BK Adversarial Proceeding

Case 17-43815-mxm7 Doc 35 Filed 01/08/18 Entered 01/08/18 16:22:03 Page 1 of 23
IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
In re: §
§
WILLARD LEE McCUSKER § CASE NO. 17-43815-MXM-7
§
Debtor. §
_____________________________________ §
§
THE HON. TRINIDAD NAVARRO, §
CIR-ML, IN HIS CAPACITY AS §
INSURANCE COMMISSIONER OF THE §
STATE OF DELAWARE ACTING AS §
RECEIVER OF FREESTONE §
INSURANCE COMPANY, fka DALLAS §
NATIONAL INSURANCE COMPANY, §
§
Plaintiff, §
v. § ADV. CASE NO. ___________________
§
WILLARD LEE McCUSKER, §
§
Defendant. §
COMPLAINT TO DETERMINE DISCHARGEABILITY

OF DEBT AND OBJECTION TO DISCHARGE
TO THE HONORABLE JUDGE OF SAID COURT:
COMES NOW Plaintiff, the Hon. Trinidad Navarro, CIR-ML, in his Capacity as
Insurance Commissioner of the State of Delaware Acting as Receiver of Freestone Insurance
Company, fka Dallas National Insurance Company (“Receiver”) and files this, his Complaint to
Determine Dischargeability of Debt and Objection to Discharge against Defendant/Debtor
Willard Lee McCusker (“Debtor”) and, in support therefore, alleges as follows:
COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 1

I.
NATURE OF THE ACTION
1. Plaintiff brings this action against Debtor to determine the dischargeability of
Debtor’s debt and to object to the Debtor’s discharge.
II.
PARTIES
2. Plaintiff is the Insurance Commissioner of the State of Delaware acting as Receiver
of Freestone Insurance Company, f/k/a DNIC Insurance Company (“DNIC”), which is also an
assignee of any claims possessed by Mack Heaton and HVAC Warranty, LLC. Prior to the
receivership, DNIC was a company formed under the laws of the State of Delaware, with its
principal place of business located in Dallas County, Texas. DNIC was subsequently sold and
changed its name to Freestone Insurance Company.
3. Upon information and belief, Debtor is an individual residing at 1741 Fountain
Pass, Colleyville, Texas 76034. Pursuant to Bankruptcy Rule 7004, service of the Summons in
this adversary proceeding may be made upon Debtor by sending the Summons and a copy of the
Complaint by first-class mail to such address.
III.
JURISDICTION AND VENUE
4. The United States Bankruptcy Court for the Northern District of Texas, Fort Worth
Division (“Bankruptcy Court”) has jurisdiction over this adversary proceeding pursuant to 11
U.S.C. §§ 523 and 727, and 28 U.S.C. §§ 1334(b) and 157(a).
5. This proceeding is a core proceeding within the meaning of 28 U.S.C. § 157(b).

6. Venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409 because
the Chapter 7 bankruptcy proceeding of the Debtor is pending in this District and the causes
asserted herein arise under Title 11 or arise in or are related to a case under Title 11.
IV.
BACKGROUND
7. On September 18, 2017 (“Petition Date”), Debtor filed a Voluntary Petition under
Chapter 7 in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth
Division, Case No. 17-43815-mxm.
8. Prior to the Petition Date, DNIC had brought an action against the Debtor and one
of his companies McCusker & Co. (“McCusker Co.”) styled Dallas National Insurance Company
v. McCusker & Co., Inc. and Willard L. McCusker, Cause No. 153-261730-12 in the 153rd Judicial
District Court of Tarrant County, Texas (“First State Court Case”). A cross-claim was filed
against Debtor and McCusker & Co. by Tier One Consumer Products Services, LLC aka
Cornerstone Consumer Products Services, LLC (“Tier One CPS” or “Cornerstone CPS”).
9. A Final Judgment granting declaratory relief was entered in the First State Court
Case, and the remaining claims were severed into a new action styled Dallas National Insurance
Company v. McCusker & Co., Inc. and Willard L. McCusker, Cause No. 153-268814-13 in the
153rd Judicial District Court of Tarrant County, Texas (“Second State Court Case”). Cross-
claims were filed against Debtor and McCusker & Co. by Tier One CPS, Lance Davis, Tim
Maynard Schuur, HVAC Warranty LLC and Mack Heaton.
10. Since the above referenced actions (hereinafter jointly referred to as “State Court
Case”) were filed, DNIC was placed into receivership in the State of Delaware, and Plaintiff was

