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Access over workers' compensation decisions, including En Banc, Significant Panel Decisions, and writ-denied cases.

Case No. MISSING
Regular Panel Decision
May 21, 2009

E. Armata, Inc. v. Parra

Plaintiffs E. Armata, Inc. and A & J Produce Corp. moved for summary judgment to declare debts owed by Defendant Jhony Parra nondischargeable under 11 U.S.C § 523(a)(4), alleging defalcation while acting as a fiduciary under the Perishable Agricultural Commodities Act (PACA). The Court determined that a PACA trust constitutes a technical trust, establishing Parra's fiduciary capacity for purposes of § 523(a)(4). However, the motion for summary judgment on the issue of defalcation was denied due to a material issue of fact regarding whether Parra had actual knowledge of his fiduciary duties, a requirement for proving defalcation under the Second Circuit's 'conscious misbehavior or extreme recklessness' standard. Additionally, the Plaintiffs' motion to strike the Defendant's opposition as untimely was denied.

BankruptcyNondischargeabilityFiduciary DutyPACA TrustPerishable Agricultural Commodities ActDefalcationSummary JudgmentTechnical TrustConscious MisbehaviorExtreme Recklessness
References
40
Case No. MISSING
Regular Panel Decision

Sheet Metal Workers' National Pension Fund v. Kern (In re Kern)

This case addresses motions for summary judgment filed by several employee benefit funds (Plaintiffs) and Richard Kern (Defendant), focusing on whether unpaid contributions of $1.3 million were non-dischargeable in Kern's Chapter 7 bankruptcy under 11 U.S.C. § 523(a)(4). Plaintiffs alleged Kern, as a functional ERISA fiduciary of his now-defunct company CSI, committed defalcation by failing to ensure contributions were made. The Court acknowledged Kern's fiduciary status but found no evidence of intentional wrongdoing, bad faith, or gross recklessness required for defalcation under the Bullock standard, noting Kern's efforts to keep CSI operational. Consequently, the Court denied the Plaintiffs' motion and granted the Defendant's cross-motion, ruling the debt dischargeable.

BankruptcyERISADefalcationFiduciary DutySummary JudgmentEmployee BenefitsUnpaid ContributionsDischargeabilityChapter 7 BankruptcyCorporate Officer Liability
References
35
Case No. 14-08229-las
Regular Panel Decision
Aug 17, 2017

Trustees of the Sheet Metal Workers' National Pension Fund v. Kakareko (In re Kakareko)

Plaintiffs, consisting of multiple employee benefit funds, brought an action against defendant Walter Kakareko III, a chapter 7 debtor, arguing that a debt of $448,588.80 was nondischargeable under 11 U.S.C. § 523(a)(4) due to defalcation while acting in a fiduciary capacity. The debt arose from All Seasons Siding, Inc.'s failure to pay employer contributions to the plaintiffs, for which the defendant, as an officer, was allegedly personally liable. The plaintiffs moved for summary judgment, contending that the defendant was an ERISA fiduciary who breached his duties. The court found that the employee benefit plans constituted technical trusts and that the defendant was an ERISA fiduciary due to his control over plan assets, which, by agreement, included unpaid employer contributions. However, the court denied the motion for summary judgment, concluding that a genuine dispute of material fact existed regarding the defendant's intent, a crucial element for establishing defalcation under the standard set by Bullock v. BankChampaign, N.A. The court noted conflicting evidence concerning whether the defendant's use of company funds for other expenses, including personal mortgage payments, constituted a conscious disregard of fiduciary duties or an effort to keep the business operational.

BankruptcyNondischargeabilityERISAFiduciary DutyDefalcationSummary JudgmentEmployee Benefit PlansEmployer ContributionsChapter 7Intent
References
48
Case No. MISSING
Regular Panel Decision

43 East 74th St. Associates v. Marceca (In Re Marceca)

The Chapter 7 debtor, Robert K. Marceca, moved to dismiss an adversary proceeding filed by plaintiffs Benjamin S. Richman, Arthur Shulman, and Irving Barr. The plaintiffs sought to declare claims nondischargeable under 11 U.S.C. § 523(a)(4). The first claim alleged Marceca embezzled partnership funds from 43 East 74th St. Associates. The second claim, by Richman, accused Marceca of embezzling real estate investment commissions. The debtor argued that a partner cannot embezzle partnership property and that the second claim was unenforceable due to the statute of frauds. The court denied the motion to dismiss both claims, affirming that New York partnership law establishes a fiduciary relationship allowing for nondischargeable claims for defalcation and that the statute of frauds is an affirmative defense, not a basis for dismissal under Fed.R.Civ.P. 12(b)(6).

