF No. 1, at 6–7.
30 See, e.g., Transcript of Trial, ECF No. 64, at 99:17–101:8, 101:9–18, 103:19–104:2, 105:16–18,
105:25–106:7, 109:22–25, 116:7–17.
31 See In re Joshua Carl Hill, No. 24-10492-cgb, at ECF No. 1.
32 See 11 U.S.C. § 727(a)(2)(A).
33 11 U.S.C. § 101(54).
34 11 U.S.C. 727(a)(2)(A).
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1. Mr. Eppright is only required by the statute to prove intent to hinder or
delay or defraud, and this specific intent may be inferred from the
circumstances.
While “proof of actual intent is necessary,” intent can be inferred.35 Factors
that may provide evidence of actual intent to defraud include:
(i) a lack or inadequacy of consideration, (ii) a familial or close
relationship between the parties, (iii) retention of possession, benefit,
or use of the property in question, (iv) the financial condition of the
party sought to be charged both before and after the transaction in
question, (v) the existence or cumulative effect of a pattern or course of
conduct after the incurring of a debt, onset of financial difficulties or
threat of suits by creditors, and (vi) the general chronology of the events
and transactions at issue.36
There is a split of authority as to whether the “intent to hinder, delay, or
defraud” requires fraudulent intent even if the debtor is only alleged to have
“hindered” 	or 	“delayed” 	a 	creditor. 37 Some 	courts, 	looking 	to 	the 	Uniform
Fraudulent Conveyance Act, which was based on Elizabethan law, have held that
fraudulent intent is always required. 38 But the Fifth Circuit follows the plain
language of the statute, and has held that “an intent to hinder or to delay or to defraud
is sufficient.”39 Thus, to find in the creditor’s favor, the Court need not find that Mr.
35 Duncan, 562 F.3d at 698 (first citing Chastant, 873 F.2d at 91, and then citing Hibernia Nat’l
Bank v. Perez (In re Perez), 954 F.2d 1026, 1029 (5th Cir. 1992)).
36 Epstein v. Busby (In re Busby), No. 19-05051-CAG, 2021 WL 1522216, at *7 (Bankr. W.D.
Tex. Apr. 15, 2021) (quoting TSCA-234 Ltd. P’ship v. Moseman (In re Moseman), 436 B.R. 398,
408–09 (Bankr. E.D. Tex. 2010)).
37 See generally Wiggains v. Reed (In re Wiggains), No. 14-03064-sgj, 2015 WL 1954438, at *15–
17 (Bankr. N.D. Tex. Apr. 28, 2015).
38 See generally 6 Collier on Bankruptcy ¶ 727.02(3)(a).
39 Wiggains v. Reed (In re Wiggains), 848 F.3d 655, 661 (5th Cir. 2017); see also id. (“Ours is not
a novel interpretation. The Supreme Court repudiated common misconceptions that surround a
debtor’s pre-bankruptcy activities by declaring that ‘[a] conveyance is illegal if made with an intent
to defraud the creditors of the grantor, but equally it is illegal if made with an intent to hinder and
delay them.’” (quoting Shapiro v. Wilgus, 287 U.S. 348, 354 (1932))).
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Hill “had the intent to delay and hinder and defraud.”40 To the contrary, “it is not
necessary to prove fraud . . . an intent to hinder or delay suffices.”41
2. Mr. Eppright did not meet his burden.
To show the alleged improper vehicle transfers, Mr. Eppright brought
evidence that Mr. Hill paid for a large storage unit for a few months, and then later,
Exotic received funds totaling about $107,000.42 But Mr. Hill testified credibly that
the storage unit was used to store customer cars because Exotic’s workshop could
not fit all of the works-in-progress.43 Thus it is not clear that even if they had been
transferred with the requisite intent (which, to be clear, the Court finds was not
shown here), there was no sufficient showing that they were property of the debtor
as required to deny a discharge under this section.