appointed as its Receiver. DNIC sued Debtor and McCusker Co. in the State Court Case for
several causes of action, including fraud.
V.
FACTS
11. This adversary complaint involves a fraudulent scheme to mislead consumers into
purchasing service contracts for heating, ventilation, and air conditioning (“HVAC”) equipment
purportedly insured by a Contractual Liability Insurance Policy (“CLIP”) issued by DNIC. In
actuality, DNIC did not, in any way, insure the HVAC service contracts marketed and sold by
Debtor and his company McCusker Co, or by any of the Cross-Defendants in the State Court Case,
or others, and did not issue the CLIP. DNIC only discovered the fraudulent scheme and the
existence of the CLIP when a direct claim was submitted to DNIC for unpaid service calls by an
HVAC dealer, 2nd Wind Heating & Air Conditioning, Inc. (“2nd Wind”).
12. DNIC was an insurance company that primarily sold worker’s compensation and
general liability insurance.
13. HVAC Warranty, L.L.C. ("HVAC Warranty") is a master reseller/distributor of
HVAC service contracts with a multi-state network of dealers who market and sell service
contracts to consumers. 2nd Wind is one of HVAC Warranty’s selling dealers. Mack Heaton
("Heaton") owns HVAC Warranty.
14. McCusker Co. is a service contract administrator and purportedly a “processing
agent” owned, operated and controlled 100% by Debtor. McCusker Co. specializes in creating
and implementing service contract programs for service contract resellers/distributors like HVAC
Warranty, including locating service contract administrators and underwriters.

15. Cornerstone Consumer Product Services, LLC fka Tier One Consumer Products
Services, LLC (“Tier One CPS”) is a service contract administrator. Tim Schuur ("Schuur") and
Lance Davis ("Davis") were the principal officers and directors of Tier One CPS. Since the filing
of the State Court Case, Tier One CPS has gone out of business, but has not been formally
dissolved, and both Schuur and Davis have filed for bankruptcy protection.
16. On September 11, 2012, DNIC received a letter from John Brigman (“Brigman”)
of Keenan Suggs on behalf of 2nd Wind. Brigman’s letter advised DNIC that Tier One CPS and
McCusker Co. had failed to pay claims under the terms of various HVAC service contracts.
Brigman’s letter enclosed a seven-page copy of a CLIP in DNIC’s name purportedly issued to Tier
One CPS with a policy period from January 1, 2009 to January 1, 2012. It also enclosed a copy of
a letter from Debtor to Heaton at HVAC Warranty dated February 20, 2009, which states:
The letter from Debtor indicates that the CLIP was originally enclosed with Debtor’s letter.
Brigman made demand upon DNIC to resolve these claims by October 1, 2012.
17. The CLIP enclosed with Brigman’s letter was never authorized, approved, or issued
by DNIC. Although the counterfeit CLIP purports to bear the signature of Chris Nehls, DNIC’s
President at the time, he did not, in fact, sign it, authorize it, or approve it. DNIC did not authorize
anyone to issue a CLIP that would guarantee payment of warranty claims for HVAC service
contracts. DNIC has never affirmatively held out any person as having authority to issue a CLIP
in DNIC’s name that would guarantee payment of warranty claims for HVAC service contracts.
DNIC had no idea that someone had issued a CLIP that misrepresented that DNIC would insure
HVAC service contracts sold by Tier One CPS from January 1, 2009 to January 1, 2012.

