2014 WL 4293968
D. Minn.2014Background
- Venture Bank sued Lapides and Holter-Lapides in Minnesota state court seeking judgment on a debt, foreclosure, and declaratory relief related to post-discharge agreements.
- Lapides filed for Chapter 7 bankruptcy; a discharge occurred on November 16, 2009, and Venture Bank sought to refinance three mortgages on Lapides’s home but did not.
- Post-discharge, the parties executed May 9, 2010 and November 9, 2010 Change in Terms Agreements, purportedly extending and reconciling a discharged debt, which the Bankruptcy Court found lacked consideration.
- In December 2011 Citizens Bank foreclosed on the home; the Lapides home was sold at public sale.
- Bankruptcy Court held the Post-Discharge Agreements unenforceable for lack of consideration and awarded Lapides damages for discharge-injunction violation, with attorney fees; damages later recalculated on appeal.
- District Court affirmed in part, modified damages, and denied Venture Bank’s certification to the Eight Circuit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the Post-Discharge Agreements have valid consideration? | Venture Bank argues new consideration exists (forbearance/deferral of foreclosure). | Lapides argues there was no new consideration; agreements merely renewed discharged debt. | No valid consideration; agreements invalid. |
| Were pre-discharge payments voluntary? | Venture Bank contends pre-discharge payments were voluntary. | Lapides argues pre-discharge payments were involuntary due to bank pressure. | Pre-discharge payments were voluntary. |
| Were post-discharge payments involuntary under § 524(f)? | Lapides argues payments were voluntary. | Venture Bank contends payments were voluntary; or coercion not shown. | Post-discharge payments were involuntary. |
| Is the damages award correctly calculated for the discharge-injunction violation? | Lapides cross-appeal argues 12 months of payments (through May 2011) should yield $42,000. | Venture Bank argues $35,000 based on 10 months. | Damages increased to $42,000. |
| Does the court need to address mutual assent where consideration is lacking? | Not applicable due to lack of consideration; mutual assent is not reached. | Bank argues broader analysis, but moot if no consideration. | Court did not reach mutual assent because lack of consideration renders agreements invalid. |
Key Cases Cited
- In re MJK Clearing, Inc., 408 F.3d 512 (8th Cir. 2005) (lack of consideration voids contract formation; equivalent standard for contract formation)
- Fix v. First State Bank of Roscoe, 559 F.3d 803 (8th Cir. 2009) (clear error standard for factual findings; credibility assessments afforded deference)
- In re Buckles, 189 B.R. 752 (Bankr. D. Minn. 1995) (voluntary repayment permitted under 11 U.S.C. § 524)
- DuBois v. Ford Motor Credit Co., 276 F.3d 1019 (8th Cir. 2002) (objective standard for voluntariness under § 524(f))