Bartenwerfer v. Buckley

(Slip Opinion) OCTOBER TERM, 2022 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
BARTENWERFER v. BUCKLEY
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 21–908. Argued December 6, 2022—Decided February 22, 2023
Kate and David Bartenwerfer decided to remodel the house they jointly
owned in San Francisco and to sell it for a profit. David took charge of
the project, while Kate remained largely uninvolved. They eventually
sold the house to respondent Kieran Buckley. In conjunction with the
sale, Kate and David attested that they had disclosed all material facts
related to the property. After the purchase, Buckley discovered several
defects that the Bartenwerfers had failed to disclose. Buckley sued in
California state court and won, leaving the Bartenwerfers jointly re-
sponsible for more than $200,000 in damages. Unable to pay that judg-
ment or their other creditors, the Bartenwerfers filed for Chapter 7
bankruptcy. Buckley then filed an adversary complaint in the bank-
ruptcy proceeding, alleging that the debt owed him on the state-court
judgment was nondischargeable under the Bankruptcy Code’s excep-
tion to discharge of “any debt . . . for money . . . to the extent obtained
by . . . false pretenses, a false representation, or actual fraud.” 11
U. S. C. §523(a)(2)(A). The Bankruptcy Court found that David had
committed fraud and imputed his fraudulent intent to Kate because
the two had formed a legal partnership to renovate and sell the prop-
erty. The Bankruptcy Appellate Panel disagreed as to Kate’s culpabil-
ity, holding that §523(a)(2)(A) barred her from discharging the debt
only if she knew or had reason to know of David’s fraud. On remand,
the Bankruptcy Court determined that Kate lacked such knowledge
and could therefore discharge her debt to Buckley. The Bankruptcy
Appellate Panel affirmed. The Ninth Circuit reversed in relevant part.
Invoking Strang v. Bradner, 114 U. S. 555, the court held that a debtor
who is liable for her partner’s fraud cannot discharge that debt in
bankruptcy, regardless of her own culpability.
2 BARTENWERFER v. BUCKLEY
Syllabus
Held: Section 523(a)(2)(A) precludes Kate Bartenwerfer from discharg-
ing in bankruptcy a debt obtained by fraud, regardless of her own cul-
pability. Pp. 3–12.
(a) Kate (hereinafter, Bartenwerfer) disputes a straightforward
reading of §523(a)(2)(A)’s text. Bartenwerfer argues that an ordinary
English speaker would understand that “money obtained by fraud”
means money obtained by the individual debtor’s fraud. This Court
disagrees. The passive voice in §523(a)(2)(A) does not hide the relevant
actor in plain sight, as Bartenwerfer suggests—it removes the actor
altogether. Congress framed §523(a)(2)(A) to “focu[s] on an event that
occurs without respect to a specific actor, and therefore without respect
to any actor’s intent or culpability.” Dean v. United States, 556 U. S.
568, 572. It is true that context can confine a passive-voice sentence
to a likely set of actors. See, e.g., E. I. du Pont de Nemours & Co. v.
Train, 430 U. S. 112, 128–129. But the legal context relevant to
§523(a)(2)(A)—the common law of fraud—has long maintained that
fraud liability is not limited to the wrongdoer. Understanding
§523(a)(2)(A) to reflect “agnosticism” as to the identity of the wrong-
doer is consistent with the age-old rule of fraud liability.
Bartenwerfer points out that “ ‘exceptions to discharge should be
confined to those plainly expressed.’ ” Bullock v. BankChampaign,
N. A., 569 U. S. 267, 275. The Court, however, has never used this
principle to artificially narrow ordinary meaning, invoking it instead
to stress that exceptions should not extend beyond their stated terms.
See, e.g., Gleason v. Thaw, 236 U. S. 558, 559–562.
Bartenwerfer also seeks support from §523(a)(2)(A)’s neighboring
provisions in subparagraphs (B) and (C), both of which require some
culpable action by the debtor herself. Bartenwerfer claims that these
neighboring provisions make explicit what is unstated in (A). This ar-
gument turns on its head the rule that “ ‘[w]hen Congress includes par-
ticular language in one section . . . but omits it in another section of
the same Act,’ ” the Court generally takes “the choice to be deliberate.”