Mr. Eppright’s counsel seemed to attempt to shift the burden to Mr. Hill on
this 	point, pointing 	out, 	for 	example, that 	Mr. Hill 	had 	not 	“provided 	any
documentation so the Court can know that those were customer cars or not.”44
However, the burden was not Mr. Hill’s to carry. Mr. Eppright did not produce any
evidence that Mr. Hill owned, or transferred ownership of, any cars. Mr. Hill testified
that he only owned two cars at the time of filing bankruptcy, that none of the cars he
stored were his—and that he was never asked to provide documentation about the
cars.45
As for the alleged improper deposits, Mr. Hill also explained those credibly
and adequately on the record. Exotic’s bank statement for September 2023 shows
that there were 7 deposits made in that account that month.46 Four of those deposits
came from ShopMonkey, which Mr. Hill testified was a system he used to collect
40 Cadle Co. v. Todd (In re Todd), No. 02-3114, 2003 Bankr. LEXIS 2259, at *9 (Bankr. N.D. Tex.
Jan. 13, 2003) (collecting cases); see also Humphries v. Schnurr (In re Schnurr), 107 B.R. 124,
130 (Bankr. W.D. Tex. 1989) (“11 U.S.C. § 727(a)(2)(A) is written in the disjunctive. That means
all the plaintiff has to prove is that the debtor hindered his creditors, he delayed his creditors, or
he defrauded his creditors.” (collecting cases)).
41 Fed. Deposit Ins. Corp. v. Morris (In re Morris), 51 B.R. 462, 464 (Bankr. E.D. Tenn. 1985)
(citing In re Perlmutter, 256 F. 862, 869 (D.N.J. 1919), aff’d sub nom. Perlmutter v. Hudspeth,
264 F. 957 (3rd Cir. 1920)).
42 See, e.g., Transcript of Trial, ECF No. 64, at 99:12–101:14; see also Pl.’s Ex. 11 at 1 (showing
$107,973.98 in deposits in September 2023 in Exotic’s account ending in 7524).
43 Transcript of Trial, ECF No. 64, at 100:13–101:4.
44 Id. at 101:5–7.
45 Id. at 170:10–22.
46 Pl.’s Ex. 11 at 1.
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invoice payments for Exotic.47 This is further supported by the other months of bank
statements, which all included deposits from ShopMonkey.48
Mr. Hill testified that the other large deposits, in the amounts of $66,530.99
and $31,415.00, were “deposits for parts purchases for a couple big projects.”49 Mr.
Hill’s testimony was that these deposits had to go into this particular account for
Exotic because another account had been frozen because Exotic was behind on
paying state sales tax.50
Similarly, the alleged transfers involving Mr. Hill’s non-filing spouse were
credibly and sufficiently explained. For example, Mrs. Hill’s testimony about one
particularly large transfer was that it was a gift from a family member that she
transferred to a new bank account to take advantage of a promotional special.51 The
testimony was also that Mr. Hill provided for his wife’s daily living expenses most
of the time, but that he used her credit card for emergencies, which he then paid off
when he was able to do so.52
As purported evidence of Mr. Hill’s concealment of property and intent to
hinder or delay creditors, Mr. Eppright also alleged that Mr. Hill intentionally
avoided a deputy that was sent to collect on the state court judgment. However, this
was contravened by the testimony that Mr. Hill met with the deputy at least once and
the record of the deputy’s visits, which were mostly outside of Exotic’s business
hours.53
Ultimately, this was a very fact-intensive determination. The Court considered
the entire record, including but not limited to the facts specifically cited above, in
reaching its determination. The Court’s clear overall impression of the situation is
that Mr. Hill, like many small business owners, was operating a business with thin
margins. He made financial decisions that were perhaps ill-advised, but the evidence
shows—and the Court finds—that his intent was not to hinder, delay, or defraud
creditors but to keep his business running and complete the projects he could for his
47 Transcript of Trial, ECF No. 64, at 172:15–173:3.
48 See, e.g., Pl.’s Ex. 11 at 3, 10, 14, 20, 24, 30, 33.
49 Transcript of Trial, ECF No. 64, at 171:17–24.
50 Id. at 105:5–6.
51 Id. at 208:19–209:4.
52 Id. at 176:6–11.
53 Id. at 151:18–152:19, 189:13–190:10; see also Pl.’s Ex. 10.
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existing customers.54 This is far from meeting the requisite standard for a wholesale
denial of discharge under § 727(a)(2)(A).
B. Mr. Hill kept sufficient financial records under the circumstances of his
case for purposes of section 727(a)(3).
