Case Type:
Case Status:
BAP No. CC-17-1252-LSTa (9th Circuit, Dec 21,2018) Not Published
State court fraud judgment was entitled to preclusive effect in subsequent nondischargeability action under Section 523(a)(2)(A). Bankruptcy court's grant of summary judgment in favor of plaintiff creditor was affirmed.
Procedural context:
Bankruptcy court granted summary judgment in creditor's action brought under 11 U.S.C. Section 523(a)(2)(A) and 523(a)(6). The Bankruptcy Appellate Panel ("BAP") affirmed as to the Section 523(a)(2)(A) and did not reach the bankruptcy court's holding under Section 523(a)(6).
Debtor promised to indemnify Creditor for any losses that Creditor incurred as a result of pledging certain collateral to a project in which both were invested. Following a trial in Colorado state court, the trial court made short but specific findings that the Debtor "knew he did not intend to pay the indemnification he promised, and he knew this at the time he made the promise" and that the Debtor "intended that [Creditor] rely on his promise, and [Creditor] reasonably did so to his detriment." The BAP agreed with the bankruptcy court that these findings were sufficient under Colorado preclusion rules to establish a Section 523(a)(2)(A) claim (damages from actual fraud).
LAFFERTY, SPRAKER, and TAYLOR, Bankruptcy Judges.

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