Badgerow v. Walters, 596 U. S. ___, ___. If there is an inference to be
drawn here, the more likely one is that (A) excludes debtor culpability
from consideration given that (B) and (C) expressly hinge on it. Bar-
tenwerfer suggests it would defy credulity to think that Congress
would bar debtors from discharging liability for fraud they did not per-
sonally commit under (A) while allowing debtors to discharge debt for
(potentially more serious) fraudulent statements they did not person-
ally make under (B). But the Court offered a possible answer for this
disparity in Field v. Mans, 516 U. S. 59, 76–77. Whatever the ra-
tionale, it does not defy credulity to think that Congress established
differing rules for (A) and (B). Pp. 3–8.
(b) Any remaining doubt about the textual analysis is eliminated by
Cite as: 598 U. S. ____ (2023) 3
Syllabus
this Court’s precedent and Congress’s response to it. In Strang v.
Bradner, 114 U. S. 555, the Court held that the fraud of one partner
should be imputed to the other partners, who “received and appropri-
ated the fruits of the fraudulent conduct.” Id., at 561. The Court so
held despite the fact that the relevant 19th-century discharge excep-
tion for fraud disallowed the discharge of debts “created by the fraud
or embezzlement of the bankrupt.” 14 Stat. 533 (emphasis added). And
when Congress next overhauled bankruptcy law, it deleted the phrase
“of the bankrupt” from the discharge exception for fraud. The unmis-
takable implication is that Congress embraced Strang’s holding. See
Ysleta Del Sur Pueblo v. Texas, 596 U. S. ___, ___. Pp. 8–10.
(c) Finally, Bartenwerfer insists that the preclusion of faultless
debtors from discharging liabilities run up by their associates is incon-
sistent with bankruptcy law’s “fresh start” policy. But the Bankruptcy
Code is not focused on the unadulterated pursuit of the debtor’s inter-
est, and instead seeks to balance multiple, often competing interests.
Bartenwerfer’s fairness-based critiques also miss the fact that
§523(a)(2)(A) does not define the scope of one’s liability for another’s
fraud. Section 523(a)(2)(A) takes the debt as it finds it, so if California
did not extend liability to honest partners, §523(a)(2)(A) would have
no role here. And while Bartenwerfer paints a picture of liability being
imposed on hapless bystanders, fraud liability generally requires a
special relationship to the wrongdoer and, even then, defenses to lia-
bility are available. Pp. 10–12.
860 Fed. Appx. 544, affirmed.
BARRETT, J., filed an opinion for a unanimous Court. SOTOMAYOR, J.,
filed a concurring opinion, in which JACKSON, J., joined.
Cite as: 598 U. S. ____ (2023) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order that
corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 21–908
_________________
KATE MARIE BARTENWERFER, PETITIONER v.
KIERAN BUCKLEY
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[February 22, 2023]
JUSTICE BARRETT delivered the opinion of the Court.
The Bankruptcy Code strikes a balance between the in-
terests of insolvent debtors and their creditors. It generally
allows debtors to discharge all prebankruptcy liabilities,
but it makes exceptions when, in Congress’s judgment, the
creditor’s interest in recovering a particular debt outweighs
the debtor’s interest in a fresh start. One such exception
bars debtors from discharging any debt for money “obtained
by . . . fraud.” 11 U. S. C. §523(a)(2)(A). The provision ob-
viously applies to a debtor who was the fraudster. But
sometimes a debtor is liable for fraud that she did not per-
sonally commit—for example, deceit practiced by a partner
or an agent. We must decide whether the bar extends to
this situation too. It does. Written in the passive voice,
§523(a)(2)(A) turns on how the money was obtained, not
who committed fraud to obtain it.
I
In 2005, Kate Bartenwerfer and her then-boyfriend, Da-
vid Bartenwerfer, jointly purchased a house in San Fran-
cisco. Acting as business partners, the pair decided to re-
model the house and sell it at a profit. David took charge of
2 BARTENWERFER v. BUCKLEY
Opinion of the Court
the project. He hired an architect, structural engineer, de-
signer, and general contractor; he monitored their work, re-
viewed invoices, and signed checks. Kate, on the other
hand, was largely uninvolved.
Like many home renovations, the Bartenwerfers’ project
was bumpier than anticipated. Still, they managed to get
the house on the market, and Kieran Buckley bought it. In
conjunction with the sale, the Bartenwerfers attested that
they had disclosed all material facts relating to the prop-
erty. Yet after the house was his, Buckley discovered sev-
eral defects that the Bartenwerfers had not divulged: a
leaky roof, defective windows, a missing fire escape, and
permit problems. Alleging that he had overpaid in reliance
on the Bartenwerfers’ misrepresentations, Buckley sued
them in California state court. The jury found in Buckley’s
favor on his claims for breach of contract, negligence, and
nondisclosure of material facts, leaving the Bartenwerfers
jointly responsible for more than $200,000 in damages.
The Bartenwerfers were unable to pay Buckley, not to
mention their other creditors. Seeking relief, they filed for
Chapter 7 bankruptcy, which allows debtors to get a “fresh
start” by discharging their debts. Marrama v. Citizens
Bank of Mass., 549 U. S. 365, 367 (2007) (internal quotation
marks omitted). While that sounds like complete relief,
there is a catch—not all debts are dischargeable. The Code
makes several exceptions to the general rule, including the
one at issue in this case: Section 523(a)(2)(A) bars the dis-
charge of “any debt . . . for money . . . to the extent obtained
by . . . false pretenses, a false representation, or actual
fraud.”
Buckley filed an adversary complaint alleging that the
money owed on the state-court judgment fell within this ex-
ception. After a 2-day bench trial, the Bankruptcy Court
decided that neither David nor Kate Bartenwerfer could
discharge their debt to Buckley. Based on testimony from
the parties, real-estate agents, and contractors, the court
Cite as: 598 U. S. ____ (2023) 3
Opinion of the Court
found that David had knowingly concealed the house’s de-
fects from Buckley. And the court imputed David’s fraudu-
lent intent to Kate because the two had formed a legal part-
nership to execute the renovation and resale project.
The Ninth Circuit’s Bankruptcy Appellate Panel agreed
as to David’s fraudulent intent but disagreed as to Kate’s.
As the panel saw it, §523(a)(2)(A) barred her from discharg-
ing the debt only if she knew or had reason to know of Da-
vid’s fraud. It instructed the Bankruptcy Court to apply
that standard on remand, and, after a second bench trial,
the court concluded that Kate lacked the requisite
knowledge of David’s fraud and could therefore discharge
her liability to Buckley. This time, the Bankruptcy Appel-
late Panel affirmed the judgment.
The Ninth Circuit reversed in relevant part. In re Bar-
tenwerfer, 860 Fed. Appx. 544 (2021). Invoking our decision
in Strang v. Bradner, 114 U. S. 555 (1885), it held that a
debtor who is liable for her partner’s fraud cannot discharge
that debt in bankruptcy, regardless of her own culpability.
860 Fed. Appx., at 546. Kate thus remained on the hook for
her debt to Buckley. Id., at 546–547. We granted certiorari
to resolve confusion in the lower courts on the meaning of
§523(a)(2)(A).1 596 U. S. ___ (2022).
II
A
“[W]e start where we always do: with the text of the stat-
ute.” Van Buren v. United States, 593 U. S. ___, ___ (2021)
(slip op., at 5). Section 523(a)(2)(A) states:
——————
1 See, e.g., In re M.M. Winkler & Assoc., 239 F. 3d 746, 749 (CA5 2001)
(debts that arise from fraud cannot be discharged); In re Ledford, 970
F. 2d 1556, 1561 (CA6 1992) (no discharge if the debtor benefited from
the fraud); Sullivan v. Glenn, 782 F. 3d 378, 381 (CA7 2015) (a debt is
nondischargeable only if the debtor knew or should have known of the
fraud); In re Walker, 726 F. 2d 452, 454 (CA8 1984) (same); In re Villa,
261 F. 3d 1148, 1151 (CA11 2001) (a debt cannot be discharged when
fraud is imputed to the debtor under agency principles).