18. In 2008, DNIC had issued a Vehicle Service Contract Liability Insurance Policy
effective August 1, 2008, to Tier One Warranty, L.L.C. (“Tier One Warranty”), a sister company
of Tier One CPS. This policy only insured vehicle service contracts (“VSC”). On April 15, 2009,
DNIC issued a notice of cancellation for the Vehicle Service Contract Liability Policy issued to
Tier One Warranty. Although Schuur and Davis had approached DNIC with the idea of DNIC
issuing a CLIP that would guarantee payment of warranty claims for cameras, small consumer
electronics, and new residential HVAC units, DNIC advised them that it would not insure any
service contracts other than the VSCs that DNIC had agreed to insure effective August 1, 2008.
Debtor has previously acknowledged that he was aware of this proposed program, which he
referred to as a "brown and white" program, and that it never went forward.
19. The fraudulent scheme concocted by Debtor began with a business arrangement
between Heaton and Debtor. McCusker Co. is a licensed third-party administrator of service
contracts in Texas. Debtor is the sole shareholder of McCusker Co. They have held themselves
out to the public as experts in developing warranty service programs. Debtor has also affirmatively
held himself out as holding a juris doctor degree—even signing his name with the abbreviation
“J.D.” In reality, Debtor’s degree is from Breyer State University, an unaccredited distance
learning “university” operating out of Panama, whose degrees are illegal to use in the State of
Texas as determined by the Texas Higher Education Coordinating Board. Indeed, the use of such
a degree in a written or oral advertisement or other promotion of a business violates TEXAS PENAL
CODE § 32.52.
20. Heaton is the only principle with HVAC Warranty with whom Debtor dealt. On
behalf of HVAC Warranty, Heaton approached McCusker Co. for assistance with getting
underwriting and an administrator for its book of business. Heaton specifically wanted to have

HVAC Warranty’s program underwritten in order to do business in certain states that required
insurance and licensing. At that time, Debtor claimed to have had relationships with multiple
administrators and underwriters. Debtor and McCusker Co. selected W3 Solutions as the
administrator because it had the necessary licensing and an A-rated insurer that Heaton had
specifically asked for. They recommended General Fidelity Insurance Company (“GFIC”).
Although Debtor claims to have verified the validity of GFIC's coverage by communicating
directly with Guy Koenig, a close personal friend who was general counsel of GFIC, Koenig has
denied that he was ever general counsel of GFIC, that he was a friend of Debtor, and that he ever
verified or approved coverage for HVAC Warranty's program. Nevertheless, Debtor and
McCusker Co. put together a warranty program for HVAC Warranty in which W3 Solutions served
as the administrator and GFIC served as the underwriting insurance carrier.
21. On May 28, 2008, HVAC Warranty entered into a written agreement with
McCusker Co. Although the agreement refers to “McCusker & Company, L.L.C.,” it is the same
business entity as “McCusker & Company, Inc.”; Debtor simply changed the business form from
a Kansas limited liability company to a Nevada corporation. McCusker Co. and W3 Solutions
drafted this agreement. The parties set forth the purpose of their agreement as follows:
Debtor’s duties and responsibilities in connection with HVAC Warranty’s program required
McCusker Co. to procure an insurance policy covering all contractual liabilities arising from the

services contracts sold and administered through the program and to remit premiums to the
insurance carrier in the following provisions of the agreement:
If such insurance policy was cancelled or terminated, the agreement between HVAC Warranty
and McCusker Co. would also terminate unless McCusker Co. obtained a replacement insurance
policy:
The program included detailed cost schedules, claim processing requirements, and standard
repair/replacement time schedules for labor. It also included four pages of “P3 HVAC Terms and
Conditions” which, upon information and belief, were drafted by McCusker Co. On June 24,
2008, Debtor notified Heaton that HVAC Warranty’s service contract program was approved and
that he should contact McCusker Co.’s Operations Chief Bill Rathbone ("Rathbone") to

coordinate data submission requirements and system rollouts. Debtor now claims that Rathbone
was simply an independent contractor who provided IT services to McCusker Co.
22. At that time, the purported relationship among the parties can be depicted as
follows:
McCusker & Co., HVAC Warranty

& McCusker & Heaton
W3 Solutions 2nd Wind
End Users / Purchasers /

GFIC Consumers
HVAC Warranty marketed the program using a fairly large network of distributors, using
McCusker Co.’s automated online program to sell service contracts. A dealer would sign up
online, create an account, would then be allowed to purchase service contracts for its customers,
and would pay McCusker Co. for the contracts purchased. In 2008, Debtor himself was involved
in the day-to-day operations of the program. Debtor developed the pricing, and McCusker Co.
received a percentage for each service contract sold. There were over 4,000 SKUs and the
percentage varied depending upon the SKU. McCusker Co. kept a portion of the price for
insurance, and would then send HVAC Warranty its commission for selling the service contract.
23. Before Tier One CPS was formed, Schuur contacted Debtor on behalf of Tier One
Warranty to see if there were any partnership possibilities between their companies. After ongoing
discussions for several months, they agreed to do business together. On July 23, 2008, Debtor, on

