Ohio Bankruptcy Resources - Mortgages, Loans, & Consolidation Options
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Recent Notable Opinions of the Supreme Court of The United States:
Archer v. Warner, Docket Number: 01-1418 IN THE SUPREME COURT OF THE UNITED STATES ON PETITION FOR WRIT OF
CERTIORARI, Argued January 13, 2003, Decided March 31, 2003. Leonard and Arlene Warner sold the Warner Manufacturing Company to Elliott and Carol Archer.
Later, the Archers sued the Warners for fraud related to the sale. This suit was settled. According to the settlement
agreement, the Archers released the Warners of all liability except for a $100,000 promissory note. After the suit
was voluntarily dismissed, the Warners defaulted on the first payment due on the note. The Archers then sued the
Warners for collection in state court, and in turn, the Warners filed Chapter 7. The Archers
objected to the discharge of their note. The Code states a debt shall not be dischargeable "to the
extent it is for money obtained by false pretenses, a false representation, or actual fraud." This motion was
denied and discharge of liability for payment of the note was granted. The District Court and Court of Appeals affirmed.
Held: In a 7-2 opinion, the Court concluded "the Archers' settlement agreement and release of liability may have
worked a kind of novation, but that fact does not bar the Archers from showing that the settlement debt arose out
of 'false pretences, a false representation, or actual fraud,' and consequently is nondischargeable." If a release
of liability is obtained by fraud, the release within the agreement is voidable.
Recent Notable Opinions from Ohio Bankruptcy Courts
Brown v. Brooks, Case No. 97-16744 Chapter 7, Adversary No. 01-1389, decided January 3, 2003 by the Ohio
Bankruptcy Court for the Southern District. Ex-husband Brown filed an adversary proceeding in connection with a
Chapter 7 case filed by Brooks, his former wife. In Chapter 7, Brooks requested discharge of her debts created
by the decree of dissolution of marriage (and agreed separation agreement within). In particular, Brown sought a
determination of non-dischargeable status while Brooks responded with a motion for summary judgment discharging
the adversary proceeding. The Ohio Bankruptcy Court for the Southern District held: The Creditor has the burden
of proof to show a debt is nondischargeable under 11 U.S.C. 523(a). Once the Creditor establishes the debt may
be covered by this section, the burden of proof shifts to the debtor, who must show, by clear and convincing
evidence, any applicable exception which may allow discharge. Hart v. Molino (In re Molino) 225 B.R. 904, 907
(B.A.P. 6th Cir. 1198). In this particular case, because The Husband/Creditor provided proof (A) the debt arose
from a dissolution decree, and (B) all rights to spousal support where waived. Because of custom drafting of
agreements included within the agreed separation agreement, the Ohio Bankruptcy Court found a genuine issue of
fact and required strict proof of all applicable exceptions.
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