4 BARTENWERFER v. BUCKLEY
Opinion of the Court
“A discharge under section 727 . . . of this title does
not discharge an individual debtor from any debt . . .
“(2) for money, property, services, or an extension, re-
newal, or refinancing of credit, to the extent obtained
by—
“(A) false pretenses, a false representation, or actual
fraud, other than a statement respecting the debtor’s
or an insider’s financial condition.”
By its terms, this text precludes Kate Bartenwerfer from
discharging her liability for the state-court judgment.
(From now on, we will refer to Kate as “Bartenwerfer.”)
First, she is an “individual debtor.” Second, the judgment
is a “debt.” And third, because the debt arises from the sale
proceeds obtained by David’s fraudulent misrepresenta-
tions, it is a debt “for money . . . obtained by . . . false pre-
tenses, a false representation, or actual fraud.”
Bartenwerfer disputes the third premise. She admits
that, as a grammatical matter, the passive-voice statute
does not specify a fraudulent actor. But in her view, the
statute is most naturally read to bar the discharge of debts
for money obtained by the debtor’s fraud.2 To illustrate, she
offers the sentence “Jane’s clerkship was obtained through
hard work.” According to Bartenwerfer, an ordinary Eng-
lish speaker would understand this sentence to mean that
Jane’s hard work led to her clerkship. Brief for Petitioner
——————
2 Buckley contends that Bartenwerfer has forfeited this argument be-
cause in her petition for a writ of certiorari and in the lower courts, she
asserted that §523(a)(2)(A) bars discharge when the debtor “knew or
should have known” of her partner’s fraud. We disagree. The question
presented is whether a debtor can be “subject to liability for the fraud of
another that is barred from discharge in bankruptcy . . . without any act,
omission, intent or knowledge of her own.” Pet. for Cert. i. Bartenwer-
fer’s current argument—that the debt must arise from the debtor’s own
fraud—is “fairly included” within that question and her position in the
lower courts. Supreme Court Rule 14.1(a); Yee v. Escondido, 503 U. S.
519, 534 (1992).
Cite as: 598 U. S. ____ (2023) 5
Opinion of the Court
20. Section 523(a)(2)(A) supposedly operates the same way:
An ordinary English speaker would understand that
“money obtained by fraud” means money obtained by the
individual debtor’s fraud. Passive voice hides the relevant
actor in plain sight.
We disagree: Passive voice pulls the actor off the stage.
At least on its face, Bartenwerfer’s sentence conveys only
that someone’s hard work led to Jane’s clerkship—whether
that be Jane herself, the professor who wrote a last-minute
letter of recommendation, or the counselor who collated the
application materials. Section 523(a)(2)(A) is similarly
broad. Congress framed it to “focu[s] on an event that oc-
curs without respect to a specific actor, and therefore with-
out respect to any actor’s intent or culpability.” Dean v.
