Treadwell v. Glenstone Lodge, Inc.
637 F.3d 855
8th Cir.2011Background
- Memory Travel registered as a Missouri fictitious name; ownership stated as 50/50 between Larry and Carole.
- Memory Travel contracted with Glenstone Lodge for the Gatlinburg Spring Fling, promising payment via a single check and depositing a $250 upfront; total addenda exceed $64,000.
- Fling generated ~$33,000 from Red Hat Society participants; Carole mismanaged funds and concealed shortfalls from Glenstone to cover continued expenses.
- The Treadwells departed April 24, 2006 without paying the bill; Glenstone sought payment; Carole promised payments and signed invoices; a forged or misrepresented payment scheme ensued, including a $20,000 wire from a trust with the husband’s name.
- Glenstone obtained a Tennessee default judgment (~$153,611.44) and registered it in Missouri, creating a lien; foreclosure proceedings were scheduled on the Branson home.
- The Treadwells filed Chapter 7 bankruptcy in August 2008; Glenstone asserted non-dischargeability under 523(a)(2)(A) and sought lien avoidance; the BAP ruled Larry’s debt dischargeable and Carole’s non-dischargeable, prompting this appeal and remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Glenstone meets 523(a)(2)(A) non-dischargeability | Glenstone argues Carole’s misrepresentations were willful and justifiably relied upon, causing damage. | Treadwells contend either no justifiable reliance or no dischargeability under imputing fraud; partnership issues unresolved. | Remand to decide underlying imputed-fraud and partnership findings. |
| Whether Carole’s fraud can be imputed to Larry via partnership | Glenstone asserts Memory Travel was a partnership and Larry knew or should have known of Carole's fraud. | Treadwells contend no partnership or agency; Larry lacked authority and knowledge. | Remand required to resolve partnership/intent findings and potential imputation. |
| Whether the BAP properly addressed imputed-fraud issues on appeal | Glenstone argues the BAP appropriately considered imputation and remanded for factual development. | Treadwells argue the BAP erred by not deferring to the bankruptcy court’s findings and by making factual conclusions. | Remand to the bankruptcy court for complete factual findings on partnership and Larry’s knowledge. |
Key Cases Cited
- Field v. Mans, 516 U.S. 59 (1995) (fraud burden and reliance standards in § 523(a)(2)(A))
- In re Walker, 726 F.2d 452 (8th Cir. 1984) (imputation of fraud depends on knowledge of partner; partnership inquiry is factual)
- R & R Ready Mix v. Freier (In re Freier), 604 F.3d 583 (8th Cir. 2010) (definition of non-dischargeability standard for § 523(a)(2)(A))
- Sells v. Porter (In re Porter), 375 B.R. 822 (8th Cir. BAP 2007) (BAP may affirm on any record-supported basis)
- Pierson, 219 F.3d 803 (8th Cir. 2000) (appellate review of BAP findings; remand framework)
- Walker v. Donnelly, 927 F.2d 369 (8th Cir. 1991) (abundant partnership evidence; partnership status evaluated as fact)
- Weston v. Donnelly, 927 F.2d 369 (8th Cir. 1991) (abundant written material evidencing partnership; fictitious-name registration as evidence)
- Hanig v. City of Winner, 527 F.3d 674 (8th Cir. 2008) (remand on collateral estoppel issues when appropriate)