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. § 727(a)(2), (5), and (7) or § 523(a)(2) and (6).
Camp Flintlock argues that four transfers made by the Stephensons, to their church, their son, their attorney and their insurance carrier, should, pursuant to § 727(a)(2), preclude their discharge. It further argued that alleged discrepancies between the Stephenson’s petition and those of another bankruptcy entity, constitute evidence of their attempt to hinder, delay or defraud creditors or an officer of the estate. The bankruptcy court found that these transfers and any discrepancies did not show an intent to hinder, delay or defraud the bankruptcy estate or Camp Flintlock.
While the state court did enter findings that the Stephenson’s actions constituted fraud, conversion, and unfair and deceptive trade practices, such findings were in a discovery sanctions order and, pursuant to Sartin v. Macik, 535 F.3d 284 (4th Cir. 2008), did not result in collateral estoppel requiring the bankruptcy court to reach the same conclusion.
Accordingly, on both claim, the bankruptcy court denied summary judgment.
For a copy of the opinion, please see:
Camp Flintlock v. Stephenson- Denial of Discharge and Non-Dischargability of Claim
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