Taggart v. Lorenzen
Issues
Does a creditor’s good-faith belief that an attempt to collect non-dischargeable debt does not violate a bankruptcy court’s discharge order protect the creditor from contempt?
This case asks the Supreme Court to determine what role, if any, good-faith belief plays in relation to contempt and bankruptcy discharge orders. Petitioner Bradley Weston Taggart contends that the bankruptcy code does not afford protection for creditors who violate a discharge order, even when a creditor holds a good-faith belief that his or her attempt at collection is permissible under the law. Respondents Shelley A. Lorenzen and others counter that the bankruptcy code must consider a creditor’s good-faith belief, because otherwise creditors would be held in contempt for minor violations that make it harder for them to seek collection of non-dischargeable debt. The outcome of this case will have significant implications on the limits of creditor liability and debtor protection in the discharge context as well as implications for legal advocacy, state taxation, and the economy.
Questions as Framed for the Court by the Parties
Whether, under the Bankruptcy Code, a creditor’s good-faith belief that the discharge injunction does not apply precludes a finding of civil contempt.
Petitioner Bradley Weston Taggart, a real estate developer, owned a twenty-five percent interest in Sherwood Park Business Center (“SPBC”). Lorenzen v. Taggart, 888 F.3d 438, 440 (9th Cir. 2018). In 2007, Taggart transferred his interest in SPBC to his lawyer, John Berman. Id.
Edited by
Additional Resources
- Daniel Gill, SCOTUS to Consider Creditors’ Collection Acts Post-Bankruptcy, Bloomberg Law (Jan. 4, 2019).
- Amy Howe, More on Today’s Orders, SCOTUSblog (Jan. 4, 2019).
- Sarah B. Boehm and Patrick L. Hayden, Circuit Split: Should Subjective Intent Preclude a Finding of Civil Contempt in a Discharge Injunction Violation Case, Lexology (Dec. 5, 2018).