Term: 2017
Docket: 16-1215
Lamar, Archer & Cofrin v. Appling
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16-1215 LAMAR, ARCHER & COFRIN, LLP V. APPLING DECISION BELOW: 848 F.3d 953 CERT. GRANTED 1/12/2018 QUESTION PRESENTED: The Bankruptcy Code prohibits the discharge of "any debt ... for money, property, [or] services ... to the extent obtained by ... false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's ... financial condition." 11 U.S.C. § 523(a)(2). Three Circuits have held that a statement concerning a specific asset of the debtor cannot be a "statement respecting the debtor's ... financial condition." Two Circuits, including the Eleventh Circuit below, have held that it can be. Based on that interpretation, the Eleventh Circuit here reversed the bankruptcy court's conclusion that the debt at issue "is nondischargeable," App. 14a, even though it is based on a fraudulent statement. The question presented is whether (and, if so, when) a statement concerning a specific asset can be a "statement respecting the debtor's ... financial condition” within Section 523(a)(2). LOWER COURT CASE NUMBER: 16-11911
In the case of Lamar, Archer & Cofrin v. Appling (2017), the United States Supreme Court ruled that a false statement about one asset can constitute "actual fraud" under Section 523(a)(2)(A) of the Bankruptcy Code, and thus prevent discharge in bankruptcy. The dispute arose when R. Scott Appling made oral statements to his law firm, Lamar, Archer & Cofrin LLP regarding his ability to cover legal fees with an expected tax refund. When he used those funds for other purposes instead and later filed for bankruptcy protection, Lamar sought to prevent him from discharging their debt on grounds of fraud. The court held that a misrepresentation made orally regarding just one asset could be sufficient grounds for nondischargeability under section 523(a)(2)(A). This ruling resolved a split among lower courts over whether such singular misrepresentations were covered by this provision.
In the case of Lamar, Archer & Cofrin v. Appling (2017), there was no dissenting opinion recorded by any justice. The Supreme Court unanimously ruled in favor of Appling, affirming that a false statement about one asset can constitute "actual fraud" under Section 523(a)(2)(A) of the Bankruptcy Code and thus prevent debt discharge in bankruptcy proceedings. This decision resolved a split among various circuit courts over whether such a misrepresentation must be made regarding financial condition to fall within this exception to discharge or if it could pertain to just one asset.
