In re Montano BAP Opinion


I have attached a recent ruling from the BAP which includes a great discussion on the one-action rule and anti-deficiency statutes in California. The court’s analysis can be found on pages 16-20 and walks someone new to this area of law through the process by examining the interplay between Section 726 and Section 580b. The court granted the debtor’s motion for summary judgment on this basis without doing a fraud analysis pursuant to 11 USC Section 523(a)(2).

The court also granted attorney’s fees to the debtor pursuant to 11 USC Section 523(d) because no evidence was demonstrated that the creditor met the burden of demonstrating “substantial justification” in bringing the action when the creditor could not demonstrate actual reliance on the alleged fraudulent misrepresentations. Moreover, the court further recognized that a creditor must be substantially justified at all times through trial to be insulated from paying attorney’s fee under Section 523(d).

Happy Holidays and Happy New Year!
Warmest regards,

Magdalena Reyes Bordeaux
Supervising Attorney
Public Counsel
Consumer Law Project &
Debtor Assistance Project

Ph: 213.385.2977 ext. 105
Fx: 213.385.9089

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