Summary Judgment Denied, Niswonger Bankruptcy

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April 15, 2026 Get Citation Alerts Download PDF Add Note

National Loan Acquisitions Company v. Jerome W.H. Niswonger and Brenda C. Niswonger

United States Bankruptcy Court, E.D. Texas

• Citations: None known
• Docket Number: 24-06005

• Precedential Status: Unknown Status

• Opinion

• Authorities (15)

• Cited By (0)

• Summaries (0)

• Similar Cases (78.1K)

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Trial Court Document

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
IN RE: §
§
Jerome W.H. NISWONGER §
xxx-xx-0625 §
and Brenda C. NISWONGER § Case No. 23-60394
xxx-xx-6505 §
PO BOX 910, Athens, TX, 75751. §
§
Debtor § Chapter 7

§
NATIONAL LOAN §
ACQUISITIONS COMPANY §
§
Plaintiff §
§
v. § Adversary No. 24-6005
§
JEROME W.H. NISWONGER §
and BRENDA C. NISWONGER §
§
Defendants §
MEMORANDUM OPINION
ON THIS DATE the Court considered the “Motion for Summary
Judgment” filed by Jerome W.H. Niswonger and Brenda C. Niswonger
(collectively, the “Niswongers”) on January 25, 2025, and the objections,
replies, and other documents filed in the above related adversary proceeding.
Upon review of the pleadings, summary judgment evidence, and the relevant
legal authorities, the Court concludes that genuine issues of material fact
remain. For the reasons explained in this memorandum, the Niswongers’
Motion for Summary Judgment is DENIED.
I. Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§
1334 (a) and 157(a). The Court has the authority to enter a final judgment in
this adversary proceeding because it constitutes a core proceeding pursuant
to 28 U.S.C. § 157 (b)(2)(A), (J), and (O).
II. Factual and Procedural Background1
Dr. Jerome and Mrs. Brenda Niswonger are the debtors in this case.2
In 2012, the Niswongers executed a loan agreement with Wells Fargo for
$1,330,000.00 (the “Wells Fargo Loan” or the “Loan”), which was secured by
their residence under a deed of trust granted in favor of Wells Fargo.3 Much
to their dismay, a wild-fire known as the “Camp Fire” destroyed their
residence in Paradise, California in November 2018.4
On November 8, 2018, the day of the Camp Fire, the Wells Fargo Loan
remained outstanding.5 On December 13, 2018, the Niswongers received a
first installment of home insurance proceeds from the Camp Fire in the
amount of $1,439,000.00.6 They were ultimately paid total insurance
proceeds of $3,020,988.00.7 A few days later, on December 20, 2018, the
Niswongers purchased a lifetime annuity from State Farm for $1,000,000.00
(the “Annuity”).8 Their daughter, Arlana Mauk, was the insurance agent who
1 This section is not intended to resolve any disputed or contested facts between the
parties.
2 Sadly, Dr. Niswonger is now deceased.
3 See Def.’s Mot for Summ. J. at 5, ECF No. 41.
4 Id. at 3.
5 Id. at 3.
6 Id. at 6.
7 See Tr.’s Resp., Ex. B at 4, ECF No. 52.
8 See Def.’s Mot for Summ. J. at 3, ECF No. 41.
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helped them obtain this Annuity.9
It was routine between Wells-Fargo and the Niswongers to renew the
Loan annually.10 Wells Fargo agreed to such an extension on February 28,
2019, at which time the principal balance was approximately $1,133,936.53.11
On December 12, 2019, the Niswongers purchased a home in Athens, Texas,
for $674,000.00 (the “Athens Home”).12 At the time, the Niswongers were
allegedly living in recreational vehicles (“RVs”) and hotels in California.13
The Niswongers defaulted on the Wells Fargo Loan in January 2020, roughly
a month after purchasing the Athens Home.14
The Niswongers met with Wells Fargo representatives to discuss a
potential settlement sometime in March 2020.15 The exact date and details of
that meeting are disputed. On March 31, April 1, and August 31, 2020, the
Niswongers respectively purchased three additional vacant lots in Henderson
County, Texas–Lots 92, 133, and 134 of Waters Edge Ranch Phase 1
(collectively, the “Texas Properties”).16
Wells Fargo eventually sold the Loan to Plaintiff, National Loan
Acquisition Company (“NLAC”) on May 4, 2020.17 Sometime in May 2020,
NLAC representatives met with the Niswongers regarding the Loan, to little
9 See Tr.’s Resp., Ex. B at 53, ECF No. 52.
10 See Def.’s Mot. for Summ. J. at 5, ECF No. 41.
11 See Pl.’s Resp., Ex. A at 2, ECF No. 53.
12 See Def.’s Mot. for Summ. J. at 5, ECF No. 41.
13 See Tr.’s Resp. at 9, ECF No. 52.
14 See Pl.’s Resp. Ex. A, at 3, ECF No. 53.
15 See Pl.’s Resp., Ex. A at 7, ECF No. 53.
16 See Def.’s Mot. for Summ. J., Exs 4–8, ECF No. 41.
17 See Pl.’s Resp. Ex. A at 2, ECF No. 53.
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effect.18 The Niswongers moved into the Athens Home in June of 2020.19 The
next month, on July 10, 2020, the Niswongers formed Niswonger Properties,
LLC, a Texas limited liability company.20
NLAC filed suit against the Niswongers on September 10, 2021, in
California state court, asserting claims for breach of contract, fraudulent
transfers and declaratory relief.21 This action is styled NLAC v. Niswonger et
al., Case No. 21-CV-02283, Superior Court, Butte County, California (the
“California Action”).22 Two years later, on August 15, 2023, the California
state court imposed sanctions on the Niswongers for failing to appear at a
scheduled deposition in Athens, Texas.23
One day after the California state court ordered sanctions, the
Niswongers filed a chapter 7 case (the “Petition”) on August 16, 2023.24 On
August 22, 2023, they filed Official Form 106C (“Schedule C”), listing the
Annuity, Athens Home, and Texas Properties as exempt assets.25
NLAC filed its Proof of Claim No. 11 (“NLAC’s Proof of Claim”), on
January 19, 2024, asserting a claim in the amount of $1,867,031.42.26 On
February 19, 2024, NLAC objected to the Niswongers’ claimed exemptions.27
The next day, on February 20, 2024, the Chapter 7 Trustee, Diane Carter (the
“Trustee”), filed her respective objection to the Niswongers’ claimed
18 Id. 19 See Def.’s Mot. for Summ. J., at 7, ECF No. 41.
20 See Tr.’s Resp. Ex. A-11 at 96, ECF No. 52.
21 See Def.’s Mot. for Summ. J. at 8, ECF No. 41.
22 See Tr.’s Resp. at 8, ECF No. 52.
23 Id. 24 See Case No. 23-60394, ECF No. 1.
25 See Case No. 23-60394, ECF No. 8, at 10-11.
26 See Case No. 23-60394.
27 See Case No. 23-60394, ECF No. 49.
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exemptions.28
NLAC filed this adversary on February 21, 2024, objecting to the
Niswongers’ discharge under 11 U.S.C. § 727 (a)(3) and (5).29 The Niswongers
objected to NLAC’s Proof of Claim on December 2, 2024.30

