Husky International Electronics, Inc. v. Ritz

578 U.S. 356, 136 S. Ct. 1581, 194 L. Ed. 2d 655 (2016)

From our private database of 46,000+ case briefs, written and edited by humans—never with AI.

Husky International Electronics, Inc. v. Ritz

United States Supreme Court
578 U.S. 356, 136 S. Ct. 1581, 194 L. Ed. 2d 655 (2016)

Facts

Between 2003 and 2007, Husky International Electronics, Inc. (Husky) (creditor) sold products to Chrysalis Manufacturing Corporation (Chrysalis). Chrysalis owed Husky nearly $164,000. Daniel Ritz, Jr. (debtor) served as Chrysalis’s director and owned 30 percent of Chrysalis’s stock. Between 2006 and 2007, Ritz transferred large amounts of Chrysalis’s money to other Ritz-controlled entities instead of using that money to pay Husky and Chrysalis’s other creditors. In May 2009, Husky sued Ritz, asserting that Ritz was personally responsible for Chrysalis’s $164,000 debt. Husky alleged that Ritz’s money-transfer scheme constituted actual fraud, which allowed a creditor to hold a company’s shareholder responsible for the company’s debt under Texas law. In December 2009, Ritz filed for Chapter 7 bankruptcy. Husky brought an adversary proceeding to hold Ritz personally responsible for Chrysalis’s debt and asserted under 11 U.S.C. § 523(a)(2)(A) that the debt could not be discharged in bankruptcy because it was a debt obtained by actual fraud. The district court held that Ritz was personally liable for Chrysalis’s debt under Texas law, but the court also held that the debt had not been obtained by actual fraud for purposes of § 523(a)(2)(A) and thus was dischargeable. The Fifth Circuit affirmed, agreeing with the district court that Ritz had not committed actual fraud for purposes of § 523(a)(2)(A). The Fifth Circuit held that actual fraud requires a false representation from the debtor to the creditor and reasoned that Ritz had not made any false representations to Husky regarding the money transfers. Because other federal appellate courts disagreed regarding whether actual fraud requires a false representation, the United States Supreme Court granted certiorari to resolve the circuit split.

Rule of Law

Issue

Holding and Reasoning (Sotomayor, J.)

Dissent (Thomas, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 742,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 742,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,000 briefs, keyed to 986 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 742,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,000 briefs - keyed to 986 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership