Supreme Court Takes Case on Imputing Fraud in Bankruptcy (1)

The U.S. Supreme Court has agreed to hear a case involving whether a bankrupt debtor can wipe out a debt stemming from another party’s fraudulent act.

Kate Bartenwerfer, a bankrupt California homeowner, appealed after the U.S. Court of Appeals for the Ninth Circuit said she is stuck with a nondischargeable debt, despite her claim that she “had no control or even knowledge” of her husband’s fraudulent conduct in the sale of their home.

The homebuyer sued Bartenwerfer and her husband following the discovery of structural defects in the house in California. The Bartenwerfers jointly declared bankruptcy after losing a jury ...