To efficiently hear these disputes, the Court entered a Sua Sponte
Order Regarding Case Management, on February 11, 2025.31 That order
mandates that although Case No. 24-6005 and NLAC and the Trustee’s
objections to the Niswongers’ claimed exemptions were not formally
consolidated, the matters involve common issues of fact and will proceed in
parallel under the same scheduling order.32
The Niswongers filed their summary judgment Motion on January 29,
2025.33 NLAC and the Trustee filed their respective responses on March 12,
2025. The Niswongers replied to NLAC and the Trustee’s responses on
March 26, 2025.
At a hearing at which all parties participated, this Court, on August 13,
2025, entered an order sustaining in part and denying in part the
Niswongers’ objection to NLAC’s Proof of Claim.34 That order allows NLAC’s
claim in the amount of $1,769,569.98 and disallows all amounts in excess of
that figure.35
28 See Case No. 23-60394, ECF No. 52.
29 See ECF No. 1.
30 See Case No. 23-60394, ECF No. 89.
31 See Case No. 23-60394, ECF No. 114.
32 Id. 33 See Def.’s Mot. for Summ. J., ECF No. 41.
34 See Case No. 23-60394, ECF No. 161.
35 Id. -5-
III. Summary Judgment Standard
A court may grant summary judgment “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed. R. Civ. P.
56(c)).36
Federal Rule of Bankruptcy Procedure 7056 incorporates Federal Rule
of Civil Procedure 56 so as to apply to adversary proceedings. Thus, if
summary judgment is appropriate, the Court may resolve the case as a
matter of law.

The moving party always bears the initial responsibility of informing
the court of the basis for its motion and any evidence which it believes
demonstrates the absence of a genuine issue of material fact. Celotex, 477
U.S. at 323. The manner in which the necessary summary judgment showing
can be made depends upon which party will bear the burden of proof at trial.
If, as in this case, the nonmovant “bears the burden of proof at trial, the
movant may merely point to an absence of evidence, thus shifting to the non-
movant the burden of demonstrating by competent summary judgment proof
that there is an issue of material fact warranting trial.” Lindsey v. Sears
Roebuck & Co., 16 F.3d 616, 618 (5th Cir. 1994) (quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986)).
“A fact is material only if its resolution would affect the outcome of the
action...” Wiley v. State Farm Fire and Cas. Co., 585 F.3d 206, 210 (5th Cir.
2009). Thus, the nonmovant must evince more than “some metaphysical
doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). If the nonmoving party were to present these
factual disputes at trial, they must be such that a rational fact finder might
find in favor of the nonmoving party. Id. at 587. “All reasonable inferences
must be viewed in the light most favorable” to the nonmoving party, and “any
doubt must be resolving in favor of the nonmoving party.” In re Louisiana
36 Pursuant to the scheduling order issued in this adversary proceeding, motions for
summary judgment are required to comply in format and content with Local District Court
Rule CV-56 and such motions shall be decided under the procedures stated therein.
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Crawfish Producers, 852 F.3d 456, 462 (5th Cir. 2017) (citing Matsushita, 475
U.S. at 586.).
IV. Analysis
The question before the Court is whether a genuine dispute of material
fact exists regarding the propriety of the Niswongers’ claimed annuity
exemption and homestead designation. The Niswongers contend that
summary judgment is warranted because their Annuity, Athens Home, and
