Bartenwerfer v. Buckley (21-908)
argument 21-908Bartenwerfer v. Buckley
Supreme Court of the United States
1h 12m
8 speakers
8 chapters
transcribed 7 days ago
official recording ↗
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the central issue of the Bartenwerfer v. Buckley case regarding the fraud exception to discharge?
We'll hear argument next in Case 21908, Barton Werfer v. Buckley. Ms. Harris.
Mr. Chief Justice, and may it please the Court. Bankruptcy law gives honest but unfortunate debtors a fresh start by extinguishing all their debts. Exceptions are narrow, must be clearly expressed, and reflect debtors' intentional wrongs, not someone else's. 523A2A thus bars dishonest debtors from discharging liabilities incurred on account of their fraud. The Code does not bar unwitting debtors, like petitioner, from discharging debts for others' fraud. That conclusion follows from the text. Section 523 specifies when the individual debtor, as distinct from others, cannot discharge debts. A2A's reference to actual fraud targets the debtor's misconduct by requiring fraudulent intent, just as other tort-based exceptions target the debtor's fault.
Since Neal v. Clark, even debtors who themselves commit constructive fraud can discharge those debts. because they lack fraudulent intent. Congress did not irrationally bar debtors who committed no fraud themselves from discharging debts for others' fraud. Respondent in the government argued that anyone's fraud counts, so long as the debtor winds up with a fraud-related debt. But HOA's use of the passive voice does not reflect indifference to who committed fraud with culpable intent, nor does String, which arose under the repealed 1867 Act, control today's code. And while state laws impose vicarious liability for partners' acts, bankruptcy discharge applies different federal law rules to individual debtors because the point of bankruptcy is to eliminate liability.
Bankruptcy is the last place to read in vicarious liability. Yet respondents' sweeping theory could apply throughout the code. to deny discharge based on others' wrongdoing. That financial death sentence would fall mostly on unsophisticated spouses who do not realize routine transactions in marriage, like selling homes, create business partnerships in the eyes of the law. Dishonest debtors cannot escape their creditors, but the Court does not consign unwitting debtors to the same fate. I welcome the Court's questions.
Ms. Harris, the 523A2A does not— focus on the debtor, at least textually? It focuses on the debt. And it isn't a passive voice, but it's talking about money or debt that's obtained by fraud. How do you convert that into a statute that is focusing on the debtor?
A few textual indications. First of all, the individual debtor runs throughout 523. It is the only identified actor who is the subject of the whole series of exceptions. And the individual debtor is the relevant actor, only relevant actor, in a lot of the other provisions. And second, we know that fraud, the term actual fraud, It's not just Congress using the passive voice. Congress is requiring fraudulent intent. And this Court has recognized in cases like Dean and Wilson, when Congress is using the passive voice without intent requirements, that's when you're more likely to think Congress is indifferent to who's doing something. But when Congress requires culpability, that is very good evidence that Congress actually cares quite a bit about who is performing the misconduct.
And Bullock confirms that, because in that case, the Court was confronting... whether defalcation requires intent. And the court said that the A4 exception for defalcation, along with the A2A exception for fraud, the A6 exception for willful and malicious injury to property. I could go on. There's a couple of other tort-related things.
I understand that. But doesn't it work against you that some of these provisions that you're referring to actually speak in terms of the debtor? and then refer specifically to the debtor, and if it does refer to the debtor in those provisions, doesn't that argue against including or treating this provision the exact same way that it does not refer to the debtor?
Not given the nature of the bankruptcy code. And if you look at the way that Congress is using the word the debtor or not using the debtor, it's very similar to what happened in Hartford underwriters with respect to using the word trustee, only trustee, or not trustee at all.
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Chapters
8 chapters
1
What is the central issue of the Bartenwerfer v. Buckley case regarding the fraud exception to discharge?
0:01–9:50
2
How does the petitioner argue that Section 523A2A applies only to the debtor’s own fraud?
9:50–18:12
3
What arguments does the government present about vicarious liability and agency law?
18:12–29:11
4
How do precedents like Husky and Field v. Manns influence the interpretation of fraud liability?
29:11–37:49
5
What policy considerations and congressional intent are discussed concerning discharge exceptions?
37:49–45:52
6
What hypothetical scenarios do the Justices raise to test the scope of the fraud exception?
45:52–54:53
7
How does the petitioner’s rebuttal address the statutory text and the role of state law?
54:53–1:04:10
8
What conclusions and final questions are presented in the closing of the oral argument?
1:04:10–1:12:43