Commercial Banking, Collections, and Bankruptcy

Dist. Ct. erred in finding that defendant violated provisions of Fair and Accurate Credit Transactions Act (Act) when it printed on receipts at its gas pumps last four digits of what defendant called customer's account number as opposed to last four digits of primary account number contained on magnetic strip of credit card. While Act mandates that defendant not display more than last 5 digits of "card number" when printing receipts, Act does not define "card number," and plaintiffs conceded that digits defendant chose to print did not leave them at risk for identity theft. Moreover, plaintiff did not establish that defendant's practice of printing last four digits of account number constituted willful violation of Act where it was unclear that customer account number was not relevant number for purpose of enforcement of Act.

Bankruptcy Judge did not err in finding that debtor's $3.4 million debt to ex-wife, as well as his $300,000 debt to ex-wife's current husband and daughters were not dischargeable in bankruptcy where $3.4 million debt stemmed from judgment ex-wife obtained in tort action for personal injuries caused by debtor during incident in which debtor hit ex-wife with baseball bat and sealed her in garbage can, and where $300,000 debt stemmed from judgment awarded to ex-wife's current husband and daughters for their loss of consortium stemming from ex-wife's injuries caused by debtor. Instant debts arose out of willful and malicious injuries sustained by ex-wife, and thus were not dischargeable under 11 USC section 523(a)(6), where, as here record showed that debtor intended to injure his ex-wife, and that her injuries were foreseeable consequences of his intentional acts. Ct. rejected debtor's argument that awards given for punitive damages and/or loss of consortium could not be properly classified as awards stemming from willful injuries.

Dist. Ct. did not err in dismissing for lack of subject matter jurisdiction plaintiff's claim for return of whole cash value of split dollar life policy that failed bank had received from insurer where plaintiff had failed to file said claim within applicable 90-day deadline set forth in FIRREA, and where said Act bars claimants from taking claims directly to Dist. Ct. without first going through administrative proceeding under FIRREA. Moreover, record showed that plaintiff had received actual notice of bank receivership 12 days prior to expiration of said deadline, and Ct. rejected plaintiff's contention that it could not have filed instant claim within said twelve-day period. Fact that instant claim first arose within 90-day window after appointment of failed bank's receiver did not mandate that plaintiff receive extension of time to file claim.

Dist. Ct. erred in dismissing under doctrine of in pari delicto, plaintiff-Bankruptcy Trustee's lawsuit alleging that defendant-accounting firm was negligent in failing to discover that debtor-business entity, which was subject of defendant's audit, lacked any inventory or customers and was involved in elaborate Ponzi scheme by corporate manager who controlled debtor. While said doctrine is potentially available to defeat plaintiff's cause of action to extent that debtor's corporate manager was participant in Ponzi fraud, Dist. Ct. erred in resolving at preliminary stage of lawsuit factual question as to what corporate manager knew about Ponzi scheme. Ct. rejected Trustee's argument that in pari delicto defense is not applicable in bankruptcy proceedings and that any culpability of debtor's corporate manager could never bar recovery against negligent auditor.

Bankruptcy Ct. did not err in granting Trustee's motion to convert debtor's Chapter 11 bankruptcy petition into Chapter 7 proceeding, even though debtor's president, in objections to said motion, alleged that Trustee and debtor's franchisees committed fraud and further asserted that debtor would regain solvency by simply collecting fees owed to debtor by franchisees. Bankruptcy Ct. could properly conclude that president failed to offer persuasive reason to doubt Trustee's judgment that reorganization of debtor was infeasible, and that president lacked standing in Chapter 7 case to bring claims on behalf of debtor. Ct. also rejected president's argument that Bankruptcy Ct. lacked jurisdiction over debtor where contractual claims held by largest creditors were subject to arbitration.