Section 523 Exceptions to discharge.

Revision as of 16:37, 20 November 2012

American National Ins. Co. v. Bossier (July 16, 2012)
Issue: Does Defendant’s violation of a contract provision to reimburse Plaintiff for unearned sales commissions constitute fraud or defalcation while acting in a fiduciary capacity, or embezzlement, rendering the debts owed to plaintiff nondischargeable under § 523(a)(4)?
Holding: Although a fiduciary duty existed between Defendant and Plaintiff, Plaintiff did not meet its burden to prove defalcation or embezzlement under § 523(a)(4). On the embezzlement claim, the Court found that the failure to reimburse Plaintiff was at most a breach of contract. The Court also found that Plaintiff could not show the requisite reckless conduct to support a claim for defalcation.

Hutton v. Ferguson, et al. (September 1, 2011)
Issue: When Plaintiffs have shown that Debtor used business loan proceeds for personal purposes, commingled funds, wiped business computer hard drives, and failed to meet terms of promissory notes, have the plaintiffs met their burden of establishing by a preponderance of the evidence that the debt is: non-dischargeable under 11 U.S.C. § 727(a)(2), (3), (4) or (5), or under 523(a)(4) or (6)?
Holding: Plaintiffs met their burden and the Court found the debt to be non-dischargeable under § 727(a)(2)&(5) and § 523(a)(4)&(6). Plaintiffs did not meet their burden under § 727(a)(3)&(4) or § 523(a)(2).
Issue: Does res judiciata bar the bankruptcy court or is the Court collaterally estopped from considering the dischargeability of the claims if a state district court has already determined the issue?
Holding: Because the state court did not make any specific factual findings on the dischargeability issue, the bankruptcy court is not barred under res judicata or collateral estoppel.

Randall v. Atkins (Nov. 30, 2011)
Issue: On motion for summary judgment, whether judgment of attorney’s fees entered against Debtor in favor of Debtor’s ex-wife in a state court custody proceeding were non-dischargeable under § 523.
Holding: The attorney’s fees were not dischargeable because they constituted domestic support obligations under § 523(a)(5) in that they were owed to or recoverable by Hutton’s former spouse and were in the nature of support. The Court also rejected Debtor’s argument that the attorney’s fees were dischargeable under the Tenth Circuit’s “unusual circumstances” exception.

Century 21 v. Gharbi (March 3, 2011)
Issue: Whether the Defendant Mohammad Gharbi (“Defendant”) violated the Anticybersquatting Consumer Protection Act, 15 U.S.C. §1125(d), when he continued to use domain names which contained the Century 21 marks after his franchise agreements with Century 21 had been terminated? If so, what is the amount of damages to be awarded under § 1117(d), and will that award be held nondischargeable under 11 U.S.C. § 523(a)(6)?
Holding: The Court finds (1) that the Defendant had a bad faith intent to profit from the use of the domain names and therefore violated 15 U.S.C. § 1125(d). The Court further finds that (2) Plaintiff should be awarded $25,000 per violation, or $75,000 total, plus attorneys’ fees as determined under Federal Rule of Bankruptcy Procedure 7054; and (3) that this award will be held nondischargeable under 11 U.S.C. § 523(a)(6) because Defendant caused Plaintiff a willful and malicious injury. The relief requested by the Plaintiff should be GRANTED.

Lange v. Lange (November 3, 2010)
Issue: Is Plaintiff, Debtor’s ex-husband, entitled to indemnification for payment on debts when a Divorce Decree executed prior to the Debtor’s filing of Chapter 7 bankruptcy provided that Plaintiff would be indemnified and held harmless for Debtor’s failure to pay specific debts?
Holding: The Court finds that those debts listed in Debtor’s Schedule “F,” in which she listed Plaintiff as a co-debtor on Schedule “H” and were also listed in the Divorce Decree, are all non-dischargeable only to the extent that the creditor/claimant obtains payment and/or a money judgment against Plaintiff. Plaintiff would then, under 11 U.S.C. § 523(a)(15), have a right of indemnification against Defendant that would not be discharged by Defendant’s Chapter 7 discharge. Plaintiff failed to provide a sufficient evidentiary basis to show that he was entitled to indemnification for a debt not listed in Debtor’s schedules and for any debt relating to a lease on an automobile. The Court finds that the debts are therefore not subject to a right of indemnification under 523(a)(15) and are completely discharged.

Materials Products v. Ortiz (Aug. 27, 2010)
Issue: If a Complaint is filed under Section 523(a)(2), does that encompass both Section 523(a)(2)(A) and (B)?
Holding: The Court finds unpersuasive Plaintiff’s assertion that in filing its Complaint under Section 523(a)(2), the Plaintiff incorporated sections (A) and (B). Plaintiff refers and cites to § 523(a)(2)(A), but never mentions § 523(a)(2)(B). Dismissal, not leave to amend, is appropriate because the Plaintiff failed to plead facts supporting non-dischargeability on the grounds it cites, Section 523(a)(2)(A).

Kesselring v. Doyal et al (March 4, 2010)
Issue: Are debts dischargeable under 11 U.S.C. § 523(a)(2)(A) that were incurred through a state court finding Debtor liable for fraud when the jury instructions used a definition of “fraud” broader than that used to find “actual fraud” to be used to find a debt nondischargable?
Holding: The Court looked to determine whether or not omitting a material fact, as opposed to making a material representation, is enough to find a debt nondischargable under § 523(a)(2)(A), and held that because a party’s material omission may be considered to constitute a false representation the Debtor is liable for the fraud committed, and the debt owed is nondischargable.

Kesselring v. Olivarez et al (March 4, 2010)
Issue: Are debts dischargeable under 11 U.S.C. § 523(a)(2)(A) that were incurred through a state court finding Debtor liable for fraud when the jury instructions used a definition of “fraud” broader than that used to find “actual fraud” to be used to find a debt nondischargeable?
Holding: The Court looked to determine whether or not omitting a material fact, as opposed to making a material representation, is enough to find a debt nondischargeable under § 523(a)(2)(A), and held that because a party’s material omission may be considered to constitute a false representation the Debtor is liable for the fraud committed, and the debt owed is nondischargeable.

Corn v. Corn (July 11, 2008)
Issue: At issue is the dischargeability of three debts incurred during the marriage of Channing and Elizabeth Corn. Plaintiff asserts that Defendant should remain liable to Plaintiff for certain marital debts pursuant to 11 U.S.C. § 523(a)(15), an exception to discharge for debts arising out of a divorce. Defendant contends in her motion for summary judgment that the Court must determine whether these obligations constitute spousal support under § 523(a)(5) (which she claims they are not), and therefore such debts are dischargeable.
Holding: The Court grants the Plaintiff’s Motion for Summary Judgment and will deny the Defendant’s Motion for Summary Judgment. Plaintiff is entitled to judgment as a matter of law because the debts were not in the nature of a domestic support obligation but were incurred in the course of the dissolution of the parties’ marital relationship.