Wank et al. v. Gordon et al. (In re Wank)
- Summarized by Albert Sheen , U.S. Bankruptcy Court
- 10 years 11 months ago
- Citation:
- Wank et al. v. Gordon et al. (In re Wank), B.A.P. No. CC-13-1137-PaKuBa (9th Cir. B.A.P. Jan. 29, 2014)
- Tag(s):
-
- Ruling:
- The Ninth Circuit Bankruptcy Appellate Panel vacated the order granting summary judgment and remanded to the Bankruptcy Court, holding as follows. First, because prepetition waivers of discharge are void as against public policy and Wank's first declaration was expressly designed to prevent relief under the Code, the Bankruptcy Court improperly relied on the first declaration in granting summary judgment. Next, because Wank's second declaration contradicted his first declaration, in ruling on summary judgment the Bankruptcy Court improperly weighed the evidence, determined Wank's credibility, and drew inferences in favor of the creditors. Finally, nothing in the record showed that creditors justifiably relied on Wank's allegedly false representations in making their investments; thus, summary judgment was improper because the creditors failed to establish this element of fraud required for a nondischargeability determination under § 523(a)(2)(A).
- Procedural context:
- Appeal from the Bankruptcy Court for the Central District of California, granting summary judgment that a portion of the debtor's judgment debt owed to creditors was nondischargeable under 11 U.S.C. § 523(a)(2)(A), reviewed de novo.
- Facts:
- Wank induced creditors to fund a fraudulent investment scheme. When the creditors lost their money, they sued Wank in state court. The parties entered into a settlement agreement and stipulated judgment, under which the creditors would execute a full release on condition that Wank pay the creditors $750,000 by a date certain. Wank also agreed that if he failed to do so, a judgment would be entered against him in state court for $1,100,000, the full amount of the creditors' claim. The parties further agreed that the judgment would be nondischargeable should Wank enter bankruptcy. In support, Wank executed a first declaration under penalty of perjury admitting to fraud. However, Wank failed to pay as agreed. The full judgment was entered against him in state court, and thereafter Wank filed a chapter 7 petition. The creditors then filed an adversary complaint against Wank, seeking an exception to discharge for fraud under § 523(a)(2)(A) as to their claim. The creditors moved for summary judgment on the fraud exception, yet failed to argue that Wank knowingly made false representations or that the creditors justifiably relied upon those representations. In opposing summary judgment, Wank submitted a second declaration contradicting sworn statements made in his first declaration.
- Judge(s):
- Pappas, Kurtz, Ballinger
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