Cohen v. Third Coast Bank, SSB (In the Matter of Cohen)

Summarized by Paul Stewart , Stewart Robbins Brown & Altazan, LLC
10 years 10 months ago

Citation:

5th Cir Court of Appeals; 14-40760 (Unpublished Opinion)

Tag(s):

Ruling:

Debtor's admittedly false borrowing base certificates are not "statements respecting the debtor's or an insider's financial condition" under section 523(a)(2)(B) that require proof of reasonable reliance under section 523(a)(2)(B)(iv), but, rather, a false representation that does not require such a showing under section 523(a)(2)(A). The Court arrived at this conclusion by distinguishing statements that are only about general conditions of the borrower - such as borrowing base certificates - from specific falsifications on the ability to repay the lender - such as loan applications. The Court also ruled, in dicta, that banks are entited to rely on borrower's assertions without investigating the assertions.

Procedural context:

Appeal was taken to the Fifth Circuit in section 523(a)(2) case where Debtor abmitted false representations to his lender. The question on appeal was whether or not the bank had to prove that it "reasonably relied" upon those representations.

Facts:

Borrower submitted false borrowing base certificates to bank. Bank sought to avoid dischargeability of borrower's obligation.

Judge(s):

Before REAVLEY, SMITH, and GRAVES, Circuit Judges.

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!