Koonce v. Gambino, No. 13-2756 (7th Cir. 2014)
Annotate this CaseGambino filed a state lawsuit to clear his title to three properties, claiming that defendants (including Koonce) used forged deeds and other fraudulent documents to improperly gain title. An Illinois state court found that Koonce acted with fraud and malice and ordered him to pay compensatory and punitive damages. After the state appellate court affirmed, but before Koonce satisfied the judgment, Koonce filed for bankruptcy. Gambino filed an adversary action against Koonce in bankruptcy, seeking to have the state judgment declared non-dischargeable under 11 U.S.C. 523(a)(2)(A) and (a)(6). The bankruptcy court found that Gambino had conclusively established that Koonce’s debt was non-dischargeable and that Koonce was collaterally estopped from relitigating the issue of his intent. The district court and Seventh Circuit affirmed, rejecting a claim that the issue of fraudulent intent was not actually litigated in state court. The state court could not have decided that Koonce slandered Gambino’s title or assessed punitive damages without first deciding whether he did so with fraudulent intent.
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