494 B.R. 562
Bankr. M.D. Fla.2013Background
- Debtor Vincent Russo (principal of JVA/KVA Electric) executed a continuing personal guaranty to HD Supply on a company credit application before filing Chapter 7.
- Debtor filed Chapter 7 on November 29, 2011 and received a discharge on March 30, 2012.
- After discharge, HD Supply extended further credit to the company and supplied at least $21,362.38 in products that went unpaid.
- HD Supply sent a collection letter to the company asserting Russo remained personally obligated under the continuing guaranty; Russo never formally revoked the guaranty in writing.
- Russo sued under 11 U.S.C. § 524(a)(2) alleging a violation of the discharge injunction. HD Supply pleaded five affirmative defenses (including lack of notice and continuing guaranty liability) and moved for summary judgment on the guaranty defense; Russo cross-moved and moved to strike several defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a prepetition continuing guaranty creates a non-dischargeable obligation for postpetition advances | Russo: prepetition guaranty created a contingent claim existing at petition date and thus personal liability was discharged | HD Supply: continuing guaranty covers future transactions; because Russo never revoked it in writing, he remains liable for post-discharge company debts | Court: Guaranty created a contingent prepetition claim (a "debt") subject to discharge; SDJ denied for HD Supply and struck that affirmative defense |
| Whether HD Supply’s lack of actual notice of Russo’s bankruptcy defeats discharge or creates an exception under §523(a)(3) | Russo: discharge applies regardless; HD Supply had no basis to collect | HD Supply: genuine dispute whether it had actual notice; lack of notice relevant to excepting claim from discharge | Court: Fact issue exists on actual notice—Motion to Strike denied as to that defense; summary judgment denied to both sides on remaining issues |
| Whether HD Supply’s collection letter constituted a willful violation of the discharge injunction | Russo: letter asserting personal liability violated §524(a)(2) and could be willful if HD Supply knew of the discharge | HD Supply: argues it reasonably believed Russo remained liable under guaranty and/or lacked notice | Court: Whether communication was willful remains a factual question to be resolved at further proceedings |
Key Cases Cited
- In re Lipa, 433 B.R. 668 (Bankr. E.D. Mich.) (prepetition guaranty held a contingent claim subject to discharge)
- Resolution Trust Corp. v. Haught, 120 B.R. 233 (Bankr. M.D. Fla.) (discussed guaranty liability for postpetition advances; facts distinguishable)
- In re Weeks, 400 B.R. 117 (Bankr. W.D. Mich.) (postpetition guaranty and renewal analyzed; court adopted a narrower view rejected here)