Archers V. Warner: Court Case

ARCHER V. WARNER
(01-1418) 538 U.S. 314 (2003)
283 F.3d 230, reversed and remanded.
NATURE OF CASE
Leonard and Arlene Warner sold the Warner Manufacturing Company to Elliott and Carol Archer. The Archers sued the Warners in North Carolina state court for fraud in connection to the sale. The settlement was that the Warners would pay the Archers $300,000. The Warners paid $200,000 and executed a promissory note for $100,000. The Warners failed to make payments on the promissory note and the Archers sued. The Warners filed for bankruptcy and the Archers brought the claim to the Bankruptcy Court to find the debt nondischargeable. Leonard Warner agreed to a consent order holding his debt nondischargeable while Arlene Warner contested nondischargeability. The Bankruptcy Court denied the Archers’ claim. The District Court and the Court of Appeals affirmed.
FACTS
Leonard and Arlene Warner bought the Warner Manufacturing Company for $250,000 in 1991. They sold the building to Elliott and Carol Archer for $610,000 six months later. They later sued the Warners in North Carolina state court for fraud in connection with the sale. The parties enter into a
127 (1979), a case where Brown sued Felsen in state court for money allegedly obtained through fraud in which a consent decree was entered that stipulated that Felsen would pay Brown a specified amount but didn’t indicate the payment was for fraudulent actions. Felsen failed to pay and entered into bankruptcy; Brown asked that the debt be held nondischargeable because it was for money obtained by fraud. The Supreme Court in that case held that claim preclusion did not prevent the Bankruptcy Court from looking beyond the record of the state court proceeding and the stipulation and consent judgment to decide whether the debt was for money obtained by fraud. In its new Archer ruling, the Supreme Court states that the Brown holding is