Bartenwerfer v. Buckley
Issues
If a member of a partnership did not know of fraud committed by their partner, does the debt of the innocent partner due to that fraud remain even after filing for bankruptcy?
This case asks the Supreme Court to decide whether a member of a partnership is prohibited from discharging debt fraudulently incurred by their partner without their knowledge. Kate Bartenwerfer argues that the Court cannot prohibit her from discharging debts in bankruptcy merely because those debts were obtained by her partner’s imputed fraud that she was not responsible for. Kieran Buckley counters that the Bankruptcy Code asks only whether debts were obtained by fraud and does not draw distinctions based on whether any individual debtor is responsible for that fraud. This case has implications for prioritizing relief to debtors or creditors in bankruptcy and for the liabilities of individuals in a marriage or domestic partnership.
Questions as Framed for the Court by the Parties
Whether an individual may be subject to liability for the fraud of another that is barred from discharge in bankruptcy under 11 U.S.C. § 523(a)(2)(A), by imputation, without any act, omission, intent or knowledge of her own.
Kate Bartenwerfer and her then-boyfriend, David Bartenwerfer, bought a house in San Francisco, CA with the intent to remodel it. In re Bartenwerfer, 596 B.R. 675, 677 (Bankr. N.D. Cal. 2019). Neither Mr. nor Mrs. Bartenwerfer had a contracting license or any experience with contracting, but Mr. Bartenwerfer nonetheless began managing the extensive renovations full-time.
- Elizabeth Aniskevich, In for a Dime, In for a Dollar? Can a Partner Escape Liability in Bankruptcy for a Fraud by Blaming Another Partner?, AARP Foundation (September 21, 2022).
- Daniel Lowenthal and Jonah Wacholder, Supreme Court Agrees to Hear a Case About the Scope of the Fraud Exception to Discharge, JD Supra (May 19, 2022).
- Dan Schweitzer, Supreme Court Report: Bartenwerfer v. Buckley, 21-908, National Association of Attorneys General (May 19, 2022).
- Alex Wolf, Supreme Court Takes Case on Imputing Fraud in Bankruptcy, Bloomberg Law (May 2, 2022).