Tag: 523(a)(6)

Bankr. E.D.N.C.: Church v. Nabors – Standing of Owner of Corporation to Bring § 523(a)(6) Claim on Individually rather than by the Corporation

Summary:

Church, who is married to the debtor, Nabors, ex-wife, owns Private Ridge Wealth Management, LLC (“PRWM”). Nabors filed a complaint with the Better Business Bureau, making allegations against PRWM, which Church alleged cost PRWM $6,000 in revenue. Church then in his individual capacity, brought suit against Nabors for making a false claim and obtained a default judgment holding that Nabors had caused malicious injury to PRWM. After Nabors filed bankruptcy, Church, acting without an attorney, brought an adversary proceeding seeking to have Nabors’ obligation to Church declared non-dischargeable pursuant to 11 U.S.C. § 523(a)(6). Nabors moved to dismiss the complaint arguing that Church lacked standing to bring the suit individually, rather than in the name of PRWM.… Read More

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Bankr. E.D.N.C.: McGinnis v. Fantone- Bankruptcy Following Settlement Agreement does not Constitute Fraud or False Written Statement

Summary:

McGinnis brought suit in state court against Fantone for two notes that Fantone had guaranteed with MSC. Following court ordered mediation, the parties agreed that Fantone would execute a modification of loan agreement for $200,000.00 with interest at six percent (6%) per year, would substitute himself as the obligor debts owed by executed by MSC, and would sign a Confession of Judgment for $200,000. Less than three weeks later, Pantone filed a voluntary Chapter 13 bankruptcy. McGinnis brought an adversary proceeding seeking a determination that Fantone’s representations, actions and/or conduct in the mediation constituted false pretenses, false representations, or actual fraud and that his Agreement to the settlement terms was a materially false written statement, due to his lack of ability to pay, and should be non-dischargeable pursuant to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: Camp Flintlock v. Stephenson- Denial of Discharge and Non-Dischargability of Claim

Summary:

Prior to the Stephenson’s bankruptcy filing, Camp Flintlock filed an action in state court against
asserting claims of fraud, constructive fraud, conversion, and unfair trade practices. The bankruptcy court granted a motion for relief from stay to allow entry of a judgment reflecting the previously rendered jury verdict, but reserved the enforcement of any monetary judgment. Subsequently, judgment was entered against the Stephenson for $635,685.00 and Camp Flintlock brought an adversary proceeding seeking to revoke their discharge and a determination that the judgment was nondischargeable. Judge Leonard dismissed the claims for relief under 11 U.S.C. §§ 727(a)(4) and 523(a)(4), but not as to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: Automotive Finance v. Ward.- Sale of Property without Consent of Lienholder

Summary:

Automotive Fiannce provided Ward’s car dealership with floor plan financing, which permitted the dealership to borrow funds to purchase cars for sale. The Automotive Finance would then hold a lien on such car, until the car, was sold and the dealership was required that it pay off the lien within 72 hours. Ward individually guarantied the obligations of the dealership under the floor plan agreement. At the time of filing the bankruptcy, the dealership had sold 4 car without paying of the liens. Automotive Finance brought an action to determine that guaranty nondischargable under 11 U.S.C. § 523(a)(6)

The bankruptcy court held that “the sale of property subject to a lien without the lienholder’s consent constitutes a “willful and malicious injury” for the purposes of § 523(a)(6).” United States v.… Read More

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Bankr. E.D.N.C.: Etheridge Oil Co. V. Brown, et al.- Discharge Action Moot following Dismissal; Termination of Bank Draft as Breach of Contract; Liability of Corporate Officeres

Summary:

A tangle of multiple cases- Thomas Brown, Michael Barns , W. Watson Barns and David Woodard were directors of Brown Oil. Brown filed Chapter 11 on August 3, 2007, but that case was dismissed on November 30, 2011. An involuntary Chapter 7 was filed for Brown Oil on October 19, 2010. Michael Barnes filed Chapter 13 on July 19, 2011.

Etheridge Oil brought an adversary proceeding against Brown seeking to have his debt declared nondischargable pursuant to 11 U.S.C. § 523(a)(2) and (a)(6). The bankruptcy court found that the dischargeability complaint was moot in the Chapter 11 case, as it had been dismissed.… Read More

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Bankr. E.D.N.C.: Poston v. Toomey- Nondischargeability under 11 U.S.C. §§ 523(a)(2)(a) and 523 (a)(6)

Summary:

In 2002, the Toomey sold real property located at 1124 Berwyn Way, Raleigh, to the Postons. At the time of the sale, the Property was encumbered by a deed of trust and, in addition, by a home equity line of credit (“HELOC”) with Central Carolina Bank (“CCB”), which was secured by a second deed of trust. At the closing of the sale, the first deed of trust was paid off and canceled of record. The Toomeys’ HELOC with CCB was paid down to zero but, unfortunately, the deed of trust securing the HELOC was not canceled and the HELOC account was not closed.… Read More

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Bankr. W.D.N.C.: Latigo Investments v. Watkins- Substantial Certainty of Harm under 11 U.S.C. § 523(a)(6)

Summary:

Watkins provided a letter to Latigo Investments and the other plaintiffs, that he owned RDS Diversity Capital Corp (“RDS”), which had obtained $30 million in financing from Waddell and Reed, Inc., for the purchase of an ownership interest in MB2, a NASCAR team.   RDS had never, in fact, been organized, did not have the ability to close the financing with Waddell and Reed, and had no ability to obtain other financing.

Accordingly, the bankruptcy court found that Watkins had acted “with substantial certainty that harm would result or a subjective motive to cause harm.” In re: Parks, 2003 WL 22989684 (4th Cir. Read More

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Bankr. EDNC: John Deere Construction v. Keeter- Conversion of Collateral as “Willful and Malicious Injury”

Summary:

The Debtor was a personal guarantor of 10 contracts between John Deere and his corporation, PEP, for the purchase of construction equipment.   Prior to filing bankruptcy, the Debtor sold 5 of the pieces of equipment to third parties, without the consent of John Deere.

John Deere then instituted an action pursuant to 11 U.S.C. § 523(a)(6) to except from discharge this debt, asserting that it arose from a “willful and malicious injury by the debtor to another entity or to the property of another entity.”  Following In re Buck, 406 B.R. 703 (Bankr. E.D.N.C. 2009), John Deere  contended that the conversion of collateral constituted such a “willful and malicious injury.”

The Court, however, found that the contracts for only 3 of the 5 pieces of converted equipment expressly prohibited sale of the property, with the remaining 2 contracts instead defining sale of such equipment only as an “event of default.”  Accordingly, the Court granted Summary Judgment as to the 3 contracts that forbade sale of the collateral, but denied it for the other two.… Read More

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