The Supreme court in a 9-0 ruling decided a woman in California could not use the United States bankruptcy code protection in order to avoid paying a debt that was made fraudulent by her partner.
The Supreme Court ruled Kate Bartenwerfer still had to pay a $200,000 debt that stemmed from her husband David’s fraudulent activity.
The code has been mostly used as a loophole for one partner to avoid paying a debt.
It appears now the Supreme Court has closed that loophole for good.
If someone is a honest victim of fraudulent activity due to their partners misdeeds it appears that person is just out of luck now.
Supreme Court delivers massive 9-0 ruling!
Do you think they got it right??https://t.co/oBhKJ8TJCb
— Chuck Woolery (@chuckwoolery) February 21, 2023
CNBC had these details to add:
The Supreme Court in a unanimous decision Wednesday ruled that a California woman could not use U.S. bankruptcy code protection to avoid paying a $200,000 debt that resulted from fraud by her partner.
The court said that the woman, Kate Bartenwerfer, owed the debt even if she did not know about her husband David’s misrepresentations regarding the condition of a house when they sold it to San Francisco real estate developer Kieran Buckley for more than $2 million.
Buckley had sued the couple and won a judgment for those misrepresentations.
The 9-0 decision written by Justice Amy Coney Barrett resolves a difference of opinion between several federal circuit appeals courts on the question of whether an innocent party can shield themselves from debt for another person’s fraud after filing for bankruptcy.
The ruling cited and reinforces a Supreme Court decision in 1885, which found that two partners in a New York wool company were liable for the debt due to the fraudulent claims of a third partner even though they were not themselves “guilty of wrong.”
Supreme Court rules 9-0 that bankruptcy filers can't avoid debt incurred by another's fraud https://t.co/mXQ953cEVp
— CNBC (@CNBC) February 22, 2023
The Conservative Brief dropped more details:
The U.S. Supreme Court delivered a massive 9-0 decision on Wednesday that a California woman could not use U.S. bankruptcy code protection to avoid paying a $200,000 debt, which resulted from fraud by her partner.
“The court said that the woman, Kate Bartenwerfer, owed the debt even if she did not know about her husband David’s misrepresentations regarding the condition of a house when they sold it to San Francisco real estate developer Kieran Buckley for more than $2 million. Buckley had sued the couple and won a judgment for those misrepresentations,” CNBC reported.
“The 9-0 decision written by Justice Amy Coney Barrett resolves a difference of opinion between several federal circuit appeals courts on the question of whether an innocent party can shield themselves from debt for another person’s fraud after filing for bankruptcy. The ruling cited and reinforces a Supreme Court decision in 1885, which found that two partners in a New York wool company were liable for the debt due to the fraudulent claims of a third partner even though they were not themselves ‘guilty of wrong.’ Barrett dismissed Bartenwerfer’s grammar-focused argument, which claimed that the relevant section of the bankruptcy code, written in the passive voice as ‘money obtained by fraud,’ refers to ‘money obtained by the individual debtor’s fraud,’” the outlet added.
Justice Barrett drops the gavel!
What do you think of this ruling?https://t.co/8rmMCiSek5
— Conservative Brief (@ConservBrief) February 23, 2023
SCOTUS ruled that a California woman could not use U.S. bankruptcy code protection to avoid paying a $200,000 debt that resulted from fraud by her partner. https://t.co/4DUjUIvMX4
— CNBC Politics (@CNBCPolitics) February 23, 2023
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