Fernandez v. Havana Gardens, LLC

Summarized by Lynn Hinson , Dean Mead Egerton Bloodworth Capouano & Bozarth PA
11 years 11 months ago

Citation:

11th Circuit Court of Appeals Case Number 13-10681 (will not be published).

Tag(s):

Ruling:

The 11th Circuit Court of Appeals affirmed a decision of the United States District Court for the Southern District of Florida.

Procedural context:

The United States Bankruptcy Court for the Southern District of Florida entered a final judgment against the Debtor-Appellant and determined that a portion of the judgment was non-dischargeable under 11 U.S.C. section 523(a)(4). The Debtor appealed the Bankruptcy Court's decision to the United States District Court, which affirmed the decision of the Bankruptcy Court. Thereafter, the Debtor appealed the decision of the District Court to the 11th Circuit Court of Appeals.

Facts:

Prior to filing bankruptcy, the Debtor and and another person entered into a business relationship to develop a parcel of real property into a condominium building. They formed a limited liability company and were the only managing members. Before the Debtor filed bankruptcy, he used funds of the limited liability company to pay his personal expenses. Following the bankrupcy filing, the limited liability company filed an adversary proceeding seeking a final judgment and a determination that the debt was nondischargeable pursuant to 11 U.S.C. sections 523(a)(2)(A) and (a)(4). The Bankruptcy Court held that a portion of the debt was dischargeable because the Debtor had made no attempt to conceal the personal nature of many of the expenses, particularly the payments made with company checks. Thus, the Bankruptcy Court found that the Debtor had no fraudulent intent to obtain the money under section 523(a)(2)(A). However, the Bankruptcy Court held that the Debtor acted with fraudulent intent for the use of undeposited rent payments and certain unexplained credit card charges for personal purposes. Based on the Debtor's testimony at trial, the Court found that his testimony was untruthful with regard to the use of rent checks and credit card charges. In addition, the Debtor failed to produce invoices related to the credit charge charges during discovery. The Bankruptcy Court therefore held that the debt attributable to the undeposited rent and unexplained credit card charges was nondischargeable under section 523(a)(4) as embezzled funds.

Judge(s):

Tjoflat, Pryor and Edmondson

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!