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Infatuation Negates Reliance in Alleged Fraud Between 2 Lovers

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  • Basketball coach and a referee met during a game.
  • The two fell in love and a romantic relationship ensured.
  • Referee loaned the Coach $40,000.
  • Romance ended under bad terms.
  • Coach (debtor) files Chapter 13
  • Referee cries “foul” and objects to Chapter 13 claiming debtor was excepted from discharge.

Findings of Fact

  • Bankruptcy case basic proofs were based on two emails from the Coach (debtor) to the referee disclosing more than $64,000 in debt.
  • E-mails did not disclose an additional $56,000 in student loans.
  • Referee (Plaintiff) argued that the failure of the Coach to disclose the additional debt constituted fraud based on material facts that were left out of the email.
  • Referee (Plaintiff) argued that she relied on email.

Final Ruling by Bankruptcy Court:

  • Judge conducted a trial and discharged the debt for lack of reliance on a false statement.
  • Judge further stated that, even had the referee known about the other debt, “it would not have swayed her one bit”.
  • The Judge recognized the difference between relationships and debts arising from affairs of the heart
  • Judge ended his opinion that the coach could repay the debt voluntarily out of the goodness of her heart.

Think twice when loaning money when your heart rules rather than a business deal.  Love can blind you into making a bad business decision.