Texas Properties are indisputably exempt, and NLAC and the Trustee cannot
prevail on their objections under 11 U.S.C. § 727 (a)(3), and (a)(5).37 NLAC
and the Trustee respond that summary judgment is precluded because the
Niswongers purchased the Annuity and Texas Properties as part of a scheme
to defraud creditors.38 The Court finds after reviewing the summary
judgment evidence that genuine issues exist.
A. § 522 Exemptions
The Niswongers may benefit from Texas state exemptions pursuant to 11 U.S.C. § 522. See 4 Collier on Bankruptcy ¶ 522.01 (16th 2025). Section
522(b)(1) states, “. . .an individual debtor may exempt from property of the
estate the property listed in. . .paragraph (3) of this subsection.” 11 U.S.C.
522(b)(1). Paragraph 3 of that section states:
. . .any property that is exempt under. . .State or local law that is
applicable on the date of the filing of the petition to the place in
which the debtor’s domicile has been located for the 730 days
immediately preceding the date of the filing of the petition or if
the debtor’s domicile has not been located in a single State for
such 730-day period, the place in which the debtor’s domicile was
located for 180 days immediately preceding the 730-day period, or
for a longer portion of such 180-day period than in any other
place. . . 11 U.S.C. § 522 (b)(3)(A). At its most simple, this provision permits a debtor
37 See Def.’s Mot. for Summ. J., ECF No. 41.
38 See Tr.’s Resp., ECF No. 52; and Pl.’s Resp., ECF No. 53.
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to claim a state’s exemptions only after residing there for two years. No party
disagrees that the Niswongers moved to Texas sometime in July 2020. The
Niswongers filed for bankruptcy on August 16, 2023, three years after moving
to Texas. Therefore, Texas exemptions apply.
B. The Annuity
The Niswongers argue the Annuity is exempt under Texas law because:
(1) the exception in Tex. Ins. Code § 1108.058 did not “exist” when they
purchased the Annuity, (2) Wells Fargo agreed to the purchase of the
Annuity, (3) NLAC and the Trustee have not identified a defrauded creditor,
and (4) the statute of limitations has expired.” In their responses, NLAC and
the Trustee cite to deposition testimony, affidavits, and an expert report to
ralse genuine issues of material fact with respect to the Annuity’s exemptions
status.
1. “Fraud” and Tex. Ins. Code § 1108.051-53
The Texas annuity exemption statute grants protection to debtors in
bankruptcy, but 1s tempered by an express limitation for premium payments
made “in fraud of a creditor.” See Tex. Ins. Code §§ 1108.051-.053. The
Niswongers argue the Annuity is exempt under Tex. Ins. Code §
1108.051(a)(1) but simultaneously argue that the fraud provision of that
statute does not apply.“° The Court finds the fraud provision applicable.
Supreme Court precedent establishes that “...when a debtor claims a
state-created exemption, the exemption’s scope is determined by state law,
which may provide that certain types of debtor misconduct warrant denial of
the exemption.” Law v. Siegel, 571 U.S. 415, 425 (2014) (emphasis added); see
also In re Zibman, 268 F.3d 298, 304 (5th Cir. 2001) (“it is the entire state law
applicable on the filing date that is determinative’).
Furthermore, § 1108.053 titled “Exceptions to Exemptions,” states that
the annuity exemption does not apply to “.. .a premium payment made in
fraud of a creditor...” See Tex. Ins. Code § 1108.053(1) (emphasis added).
This language forms the basis of NLAC and the Trustee’s objections. Does