Section 727(a)(3) “requires debtors present a full financial picture to the
trustee, creditors, and Court.”55 To deny a debtor’s discharge under this provision,
first, the creditor must prove by a preponderance of the evidence that “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
debtor’s financial condition or business transactions might be ascertained.”56 Then,
the burden shifts to the defendant to establish “that his failure to keep adequate
records was justified under all circumstances of the case.”57
A creditor need not prove that a debtor acted with fraudulent intent to deceive
creditors.58 “Mere negligence in failing to keep and produce records is sufficient to
deny a debtor’s discharge under § 727(a)(3).”59 However, the debtor is not required
to have records containing “full detail,” but merely “‘written evidence’ of the
debtor’s financial condition.”60
When determining whether a defendant kept sufficient records for a creditor
to analyze his financial condition and whether the defendant’s failure to keep records
was “justified under all circumstances” of the case, a court has wide discretion.61
Courts have considered, for example, the defendant’s education level, the nature of
54 See, e.g., Transcript of Trial, ECF No. 64, at 61:8–10 (“I would probably suffer a great deal
more litigation if I didn’t complete the rest of the cars that belonged to people who wanted me to
complete them.”).
55 Hobbs v. Roberts (In re Roberts), 611 B.R. 261, 272 (Bankr. W.D. Tex. 2020) (citing Tow v.
Henley (In re Henley), 480 B.R. 708, 781 (Bankr. S.D. Tex. 2012)).
56 11 U.S.C. § 727(a)(3).
57 Roberts, 611 B.R. at 272 (citing In re Lee, 309 B.R. 468, 477–78 (Bankr. W.D. Tex. 2004)).
58 Id. (citing Henley, 480 B.R. at 781).
59 Id. (citing Henley, 480 B.R. at 781).
60 Robertson v. Dennis (In re Dennis), 330 F.3d 696, 703 (5th Cir. 2003) (citing Goff v. Russell Co.
(In re Goff), 495 F.2d 199, 201 (5th Cir. 1974)).
61 E.g., id. at 703 (citing Goff, 495 F.2d at 202).
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the business, the defendant’s compliance with discovery obligations, and the
defendant’s testimony at trial. 62
Here, Mr. Hill testified that he successfully completed less than two years of
high school.63 He has worked as a mechanic in some capacity his entire adult life.64
He testified that he did have staff working for Exotic at one time.65 He had most
recently been working for himself.66
Mr. Hill consistently testified that he provided Mr. Eppright’s counsel with
bank statements pursuant to a discovery agreement.67 It seemed that Mr. Eppright’s
counsel also wanted Mr. Hill to produce receipts for his consumer transactions,
including for daily expenses such as food, utilities, and gas.68 However, as Mr. Hill
himself pointed out on the stand, Mr. Eppright’s counsel seemed able to discern Mr.
Hill’s spending habits with considerable clarity from the information that was
provided in the bank statements.69
62 Hale v. Hilton (In re Hilton), No. 19-01081-tmd, 2021 WL 1811519, at *2 (Bankr. W.D. Tex.
May 5, 2021) (“While justification is a ‘sliding scale’ based on sophistication, and [the debtor]
was in some ways lacking in sophistication, [the debtor’s] failures were ultimately a product of
obstinate noncompliance during discovery and in her testimony at trial. Therefore, the inadequate
records are not justified under the circumstances.”); see also, e.g., Hughes v. Wells (In re Wells),
426 B.R 579, 594 (Bankr. N.D. Tex. 2006) (“The financial records a debtor maintains should be
appropriate and reasonable for a debtor of similar sophistication.” (collecting cases)).
63 Transcript of Trial, ECF No. 64, at 118:14–21.
64 See, e.g., id. at 119:2–125:10, 149:17–22.
65 Id. at 116:22–24.
66 Id. at 58:15–18.
67 Some documents were apparently produced under a discovery agreement that was negotiated by
counsel and not presented to the Court. This issue in a different context may raise a question as to
whether 	§ 727(a)(3) 	creates 	an 	independent 	duty 	to 	preserve 	or 	disclose 	documents
notwithstanding discovery agreements with opposing counsel or other parties in interest. However,
the Court declines to answer this question in the context of this case, because here, Mr. Hill
provided sufficient documentation. See Dennis, 330 F.3d at 703. It is important for counsel to be
able to rely on discovery agreements, as the debtor’s attorneys did here. Mr. Eppright’s counsel is
very experienced in litigation, and the Court is comfortable concluding that they could and would
have pressed this issue if they had seen fit or if they had thought that Debtor or Debtor’s counsel
were being strategic rather than acting in good faith in raising objections to discovery requests.
