Adamar of New Jersey, Inc. v. Innerbichler (In re Innerbichler)

Adamar of New Jersey, Inc . v. Innerbichler (in re Innerbichler), Case No. NM-12-032 (10th Cir. BAP Feb. 25, 2013) (Unpublished)
The BAP affirmed the bankruptcy court's ruling that the debtor's gambling debts were dischargeable and that the creditor was unable to establish that the debts were obtained by fraud under 11 USC Section 523(a)(2)(A) and denied debtor fees under Section 523(d).
Procedural context:
Appeal by the creditor of the bankruptcy court's order finding that a gambling debt incurred by debtor, Nicholas Raymond Innerbichler, was dischargeable and cross appeal by the debtor for attorneys' fees. Specifically, the bankruptcy court held that the creditor failed to meet the first prong of Section 523(a)(2)(A) and that the creditor failed to provide that the debtor intended not to pay the debt at the time it was incurred. Further, the bankruptcy court did not award the debtor costs and reasonable attorneys' fees for the proceeding as permitted under Section 523(d).
Debtor had been gambling in Atlantic City casinos since 1992. After selling his business in 2003 for approximately $68 million, debtor received 49% of the sales price based on his ownership interest. In August of 2003, debtor filled out a credit application with the creditor, Adamar of New Jersey Inc., (the owner of the Tropicana casino in Atlantic City, hereinafter "Adamar" or creditor) listing $250,000 of income per year and assets at $30 million. In January 2005, debtor signed markers' with Adamar for a total of $550,000. When the creditor subsequently presented the markers to debtor's bank for payment in March of 2005, it learned that the debtor had stopped payment on them. The creditor obtained a judgment for $399,936.99 against the debtor in state court. In June 2009, the debtor filed for relief under chapter 11 and the creditor filed its complaint under Section 523(a)(2)(A), objecting to the discharge of the debts remaining outstanding. After the bankruptcy court ruled that the creditor failed to meet the requirements under Section 523(a)(2)(A), the creditor appealed to the Bankruptcy Appellate Panel and the debtor cross-appealed for attorney fees.
Michael, Romero and Tallman, Bankruptcy Judges.

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