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Glencove Holdings, LLC v. Steven Bloom

Summarizing by Amir Shachmurove


Case Type:
Case Status:
17-40229 (5th Circuit, Dec 29,2017) Not Published
Debtor's oral statement that his company was in "very fine legally [sic] financial shape" and had "plenty of cash to operate" fell within the exception under section 523(a)(2)(A) because it was an oral statement made respecting the debtor or an insider's financial condition. Because it fell within the exception, the debt was dischargeable and creditor was not entitled to a summary judgment under section 523(a)(2). Summary judgment was reversed.
Procedural context:
On appeal from the District Court for the Eastern District of Texas, which affirmed the bankruptcy court's summary judgment in favor of the plaintiff-creditor.
Debtor was the principal and limited partner McKinney Aerospace, a company that repaired and refurbished business jets. Plaintiff paid the debtor's company money to work on several jets, but later cancelled the contracts and demanded a return of the money. When the debtor's company failed to refund the money, the plaintiff sued the debtor and his company for fraud. At trial, the plaintiff presented evidence that the debtor had told the plaintiff that his company was in "very fine legally [sic] financial shape" and that the company had "plenty of cash to operate" during the term of the services to be provided. The state court relied on these statements and issued findings of fraud and a judgment in favor of the plaintiff. The debtor then filed a chapter 7 bankruptcy petition, and the plaintiff commenced an action to determine that the judgment was not dischargeable under section 523(a)(2) and 523(a)(4). The bankruptcy court entered summary judgment in favor of the plaintiff, and the debtor appealed.
King, Dennis and Costa (per curiam)

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