Commercial Banking, Collections, and Bankruptcy

Bankruptcy Ct. did not err in granting Trustee's objection to discharge of debtor's debts under 11 USC section 727(a)(4) after finding that debtors had reckless disregard for truth when making several omissions about estate assets in bankruptcy petition. Record showed that debtors misstated gross income on tax return, failed to disclose interests in two defunct businesses, as well as in two limited partnerships, and failed to disclose receipt of $90,000 in refinance proceeds on their home. Moreover, Bankruptcy Ct. could properly find that said failures were material and reckless given debtors' post-secondary education and business experience. Fact that debtors had amended bankruptcy petition to correct said omissions did not require different result.

Dist. Ct. did not err in affirming Bankruptcy Ct. determination that $77,015.98 money judgment in which Indiana state court had found that debtor violated Indiana Home Improvement Contract Act was dischargeable even though state court had found that debtor had committed deceptive act by only partially repairing customer's home. Creditor did not establish exception to discharge under 11 USC section 523(a)(2)(A) where Bankruptcy Ct. found that debtor's failure to complete repairs was not tantamount to fraudulent intent since debtor and customer had only different understandings of substance of repair contract.

In action by plaintiff seeking recovery for certain fees arising out of plaintiff's loan of $3.53 million as part of agreement calling for plaintiff to loan defendant $6 million, Dist. Ct. did not err in finding that defendant was not required to pay said fees where terms of agreement required that plaintiff both inform defendant that it owed said fees and allow defendant three-day window to pay said fees as condition precedent to plaintiff enforcing said fees, and where plaintiff had repudiated agreement by informing defendant that it would not loan defendant any more money prior to plaintiff giving defendant required notice that defendant owed said fees. Ct. rejected plaintiff's argument that it retracted its repudiation of agreement when it sent summary statement to defendant indicating availability of remaining portion of $6 million loan commitment.

In bankruptcy proceeding where third-party filed cure claim arising out of claim purchased from creditor and stemming from executory contract with debtor, Dist. Ct. erred in finding that third-party could not potentially enforce its rights under cure provisions set forth in 11 USC section 365(b)(1)(A). Dist. Ct., though, could properly find that third-party was barred from recovering cure amount where debtor timely rejected subject executory contract under circumstances where specific terms of debtor's Chapter 11 plan gave debtor option to decline said contract after date that plan had been confirmed by Bankruptcy Ct. Moreover, failure of third-party to object to ability of debtor to postpone decision to reject executory contract until after plan's confirmation or otherwise appeal from confirmation of plan precluded third-party from challenging said ability at time debtor rejected executory contract.

Dist. Ct. did not err in granting defendant-debt collector's motion for summary judgment in FDCPA action alleging that defendant's telephone call to debtor's lawyer about outstanding debt violated section 1692c(c) of FDCPA where lawyer had previously instructed defendant to cease all further collection activities. Debtor's lawyer was not within definition of consumer for purposes of coverage under section 1692c. Accordingly, defendant could communicate freely with debtor's lawyer about instant debt even though debt collector could not speak directly to debtor about said debt.

Dist. Ct. did not err in affirming Bankruptcy Ct. decision finding that debtor's $3,000 student loan was non-dischargeable debt under Bankruptcy Code. Ct. rejected debtor's claim that loan was dischargeable because loan proceeds were not used for educational purposes, after finding that instant loan was educational where loan was part of aid package that included scholarship and grant money earmarked for completion of debtor's education at creditor-college, and where debtor had to be student to obtain loan. Moreover, Bankruptcy Ct. did not err in imposing on debtor collection costs and attorney fees generated by creditor where both items were included in promissory note for instant loan. Also, while Dist. Ct. could properly sanction debtor and his attorney for committing several procedural errors during appeal of Bankruptcy Ct. order, instant sanction of $61,942.50 (which Ct. of Appeals reduced by 50%) was excessive in view of lack of bad faith on part of debtor or his attorney.