68 E.g., Transcript of Trial, ECF No. 64, at 115:7–16.
69 See id. at 107:14–20.
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It is true that creditors should not be “compelled to reconstruct the debtor’s
affairs.”70 But on the other hand, it is not required of a chapter 7 debtor under these
circumstances to provide receipts of all of his daily consumer transactions.71
Ultimately, this is not a close call. Under the circumstances of this case, Mr.
Hill preserved sufficient records to analyze his financial condition. Mr. Eppright’s
§ 727(a)(3) claim is accordingly dismissed.
C. Mr. 	Hill 	did 	not 	fail 	to 	disclose 	bank 	accounts 	in 	violation 	of
section 727(a)(4).
Mr. 	Eppright’s 	complaint 	did 	not 	specify 	under 	which 	subsections 	of
§ 727(a)(4) he wished to object to the discharge, but he alleges that Mr. Hill
“knowingly and fraudulently made a false oath or account related to his bankruptcy
filings in this case.”72 This language is found in 11 U.S.C. § 727(a)(4)(A), which
states that the court shall grant the debtor a discharge, unless “the debtor knowingly
and fraudulently, in or in connection with the case– made a false oath or account.”
For the avoidance of doubt, the other subsections of § 727(a)(4) are not mentioned
in the complaint, and no evidence appears to have been presented of them at trial.73
Thus, 	the 	Court 	will 	analyze 	Mr. 	Eppright’s 	objection 	to 	discharge 	under
§ 727(a)(4)(A).
A creditor bringing a claim of false oath must show by a preponderance of the
evidence that “(1) [the debtor] made a statement under oath; (2) the statement was
false; (3) [the debtor] knew the statement was false; (4) [the debtor] made the
statement with fraudulent intent; and (5) the statement related materially to the
bankruptcy case.”74 The denial of a debtor’s discharge is justified when the debtor
makes a false statement or omission in his schedules or makes a false statement “at
the examination during the course of the proceedings.”75
70 Keils v. Villarreal (In re Villarreal), 666 B.R. 157, 166 (Bankr. N.D. Tex. 2024) (quoting In re
Juzwiak, 89 F.3d 424, 428 (7th Cir. 1996)).
71 See, e.g., Wells, 426 B.R. at 594–95 (discussing a consumer debtor’s obligations to provide
documents).
72 Pl.’s Compl., ECF No. 1, at 6.
73 See generally Pl.’s Compl., ECF No. 1.
74 Cadle Co. v. Pratt (In re Pratt), 411 F.3d 561, 566 (5th Cir. 2005) (citations omitted) (quoting
Beaubouef v. Beaubouef (In re Beaubouef), 966 F.2d 174, 178 (5th Cir. 1992)); Fed. R. Bank.
P. 4005 (“At a trial on a complaint objecting to a discharge, the plaintiff has the burden of proof.”).
75 Beaubouef, 966 F.2d at 178.
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The Plaintiff also drew attention to Mr. Hill’s alleged nondisclosure of certain
bank accounts, namely those of his wife and those of his business.76 However, those
bank accounts were disclosed in Mr. Hill’s schedules as originally filed in this case.77
Mr. Eppright did not present any evidence of bank accounts that Mr. Hill failed to
disclose, and therefore failed to meet his burden of proving that the debtor made a
false statement. Mr. Eppright’s § 727(a)(4) claim is denied.
D. Mr. Hill’s debt to Mr. Eppright was not obtained by false pretenses, a
false representation, or actual fraud in violation of section 523(a)(2)(A).
To 	deem 	a 	debt 	nondischargeable 	under 	11 U.S.C. 	§ 523(a)(2)(A), 	an
objecting creditor must prove by a preponderance of the evidence that it was a debt
“for money, property, services, or an extension, renewal, or refinancing of credit, to
the extent obtained by false pretenses, a false representation, or actual fraud, other
than a statement respecting the debtor’s or an insider’s financial condition.”78 Actual
fraud “encompasses forms of fraud, like fraudulent conveyance schemes, that can be
effected without a false representation.”79
1. Under the conditions here, the state court no-answer default judgment
cannot be given collateral estoppel effect.