behalf of McCusker Co., and Schuur, on behalf of Tier One Warranty, entered into a mutual non-
disclosure agreement in contemplation of their intent to engage in future business arrangements
with each other. Shortly thereafter, on August 13, 2008, Tier One CPS was formed. Tier One
Warranty devoted its business efforts to vehicle service contracts, while Tier One CPS devoted its
business efforts to consumer products service contracts. Debtor and McCusker Co. were aware
that Davis and Schuur were operating two separate companies -- Tier One Warranty to vehicle
service contracts, and Tier One CPS to consumer products service contracts. Upon information
and belief, Debtor and McCusker Co. became aware DNIC had issued a Vehicle Service Contract
Liability Insurance Policy effective August 1, 2008 to Tier One Warranty. After Tier One CPS
was formed, Debtor and McCusker Co. began actively promoting its services as a service contract
administrator to Heaton and HVAC Warranty.
24. In late 2008 or early 2009, an issue arose regarding the continuation of W3
Solutions as McCusker Co.’s administrator for HVAC Warranty’s program and the continuation
of GFIC as the underwriter. Debtor told Heaton that GFIC was leaving the market. HVAC
Warranty still wanted to sell service contracts, and those service contracts still had to be insured
by an insurance company. The agreement between McCusker Co. and HVAC Warranty would
terminate unless Debtor obtained a replacement insurance policy. It was Debtor’s responsibility
to find a new insurance company willing to participate in the program. Heaton relied on McCusker
Co. and Debtor to find a new administrator and a valid insurance policy.
25. Debtor introduced Heaton to Schuur with Tier One CPS. Heaton relied upon
Debtor to give Heaton information about Tier One CPS. Their involvement in the program evolved
over time, and there was never any new written agreement with HVAC Warranty specifically
naming Tier One CPS as the new administrator of the warranty program. Nevertheless, Tier One

CPS effectively became the administrator of HVAC Warranty’s program on February 19 or 20,
2009. Debtor set up the pricing for the program, the plans, the prices, the cost “and everything.”
HVAC Warranty’s network of dealers continued to market the HVAC service contracts through
the internet using McCusker Co.’s automated online program. Service contracts that were sold by
HVAC Warranty from February 2009 through October 2009 were warehoused by McCusker Co.
and then transferred to Tier One CPS as part of a portfolio transfer in October 2009. McCusker
Co. held the funds for the service contracts sold during that period of time, including the portion
to cover the insurance premium.
26. In connection with the substitution of Tier One CPS as the administrator of the
program, Debtor sent Heaton a letter dated February 20, 2009, which states:
Debtor also enclosed the seven-page copy of the CLIP in DNIC’s name purportedly issued to Tier
One CPS. On behalf of McCusker Co., Rathbone had previously provided to HVAC Warranty a
23-page document entitled HVAC Program dated October 24, 2008. The Program documentation
contains the following statement:
All twenty-three pages also contain the following information:
Debtor intended and expected that Heaton and HVAC Warranty would incorporate this
information into HVAC Warranty’s service contracts which would then be distributed through
HVAC Warranty’s multi-state network of dealers to consumers, and that consumers, dealers, and

service providers would ultimately rely on such information and believe that their service contracts
were insured by DNIC.
27. McCusker Co. also incorporated language into HVAC Warranty’s service contracts
which reads as follows:
McCusker Co. made the service contracts containing this language available to HVAC Warranty’s
multi-state network of dealers through its interactive website, and began selling service contracts
which represent that they are fully insured by DNIC.
28. DNIC did not issue, authorize, or approve the CLIP that Debtor sent to Heaton.
The CLIP requires DNIC’s approval in writing of the form of service contracts to be offered that
are insured by the CLIP, the attachment of a specimen of each service contract form, and a schedule
of all products for which the service contract may be sold and the loss reserves. Because DNIC
was unaware of the CLIP, no one ever submitted the form or specimen copies of any services
contracts to DNIC for approval, and DNIC never agreed to any products for which a service
contract may be sold that would be insured by the CLIP. Although it would have been customary
for Debtor and McCusker Co. to communicate with the underwriter of such a program to develop
a schedule of products for which service contracts may be sold and SKUs for the pricing of such
service contracts, neither Debtor nor McCusker Co. employees had any such communications with
DNIC concerning the CLIP and the HVAC Warranty program.

