In re Vincent A. Piazza (Patricia Elliott v. Vincent A. Piazza, III)
- Summarized by Stephen Falanga , Walsh Pizzi O'Reilly Falanga LLP
- 1 month 1 week ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 23-3061 (3rd Circuit, Dec 02,2024) Not Published
- Tag(s):
-
- Ruling:
- The Third Circuit affirmed the decision of the district court affirming the decision of the bankruptcy court below that the debt owed to a creditor based on a pre-petition written promise to repay with details about the debtor's financial condition was dischargeable and not subject to 11 U.S.C. § 523(a)(2)(B). The creditor failed to establish the statements made by the debtor were untrue when made and an affidavit the creditor sought to admit in evidence to establish falsity from a prior business partner of the debtor was properly excluded as hearsay.
- Procedural context:
- The Bankruptcy Court held a trial on the creditor's adversary proceeding seeking to declare the debt owed by the debtor to the creditor non-dischargeable pursuant to, inter alia, 11 U.S.C. § 523(a)(2).
At the trial, the creditor presented evidence that the debtor made various representations in writing to her concerning his real estate holdings and receivables. In response, the debtor elicited testimony from the creditor that she “relied on past history, and all the work that [she] knew that [Piazza] had,” in deciding to seek a credit limit increase.
The creditor then sought to introduce evidence that, though the debtor stated in a February 2014 letter that he “ha[d] been experiencing serious financial distress d[ue] to large unpaid invoices on two commercial projects,” no such unpaid invoices existed. Specifically, the creditor sought to introduce records purporting to show that, as of 2013, the debtor had in fact been fully paid on one of the projects. The payment records were attached to a submission entitled “Affidavit and Certification of Bradley Strahl (the Affiant) Fed. R. Evid. 803(6); 902(11) Records of Regularly Conducted Activity,” which stated that the affiant “served in various managerial roles” at the company, he was familiar with the payment records, and such records were kept in the ordinary course of business.
The debtor moved to exclude the documents as hearsay. In response, the creditor argued that the documents were meant to rebut the debtor's statements about his receivables but did not orally argue that the documents were not hearsay or subject to a hearsay exception. The Bankruptcy Court excluded the documents, explaining that no hearsay exception applied and that it “d[id]n’t know how [it] could let in [evidence] of this nature without giving [the debtor] an opportunity to cross-examine.”
After trial, the Bankruptcy Court granted judgment to the debtor, holding that the state court judgments were dischargeable because “the record is devoid of any evidence indicating that [the debtor] intended to deceive [the creditor] in writing or otherwise in order to retain access to the [c]ards despite his non-payment.”
The District Court affirmed, holding that the Bankruptcy Court (1) correctly excluded the Strahl Affidavit, in part, because the creditor forfeited any argument that the Strahl affidavit was a self-authenticating business record; and (2) properly found the debts dischargeable because the debtor lacked the intent to deceive the creditor in his representations to her.
The creditor appealed to the Third Circuit, which affirmed.
- Facts:
- In 2011, Elliott and Piazza orally agreed to (1) allow Piazza and his wife to use Elliott’s credit cards for business and personal purchases, and (2) share the credit card rewards, so long as Piazza paid the charges. Throughout early 2012, Piazza charged tens of thousands of dollars on the cards and made multiple timely payments for the charges.
After a few months, the cards had an unpaid balance of $33,951.05. Piazza then asked Elliott to request a credit limit increase. Elliott agreed to do so in exchange for some sort of “security” to ensure payment. Piazza responded in an email that his business had “a little over [$]1.5 million worth of work on the books over the next 12 months,” and that he had “a ton of equity in all 6 properties [he] own[ed],” which he would sell to make the payments if necessary.
Piazza continued to use the cards, charging hundreds of thousands of dollars, and making payments of similar magnitude. Piazza fell behind again, however, leaving the cards with unpaid balances of over $60,000. Piazza offered various excuses for his non payment but assured Elliott that he would make full payment. Despite these promises, Piazza did not keep up with the payments.
Elliott then filed a breach of contract action against Piazza in state court and obtained three judgments totaling $82,766.06, which reflected the unpaid balances.
Piazza thereafter filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Middle District of Pennsylvania, seeking to discharge his debts, including the judgments he owed to Elliott.
Elliott initiated an adversary proceeding in the Bankruptcy Court seeking, among other things, a declaration that, under 11 U.S.C. § 523(a)(2)(B), Piazza could not discharge the state court judgments owed to her because Piazza had accrued such debts by deceiving Elliott about his ability and intent to pay for the credit card charges.
- Judge(s):
- SHWARTZ, MATEY, and McKEE, Circuit Judges
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