Mr. Eppright argues that Mr. Hill is collaterally estopped from re-litigating
the issue of fraud in this Court due to a state court default judgment.80 Mr. Eppright
also seeks attorneys’ fees arising out of this judgment.81 When a bankruptcy court is
evaluating the effect of a state court judgment on a dischargeability proceeding, the
bankruptcy court must look to state preclusion law from the state in which the
judgment was entered.82 Here, the default judgment was entered by the 33rd Judicial
District Court of Burnet County, Texas, so Texas collateral estoppel law applies.83
76 Transcript of Trial, ECF No. 64, at 95:17–97:4.
77 Id. at 161:17–163:2, 166:9–167:5; see also In re Joshua Carl Hill, No. 24-10492-cgb, ECF No.
1 at 12, 56–57.
78 11 U.S.C. § 523(a)(2)(A); Grogan, 498 U.S. at 287–88.
79 Husky Int’l Elecs., Inc. v. Ritz, 578 U.S. 355, 359 (2016).
80 E.g., Pl.’s Compl., ECF No. 1, at 5 (“As the state district court has already found . . . .”); see
also Pl.’s Opp. To Def.’s Rule 12(c) Mot., ECF No. 21, at 8–9.
81 Pl.’s Compl., ECF No. 1, at 5.
82 E.g., Guion v. Sims (In re Sims), 479 B.R. 415, 420 (Bankr. S.D. Tex. 2012) (citing Plunk v.
Yaquinto (In re Plunk), 481 F.3d 302, 307 (5th Cir. 2007)).
83 The default judgment is in the record as Pl.’s Ex. 5.
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Under Texas law, the elements of collateral estoppel are: “(1) the facts sought
to be litigated in the second action were fully and fairly litigated in the prior action;
(2) those facts were essential to the judgment in the first action; and (3) the parties
were cast as adversaries in the first action.”84 Generally, a default judgment is
considered to have been fully and fairly litigated for collateral estoppel purposes.85
However, Texas courts have differentiated the case of a no-answer default—that is,
a default judgment is entered because the defendant failed to answer the plaintiff’s
complaint.86 As the Fifth Circuit has stated, “Courts generally hold that no-answer
default judgments fail to meet the ‘actually litigated’ prong of the issue preclusion
test.”87
Here, Mr. Eppright’s default judgment is a no-answer default judgment
because Mr. Hill did not file an answer in state court.88 As noted, this fact alone puts
its preclusive effect in doubt. Still, if a party seeking to use a no-answer default
judgment for collateral estoppel purposes is able to “produce record evidence
demonstrating that the state court conducted a hearing in which [the party] was put
to its evidentiary burden, collateral estoppel may be found to be appropriate.”89
While the entire state court record is not required, “enough of the prior court’s record
must be presented to the bankruptcy court for it to make a determination that a trial
or hearing was conducted at which the plaintiff met his or her burden of proof.”90
This requirement was not met. Mr. Eppright provided the default judgment
and the motion for default judgment that was filed in the state court, and nothing
else.91 The default judgment entered in the state court explained that the Court
considered “the pleadings and papers on file as well the accompanying exhibits and
affidavits and argument of counsel.”92 But “the mere assertion that a judgment is
84 Sims, 479 B.R. at 420 (citing Schwager v. Fallas (In re Schwager), 121 F.3d 177, 181 (5th Cir.
1997)).
85 See, e.g., Cornwall v. Loesch (In re Cornwall), 109 F. App’x 682, 684 (5th Cir. 2004) (collecting
Fifth Circuit cases about post-answer default judgments).
86 Gober v. Terra+Corp. (In re Gober), 100 F.3d 1195, 1204 (5th Cir. 1996) (citing Stoner v.
Thompson, 578 S.W.2d 679, 683 (Tex. 1979)).
87 Id. (collecting cases).
88 Pl.’s Ex. 5 at 1 (“Defendants were required to file a written answer by 10:00 a.m. on May 22,
2023. Defendants did not do so.”).
89 Pancake, 106 F.3d at 1245.
90 Chizk v. Ramon (In re Ramon), 433 B.R. 571, 584 (Bankr. N.D. Tex. 2010) (first citing Sheerin
v. Davis (In re Davis), 3 F.3d 113, 115 (5th Cir. 1993), and then citing Pancake, 106 F.3d 1242)).