29. Debtor and McCusker Co.’s role in connection with this CLIP appears clear. On
February 19, 2009, Schuur sent to Debtor by email a portion of a CLIP containing an endorsement
that specifically identifies it as part of a Vehicle Service Contract Liability Policy:
Debtor removed the last four pages of the CLIP, including this endorsement, and substituted four
pages of HVAC “Terms and Conditions.” Debtor then sent the CLIP, altered by him to appear to
insure HVAC service contracts, to Heaton at HVAC Warranty.
30. Upon information and belief, a total of approximately 6,000 HVAC service
contracts were sold by McCusker Co. and HVAC Warranty with the false and misleading
information claiming that the service contract is fully insured by DNIC and that the purchaser of
a service contract is entitled to make a direct claim against DNIC. Upon information and belief,
Debtor and the various Cross-Defendants in the State Court Case divided among themselves
approximately Two Million Dollars ($2,000,000) in service contract premiums, reserves, and
commissions without paying DNIC or its assignees one cent in connection with the HVAC
Warranty program.

31. As long as revenue from sales of new HVAC service contracts exceeded expenses
for claims made, the fraudulent scheme was able to continue undiscovered. Upon information and
belief, however, the program began to experience revenue shortfalls in 2012 or earlier leading to
slower and slower claims processing by Tier One as the administrator of the program. Upon
information and belief, Tier One eventually stopped paying claims under the HVAC Warranty
program. In an effort to protect its dealers and their customers, HVAC Warranty began to pay
claims under the program. HVAC Warranty was unable to keep up with incoming claims,
including those submitted by 2nd Wind. HVAC Warranty provided a copy of Debtor’s February
20, 2009 letter and the enclosed CLIP to 2nd Wind to reassure 2nd Wind that all claims under
HVAC Warranty’s program were fully insured.
32. On or about September 12, 2012, Mr. Brigman of Keenan Suggs presented a claim
on behalf of 2nd Wind to DNIC. Upon receiving such letter, DNIC immediately filed the State
Court Case to enjoin Debtor and McCusker Co. from continuing to perpetuate the fraudulent
scheme. Although Debtor and McCusker Co. initially defiantly insisted that the State Court Case
was filed in bad faith and no injunction should be issued to enjoin them from misrepresenting to
consumers that their service contracts are fully insured by DNIC, in an Affidavit signed by Debtor
on June 20, 2013, they now maintain that, since the State Court Case was filed, they have never
denied or disputed

33. DNIC has incurred substantial attorney’s fees and expenses in connection with the
investigation of the fraudulent scheme and the prosecution of both State Court Cases, as well as
the reasonable efforts required to prevent prospective service contract purchasers from being
misled by Debtor’s conduct.
34. In recognition that DNIC did not issue, authorize, or approve the CLIP, Tier One
CPS, Schuur, Davis, HVAC Warranty, Heaton, and 2nd Wind all agreed to the entry of a final
judgment granting declaratory relief. DNIC’s claims against these parties were resolved by the
entry of a Final Judgment in Cause No. 153-261730-12 (First State Court Case). DNIC’s
remaining claims against Debtor and McCusker Co, and Debtor and McCusker Co’s claims against
DNIC and against the various Cross-Defendants were severed into Cause No. 153-268814-13
(Second State Court Case). Prior to the Petition Date, Debtor and McCusker Co. refused and
opposed the granting of declaratory relief despite acknowledging that the CLIP is a counterfeit and
was not enforceable against DNIC.
35. On September 5, 2013, HVAC Warranty and Heaton assigned to DNIC all of their
right, title, and interest in and to all claims, causes of action, or rights that they have or may claim
to have against Debtor and McCusker Co. under the agreement or arising from the sale of any
warranty or service agreement purporting to be insured by DNIC.