BankruptcyNondischargeabilityEmbezzlementDefalcationFiduciary DutyPartnership LawStatute of FraudsMotion to DismissRule 12(b)(6)Adversary Proceeding
References
12
Case No. Docket No. 165
Regular Panel Decision

Rainey v. Davenport (In Re Davenport)

Ron S. Rainey, an associate at the Davenport Law Firm, initiated an adversary proceeding against the firm's owner, Valorie W. Davenport (the Debtor), seeking to prevent the discharge of a debt owed to him. The dispute arose from contingent fees from the "Brio/DOP Litigation," where Rainey was promised a percentage of fees but alleged the Debtor failed to remit his full share, instead spending some funds for personal and firm expenses. After two state court lawsuits and a mediated settlement agreement which the Debtor defaulted on, Rainey filed a complaint in bankruptcy court under 11 U.S.C. § 523(a)(4) and (a)(6) for fraud, defalcation, embezzlement, larceny, or willful and malicious injury. The court found that the Debtor did not owe Rainey a fiduciary duty but concluded that she embezzled Rainey's funds and/or caused willful and malicious injury, thereby rendering Rainey's claim of $171,807.35 nondischargeable.

contingent feesbankruptcydischargeabilityembezzlementwillful and malicious injuryattorney feesbreach of contractlaw firm disputeTexas lawres judicata
References
82
Case No. 13-71700
Regular Panel Decision

Board of Trustees v. Kern (In re Kern)

The Plaintiffs, the Board of Trustees of benefit funds under ERISA, sought to declare debts owed by Defendant Richard Kern, principal owner of Cool Sheetmetal, Inc. (CSI), non-dischargeable in bankruptcy. The core issue was whether monies deducted from employee paychecks but not remitted to the benefit funds constituted non-dischargeable debts under § 523(a)(4) and (6) of the Bankruptcy Code. The Court ruled that monies deducted for a vacation fund are non-dischargeable because they were subject to a statutory trust, Kern acted as a fiduciary, and committed defalcation. However, deductions for union assessments and political action league (PAL) funds were deemed dischargeable, as no statutory trust was established for these. Furthermore, the Plaintiffs' claim under § 523(a)(6) for willful and malicious injury was dismissed. The Court granted summary judgment in part for Plaintiffs regarding the Vacation Fund deductions, with the exact amount to be determined at trial, and granted summary judgment in part for Defendant on the other claims.

BankruptcyNon-dischargeabilityERISAFiduciary DutyDefalcationSummary JudgmentEmployee ContributionsVacation FundUnion AssessmentsPolitical Action League (PAL)
References
10
Case No. MISSING
Regular Panel Decision
Mar 24, 2004

Chao v. Duncan (Duncan)

This case involves a motion for summary judgment filed by Eugene Duncan, the Debtor, in an adversary proceeding initiated by the Secretary of Labor (DOL). Duncan, who filed for bankruptcy under chapter 11 (later converted to chapter 7), seeks to discharge a debt arising from a Consent Judgment. The DOL's complaint aims to establish the non-dischargeability of this debt under section 523(a)(4) of the Bankruptcy Code, alleging fraud or defalcation while acting in a fiduciary capacity, related to his role in the International Workers’ Guild Health and Welfare Trust, which was subject to ERISA. Duncan's motion for summary judgment argues that the DOL lacked standing and the District Court lacked subject matter jurisdiction because the Plan was not an ERISA plan, and that the Secretary cannot demonstrate a breach of fiduciary duties. The Bankruptcy Court denied Duncan's motion, concluding that the Secretary has standing and that res judicata prevents relitigation of the District Court's jurisdiction and the Secretary's standing, given that Duncan had the opportunity to raise these issues in the prior District Court action.

BankruptcySummary JudgmentNon-dischargeability of DebtERISA ViolationsFiduciary DutyFraudDefalcationRes JudicataSubject Matter JurisdictionStanding
References
48
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