Jones v. U.S. Trustee, Eugene

Ninth Circuit Court of Appeals, No. 12-35665 (December 2, 2013)
A fraud that would have served as grounds for denying a chapter 7 discharge if it had been known at the time of the discharge can serve as grounds for the later revocation of that discharge.
Procedural context:
Appeal from bankruptcy order grantng motion of the United States Trustee to revoke a dischage pursuant to to 11 U.S.C. § 727(d)(1).
Debtor filed chapter 7. Subsequent to the entry of the discharge order, the United States Trustee learned that the Debtor had misrepresented the value or existence of a number of assets in both the schedules the Debtor had filed and in the testimony he gave during the creditors meeting. Finding that the Debtor made false oaths in connection with the case that violated section 727(a)(4)(A), the Bankruptcy Court granted the UST's motion to revoke the discharge pursuan tto section 727(d)(1). On appeal, the Debtor argued that for a discharge to be revoked, the fraud must be a "but for" cause of the granting of the discharge. The Debtor then argued that it was not his misrepresentations that resulted in his discharge, but instead his concealment of the misrepresentations. In other words, if the Debtor had not made the misrepresentations, he would have received the discharge, so the misrepresentations were not a "but for" cause of the discharge. Consequently, the Debtor argued that the Bankruptcy Court erred in finding that a misrepresentation that would result in a denial of discharge under section 727(a)(4) necessarily results in a revocation of discharge under section 727(d)(1). The Ninth Circuit disagreed with the Debtor, holding that where the evidence demonstrates that a debtor committed a material fraudulent act that would have resulted in a denial of discharge if discovered before the granting of the discharge, then such conduct warrants a revocation of discharge if not discovered until after the granting of the discharge.
Milan D. Smith, Jr., Andrew D. Hurwitz, James C. Mahan

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