Heide v. Juve (In re Juve)

In re Juve, Case No.: 11-6006 (8th Cir. BAP 2011)
Reversed and remand to bankruptcy court of summary judgment in favor of plaintiff where there existed genuine issues of material fact in respect to (1) whether the financing arrangement should be treated as if it was between the Debtor and Creditor, or between Import Plus, Inc. and the Creditor and (2) whether Debtor's action constituted fraud under Section 523(a)(2)(A).
Procedural context:
Defendant, Juve (Debtor), appeals the bankruptcy court's ruling to the Eighth Circuit Bankruptcy Appellate Panel (BAP) of summary judgment in favor of plaintiff, Creditor (Heidi). BAP reversed the bankruptcy court's ruling and remanded the matter for further proceedings consistent with their opinion.
Debtor (Juve) operated a car dealership known as Import Plus, Inc. Creditor (Heidi) began to loan money for the purchase of inventory. Creditor provided loans in the form of checks to the Debtor in the name of Import Plus, Inc., where Creditor received a $50 fee per vehicle in addition to 10% interest that was paid monthly. No written agreement existed between the parties in respect to the loans. By December 2004, the Creditor had loaned approximately $300,000 to finance the purchase of vehicles. According to Debtor, there existed unencumbered cars on the dealership's lot worth at least $300,000 at that time. In 2007 and 2008, the Creditor and Creditor's daughter (hereinafter also "Creditor" or "Creditors") provided an additional $50,000 each for additional vehicles to be purchased and financed by the dealers. Those vehicles were never purchased. Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code and the Creditor brought an action seeking relief under Sections 523(a)(4) and (6) for non-dischargeability of the entire $400,000 loaned to the debtor and denial of Debtors' discharges in their entirety under multiple subsections of Section 727(a). The bankruptcy court entered a summary judgment in favor of plaintiff, Creditors. Debtor and Creditors, thereafter, entered into a stipulation were the Creditors would have a judgment against the Debtor in the amount of $400,000, that it would be exempted from discharge under Section 523(a)(2)(A), and Debtor's appeal rights would be preserved.
Hon. Barry S Schermer, Hon. Arthur B. Federman and Hon. Charles L. Nail

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