Islamov v. Ungar (In Re Ungar)
633 F.3d 675
| 8th Cir. | 2011Background
- Ungar induced Islamov to borrow and invest about $503,791 based on her false profit representations.
- Ungar reported phantom profits and concealed losses; she used funds for personal expenses and to support the fraud.
- Islamov received $377,615 in payments, some to cover interest, with roughly $275,615 attributed to principal returns.
- Ungar filed Chapter 7; Islamov sought non-dischargeability under 11 U.S.C. § 523(a)(2)(A) and a redirected judgment.
- Bankruptcy court held the debt non-dischargeable for fraud and entered a $228,791 judgment; BAP affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Islamov’s reliance was justifiable under §523(a)(2)(A). | Islamov's reliance justified given Ungar’s confidence-building, even if not reasonable. | Ungar argues reliance was not justifiable due to misrepresentations. | Justifiable reliance found; district court did not err. |
| Whether the bankruptcy court had authority to enter a monetary judgment after non-dischargeability is found. | Court has equitable jurisdiction to liquidate debt. | No proper notice or basis for monetary judgment beyond dischargeability ruling. | Bankruptcy court may enter monetary judgment after ruling on dischargeability. |
| What is the correct amount of non-dischargeable debt, given repayments and alleged expenses? | Dispute over $102,000 treated as interest; seeks larger non-dischargeable amount. | Amounts allocated to principal vs. interest are as found by the evidence; not clearly erroneous. | Court accepted limited uncontested evidence; affirmed judgment amount. |
Key Cases Cited
- Field v. Mans, 516 U.S. 59 (U.S. 1995) (defines justifiable reliance under §523(a)(2)(A))
- In re Freier, 604 F.3d 583 (8th Cir. 2010) (weight of the evidence; issue for trier of fact)
- Morrison v. W. Builders of Amarillo, Inc. (In re Morrison), 555 F.3d 473 (5th Cir. 2009) (bankruptcy court may liquidate debt after non-dischargeability ruling)
- Johnson v. Riebesell (In re Riebesell), 586 F.3d 782 (10th Cir. 2009) (collection-specific jurisdictional considerations in bankruptcy)
- Abramowitz v. Palmer, 999 F.2d 1274 (8th Cir. 1993) (related-to jurisdiction to impose monetary remedies)