Tag: 523(a)(2)

Bankr. E.D.N.C.: McGinnis v. Fantone- Bankruptcy Following Settlement Agreement does not Constitute Fraud or False Written Statement

Summary:

McGinnis brought suit in state court against Fantone for two notes that Fantone had guaranteed with MSC. Following court ordered mediation, the parties agreed that Fantone would execute a modification of loan agreement for $200,000.00 with interest at six percent (6%) per year, would substitute himself as the obligor debts owed by executed by MSC, and would sign a Confession of Judgment for $200,000. Less than three weeks later, Pantone filed a voluntary Chapter 13 bankruptcy. McGinnis brought an adversary proceeding seeking a determination that Fantone’s representations, actions and/or conduct in the mediation constituted false pretenses, false representations, or actual fraud and that his Agreement to the settlement terms was a materially false written statement, due to his lack of ability to pay, and should be non-dischargeable pursuant to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: Camp Flintlock v. Stephenson- Denial of Discharge and Non-Dischargability of Claim

Summary:

Prior to the Stephenson’s bankruptcy filing, Camp Flintlock filed an action in state court against
asserting claims of fraud, constructive fraud, conversion, and unfair trade practices. The bankruptcy court granted a motion for relief from stay to allow entry of a judgment reflecting the previously rendered jury verdict, but reserved the enforcement of any monetary judgment. Subsequently, judgment was entered against the Stephenson for $635,685.00 and Camp Flintlock brought an adversary proceeding seeking to revoke their discharge and a determination that the judgment was nondischargeable. Judge Leonard dismissed the claims for relief under 11 U.S.C. §§ 727(a)(4) and 523(a)(4), but not as to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: Raleigh Plumbing & Heating v. Lamanna- Dischargeability from Bad Check under 11 U.S.C.§ § 523(a)(2)(A) and (B)

Summary:

In 2005, the Debtor paid Raleigh Plumbing & Heating (“RPH”) by check for a residential remodeling project for which the Debtor was a contractor. RPH confirmed with the Debtor’s bank the availability of funds and completed work. Three days later, RPH received notice that the Debtor had placed a stop payment on the check. RPH brought civil suit against the Debtor later in 2005, obtaining a judgment. In 2011, the Debtor filed Chapter 13 and RPH commenced an Adversary Proceeding seeking to have its claim declared non-dischargeable pursuant to 11 U.S.C. §§ 1328(a)(2), 523(a)(2)(A) and (B).

Under § 523(a)(2)(A), a creditor seeking to except a debt from discharge on the basis of fraud
must establish the following:
(1) false representation,
(2) knowledge that the representation was false,
(3) intent to deceive,
(4) justifiable reliance on the representation, and
(5) proximate cause of damages.… Read More

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Bankr. M.D.N.C.: In re Chesson- Summary Judgment on 11 U.S.C. § 523(a)(2)(B)

Summary:

This Adversary Proceeding was brought to determine whether a debt was nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(B). Plaintiff sought Summary Judgment, but the bankruptcy court held that there was an insufficient showing, when evidence was considered in the most favorable light for the Debtor, both that the Debtor had the intent to deceive when he signed the affidavit referred to in the complaint and that the Plaintiff’s reliance upon the affidavit was reasonable.

For a copy of the opinion, please see:

Chesson- Summary Judgment on 11 U.S.C. § 523(a)(2)(B).pdf Read More

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Bankr. E.D.N.C.: Etheridge Oil Co. V. Brown, et al.- Discharge Action Moot following Dismissal; Termination of Bank Draft as Breach of Contract; Liability of Corporate Officeres

Summary:

A tangle of multiple cases- Thomas Brown, Michael Barns , W. Watson Barns and David Woodard were directors of Brown Oil. Brown filed Chapter 11 on August 3, 2007, but that case was dismissed on November 30, 2011. An involuntary Chapter 7 was filed for Brown Oil on October 19, 2010. Michael Barnes filed Chapter 13 on July 19, 2011.

Etheridge Oil brought an adversary proceeding against Brown seeking to have his debt declared nondischargable pursuant to 11 U.S.C. § 523(a)(2) and (a)(6). The bankruptcy court found that the dischargeability complaint was moot in the Chapter 11 case, as it had been dismissed.… Read More

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Bankr. E.D.N.C.: Poston v. Toomey- Nondischargeability under 11 U.S.C. §§ 523(a)(2)(a) and 523 (a)(6)

Summary:

In 2002, the Toomey sold real property located at 1124 Berwyn Way, Raleigh, to the Postons. At the time of the sale, the Property was encumbered by a deed of trust and, in addition, by a home equity line of credit (“HELOC”) with Central Carolina Bank (“CCB”), which was secured by a second deed of trust. At the closing of the sale, the first deed of trust was paid off and canceled of record. The Toomeys’ HELOC with CCB was paid down to zero but, unfortunately, the deed of trust securing the HELOC was not canceled and the HELOC account was not closed.… Read More

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Bankr. M.D.N.C.: Dark v. Thomas- Iqbal/Twombley Pleading under 11 U.S.C. § 523(a)(2)(A) regarding whether money was “Obtained” through Fraud

Summary:

Dark brought an adversary proceeding seeking to have the debt of Thomas declared nondischargable pursuant to 11 U.S.C. § 523(a)(2).  Thomas moved to dismiss pursuant to Rule 12(b)(6), arguing that “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.'” Ashcroft v. Iqbal,  129 S.Ct. 1937, 1949,  (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).  The Court ruled for Thomas finding that the complaint did not contain even a “threadbare recital of the elements” required under § 523(a)(2).  Pertinent in this case is that § 523(a)(2)(A) requires that money or property be “obtained” by fraud, false representation or false pretenses. … Read More

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