United States, 556 U. S. 568, 572 (2009); B. Garner, Modern
English Usage 676 (4th ed. 2016) (the passive voice signifies
that “the actor is unimportant” or “unknown”). The debt
must result from someone’s fraud, but Congress was “ag-
nosti[c]” about who committed it. Watson v. United States,
552 U. S. 74, 81 (2007).
It is true, of course, that context can confine a passive-
voice sentence to a likely set of actors. E. I. du Pont de
Nemours & Co. v. Train, 430 U. S. 112, 128–129 (1977). If
the dean of the law school delivers Bartenwerfer’s hypothet-
ical statement to Jane’s parents, the most natural implica-
tion is that Jane’s hard work led to the clerkship. But in
the fraud-discharge exception, context does not single out
the wrongdoer as the relevant actor. Quite the opposite:
The relevant legal context—the common law of fraud—has
long maintained that fraud liability is not limited to the
wrongdoer. Field v. Mans, 516 U. S. 59, 70–75 (1995) (in-
terpreting §523(a)(2)(A) with reference to the common law
of fraud). For instance, courts have traditionally held prin-
cipals liable for the frauds of their agents. McCord v. West-
ern Union Telegraph Co., 39 Minn. 181, 185, 39 N. W. 315,
317 (1888); Tome v. Parkersburg Branch R. Co., 39 Md. 36,
6 BARTENWERFER v. BUCKLEY
Opinion of the Court
70–71 (1873); White v. Sawyer, 82 Mass. 586, 589 (1860); J.
Story, Commentaries on the Law of Agency 465–467 (1839).
They have also held individuals liable for the frauds com-
mitted by their partners within the scope of the partner-
ship. Tucker v. Cole, 54 Wis. 539, 540–541, 11 N. W. 703,
703–704 (1882); Alexander v. State, 56 Ga. 478, 491–493
(1876); Chester v. Dickerson, 54 N. Y. 1, 11 (1873); J. Story,
Commentaries on the Law of Partnership 161, 257–259
(1841). Understanding §523(a)(2)(A) to reflect the passive
voice’s usual “agnosticism” is thus consistent with the age-
old rule that individual debtors can be liable for fraudulent
schemes they did not devise.
Searching for a way to defeat the natural breadth of the
passive voice, Bartenwerfer points to our observation that
“ ‘exceptions to discharge “should be confined to those
plainly expressed.” ’ ” Bullock v. BankChampaign, N. A.,
569 U. S. 267, 275 (2013) (quoting Kawaauhau v. Geiger,
523 U. S. 57, 62 (1998)). This does not get her far. We have
never used this principle to artificially narrow ordinary
meaning, which is what Bartenwerfer asks us to do. In-
stead, we have invoked it to stress that exceptions should
not extend beyond their stated terms. In Gleason v. Thaw,
we held that “liabilities for obtaining property” did not in-
clude an attorney’s services because services are not prop-
erty. 236 U. S. 558, 559–562 (1915). In Kawaauhau, we
concluded that medical malpractice attributable to negli-
gence or recklessness did not amount to a “willful and ma-
licious injury.” 523 U. S., at 59. And in Bullock, interpret-
ing the discharge exception “for fraud or defalcation while
acting in a fiduciary capacity, embezzlement, or larceny,”
we applied the familiar noscitur a sociis canon to hold that
the term “defalcation” possessed a mens rea requirement
akin to those of “fraud,” “embezzlement,” and “larceny.”
569 U. S., at 269, 274–275. In each case, we reached a re-
sult that was “plainly expressed” by the text and ordinary
tools of interpretation. Our interpretation in this case,
Cite as: 598 U. S. ____ (2023) 7
Opinion of the Court
which rests on basic tenets of grammar, is more of the same.
Bartenwerfer also seeks support from §523(a)(2)(A)’s
neighboring provisions, which both require action by the
debtor herself. Section 523(a)(2)(B) bars the discharge of
debts arising from the “use of a statement in writing—(i)
that is materially false; (ii) respecting the debtor’s or an in-
sider’s financial condition; (iii) on which the creditor to
whom the debtor is liable . . . reasonably relied; and (iv) that
the debtor caused to be made or published with intent to de-
ceive.” (Emphasis added.) Similarly, §523(a)(2)(C) pre-
sumptively bars the discharge of recently acquired “con-
sumer debts owed to a single creditor and aggregating more
than $500 for luxury goods or services incurred by an indi-
vidual debtor” and “cash advances aggregating more than
$750 . . . obtained by an individual debtor.” §523(a)(2)(C)(i)
(emphasis added). Unlike subparagraph (A), the discharge
exceptions in subparagraphs (B) and (C) expressly require
some culpable act on the part of the debtor. According to
Bartenwerfer, these provisions make explicit what goes
without saying in (A): The debtor’s own fraud must have
given rise to the debt.
