A. Elliott Archer, et Ux. v. Arlene L. Warner (538 U.S. 314)
U.S. Supreme Court · decided March 31, 2003 · Supreme Court Database (Spaeth)
- Citation
- 538 U.S. 314 · 123 S. Ct. 1462
- Decided
- March 31, 2003
- Term
- October Term 2002
- Vote
- 7–2
- Majority author
- Justice Breyer
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice Breyer delivered the opinion of the Court. The Bankruptcy Code provides that a debt shall not be dischargeable in bankruptcy “to the extent” it is “for money ... obtained by ... false pretenses, a false representation, or actual fraud.” 11 U. S. C. § 523(a)(2)(A). Can this language cover a debt embodied in a settlement agreement that settled a creditor’s earlier claim “for money ... obtained by ... fraud”? In our view, the statute can cover such a debt, and we reverse a lower court judgment to the contrary. I This case arises out of circumstances that we outline as follows: (1) A sues B seeking money that (A says) B obtained *317 through fraud; (2) the parties settle the lawsuit and release related claims; (3) the settlement agreement does not resolve the issue of fraud, but provides that B will pay A a fixed sum; (4) B does not pay the fixed sum; (5) B enters bankruptcy; and (6) A claims that B’s obligation to pay the fixed settlement sum is nondischargeable because, like the original debt, it is for “money . . . obtained by . . . fraud.” This outline summarizes the following circumstances: In late 1991, Leonard and Arlene Warner bought the Warner Manufacturing Company for $250,000. About six months later they sold the company to Elliott and Carol Archer for $610,000. A few months after that the Archers sued the Warners in North Carolina state court for (among other…
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