Reingold v. Shaffer (In re Reingold)
- Summarized by James Webster , Law Office of James Portman Webster, PLLC
- 10 years 2 months ago
- (NOT FOR PUBLICATION) BAP NO. CC-12-1112-PaDKI & CC-12-1141-PaDKi
- The Ninth Circuit BAP Affirmed the bankruptcy court judgment which excepted from discharge, under 11 USC 523(a)(2)(A), a debt for $76,000 and discharged a debt for $50,000 based upon the dates of the loans and the date of the written agreement. Debtor obtained a loan of $50,000 prior to signing an agreement which limited the loans use to a specific project and then obtained an additional $76,000 after signing the agreement and did not follow the terms of the agreement. The BAP looked at the exception to discharge and held that this is not a contractual issue as much as it is a fraud in connection with the extension of credit.
- Procedural context:
- Under 11 USC 523(a)(2)(A), Creditor brought an adversary proceeding against Debtor. Creditor obtained an exception to discharge on the second loan payment of $76,000 and did not discharge the first loan payment of $50,000. Creditor appealed and Debtor cross-appealed.
- Prior to filing bankruptcy, Debtor make a $32,000 deposit into a escrow account for the purchase of a property. After running out of funds, Debtor obtained a loan from Creditor without anything being put in writing. Two days after the check cleared the bank, the Parties entered into an agreement where Debtor agreed to use all funds specifically on the property with the $32,000 deposit.
The Debtor obtained an additional $76,000 from Creditor after signing the agreement. It does not appear that there was a clear or close nexus between the property and the use of the funds.
Creditor obtained a judgment in State Court and then Debtor filed chapter 7 bankruptcy.
Creditor filed an Adversary Proceeding against Debtor for fraud under 11 USC 523(a)(2)(A).
- Pappas, Dunn and Kirscher
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