This argument flips the rule that “ ‘[w]hen Congress in-
cludes particular language in one section of a statute but
omits it in another section of the same Act,’ we generally
take the choice to be deliberate.” Badgerow v. Walters, 596
U. S. ___, ___ (2022) (slip op., at 8) (quoting Collins v.
Yellen, 594 U. S. ___, ___ (2021) (slip op., at 23)). As the
word “generally” indicates, this rule is not absolute. Con-
text counts, and it is sometimes difficult to read much into
the absence of a word that is present elsewhere in a statute.
See, e.g., Field, 516 U. S., at 67–69. But if there is an infer-
ence to be drawn here, it is not the one that Bartenwerfer
suggests. The more likely inference is that (A) excludes
debtor culpability from consideration given that (B) and (C)
expressly hinge on it.
Bartenwerfer retorts that it would have made no sense
8 BARTENWERFER v. BUCKLEY
Opinion of the Court
for Congress to set up such a dichotomy, particularly be-
tween (A) and (B). These two provisions are linked: (A)
carves out fraudulent “statement[s] respecting the debtor’s
or an insider’s financial condition,” while (B) governs such
statements that are reduced to writing. In Bartenwerfer’s
view, it “defies credulity” to think that Congress would bar
debtors from discharging liability for mine-run fraud they
did not personally commit while simultaneously allowing
debtors to discharge liability for (potentially more serious)
fraudulent statements they did not personally make. Brief
for Petitioner 23.
But in Field, we offered a possible answer for why (B) con-
tains a more debtor-friendly discharge rule than (A): Con-
gress may have “wanted to moderate the burden on individ-
uals who submitted false financial statements, not because
lies about financial condition are less blameworthy than
others, but because the relative equities might be affected
by practices of consumer finance companies, which some-
times have encouraged such falsity by their borrowers for
the very purpose of insulating their own claims from dis-
charge.” 516 U. S., at 76–77. This concern may also have
informed Congress’s decision to limit (B)’s prohibition on
discharge to fraudulent conduct by the debtor herself.
Whatever the rationale, it does not “def[y] credulity” to
think that Congress established differing rules for (A) and
(B). Brief for Petitioner 23.
B
Our precedent, along with Congress’s response to it, elim-
inates any possible doubt about our textual analysis. In the
late 19th century, the discharge exception for fraud read as
follows: “[N]o debt created by the fraud or embezzlement of
the bankrupt . . . shall be discharged under this act.” Act of
Mar. 2, 1867, §33, 14 Stat. 533 (emphasis added). This lan-
guage seemed to limit the exception to fraud committed by
Cite as: 598 U. S. ____ (2023) 9
Opinion of the Court
the debtor herself—the position that Bartenwerfer advo-
cates here.
But we held otherwise in Strang v. Bradner. In that case,
the business partner of John and Joseph Holland lied to fel-
low merchants in order to secure promissory notes for the
benefit of their partnership. 114 U. S., at 557–558. After a
state court held all three partners liable for fraud, the Hol-
lands tried to discharge their debts in bankruptcy on the
ground that their partner’s misrepresentations “were not
made by their direction nor with their knowledge.” Id., at
557, 561. Even though the statute required the debt to be
created by the fraud “of the bankrupt,” we held that the
Hollands could not discharge their debts to the deceived
merchants. Id., at 561. The fraud of one partner, we ex-
plained, is the fraud of all because “[e]ach partner was the
agent and representative of the firm with reference to all
business within the scope of the partnership.” Ibid. And
the reason for this rule was particularly easy to see because
“the partners, who were not themselves guilty of wrong, re-
ceived and appropriated the fruits of the fraudulent conduct
of their associate in business.” Ibid.The next development—Congress’s post-Strang legisla-
tion—is the linchpin.3 “This Court generally assumes that,
when Congress enacts statutes, it is aware of this Court’s
relevant precedents.” Ysleta Del Sur Pueblo v. Texas, 596
U. S. ___, ___ (2022) (slip op., at 13). Section 523(a)(2) is no
exception to this interpretive rule. Lamar, Archer & Cofrin,
LLP v. Appling, 584 U. S. ___, ___–___ (2018) (slip op., at
——————
3 Bartenwerfer asserts that we should ignore Strang because, as a
product of the Swift v. Tyson era, it turned on the Court’s understanding
of the general common-law rule rather than its interpretation of the stat-
utory text. 16 Pet. 1 (1842). This argument is a detour we need not take.
