PRN Real Estate & Investments, Ltd. v. William W. Cole, Jr., No. 22-11118 (11th Cir. 2023)Annotate this Case
Defendant, petitioned for Chapter 7 bankruptcy and listed PRN Real Estate & Investments, Ltd. (“PRN”) as his primary creditor. PRN sought to exempt debts that Defendant owes PRN from being discharged. The bankruptcy court granted judgment for Defendant on all of PRN’s claims and fully discharged Defendant’s debt. The district court affirmed.
The Eleventh Circuit affirmed in part and reversed the bankruptcy court’s rulings and remanded for further proceedings. The court explained that it agrees with each of the bankruptcy court’s rulings except one: that PRN pleaded a viable discharge exception in Count 3. The court explained that Congress gave PRN the right to request an exception of COLP’s contribution debt, if PRN can prove that Defendant fraudulently obtained COLP’s money and, as a result, became responsible for COLP’s contribution debt. PRN has pleaded facts that, if proven, meet these requirements. The Trustee’s action to avoid the same fraudulent transfer does not preempt PRN’s right to seek a discharge exception. Because the bankruptcy court dismissed PRN’s claim based on non-viability and lack of standing, the bankruptcy court did not rule on the merits of Defendant’s motion for summary judgment. Thus, the court remanded the case for the bankruptcy court to determine in the first instance whether any facts material to Count 3 are genuinely disputed and, if not, whether Defendant is entitled to judgment on Count 3. See Fed. R. Civ. P. 56(a).