Cote v. Al V., Inc. (In re Cote)
- Summarized by Joel Newell , Ballard Spahr, LLP
- 10 years 7 months ago
- Citation:
- Ninth Circuit Bankruptcy Appellate Panel Case No. NC-14-1025-TaPaJu (July 27, 2015)
- Tag(s):
-
- Ruling:
- In the unpublished decisions, the BAP determined that the bankruptcy court's findings were clearly erroneous and reversed the bankruptcy court's judgment. The BAP determined that a finding of fraud was appropriate only if Debtor knew that he could not pay Contractor as required under the Contract, and based on the record there was no evidence of this knowledge.
- Procedural context:
- The bankruptcy court entered a judgment in favor of Al V., Inc. ("Contractor") and against Chapter 7 Debtor Christopher Cole ("Debtor") after a trial. The bankruptcy court found that Debtor intentionally deceived Contractor by knowingly misrepresenting his ability to perform under the construction contract. It then determined that this proximately caused damages to Contractor. Debtor timely appealed the bankruptcy court's judgment excepting from discharge an award of $490,883.85 in favor of Contractor.
- Facts:
- Contractor entered into a contract with Debtor to build 10 homes of a planned 18-home solar powered residential community in California. Prior to entering the contract, Contractor and Debtor signed a letter of understanding wherein Debtor agreed to provide information related to the project, including bank construction loan approval, to Contractor. The Contractor alleged 3 misrepresentations made by the Debtor (i) a false promise to pay (ii) false representation to the bank regarding the construction loan and (iii) false representations regarding the construction loan and sufficiency to pay Contractor. The bankruptcy court did not base its judgment on the first alleged misrepresentation; therefore, the BAP did not address it in detail. On appeal the Debtor asserted that the bankruptcy court clearly erred. The BAP outline three factual findings that were in clear error. First, it overestimated the amount Debtor agreed to pay to Contractor under the Contract in connection with construction project. Second, it underestimated the funds and sources of funds available to Debtor to meet the agreed upon expenses under the Contract. And, third, its award of damages exceeded anything owed under the Contract both as it was initially drafted and even as modified by the change orders.
- Judge(s):
- TAYLOR, PAPPAS, and JURY, Bankruptcy 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!
