A flimsy basis for disputing a pivotal issue of fact is a dangerous undertaking. The bankruptcy court denied a man’s discharge for lying under oath because he testified that his signature on a promissory note was forged.
The Eleventh Circuit upheld the denial of discharge in an unpublished opinion on May 8.
A creditor sued a man in state court based on a note for about $700,000. The state court entered a default judgment when the debtor did not answer. Although the man claimed his signature on the note was forged and that he was never properly served, the debtor did not move in state court to set aside the judgment.
Instead, the debtor filed a chapter 7 petition when the judgment creditor began to garnish his wages.
In bankruptcy court, the creditor filed a claim for some $700,000 together with a complaint objecting to discharge and for a declaration that the debt was not dischargeable.
The debtor answered the complaint, contending that he was never served in state court, that he owed the creditor only $9,000, and that his signature on the note was forged. He testified to the same effect at trial.
At the trial’s conclusion, the bankruptcy judge ruled that the debt was valid. Unfortunately for the debtor, the bankruptcy judge didn’t stop with overruling the debtor’s objection to the claim.
The bankruptcy judge went on to deny the debtor’s discharge under Section 727(a)(4)(A) for “knowingly and fraudulently” making “a false oath” in connection with the case. The district court affirmed. The Eleventh Circuit did likewise in a nonprecedential, per curiam opinion on May 8.
According to the circuit court, the bankruptcy judge found that the debtor lied multiple times under oath by testifying that he never signed the note. Among other things, two witnesses at trial testified that they saw him sign the note. A handwriting expert testified that the signature was “probably” the debtor’s. Bank records in evidence showed that the creditor advanced at least part of the amount shown on the note.
Trial testimony considered as a whole, the circuit court ruled that the bankruptcy court’s findings of fact about the validity of the note and the debt were not clearly erroneous because the appellate court did not have “a definite and firm conviction that a mistake has been committed.”
Likewise, the appeals court said, the bankruptcy court did not commit clear error in finding that the debtor “knowingly and fraudulently made false oaths in connection with the adversary proceeding.”