91 Pl.’s Ex. 5; Pl.’s Ex. 24.
92 Pl.’s Ex. 5 at 1.
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based on evidence and argument is insufficient to support the application of the
doctrine of collateral estoppel.”93
Counsel for Mr. Eppright contended in his closing argument that Plaintiff’s
Exhibit 24, the motion for default judgment from the state court proceeding,
contained a declaration drafted by Mr. Eppright that met his evidentiary burden.94
And it is true that Plaintiff’s Exhibit 24 was pre-admitted without objection.95 But
the only time it was used in the trial was by Mr. Hill’s counsel on cross-examination
of Mr. Eppright.96 (For its part, that cross-examination was far from encouraging.
Mr. Eppright confirmed that the declaration attached to Plaintiff’s Exhibit 24 stated
that his Ferrari was a total loss—as did the complaint filed in this case.97 But Mr.
Eppright also admitted that the Ferrari was not, in fact, a total loss. In fact, he was
able to sell it for $15,000 sometime in 2025, after the state court judgment was
entered.98 The sale of the vehicle and/or its parts directly contradicts Mr. Eppright’s
“total loss” testimony.99)
Overall, the Court cannot find that the conclusions in the state court default
judgment were actually determined from the evidence presented in state court.100
For a no-answer default judgment to be given collateral estoppel effect, the moving
party must produce “record evidence” demonstrating their burden was met in the
state court proceeding.101 The Court is unsatisfied with the record evidence provided
93 Ramon, 433 B.R. at 584 (citing Pancake, 106 F.3d 1242).
94 Audio of 4/1/26 Hr’g. Mr. Eppright’s counsel also discussed this declaration in his opening
statement. See Transcript of Trial, ECF No. 64, at 9:9–18.
95 Transcript of Trial, ECF No. 64, at 5:8–16; 6:16–19.
96 See Transcript of Trial, ECF No. 64, at 41:20–43:19.
97 Transcript of Trial, ECF No. 64, at 42:21–23; ECF No. 1 at 2, 6.
98 Transcript of Trial, ECF No. 64, at 43:2–3.
99 Mr. Eppright testified that the “total loss” testimony in the default judgment affidavit was true
at the time because he didn’t know until later that he would have been able to sell the vehicle. See
Transcript of Trial, ECF No. 64, at 42:21–43:11. The Court finds this testimony unconvincing.
Mr. Eppright sold the vehicle to an employee at the Petrol Lounge, a car club of which he was a
member, for the employee and her husband to try to fix the car. Id. at 43:20–44:8. The Court
believes that Mr. Eppright was sufficiently knowledgeable in cars to know that there was at least
some significant value in what remained of the vehicle and parts. Additionally, while the sale
occurred after this case was filed, the complaint in this Court was not amended to reflect that the
vehicle was not a “total loss” even though Mr. Eppright testified that he had informed his attorney
of the sale, as the Court believes should have been done as a matter of candor to this tribunal. Id.at
43:12–17.
100 See Ramon, 433 B.R. at 584 n. 19 (expressing a lack of confidence in a state court judgment
with factual errors).
101 See Pancake, 106 F.3d at 1245.
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by the Plaintiff here and on the basis of that record cannot find that Mr. Eppright
was held to his burden in the state court proceeding.102
Accordingly, the Court finds that based on all the relevant facts and
circumstances here, the state court judgment should not be given collateral estoppel
effect.
2. Mr. Eppright did not come close to proving his section 523(a)(2)(A) claim
on the merits.
The Court now turns to the merits of the § 523(a)(2)(A) claim. Mr. Eppright
alleges that Mr. Hill lied about his ability to competently perform the work, to timely
complete the work, and to complete the work for the stated price.103 The Court finds
these claims to be unfounded.
The evidence at trial included several estimates created by Mr. Hill and many
emails between Mr. Eppright and Mr. Hill discussing, for example, the work to be
done on the Ferrari, quotes for various services and supplies, and the timeline in
which the work could be completed. Mr. Hill’s estimate form contains language that
would limit reasonable expectations of both timing and price. Each estimate states:
Estimates provided are an approximation of timing and charges to you
for the services requested. They are based on the anticipated work to be
done. It is possible for unexpected complications to cause some
deviation from the original quote.
[ . . .]
