Bershadskiy v. Rodeo Realty, Inc (In re Bershadskiy)

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
12 years 4 months ago

Citation:

Bershadskiy v. Rodeo Realty, Inc. (In re Bershadskiy), No. CC-12-1452-TaKuKi (9th Cir. B.A.P. Oct. 15, 2013)

Tag(s):

Ruling:

According to this not-for-publication decision of the 9th Circuit B.A.P., if a debtor sells real property after canceling a listing agreement and without disclosing the sale to the broker, the debtor has committed fraud, rendering the debt to the broker for the unpaid commission nondischargeable under § 523(a)(2).

Procedural context:

In the debtor’s chapter 7 case, the broker sought a determination that the debt for the unpaid commission was for fraud and thus nondischargeable under 11 U.S.C. § 523(a)(2). The bankruptcy court granted the broker’s motion for summary judgment. On the debtor’s appeal, the B.A.P. affirmed the bankruptcy court.

Facts:

The debtor, an individual, entered into an exclusive listing agreement with a real-estate broker to sell the debtor’s home. The agreement permitted the debtor to cancel the listing after 30 days and required the debtor to pay a commission on any sale during the term of the listing or within six months after its expiration. After the 30-day period expired, the debtor requested cancellation of the agreement, and the broker agreed. Before cancellation, the broker had introduced a potential buyer to the debtor. After cancellation, the debtor sold the property to the same potential buyer without notifying the broker or paying the broker’s commission. The B.A.P. held that the debtor committed fraud because, among other things, the debtor breached a duty to disclose to the broker the debtor’s post-cancellation sale and intent to sell the property and misrepresented to the broker that the debtor was taking the property off the market.

Judge(s):

Laura S. Taylor, Frank L. Kurtz, and Ralph B. Kirscher, Bankruptcy Judges.

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