Source: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=523&invol=213
Timestamp: 2014-08-20 08:47:12
Document Index: 11607982

Matched Legal Cases: ['§ 523', '§523', '§523', '§ 523', '§56', '§ 523', '§523', '§523']

http://laws.findlaw.com/us/523/213.html
Section 523(a)(2)(A) of the Bankruptcy Code excepts from discharge in bankruptcy any debt  for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by  false pretenses,a false representation, or actual fraud. 11 U.S.C. § 523(a)(2)(A). The issue in this case is whether §523(a)(2)(A) bars the discharge of treble damages awarded on account of the debtors fraudulent acquisition of money, property, services, or  credit, or whether the exception only encompasses the value of the money, property, services, or  credit the debtor obtains through fraud. We hold that §523(a)(2)(A) prevents the discharge of all liability arising from fraud, and that an award of treble damages therefore falls within the scope of theexception.
Petitioner subsequently filed for relief under Chapter 7 of the Bankruptcy Code, seeking to discharge his debts. The tenants filed an adversary proceeding against petitioner in the Bankruptcy Court, arguing that the debt owed to them arose from rent payments obtained by actual fraud and that the debt was therefore nondischargeable under 11 U.S.C. § 523(a)(2)(A). They also sought treble damages and attorneys fees and costs pursuant to the New Jersey Consumer Fraud Act. See N. J. Stat. Ann. §§56:82, 56:819 (West 1989).
Following a bench trial, the Bankruptcy Court ruled in the tenants favor. In re Cohen, 185 B. R. 171 (1994); 185 B. R 180 (1995). The court found that petitioner had committed actual fraud within the meaning of 11 U.S.C. § 523(a)(2)(A) and that his conduct amounted to an unconscionable commercial practice under the New Jersey Consumer Fraud Act. As a result, the court awarded the tenants treble damages totaling $94,147.50, plus reasonable attorneys fees and costs. Noting that courts had reached conflicting conclusions on whether §523(a)(2)(A) excepts from discharge punitive damages (such as the treble damages at issue here), the Bankruptcy Court sided with those decisions holding that §523(a)(2)(A) encompasses all obligations arising out of fraudulent