We are not responsible for any delays caused by unavailability of parts
or delays in delivery of parts by the supplier or transporter.104
Mr. Hill’s emails to Mr. Eppright similarly managed expectations. An initial
email from Mr. Hill, sent April 20, 2021, states:
Please be aware that Labor Times are based on Manufacturer Labor
Guides when your vehicle was new and cannot account for Excessively
Worn Components or Poorly Performed Prior Repairs. Also be aware
102 Further, the DTPA portion of the judgment “has no preclusive effect on the issue of
dischargeability of the debt under section 523(a)(2)(A).” Stanley v. McLain (In re McLain), No.
09-6016-RBK, 2011 WL 1638578, at *4 (Bankr. W.D. Tex. Apr. 29, 2011)).
103 Pl.’s Compl., ECF No. 1, at 5.
104 See, e.g., Def.’s Ex. 9 at 1.
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that Parts Pricing is constantly changing due to Varying Stock Levels,
Customs/Tariffs/Freight Costs and Exchange Rates. As such, It Is
Possible that the Labor Times and Parts Costs on Your Final Invoice
will Reflect these Fluctuations.105
When Mr. Eppright emailed Mr. Hill asking whether the Ferrari would be
ready for a car show in October 2021, Mr. Hill replied: “Hey Matt, it is definitely
possible. The car is too far from completion to absolutely promise right now, but I
will work towards meeting that deadline.”106
Mr. Eppright asserts that “Hill falsely represented to Eppright that he had the
expertise, experience, and ability to restore Eppright’s Ferrari in a good and
workmanlike manner that was consistent with industry standards, within a few
months’ time, and he knew at that time that the statements were made that they were
false and fraudulent.” 107 The Court is unconvinced. The evidence shows that
Mr. Hill made reasonable representations about what was possible with the vehicle’s
restoration, but that Mr. Hill was careful not to promise anything in light of many
unknown factors concerning this decades-old used Italian sports car.
Further, the evidence admitted by both sides showed that Mr. Eppright
contributed to the delays with this job, particularly in replying to emails and in
payment. For example, on August 5, 2021, Mr. Hill messaged Mr. Eppright asking
for a wire transfer of $7,500 to make a down payment to the paint shop that would
be working on the Ferrari.108 Mr. Hill followed up to ask again on August 12, 2021,
stating, 	“Bodyshop 	has 	the 	car 	but 	is 	waiting 	to 	get 	started.” 109 The 	next
communication from Mr. Eppright was not until November 4, 2021, asking for a
status update, to which Mr. Hill responded less than an hour later, “I’ve billed out
all the hours and parts I could against the original deposit. I’ll need another deposit
of $12.5k to get the paint shop moving along, which will hold us over until it returns
and is ready to be assembled.”110 Yet, the evidence shows that Mr. Eppright did not
remit payment for more than a month. Mr. Eppright messaged on December 28, 2021,
105 Def.’s Ex. 10 at 2.
106 Pl.’s Ex. 3 at 10.
107 Pl.’s Compl., ECF No. 1, at 5.
108 Pl.’s Ex. 3 at 10.
109 Id.
110 Id. at 10–11.
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asking if Mr. Hill received a check.111 Mr. Hill replied a mere twenty-six minutes
later stating that the check was received and deposited.112
The Court also has doubts concerning Mr. Eppright’s testimony about his
expectations for the repair. Mr. Eppright was clearly what one could term a “car guy.”
He testified that he has a collection of cars and hangs out with fellow car collectors
at the Petrol Lounge.113 He also seems to be closely involved with his brother’s car
collection, as evidenced by his testimony and his discussion of his brother’s car in
messages with Mr. Hill.114 Given his knowledge and experience, Mr. Eppright surely
should have been aware that a repair job like this would not necessarily run smoothly,
on time and on budget, that unforeseen challenges might well arise.
The parties dispute the extent to which the car was functional when it reached
Mr. Hill’s shop. Mr. Eppright claims that it was functional, because he drove it for
about a mile (although he admits it “did run a little rough”).115 Mr. Hill contends that
the car didn’t run for him.116 The evidence supports Mr. Hill’s assessment of the
vehicle. In emails on May 11, 2021, Mr. Hill stated, “I just tried to fire the car up
and go for a short drive and it won’t start” and Mr. Eppright replied, “Kk, it’s got
issues.”117 This shows that at that time, Mr. Eppright was well-apprised of the
mechanical problems with the car.
Mr. Eppright admits he is not a mechanic.118 The credible testimony by Mr.
