Robin Miller of CBAR reports that a state court default judgment on a fraud claim was nondischargeable based on the following case law developments:
Elements of nondischargeability under Code § 523(a)(2)(A):
To except a debt from discharge under Code § 523(a)(2)(A), a creditor must prove each of the following elements by a preponderance of the evidence: (1) the debtor obtained money through a material misrepresentation that, at the time, the debtor knew was false or made with gross recklessness as to its truth; (2) the debtor intended to deceive the creditor; (3) the creditor justifiably relied on the false representation; and (4) the creditor’s reliance was the proximate cause of loss. Whether a debtor possessed an intent to defraud a creditor within the scope of § 523(a)(2)(A) is measured by a subjective standard. See In re Rembert, 141 F.3d 277 (6th Cir. 1998).
State-court default judgment on fraud claims was nondischargeable under Code § 523(a)(2)(A):
The fraud claims on which the creditors received a default judgment against the debtor in a state court action were identical to those relevant under Code § 523(a)(2)(A), were actually litigated and were necessary for the result. Accordingly, under Tennessee law of collateral estoppel, the state court judgment was nondischargeable under § 523(a)(2)(A).
In re Anderson, 2014 WL 98691 (Bankr. E.D. Ky., Jan. 10, 2014), appeal filed, Case No. 14-8007 (6th Cir. B.A.P., filed Jan. 30, 2014)
(case no. 6:13-bk-60469; adv. proc. no. 6:13-ap-6021) (Bankruptcy Judge Gregory R. Schaaf)