- Case Type:
- Case Status:
- BAP No. NV-18=1219-KuLB (9th Circuit, Sep 27,2019) Not Published
- The Bankruptcy Appellate Panel affirmed the bankruptcy court's decision that the debtors' failure to timely pay a discounted settlement amount, thus leaving a $25 late fee unpaid after a contractual grace period, was immaterial for purposes of making the full amount of the settlement debt nondischargeable. Under applicable nonbankruptcy law, which governs the settlement agreement, the fact that the payment was paid, even though late, was not material. Thus, the bankruptcy court did not err.
- Procedural context:
- The bankruptcy court denied the creditor's motion for entry of judgment against the debtor for the undiscounted amount of the settlement. The creditor appealed to BAP for 9th Circuit.
- Before bankruptcy, the female debtor owned a bridal company that incurred a debt to the creditor. After the female debtor and her husband filed bankruptcy, the creditor filed a nondischargeability action against the debtors, alleging claims for fraud and embezzlement. The parties settled for $48,000, which would be reduced to $30,000 if payments were timely made. The bankruptcy court approved the settlement. The settlement amount was nondischargeable. The female debtor was one day late with her April 2018 payment. Although she timely cured the payment, she did not pay the $25 late fee until after the grace period expired. The creditor sought entry of judgment based on the female debtor’s breach. The bankruptcy court denied his request, finding that payment of the $25 late fee outside the grace period was not a material breach of the settlement.
- Kurtz, Lafferty, Brand
Jenny Smith v. Haynes & Haynes P.C.
Summarizing by Kathleen DiSanto
2981 in the system
3 Being Processed