Hill, on the other hand, demonstrates that he is experienced and knowledgeable,
particularly about Ferraris.119 Mr. Hill’s opinion, as evidenced in both his testimony
and his contemporaneous communications with Mr. Eppright, was that there were
significant unforeseen issues with the engine that would take further time, labor, and
money to fix.120 Mr. Eppright wasn’t willing to pay for those repairs, which was
certainly his choice—but doesn’t constitute fraud on Mr. Hill’s part.
111 Id. at 11.
112 Id.
113 Transcript of Trial, ECF No. 64, at 44:1–5, 45:14–20.
114 Id. at 13: 9–10, 46:1–2; Pl.’s Ex. 3 at 10–11.
115 Transcript of Trial, ECF No. 64, at 15:16–20.
116 Id. at 76:1–6.
117 Pl.’s Ex. 3 at 6.
118 Transcript of Trial, ECF No. 64, at 28:12–13, 38:18–21, 53:17.
119 Id. at 127:3–129:23.
120 See generally, e.g., id. at 132:20–142:18.
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Mr. Eppright attempted to use a YouTube video in which Mr. Hill appears,
apparently as evidence that Mr. Hill’s business practice is to leave work incomplete
or to drag it out for more money, and then to threaten his clients with a lien or storage
fees when they don’t pay up.121 The Court found this completely unconvincing, and
the introduction of these videos a distraction from the matters really at issue in this
trial.
Whether or not this was a common practice for Mr. Hill, Mr. Eppright
complains that Mr. Hill did in fact threaten to charge him storage fees or put a lien
on his car after payment delays. That appears to be true, but it is not evidence of
wrongdoing on Mr. Hill’s part. The evidence shows that Mr. Eppright was slow to
communicate 	and 	pay. 	It 	is 	a 	normal 	business 	practice 	in 	the 	industry, 	as
contemplated by the relevant law, to put a lien on a vehicle when a client has delayed
payment.122 This protects the mechanic’s right to payment. Whatever he may have
threatened, Mr. Hill never put a lien on Mr. Eppright’s vehicle.123 (Mr. Hill did, at
one time, charge Mr. Eppright storage fees, but he ended up taking them off of the
invoice. 124 In any case this, too, would not have been evidence of any sort of
unsavory or fraudulent practices on this record.)
Mr. Eppright testified that Mr. Hill had serviced Mr. Eppright’s brother’s
Ferrari, and that his brother had recommended Mr. Hill as “a good Ferrari mechanic
that can do a restoration.”125 In two separate ways, this testimony cuts against Mr.
Eppright’s argument that Mr. Hill’s business practices are to scam his clients: first,
there was no testimony that Mr. Hill engaged in any suspicious business practices
with Mr. Eppright’s brother, or certainly Mr. Eppright would not have hired Mr. Hill.
Second, if Mr. Hill took extra time or charged extra money to Mr. Eppright’s brother,
Mr. Eppright would have been on notice from his brother’s prior dealings and so
could not have reasonably expected the project to be completed on time or under
budget.
While the Court has dealt with this claim last, it is in a way the heart of this
suit, because it is what led to all of the rest. But in the Court’s view, the evidence for
121 Pl.’s Ex. 22.
122 See Tex. Prop. Code § 70.001.
123 Transcript of Trial, ECF No. 64, at 194:7–9.
124 Id. at 194:13–14; see also id. at 79:14–18 (“What I can say is that the storage fee is used as a[n]
attention getter to get someone who’s not acknowledging me to acknowledge me. So it’s not
unusual to, you know, write those off once you get acknowledgement and approval to continue to
work. I don’t actually want to charge storage fees.”).
125 Id. at 12:17–19, 13:6–10.
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the Plaintiff’s side of this claim is weak. Obviously, this car restoration project did
not go well for either party. Mr. Hill was not able to complete the work that he set
out to complete. Mr. Eppright did not receive the “budget-conscious” repair he
sought. But this incompletion was due to multiple factors, including unforeseeable
mechanical issues with the car, availability of parts, timing of outsourced labor, and
Mr. Eppright’s delays. Not false pretenses, false representations, or actual fraud. Mr.
Eppright’s § 523(a)(2)(A) claim is denied.
Conclusion
All claims against Mr. Hill will be denied. The Court will enter a separate
judgment consistent with this ruling.
# # #
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