Wyly v. Eichor
- Summarized by Caleb Chaplain , U.S. Bankruptcy Court, Western District of Virginia
- 12 months 2 days ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- 24-20238 (5th Circuit, Feb 26,2025) Not Published
- Tag(s):
-
- Ruling:
- The Fifth Circuit affirmed the district court’s decision affirming the bankruptcy court’s ruling holding Benson and Pam Wyly in civil contempt for violating Johnnie Eichor’s chapter 7 discharge order. More specifically, the Fifth Circuit found no clear error in the bankruptcy court’s findings that the Wylys willfully pursued collection of a discharged debt through a state court action seeking to obtain title to Eichor’s property without a reasonable basis to believe they could properly do so.
- Procedural context:
- Johnnie Eichor filed a chapter 7 petition after Benson and Pam Wyly filed an action against him in Texas state court for breach of a series of “loan” contracts. After Johnnie Eichor received a discharge, the Wylys continued to pursue their claims in state court. Eichor filed an adversary complaint against the Wylys for violation of the discharge injunction.
The bankruptcy court determined that (i) the agreements were personal loans, not legitimate property sales; (ii) the Wylys had no valid security interest or perfected lien; and (iii) the Wylys willfully violated the discharge order by pursuing the state court action. The bankruptcy court thus held the Wylys in civil contempt and awarded damages and attorney’s fees to Eichor. The district court affirmed the bankruptcy court’s decision, and the Wylys appealed.
- Facts:
- Benson Wyly, Pam Wyly, and Johnnie Eichor were friends for years. Over the years of their friendship, the Wylys had a history of providing loans to Eichor. Between 2015 and 2017, they entered into three “Sales Agreements,” the final two of which involved Eichor’s home. These agreements were poorly drafted and, according to the Fifth Circuit, were “not a model of precision, to put it charitably.” After Eichor’s bankruptcy discharge was issued, the Wylys continued with the state court action and obtained a default judgment in the Texas state court case to obtain title to Eichor’s home. The Wylys changed the locks and posted the judgment on the front door. Eichor then went back to the bankruptcy court to file an adversary proceeding against the Wylys for a discharge violation.
- Judge(s):
- Haynes, Duncan, and Wilson
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!