36. Debtor and McCusker Co. represented to HVAC Warranty and Heaton that they
were experts in developing warranty service programs. Debtor also represented to HVAC
Warranty and Heaton that he personally held a juris doctor degree in order to bolster the perception
that he had special knowledge and education in legal requirements for such programs. Upon
information and belief, Debtor further represented to HVAC Warranty and Heaton that he
personally had performed key duties with respect to the nuclear weapons systems of the United
States armed forces, in order to bond with Heaton as a veteran and to bolster the perception that
Debtor was especially trustworthy. Debtor and McCusker Co. represented to HVAC Warranty
and Heaton that a CLIP issued by DNIC covered the United States portion of HVAC Warranty’s
service contract program and that the HVAC warranty program administered by Tier One CPS
was fully underwritten and insured by DNIC. These representations were material. These
representations were false. When Debtor and McCusker Co. made these representations, they
knew that each of these representations were false or they made the representations recklessly, as
a positive assertion, and without knowledge of its truth. Debtor and McCusker Co. made these
representations with the intent that HVAC Warranty and Heaton would act on them. HVAC
Warranty and Heaton relied on these representations. These representations caused injury to
HVAC Warranty and Heaton. As a result, HVAC Warranty and Heaton have sustained direct and
consequential damages, including revenue paid to McCusker Co. and Tier One CPS after the
substitution of Tier One CPS for W3 Solutions as the administrator of the program, all repair costs
incurred honoring service contracts which were not paid by McCusker Co. or its administrators,
as well as incidental and consequential damages due to selling service contracts which falsely
indicate that they are fully insured by DNIC.

37. Debtor and McCusker Co. used cunning, deception, or artifice to cheat and injure
HVAC Warranty, Heaton, and DNIC by disseminating false information that the service contracts
were fully insured by DNIC pursuant to a CLIP which was not actually issued, authorized, or
approved by DNIC. In doing so, Debtor and McCusker Co. engaged in acts, omissions, and
concealment in breach of a legal duty, trust, or confidence justly imposed, taking an undue and
unconscientious advantage of HVAC Warranty, Heaton, and DNIC. As a result of this fraud,
HVAC Warranty, Heaton, and DNIC have sustained actual damages, including revenue paid to
McCusker Co. and Tier One CPS after the substitution of Tier One CPS for W3 Solutions as the
administrator of the program, all repair costs incurred honoring service contracts which were not
paid by McCusker Co. or its administrators, incidental and consequential damages due to selling
service contracts which falsely indicate that they are fully insured by DNIC, and special damages
as a result of past and future expenditures to prevent prospective service contract purchasers from
being misled by Debtor’s conduct and injury to their business reputation.
38. DNIC’s trade name had acquired secondary meaning through usage. The similarity
of the name used by McCusker Co. and McCusker (Debtor) would be likely to confuse the public.
Indeed, McCusker Co. and Debtor used DNIC’s exact trade name with the intention of leading the
public to believe that their products were fully insured by DNIC and maliciously injured DNIC.
As a result of these acts, DNIC has sustained actual damages, including special damages as a result
of past and future expenditures to prevent prospective service contract purchasers from being
misled by Debtor and McCusker Co.’s conduct and injury to its business reputation.
39. Debtor and McCusker Co. unlawfully appropriated the property of DNIC. DNIC’s
original VSC CLIP is a document that represents or embodies something of value. Debtor and
McCusker Co. unlawfully appropriated a DNIC VSC CLIP by deception without DNIC’s effective

consent by altering the VSC to create the counterfeit CLIP to make it appear to be a new separate
policy.
40. Debtor was an officer, director, or manager of McCusker Co. at the time of the
wrongful conduct asserted against him by DNIC. McCusker Co. intentionally conferred authority
on Debtor to engage in the acts described in this Complaint, intentionally allowed Debtor to believe
he had such authority, or, by lack of due care, allowed Debtor to believe he had authority.
41. Debtor was an officer, director, or manager of McCusker Co. at the time of the
wrongful conduct asserted against him by DNIC.
42. DNIC, in its own right and as assignee of HVAC Warranty and Heaton, has been
injured by the acts and representations of Debtor. Debtor committed the acts, and made the
representations.
43. While Debtor asserted to Plaintiff that he had ready assets worth at least
$500,000.00 just prior to the filing of the bankruptcy, no such assets or values appear on his sworn
Schedules. Also, Debtor testified about transferring interests in a Debtor related entity and/or
transferring directly a Debtor controlled entity just prior to bankruptcy or thereafter which
transactions are not scheduled and which it appears there may not be sufficient documentation to
evidence these transfers.
44. Based on the facts set forth herein, Plaintiff has claims against Debtor arising from
his fraudulent conduct, which was willful and malicious, as well as for his theft and services or
money obtained by false pretenses, false representations and actual fraud. Such claims are in the
amount of at least $2,740,133.73.

