In In re Trujillo, 2014 WL 3051319 (Bkrtcy.D.N.M. 2014), Judge Jacobvitz found that a debtor’s giving an RV to a third party in derogation of the lender’s rights did not constitute willful misconduct so as to render the debt non-dischargeable because the debtor did not profit from the arrangement.

Mountain America correctly points out that Mr. Trujillo violated the Loan Agreement by relinquishing possession and control of the RV to Mr. Chavez and by failing to inform Mountain America when it disappeared. The Loan Agreement expressly prohibited Mr. Trujillo from lending the collateral without Mountain America’s consent. He was also required to do “all that is necessary to help Mountain America protect its security interest in the collateral.” Although Mr. Trujillo did not familiarize himself with the Loan Agreement before signing it, he was nevertheless bound by its terms. See Dantonio v. Crowder, 149 N.M. 249, 434, 249 P.3d 1249, 1257 (Ct.App.2010) (“[E]ach party to a contract has a duty to read and familiarize himself with its contents before he signs and delivers it, and if the contract is plain and unequivocal in its terms, each is ordinarily bound thereby.”). There is also a strong argument that the collateral was converted. The arrangement constituted “an unauthorized and injurious use of” Mountain America’s property and defied its rights under the Loan Agreement. ¶ Assuming Mr. Trujillo breached the Loan Agreement and converted the collateral, however, the Court is not convinced that such conduct renders the debt non-dischargeable under Section 523(a)(6). The evidence at trial demonstrates that Mr. Trujillo did not intend to harm Mountain America, nor was he substantially certain harm would occur. Mr. Trujillo believed that Mr. Chavez would make timely payments and return the RV after several months. Such belief was not entirely unreasonable. The gentlemen had been friends for 10 years, Mr. Trujillo visited the RV park where Mr. Chavez was initially staying and saw the RV there, and Mr. Trujillo was in the process of repairing Mr. Chavez’s vehicle at the time. Further, when Mr. Chavez disappeared with the RV, Mr. Trujillo made several attempts to locate and recover it. He inquired with Mr. Chavez’s mother as to his whereabouts and even paid someone to travel to Odessa, Texas to repossess the RV from Mr. Chavez. ¶ Mountain America argues that, even if Mr. Trujillo believed that lending the RV to Mr. Chavez would be harmless, his failure to notify Mountain America when the collateral disappeared was patently unreasonable. The Court is not unsympathetic to this argument. Mr. Trujillo or his wife should have contacted Mountain America sooner and/or reported the RV as stolen. Based on the testimony at trial, however, the Court does not believe that the Defendants were fully cognizant of the harm they were causing or intentionally concealed the disappearance of the RV. Between July or August of 2012–when Mr. Chavez absconded with the RV—and the Petition Date, the Defendants were focused on Mr. Trujillo’s severe illness. He was in and out of the hospital for six months and was forced to close his business because he could no longer work. After his release from the hospital, he became very depressed and was taking various medications. Though Mrs. Padilla Trujillo could have tried harder to contact Mountain America, she was distracted by his medical issues and was not always able to access the Mountain America account on her husband’s behalf. Further, unlike most cases under Section 523(a)(6) involving the conversion of collateral, the Defendants did not dispose of the RV in order to keep the proceeds. As one bankruptcy court explained: “With respect to collateral conversion cases … the true injury’ in such cases is that the creditor’s collateral was wrongly or improperly disposed of and that the proceeds were used for purposes other than payment of the obligation that the property secured … the question to ask is whether the debtor intended to improperly use the creditor’s collateral and/or its proceeds for purposes other than the payment of the debt that property secured. If so, there is an intentional injury.” In re Doughty, 2011 WL 4368689, *5 (Bankr.S.D.Ind.2011) (quoting In re Russell, 262 B.R. 449, 454–455 (Bankr.N.D.Ind.2001). The Defendants here did not profit from the arrangement, nor did they lie to Mountain America regarding the location of the collateral. Mr. Trujillo informed the individual Mountain America retained to repossess the RV that he no longer had it and was trying to get it back. Under these circumstances, the Court finds that the Defendants did not willfully injure Mountain America. The Court is also not persuaded that the Defendants’ conduct was malicious. As discussed above, there were extenuating circumstances that caused the Defendants to loan the RV to Mr. Chavez and to delay contacting Mountain America when it disappeared. Based on Mr. Trujillo’s severe health and financial problems, the Court cannot conclude that the Defendants’ actions were “intentional, wrongful, [or] done without justification or excuse.” Mountain America is therefore not entitled to judgment on its claim under Section 523(a)(6).