Sauer Inc. v. Lawson, No. 14-2058 (1st Cir. 2015)
Annotate this CaseSauer Incorporated alleged that Carrie Lawson incurred a debt by knowingly receiving a fraudulent conveyance from her father that was designed to prevent Sauer from collecting a judgment against him. After Lawson filed for chapter 13 bankruptcy Sauer initiated this adversary proceeding objecting to the discharge of this debt under 11 U.S.C. 523(a)(2)(A) as being for money “obtained by…actual fraud.” The bankruptcy court dismissed Sauer’s adversary proceeding, determining that because Sauer could not allege that Lawson had made a misrepresentation, Sauer could not establish that section 523(a)(2)(A) barred discharge of Lawson’s debt. The First Circuit vacated the bankruptcy court’s grant of Lawson’s motion to dismiss, holding that a debt that is not dischargeable in Chapter 13 bankruptcy as a debt for money or property “obtained by…actual fraud” extends beyond debts incurred through fraudulent misrepresentations to also include debts incurred as a result of knowingly accepting a fraudulent conveyance that the transferee knew was intended to hinder the transferor’s creditors.
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