Reeves v. Davis (In re Davis)

Reeves v. Davis (In re Davis), No. 10-2757 (7th Cir. Mar. 14, 2011)
The Court ruled that a pre-petition decision in state court that the debtor had committed a "deceptive act" under a state statute did not have a collateral estoppel effect in the creditor's subsequent adversary proceeding against the debtor under Bankruptcy Code section 523(a)(2)(A) because the state court decision did not contain any finding that the debtor possessed the necessary intent to deceive or defraud. As a result, collateral estoppel did not prevent Bankruptcy Court litigation on the necessary element of fraudulent intent. The Court further found that the creditor had failed to plead fraud with sufficient particularity in her adversary complaint, that the creditor waived certain arguments regarding fraud by failing to raise them in her briefing below, and that the creditor had failed to demonstrate fraudulent intent with regard to certain other allegedly fraudulent conduct.
Procedural context:
Appeal from the District Court for the Southern District of Indiana affirming decision of Bankruptcy Court for the Southern District of Indiana finding debt dischargeable on grounds that debtor lacked requisite intent to deceive or defraud; reviewed for clear error as to alleged factual errors and de novo as to conclusions of law.
Creditor retained debtor to perform renovations at her residence. Creditor paid most of the agreed price for the work, but debtor failed to perform. Creditor obtained judgment against debtor in state court action for damages under section 24-5-11-14 of the Indiana Home Improvement Contracts Act, Ind. Code §§ 24-5-11-1 et seq., which judgment found that debtor had committed a "deceptive act" under the applicable statutory section . Debtor sought Chapter 7 relief and creditor pursued adversary proceeding under Bankruptcy Code section 523(a)(2)(A).
Flaum, Williams, Herndon (sitting by designation)

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!

About us in numbers

3525 in the system

3408 Summarized

7 Being Processed