Whatever Strang’s rationale, it constituted an important part of the
background against which Congress drafted the current discharge excep-
tion for fraud.
10 BARTENWERFER v. BUCKLEY
Opinion of the Court
10–11). So if Congress had reenacted the discharge excep-
tion for fraud without change, we would assume that it
meant to incorporate Strang’s interpretation. Appling, 584
U. S., at ___–___ (slip op., at 10–11); Lorillard v. Pons, 434
U. S. 575, 580 (1978).
But Congress went even further than mere reenactment.
Thirteen years after Strang, when Congress next over-
hauled bankruptcy law, it deleted “of the bankrupt” from
the discharge exception for fraud, which is the predecessor
to the modern §523(a)(2)(A). Act of July 1, 1898, §17, 30
Stat. 550 (“A discharge in bankruptcy shall release a bank-
rupt from all of his provable debts, except such as . . . are
judgments in actions for frauds, or obtaining property by
false pretenses or false representations, or for willful and
malicious injuries to the person or property of another”). By
doing so, Congress cut from the statute the strongest tex-
tual hook counseling against the outcome in Strang. The
unmistakable implication is that Congress embraced
Strang’s holding—so we do too.
C
In a last-ditch effort to persuade us, Bartenwerfer in-
vokes the “fresh start” policy of modern bankruptcy law.
Precluding faultless debtors from discharging liabilities
run up by their associates, she says, is inconsistent with
that policy, so §523(a)(2)(A) cannot apply to her. A contrary
holding would be a throwback to the harsh days when
“debtors faced ‘perpetual bondage to their creditors,’ surviv-
ing on ‘a miserable pittance [and] dependent upon the
bounty or forbearance of [their] creditors.’ ” Brief for Peti-
tioner 16 (quoting 3 J. Story, Commentaries on the Consti-
tution of the United States 5 (1833)). The same Congress
that “champion[ed]” the fresh start could not also have
shackled honest debtors with liability for frauds that they
did not personally commit. Brief for Petitioner 37.
This argument earns credit for color but not much else.
Cite as: 598 U. S. ____ (2023) 11
Opinion of the Court
To begin, it characterizes the Bankruptcy Code as focused
on the unadulterated pursuit of the debtor’s interest. But
the Code, like all statutes, balances multiple, often compet-
ing interests. Section 523 is a case in point: Barring certain
debts from discharge necessarily reflects aims distinct from
wiping the bankrupt’s slate clean. Perhaps Congress con-
cluded that these debts involved particularly deserving
creditors, particularly undeserving debtors, or both. Re-
gardless, if a fresh start were all that mattered, §523 would
not exist. No statute pursues a single policy at all costs,
and we are not free to rewrite this statute (or any other) as
if it did. Azar v. Allina Health Services, 587 U. S. ___, ___
(2019) (slip op., at 15).
It also bears emphasis—because the thread is easily lost
in Bartenwerfer’s argument—that §523(a)(2)(A) does not
define the scope of one person’s liability for another’s fraud.
That is the function of the underlying law—here, the law of
California. Section 523(a)(2)(A) takes the debt as it finds it,
so if California did not extend liability to honest partners,
§523(a)(2)(A) would have no role to play. Bartenwerfer’s
fairness-based critiques seem better directed toward the
state law that imposed the obligation on her in the first
place.