3° See Def.’s Mot. for Summ. J., ECF No. 41.
1 Td.
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the Niswongers’ purchase of the Annuity constitute a “premium payment
made in fraud of a creditor” as contemplated by Tex. Ins. Code § 1108.053?
To decide, the Court looks to precedent. In Soza, the Fifth Circuit
clarified that “fraud” in this context includes “badges of fraud.” Jn re Soza, 542 F.3d 1060, 1066 (5th Cir. 2008). In that case, the debtors purchased an
annuity one day before filing for bankruptcy. Id. The Soza court stated that
“[bJecause Tex. Ins. Code § 1108.053 uses the general phrase “in fraud of a
creditor[,]” rather than specific language requiring intent to defraud|[,] we
conclude that it encompasses both intentional fraud and conduct less than
intentional fraud.” Id. at 1065 (emphasis added). The court further explained
that courts must apply a non-exclusive list of factors, the “badges of fraud,” to
guide their decisions. /d. at 1066. These badges include:
(1) the lack or inadequacy of consideration; (2) the family,
friendship or close associate relationship between the parties; (3)
the retention of possession, benefit or use of the property in
question; (4) the financial condition of the party sought to be
charged both before and after the transaction in question; (5) the
existence or cumulative effect of the pattern or series of
transactions or course of conduct after the incurring of debt, onset
of financial difficulties, or pendency or threat of suits by creditors;
and (6) the general chronology of events and transactions under
inquiry.
Soza, 542 F.3d at 1067. The Soza court emphasized that “[w]hen several of
these indicia of fraud are found, they can be a proper basis for an inference of
fraud.” Id. (citing Roland v. United States, 838 F.2d 1400, 1402-03 (5th
Cir.1988)).
NLAC and the Trustee have pled facts that evince genuine disputes of
material fact on several badges of fraud. For example, in its response and
objection, NLAC attached an affidavit by Micheal J. Henry-NLAC’s Senior
Vice President.’ In his affidavit, he alleges that NLAC was not made aware
that the Niswongers’ daughter sold them the lifetime annuity until the

