Lavender v. Manheim's Pennsylvania Auction Services, Inc., 399 F. App'x 649

Lavender filed for bankruptcy; Manheim's creditors claimed a nondischargeable debt under 11 U.S.C. § 523(a)(2)(B) based on Lavender's 1998 financial statement.
Bankruptcy Court denied Lavender's summary judgment motion, and found that creditors reasonably relied on the 1998 statement to extend and renew financing.
Creditors had a long-standing four-plus year relationship with Lavender, including guaranty, bank letter, dealer's license, tax returns, and a credit report.
Lavender argued no genuine issue of material fact remained about reasonable reliance and challenged the creditors’ verification efforts beyond a credit report.
Creditors opposed summary judgment and later produced additional documents and a witness; sanctions and discovery issues were raised by Lavender.
The district court (on appeal) conducted de novo review of law and a deferential review of factual findings, and affirmed the bankruptcy court's rulings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Reasonableness of reliance under §523(a)(2)(B)	Lavender contends no genuine fact exists on reliance due to lack of verification.	Manheim relied reasonably on Lavender's 1998 statement in extending/renewing credit.	Reasonable reliance found; no clear error in bankruptcy court's factual finding.
Sanctions for discovery abuses	Lavender asserts sanctions should be imposed for discovery deficiencies.	Creditors acted with explanations for delays; prejudice to Lavender was insufficient.	Bankruptcy Court did not abuse its discretion in denying sanctions.
Interrogatories and related disclosure issues	Unsigned or late responses prejudiced trial.	Sanctions issues argued but not properly preserved; any prejudice was not shown.	No sanctions; issues either waived or not shown to be prejudicial; no abuse of discretion.

In re Bonnanzio, 91 F.3d 296 (2d Cir. 1996) (reasonableness of reliance under §523(a)(2)(B) is a factual question)
Novak v. Wolpoff & Abramson LLP, 536 F.3d 175 (2d Cir. 2008) (requires record-informed reasoning for sanctions and proceedings)
Patterson v. Balsamico, 440 F.3d 104 (2d Cir. 2006) (factors for sanctions under Rule 37)
Softel, Inc. v. Dragon Med. & Sci. Commc’ns, Inc., 118 F.3d 955 (2d Cir. 1997) (discovery sanction standards and prejudice considerations)
Davis v. New York, 316 F.3d 93 (2d Cir. 2002) (summary judgment standard and record-viewing)
Allianz Ins. Co. v. Lerner, 416 F.3d 109 (2d Cir. 2005) (sanctions and prejudice standards in bankruptcy adversary proceedings)
In re Momentum Mfg. Corp., 25 F.3d 1132 (2d Cir. 1994) (application of summary judgment standards in bankruptcy context)
In re Jackson, 593 F.3d 171 (2d Cir. 2010) (plenary review of bankruptcy court factual findings and law)
In re Kalikow, 602 F.3d 82 (2d Cir. 2010) (general framework for appellate review of bankruptcy decisions)