Case Details

Issues

Bankruptcy, Common Law Powers, Parens Patriae

Filing State

OH

Court

U.S. Bankruptcy Court for the District of Ohio

Year

2013

Citation

In re Suwinski, 2013 Bankr. LEXIS 1247 (S.D. Ohio Bankr. Feb. 27, 2013)

Resolution

Attorney General could challenge the dischargeability of a potential judgment for consumers in a consumer protection case using his parens patriae authority.

Case Description

The Attorney General filed a consumer protection complaint against the defendant in September 2010 after a number of consumer complaints. Defendants consented to a permanent injunction, but the court had not issued a decision or finding that the state or consumers are entitled to monetary damages by the time the defendant filed for bankruptcy under Chapter 7 of the Bankruptcy Code in November 2011. The Attorney General challenged the dischargeability of the debt to the consumers injured by the defendant, arguing that he had standing to challenge dischargeability based on the doctrine of parens patriae. The court agreed. The court found that the state has a quasi-sovereign interest in protecting the economic well-being of its citizens from consumer fraud, because “the state has a great interest in protecting its citizens from losing property due to fraudulent practices.” The number of affected consumers (92) was sufficient to constitute a substantial segment of the population. Although the Ohio statutory scheme allows consumers to pursue certain claims, the relief sought by the Attorney General is broader and includes injunctive relief. Finally, the court held that although there had been no final judgment in the Attorney General’s case against the defendants, “The fact that the attorney general does not have a final judgment from the state court was not important, because the attorney general’s right to seek damages on behalf of the consumers and pursue restraining orders or injunctions are enforceable obligations and fall within the broad definition of the term “claim”.