“| See Pl.’s Resp., Ex. A. at 1, ECF No. 53.
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discovery phase of the California Action.42 This close familial relationship
supports a possible inference that the Niswongers’ purchase of the Annuity
was made “in fraud of a creditor.”
The Trustee attached exhibits produced by the Niswongers which
purport to list their assets, their respective worth over the years since the
Camp Fire, and an indication of whether the asset is exempt, closed, sold, or
“at risk.”43 Exhibits A-1 and A-2, for example, are documents produced by the
Niswongers in the California Action that denote the exemption status and
source of a respective asset.44 When questioned about these exhibits during
her deposition, Mrs. Niswonger claims to have provided the information, but
alleges that her nephew, Ronald Rohde, was the one who prepared the
document itself.45
The chronology and timing of the Annuity purchase also raise questions
that the premium payment could have been made in fraud of a creditor. The
Niswongers received the first installment of their insurance proceeds in the
amount of $1,439,000.00, on December 12, 2018.46 Not all of the proceeds
were exempt from seizure under California’s homestead laws.47 Eight days
later, on December 20, 2018, the Niswongers purchased the Annuity for
$1,000,000.00. On February 28, 2019, approximately three months after the
Camp Fire, Wells Fargo agreed to another extension with the then principal
balance of $1,133,936.53 due one year later on February 15, 2020. Questions
remain concerning when the Niswongers disposed of non-exempt assets in
exchange for exempt assets, what was exempt when, and the Niswongers
motivations, which the summary judgment evidence does not answer.
42 Id. at 7.
43 See Tr.’s Resp. Exs. A-1 to A-3 and B at 122-130, ECF No. 52.
44 Id.
45 See Tr.’s Resp., Ex. B at 20 and 129, ECF No. 52.
46 See Def.’s Mot. for Summ. J. at 3, ECF No. 41;
47 See Cal. Civ. Proc. Code § 704.720; and Cal. Civ. Proc. Code § 704.730 (capping the
California homestead exemption at $600,000.00)
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The familial relationship surrounding the purchase of the Annuity, the
pendency or threat of suits by Wells Fargo (later NLAC), the uncertainties of
timing, and difficulty discerning who knew what when, all raise genuine
issues about whether the purchase of the Annuity was made “in fraud of a
creditor” for purposes of Tex. Ins. Code § 1108.053(1).48
2. Statute of Limitations
The Court finds that NLAC has raised a genuine dispute about whether
the statute of limitations expired before it filed its complaint.49 The
Niswongers’ argument, to the contrary, is premised on Tex. Civ. Prac. & Rem.
Code § 16.004 which states that a party must bring fraud-based causes of
action no later than “four years after the day the cause of action accrues.”
Tex. Civ. Prac. & Rem. Code § 16.004. Under Texas’s “discovery rule” the
limitations period for a fraud claim begins when the plaintiff knew or should
have known of facts that would prompt a reasonably prudent person to
investigate. See Petrobas Am., Inc. v. Samsung Heavy Indus. Co. Ltd., 9
F.4th 247 (5th Cir. 2021).
Determining what NLAC or Wells Fargo knew and when they knew it
is a task for a fact finder. The Niswongers insist that the cause of action
began to accrue on December 20, 2018, and ran on December 20, 2022.50
According to this timeline, NLAC filed its complaint approximately 13
months too late.51 NLAC raises a factual dispute about this through its
summary judgment evidence. In an affidavit by NLAC’s Senior Vice
President, he states:
“[i]n discovery in the [California litigation] and in these
proceedings we learned several things, including that Mr.
Niswonger’s daughter Arlauna Mauk was an employee of
48 The Court is not deciding whether NLAC or the Trustee have proven that a
premium payment was made in fraud of a creditor, but only whether a genuine dispute of
material fact exists.
49 See Def.’s Mot. for Summ. J. at 10, ECF No. 41.
50 Id. 51 Four years after December 20, 2018, is December 20, 2022.
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State Farm and had assisted the [Niswongers] in obtaining
a $1,000,000 lifetime annuity within a month of the Camp
Fire and immediately after the debtors received their first
large Allstate insurance check of $1,439,000.00.52
The statements in Mr. Henry’s affidavit contradict the Niswongers’ argument
that the purchase date of the Annuity should be the date the cause of action
began to accrue. Therefore, determining when NLAC or the Trustee knew or
should have known of the injury presents a fact issue for trial.
C. Homestead Exemption
Genuine disputes of material fact exist as to whether the Athens Home
and Texas Properties are exempt under Texas law. This Court is bound by
the relevant Texas statutes and its judicial interpretations when determining
the scope of state homestead exemptions. See 43 Tex. Jur. 3d Homestead §
10; and 4 Collier on Bankruptcy ¶ 522.10 (16th 2025).
Texas provides generous homestead protections through its state
constitution and statutes. See 43 Tex. Jur. 3d Homestead § 10; Tex. Const.
art. XVI, § 50(a); Tex. Prop. Code. § 41.002. The constitutional provision
solidifies the concept of “homestead” as a fundamental right, and the Tex.
Prop. Code defines the nature and scope of that right. Id. The Niswongers
assert a homestead exemption in their Amended Schedule C pursuant to
article XVI, § 50(a) of the Texas Constitution and Texas Property Code §§
41.001 through 41.002.53 NLAC and the Trustee argue that the Niswongers’
homestead claim should be reduced pursuant to 11 U.S.C. § 522 (o).54
11 U.S.C. 522(o) permits a creditor or trustee to challenge and seek to
reduce a debtor’s homestead exemption if the debtor converted non-exempt
assets into homestead equity with intent to hinder, delay or defraud a
creditor. It states:

