Hillsman v. Escoto (In re Escoto)
- Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
- 10 years 9 months ago
- Citation:
- In re Escoto, BAP No. NV-14-1358-KuDJu (9th Cir. B.A.P. May 15, 2015).
- Tag(s):
-
- Ruling:
- A debtor’s concealment from a creditor of an event that triggers a creditor’s right to immediate payment of a loan constitutes an extension of credit under section 523(a)(2)(A). Not-for-publication memorandum.
- Procedural context:
- Creditor commenced a nondischargeability action against the debtor in this chapter 7 case. The bankruptcy court granted debtor’s motion for summary judgment. Creditor appealed to the BAP, which reversed and remanded.
- Facts:
- In 2008, creditor made loan to debtor. The loan was due on the earliest of three dates, one of which was when debtor settled certain litigation. Without informing creditor, debtor settled the litigation in 2008 and 2009 and received $700,000. In 2011 and 2012, creditor extended the loan’s maturity date without knowing of the settlement. Creditor did not learn of the settlement until after debtor filed his petition in 2013. In the dischargeability action, the bankruptcy court found that debtor’s concealment of the settlement amounted to fraud and induced creditor to grant the two extensions. But the bankruptcy court ruled against creditor because creditor failed to demonstrate that creditor had lost valuable collection remedies existing when creditor agreed to the extensions in 2011 and 2012. In reversing, the BAP held that, because debtor’s concealment of the settlement deprived creditor of a right to immediate payment, the bankruptcy court should have evaluated creditor’s collection remedies as of the time of the concealed settlement in 2008 and 2009, not at the time of the later loan extensions in 2011 and 2012.
- Judge(s):
- Frank L. Kurtz, Randall L. Dunn, and Meredith A. Jury, Bankruptcy Judges.
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