VI.
CAUSES OF ACTION
CAUSE OF ACTION NO. 1 – 11 U.S.C. § 523(a)(2)(A)
45. Plaintiff reincorporates the allegations contained in the preceding Paragraphs 1
through 44 of this Complaint as though fully set forth herein.
46. As shown above, Plaintiff seeks to have Debtor’s debt to Plaintiff rendered non-
dischargeable pursuant to § 523(a)(2)(A) for the actions of Debtor as set forth above constitute
fraud in that Debtor obtained money, property services, or an extension, renewal, or refinancing
of credit, to the extent obtained by a false pretense, a false representation or actual fraud, other
than a statement respecting the Debtor’s or an insider’s financial condition.
47. Accordingly, Debtor’s debt to Plaintiff should be determined to be non-
dischargeable.
CAUSE OF ACTION NO. 2 – 11 U.S.C § 523(a)(2)(B)
48. Plaintiff reincorporates the allegations contained in the preceding paragraphs 1
dischargeable pursuant to § 523(a)(2)(B) for the actions of Debtor as set forth above constitute
fraud in that Debtor obtained money, property services, or an extension, renewal, or refinancing
of credit, to the extent obtained by (a) the use of a statement in writing that is materially false, (b)
which the creditor to whom the Debtor is liable for such money, property, services, or credit
reasonably relied, and (c) that the Debtor caused to be made or published with intent to deceive.
dischargeable.

CAUSE OF ACTION NO. 3 – 11 U.S.C § 523(a)(4)
dischargeable pursuant to § 523(a)(4) because Debtor has committed fraud or defalcation while
acting in a fiduciary capacity, embezzlement, or larceny.
dischargeable.
CAUSE OF ACTION NO. 4 – 11 U.S.C § 523(a)(6)
dischargeable pursuant to § 523(a)(6) because Debtor has caused a willful and malicious injury to
the Plaintiff and/or the property of the Plaintiff.
dischargeable.
CAUSE OF ACTION NO. 5 -- 11 U.S.C. § 727(a)(2)
58. As shown above, Plaintiff objects to Debtor’s discharge pursuant to § 727(a)(2)
because Debtor, with intent to hinder, delay, or defraud a creditor or an officer of the Estate charged
with the custody of property under this title, has transferred, removed, destroyed, mutilated, or
concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed: (A)

property of the Debtor, within one year before the date of the filing of the petition; of (B) property
of the Estate, after the date of the filing of the Complaint.
59. Accordingly, Debtor’s discharge should be denied.
because 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, unless such act or failure to act
was justified under all of the circumstances of the case.
CAUSE OF ACTION NO. 7 -- 11 U.S.C. § 727(a)(4)(A)
64. As shown above, Plaintiff objects to Debtor’s discharge pursuant to § 727(a)(4)(A)
because Debtor knowingly and fraudulently, in or in connection with the case made a false oath or
account.

because Debtor has failed to explain satisfactorily, before determination of denial of discharge
under this paragraph, any loss of assets or deficiency of assets to meet the Debtor’s liabilities.
VII.
PRAYER FOR RELIEF
WHEREFORE, PREMISES CONSIDERED, Plaintiff respectfully prays that this Court:
1. enter judgment against the Defendant/Debtor Willard L. McCusker rendering
Plaintiff’s debt non-dischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A),
524(a)(2)(B), 523(a)(4) and 523(a)(6) in the amount of at least $2,740,133.73;
2. enter judgment against the Defendant/Debtor Willard L. McCusker denying his
discharge pursuant to 11 U.S.C. §§ 727(a)(2), 727(a)(3), 727(a)(4)(A) and 727(a)(5);
3. enter judgment in favor of Plaintiff and against Defendant/Debtor Willard L.
McCusker for pre-judgment and post-judgment interest on the judgment amount to
the fullest extent allowed by applicable law;
4. enter judgment in favor of Plaintiff and against Defendant/Debtor Willard L.
McCusker for costs of suit incurred herein including, without limitation, attorneys’
fees; and
5. for such and other further relief as Plaintiff may show himself to be justly entitled.
DATED: January 08, 2018