[T]he value of an interest in—(1) real or personal property that
52 See Pl.’s Resp. at 3, ECF No. 53.
53 See Case No. 23-60394, ECF No. 8.
54 See Pl.’s Resp. at 19-21, ECF No. 53; and Tr.’s Resp. at 17-20, ECF No. 52.
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the debtor or a dependent of the debtor uses as a residence. . .
shall be reduced to the extent that such value is attributable to
any portion of any property that the debtor disposed of in the
10-year period ending on the date of the filing of the petition with
the intent to hinder, delay, or defraud a creditor and that the
debtor could not exempt, or that portion that the debtor could not
exempt, under subsection (b), if on such date the debtor had held
the property so disposed of.
11 U.S.C § 522(o)(emphasis added). Put simply, to reduce the value of a
debtor’s homestead under § 522(o), a creditor must show that: (1) the debtor
disposed of property within ten years before filing; (2) this property was
nonexempt; (3) the proceeds were used to buy, improve, or pay down debt on a
homestead (or a dependent’s residence); and (4) the debtor acted with intent
to hinder, delay, or defraud a creditor. See In re Sissom, 366 B.R. 677, 688 (Bankr. S.D. Tex. 2007).
NLAC and the Trustee claim the Niswongers disposed of the insurance
proceeds by purchasing the Athens Home and Texas Properties to avoid
repaying the Loan, and that the amount paid exceeds the amount that could
be otherwise claimed as homestead.55 To determine whether insurance
proceeds are exempt or non-exempt, courts must apply the “snapshot rule”
which states that exemptions “...are determined at the time the bankruptcy
petition is filed, and...do not change due to subsequent events.” In re Frost, 744 F.3d 384, 386 (5th Cir. 2014) (citing In re Zibman, 268 F.3d 298, 302 (5th
Cir. 2001)). Under § 41.001(c) of the Texas Property Code, “[t]he homestead
claimant’s proceeds of a sale of a homestead are not subject to seizure for a
creditor’s claim for six months after the date of sale.” Tex. Prop. Code §
41.001(c). In Texas, this includes insurance proceeds of up to six months
after being paid out. See In re Carlew, 469 B.R. 666, 675 (Bankr. S.D. Tex.
2012), aff'd sub nom; and West v. Carlew, No. BR 11-37886-H4, 2012 WL
3002197 (S.D. Tex. July 23, 2012).
In support of its response, NLAC attached a Rule 26(a)(2)(B) disclosure
report (“NLAC’s Expert Report”).56 NLAC’s Expert Report alleges that,
55 See Pl.’s Resp. at 19, ECF No. 53.
56 See Pl.’s Resp., Ex. D, ECF No. 53.
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although the Niswongers received insurance proceeds from Allstate totaling
$3,020,988.00, the expert could not determine how $1,079,623.48 of the
proceeds were spent.57 It also states, “[d]ocuments produced to NLAC in the
California Action and in this bankruptcy proceeding do not fully account for
expenditures of the Nonexempt Proceeds.”58 NLAC’s Expert Report, coupled
with an affidavit by NLAC’s Senior Vice President raises a genuine dispute
about whether the Niswongers may exempt all or some of their real property
as a Texas homestead.
D. NLAC’s Discharge Objection under § 727
Genuine disputes of material fact preclude summary judgment on
NLAC’s objections to discharge under 11 U.S.C. § 727. Section 727 requires
the Court to grant a chapter 7 discharge unless the objecting party proves one
of the enumerated grounds for denial set forth in § 727(a)(1)–(12). See 6
Collier on Bankruptcy ¶ 727.01 (16th 2025). NLAC seeks to deny the
Niswongers a discharge under 11 U.S.C. §§ 727 (a)(3) and (5).59 Under
§ 727(a)(3), the Court is required to deny a discharge when the plaintiff
demonstrates that the debtor failed to keep or preserve adequate financial
records and the debtor cannot justify that failure under the circumstances.
See 11 U.S.C. 727(a)(3); In re Dennis, 330 F.3d 696, 704 (5th Cir. 2003); and 6
Collier on Bankruptcy ¶ 727.03 (16th 2026). Under § 727(a)(5), the court
likewise is required to deny discharge when the plaintiff proves that the
debtor failed to satisfactorily explain the loss or deficiency of assets necessary
to meet liabilities. See 11 U.S.C. § 727 (a)(5).
The Niswongers fall short in arguing that there is no genuine dispute
that they are entitled to a discharge despite NLAC’s § 727 objections. In
support of their argument, they allege the following:
The Niswongers have produced tax returns from 2017 to 2022.
They have provided all the documents and information requested
by the Trustee and have not withheld information. They are
entitled to a discharge. . .The Plaintiff has come forward with no
57 Id. at 8.
58 Id. at 13.
59 See ECF No. 1.
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evidence of missing property or a failure to report the property
and financial affairs of the Niswongers. The Niswongers are
entitled to a discharge.”
The Niswongers have not, through their pleadings or summary judgment
evidence, demonstrated the absence of a genuine issue of material fact.°' On
the contrary, NLAC’s Expert Report constitutes proper evidence which tends
to raise a dispute as to whether the Niswongers failed to keep or preserve
adequate financial records or failed to satisfactorily explain the loss or
deficiency of assets necessary to meet liabilities.” Accordingly, a trial should
be set on whether NLAC may prevail on its objections under § 727.
V. Conclusion
Genuine disputes of material fact remain as to the exemption status of
the Niswongers’ Annuity, Athens Home, Texas Properties, and NLAC’s
objections under 11 U.S.C. § 727. Therefore, Summary Judgment is
DENIED.
Signed on 4/15/2026

THE HONORABLE JOSHUA P. SEARCY
UNITED STATES BANKRUPTCY JUDGE

© Def.’s Mot. for Summ. J. at 19-20, ECF No. 41.
51 See Fed. R. Bankr. P. 7056; 179 Am. Jur. Trials 351.
® See Pl.’s Resp., Ex. D at 13, ECF No. 53 (“Documents produced to NLAC in the
California Litigation and in this bankruptcy proceeding are incomplete. I have been unable
to trace all of the insurance proceeds and California lot proceeds into Debtor bank accounts
and I am also unable to complete my tracing of the uses of cash due to missing records.”)
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