stating, for example, that § 523(a)(2)(B) excepts from discharge "debts traceable ... to a materially false financial statement," and that, with respect to the 1978 recodification, "Congress wanted to moderate the burden on individuals who submitted false financial statements, not because lies about financial condition are less blameworthy than others,” but to curb abuses by consumer finance companies
How later courts described this case
- stating, for example, that § 523(a)(2)(B) excepts from discharge "debts traceable ... to a materially false financial statement," and that, with respect to the 1978 recodification, "Congress wanted to moderate the burden on individuals who submitted false financial statements, not because lies about financial condition are less blameworthy than others,” but to curb abuses by consumer finance companies
- stating that the standard to which the person is held when justifiable reliance is the applicable test is simply a subjective one, not an objective one; it is “a matter of the qualities and characteristics of the particular plaintiff, and the circumstances of the particular case, rather than of the application of a community standard of conduct to all cases.”
- holding that 28 justifiable reliance focuses on the knowledge, intelligence, and 4 1 other “qualities and characteristics of the particular plaintiff, 2 and the circumstances of the particular case, rather than [on] 3 the application of a community standard of conduct to all 4 cases.”
- stating that the terms of the Bankruptcy Code’s fraud exception to discharge are to be construed to incorporate the general common law of torts, under the dominant consensus of common law jurisdictions, rather than under the law of any particular state
Written by the judges who cited it.
Distinguished
Distinguished by Husky International Electronics, Inc. v. Ritz (In re Ritz), 787 F.3d 312 (2015)
ischarge to a debtor who made unintentional and wholly immaterial misrepresentations having no effect on a creditor’s decision, it could have provided that.”); see also id. at 79, 116 S.Ct. 437 (Breyer, J., dissenting) (“I agree with the Court’s holding that ‘actual fraud’ under 11 U.S.C. § 523(a)(2)(A) incorporates the common-law elements of intentional misrepresentation.”).8 The majority in McClellan asserted that…
The opinion
*78 Justice Ginsburg,
concurring.
I concur in the Court’s opinion and write separately to highlight a causation issue still open for determination on remand: Was the debt in question, as the statute expressly requires, “obtained by” the alleged fraud? See 11 U. S. C. § 528 (a)(2)(A); ante, at 63, n. 3. Mans ultimately urges that the promissory note to the Fields is, in any event, a dis-chargeable debt because it was not “obtained by” the allegedly fraudulent letters Mans’s attorney wrote to the Fields’ attorney months after the debt was incurred. The Fields maintain that they relied on the letters to their detriment, in effect according Mans an extension of credit instead of invoking the due-on-sale clause.
Mans prevailed on the reliance issue before the bankruptcy, district, and appellate courts on the basis of then-governing Circuit precedent. See In re Burgess, 955 F. 2d 134 , 140 (CA1 1992) (creditor required to prove that its reliance was reasonable). With the Circuit law on reliance solidly in his favor, Mans understandably did not advance in the lower courts the argument that the debt was not “obtained by” fraud. When the “reliance must be reasonable” rule solid in the Circuit was challenged in this Court, however, Mans raised the causation point as an alternate justification for the judgment in his favor. See Brief for Respondent 32-33 (argument heading V. reads: “Since the credit here was not ‘obtained by’ the alleged fraud, petitioners have failed to meet the [causation] requirement of 523(a)(2)(A)”); Tr. of Oral Arg. 43 (“[U]nder the clear language of the statute, there *79 has to be an extension of credit in connection with the fraud. It has to be obtained by the fraud . .. .”). *
At oral argument, the following exchange between the Court and the Fields’ attorney occurred:
“QUESTION:... Suppose the debtor here had simply transferred th[e] property without saying one word to the creditor. . . . [W]ould [the debt] then be discharge-able? There would be no representation at all, just in violation of the agreement the debtor sells the property .... Dischargeable, right?
“MR. SEUFERT: While [those are] not the facts of this case, I would agree with you, it would be discharge-able.” Id., at 8-9.
It bears consideration whether a debt that would have been dischargeable had the debtor simply transferred the property, in violation of the due-on-sale clause with never a word to the creditor, nonetheless should survive bankruptcy because the debtor wrote to the creditor of the prospect, albeit not the actuality, of the transfer. Because this Court is not positioned to provide a first view on questions of this order, I express no opinion on the appropriate resolution of the unsettled causation (“obtained by”) issue.
Mans appeared pro se in the lower courts; he was represented by counsel in this Court.