And while Bartenwerfer paints a picture of liability im-
posed willy-nilly on hapless bystanders, the law of fraud
does not work that way. Ordinarily, a faultless individual
is responsible for another’s debt only when the two have a
special relationship, and even then, defenses to liability are
available. For instance, though an employer is generally
accountable for the wrongdoing of an employee, he usually
can escape liability if he proves that the employee’s action
was committed outside the scope of employment. Restate-
ment (Third) of Agency §7.07 (2006); D. Dobbs, P. Hayden,
& E. Bublick, Law of Torts §425 (2022). Similarly, if one
partner takes a wrongful act without authority or outside
the ordinary course of business, then the partnership—and
12 BARTENWERFER v. BUCKLEY
Opinion of the Court
by extension, the innocent partners—are generally not on
the hook. Uniform Partnership Act §305 (2013). Partner-
ships and other businesses can also organize as limited-
liability entities, which insulate individuals from personal
exposure to the business’s debts. See, e.g., §306(c) (limited-
liability partnerships); Uniform Limited Partnership Act
§303(a) (2013) (limited partnerships); Uniform Limited Li-
ability Company Act §304(a) (2013) (limited-liability com-
panies).
Individuals who themselves are victims of fraud are also
likely to have defenses to liability. If a surety or guarantor
is duped into assuming secondary liability, then his obliga-
tion is typically voidable. Law of Suretyship and Guaranty
§6:8 (2022); Restatement (Third) of Suretyship & Guaranty
§12 (1996). Likewise, if a purchaser unwittingly contracts
for fraudulently obtained property, he may be able to re-
scind the agreement. 27 R. Lord, Williston on Contracts
§69:47 (4th ed. 2022). Thus, victims have a variety of ante-
cedent defenses at their disposal that, if successful, protect
them from acquiring any debt to discharge in a later bank-
ruptcy proceeding.
All of this said, innocent people are sometimes held liable
for fraud they did not personally commit, and, if they de-
clare bankruptcy, §523(a)(2)(A) bars discharge of that debt.
So it is for Bartenwerfer, and we are sensitive to the hard-
ship she faces. But Congress has “evidently concluded that
the creditors’ interest in recovering full payment of debts”
obtained by fraud “outweigh[s] the debtors’ interest in a
complete fresh start,” Grogan v. Garner, 498 U. S. 279, 287
(1991), and it is not our role to second-guess that judgment.
III
We affirm the Ninth Circuit’s judgment that Kate Bar-
tenwerfer’s debt is not dischargeable in bankruptcy.
It is so ordered.
Cite as: 598 U. S. ____ (2023) 1
SOTOMAYOR, J., concurring
SUPREME COURT OF THE UNITED STATES
_________________
No. 21–908
_________________
KATE MARIE BARTENWERFER, PETITIONER v.
KIERAN BUCKLEY
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[February 22, 2023]
JUSTICE SOTOMAYOR, with whom JUSTICE JACKSON joins,
concurring.
The Court correctly holds that 11 U. S. C. §523(a)(2)(A)
bars debtors from discharging a debt obtained by fraud of
the debtor’s agent or partner. Congress incorporated into
the statute the common-law principles of fraud, Husky Int’l
Electronics, Inc. v. Ritz, 578 U. S. 356, 360 (2016) (citing
Field v. Mans, 516 U. S. 59, 69 (1995)), which include
agency and partnership principles, ante, at 5–6. This Court
long ago confirmed that reading when it held that fraudu-
lent debts obtained by partners are not dischargeable,
Strang v. Bradner, 114 U. S. 555, 559–561 (1885), and Con-
gress “embraced” that reading when it amended the statute
in 1898, ante, at 10.
The Bankruptcy Court found that petitioner and her hus-
band had an agency relationship and obtained the debt at
issue after they formed a partnership. Because petitioner
does not dispute that she and her husband acted as part-
ners, the debt is not dischargeable under the statute.
The Court here does not confront a situation involving
fraud by a person bearing no agency or partnership rela-
tionship to the debtor. Instead, “[t]he relevant legal con-
text” concerns fraud only by “agents” and “partners within
the scope of the partnership.” Ante, at 5–6. With that un-
derstanding, I join the Court’s opinion.