Respectfully submitted,
SINGER & LEVICK, P.C.
By: /s/ Larry A. Levick

Larry A. Levick
State Bar No. 12252600
16200 Addison Road, Suite 140

Addison, Texas 75001
Phone: 972.380.5533
Fax: 972.380.5748
Email: levick@singerlevick.com
and
William E. Reid
State Bar No. 16748500
REID & DENNIS
15660 Dallas Parkway, Suite 1400
Dallas, TX 75248
Phone: 972.991.2626
Fax: 972.991.2678
Email: wreid@reiddennis.com
ATTORNEYS FOR THE HON. TRINIDAD

NAVARRO, CIR-ML, IN HIS CAPACITY AS
INSURANCE COMMISSIONER OF THE STATE OF
DELAWARE ACTING AS RECEIVER OF
FREESTONE INSURANCE COMPANY, FKA
DALLAS NATIONAL INSURANCE COMPANY

BK Adversarial Proceeding

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Case 17-43815-mxm7 Doc 35 Filed 01/08/18 Entered 01/08/18 16:22:03 Page 1 of 23

IN THE UNITED STATES BANKRUPTCY COURT

COMPLAINT TO DETERMINE DISCHARGEABILITY

TO THE HONORABLE JUDGE OF SAID COURT:

Insurance Commissioner of the State of Delaware Acting as Receiver of Freestone Insurance

Determine Dischargeability of Debt and Objection to Discharge against Defendant/Debtor

Willard Lee McCusker (“Debtor”) and, in support therefore, alleges as follows:

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 1

NATURE OF THE ACTION

1. Plaintiff brings this action against Debtor to determine the dischargeability of

Debtor’s debt and to object to the Debtor’s discharge.

2. Plaintiff is the Insurance Commissioner of the State of Delaware acting as Receiver

changed its name to Freestone Insurance Company.

3. Upon information and belief, Debtor is an individual residing at 1741 Fountain

Complaint by first-class mail to such address.

JURISDICTION AND VENUE

U.S.C. §§ 523 and 727, and 28 U.S.C. §§ 1334(b) and 157(a).

5. This proceeding is a core proceeding within the meaning of 28 U.S.C. § 157(b).

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 2

Division, Case No. 17-43815-mxm.

Maynard Schuur, HVAC Warranty LLC and Mack Heaton.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 3

several causes of action, including fraud.

purportedly insured by a Contractual Liability Insurance Policy (“CLIP”) issued by DNIC. In

general liability insurance.

13. HVAC Warranty, L.L.C. ("HVAC Warranty") is a master reseller/distributor of

("Heaton") owns HVAC Warranty.

14. McCusker Co. is a service contract administrator and purportedly a “processing

Warranty, including locating service contract administrators and underwriters.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 4

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 5

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 6

as the administrator and GFIC served as the underwriting insurance carrier.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 7

insurance carrier in the following provisions of the agreement:

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 8

was simply an independent contractor who provided IT services to McCusker Co.

McCusker & Co., HVAC Warranty

W3 Solutions 2nd Wind

End Users / Purchasers /

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 9

disclosure agreement in contemplation of their intent to engage in future business arrangements

administrator to Heaton and HVAC Warranty.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 10

to cover the insurance premium.

contains the following statement:

All twenty-three pages also contain the following information:

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 11

were insured by DNIC.

which reads as follows:

which represent that they are fully insured by DNIC.

DNIC concerning the CLIP and the HVAC Warranty program.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 12

that specifically identifies it as part of a Vehicle Service Contract Liability Policy:

insure HVAC service contracts, to Heaton at HVAC Warranty.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 13

HVAC Warranty’s program were fully insured.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 14

misled by Debtor’s conduct.

was not enforceable against DNIC.

warranty or service agreement purporting to be insured by DNIC.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 15

indicate that they are fully insured by DNIC.

COMPLAINT TO DETERMINE DISCHARGEABILITY OF DEBT AND OBJECTION TO DISCHARGE Page 16