Washington Mutual Bank v. Carlson (In re Carlson)

Summarized by Tracy Frasier , Smith Frasier, P.A.
13 years 11 months ago

Citation:

No. 11-13314 (11th Cir. March 30, 2012)

Tag(s):

Ruling:

The 11th Circuit Court of Appeals affirmed the decisions of the District Court for the Southern District of Florida related to an adversary proceeding for non-dischargeability of a Chapter 7 Debtor and for fraud, misrepresentation, negligent misrepresentation, breach of contract and attorney's fees and costs against the Debtor and her spouse. The claims raised were not barred by the doctrine of res judicata because the earlier state court litigation between the parties did not require cross-claims to be raised under Minnesota Rules of Civil Procedure 13.07, and because the state court did not have subject matter jurisdiction to consider dischargeability of the debts. The bankruptcy court and the district court had subject matter jurisdiction to hear the causes of action against the non-debtor spouse under its related to jurisdiction, and the district court had subject matter jurisdiction over the dischargeability claims under federal question jurisdiction, and over the Minnesota state law claims under diversity and supplemental jurisdiction. The appellate court declined review of the bankruptcy court's denial of the Debtor and spouse's motion for summary judgment because the the request came after the district court's trial and judgment. Finally, the appellate court concluded that the district court did not abuse its discretion in denying the non-debtor spouse's motion to continue the trial based upon a review of the four factors from Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 1333, 1351 (11th Cir. 2003).

Procedural context:

This is an appeal to the Court of Appeals for the Eleventh Circuit from the District Court for the Southern District of Florida after withdrawal of the reference to the Bankruptcy Court for the Southern District of Florida. The District Court conducted a bench trial of the seven count complaint filed by Creditor Washington Mutual Bank against Chapter 7 Debtor and her non-debtor spouse.

Facts:

The Chapter 7 Debtor and her non-debtor spouse entered into a refinancing mortgage with Washington Mutual Bank of their first mortgage. Washington Mutual Bank conditioned financing upon satisfaction of the second and third mortgages. At the closing for the refinancing mortgage, two satisfactions of mortgage were presented for the second and third mortgages, which were later discovered to be forgeries. The facts also showed that the Debtor and non-debtor spouse gave their mortgage broker a Rolex watch before the closing, and they received an undisclosed kickback from the broker after the closing. After finding its was in third position on the property, Washington Mutual Bank suffered over $1.1 million in losses in redeeming the property from the third mortagor's foreclosure and satisfying the second mortgage.

Judge(s):

Dubina, Chief Judge; Marcus and Martin, Circuit Judges.

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