American Asset Finance, LLC v. Feldman (In re Feldman)

506 B.R. 222
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedMarch 6, 2014
DocketBankruptcy No. 13-11302; Adversary No. 13-0287
StatusPublished
Cited by9 cases

This text of 506 B.R. 222 (American Asset Finance, LLC v. Feldman (In re Feldman)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Asset Finance, LLC v. Feldman (In re Feldman), 506 B.R. 222 (Pa. 2014).

Opinion

Opinion

STEPHEN RASLAVICH, Bankruptcy Judge.

Introduction

American Asset Finance LLC (American) has filed an amended complaint against the Debtor to except its claim from discharge. The Debtor has filed a motion to dismiss the Complaint. A hearing on the matter was held on January 29, 2014. The Court thereafter took the matter un[226]*226der advisement. For the reasons which follow, the Motion will be denied.1

Background

The original complaint plead four counts, three of which sought determinations of nondischargeability. On November 6, 2013 the Court granted the Debtor’s motion to dismiss all counts without prejudice. The Plaintiff has filed an Amended Complaint which now pleads two counts which seek a determination of nondis-chargeability on alternate grounds. The first count alleges that the claim is the result of the Debtor’s fraud and is therefore not dischargeable pursuant to § 523(a)(2)(A). The second count alleges that the claim resulted from willful and malicious injury by the Debtor and is, therefore, not dischargeable pursuant to § 523(a)(2)(6).

Grounds for Dismissal

The Debtor seeks dismissal of both counts. As to the first, he maintains that it is based on an incomplete reading of the facts and that it otherwise fails to state a claim upon which relief may be granted. As to the second, he maintains that it is untimely and that it likewise fails to state a claim upon which relief may be granted. Documents Which the Court May Consider

The first of the Debtor’s challenges as to Count I concerns not so much what is plead, but what the Plaintiff is supposed to have left out. As the Debtor reads the amended complaint, the Plaintiff bases its fraud claim on certain provisions in the parties’ agreement while ignoring others which would disprove fraud. In other words, Debtor maintains that the amended complaint fails to allege all of the relevant provisions in the parties’ agreement.

As a general proposition, the Debt- or is correct that the entire contract may be considered in this context. The applicable rule of procedure provides that “[a] copy of a written instrument that is an exhibit to a pleading is a part of the pleadings for all purposes.” F.R.C.P. 10(c) (made applicable by B.R. 7010). The rule’s use of the term “instrument” contemplates that contracts, notes and other writing on which a parties’ action or defense is based may be considered on a motion to dismiss. Rose v. Bartle, 871 F.2d 331, 339 n. 3 (3d Cir.1989) citing 5A Wright & Miller, Fed. Prac. & Proc. Civ. § 1327 (3d ed.); see also Bidlingmeyer v. Broadspire, 2011 WL 4470983, at *1 n. 1 (E.D.Pa. Sept. 27, 2011) (explaining that “a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are based on the document.”)

The Court will consider the operative documents referenced in the Amended Complaint and which the Plaintiff intended to attached as Exhibits. The Court uses the word “intended” because it appears that the Plaintiff failed to upload the exhibits when it electronically filed its Amended Complaint. Notwithstanding, the two purported exhibits on which both parties rely to make their respective cases, the 2007 and 2009 Agreements, were attached to the original complaint. The Court concludes that the two agreements attached to the original complaint are the same two agreements which Plaintiff intended to attached to the amended complaint. Thus, relying on those documents in making a ruling on the motion would pose no prejudice. See Roucchio v. [227]*227Coughlin, 923 F.Supp. 360, 366 (E.D.N.Y.1996) (holding that where plaintiff forgot to attach exhibits to present proceeding which were attached in prior proceeding involving same parties, exhibits may be considered in present proceeding).

Pleading Standard

Having determined what may be considered, the Court turns to what must be alleged. To state a claim under Rule 8 of the Federal Rules of Civil Procedure, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” F.R.C.P. 8(a)(2) (made applicable by B.R. 7008(a)). However, “recitals of the elements of a cause of action, supported by mere eonelu-sory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Rather, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. at 678, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). Where fraud is alleged, the rules require the complaint to include specificity as to the “circumstances constituting fraud” such as the “who, what, when, where, and how.” In re Dulgerian, 388 B.R. 142,147 (Bankr.E.D.Pa.2008) (citing In re Rockefeller Center Properties, Inc. Sec. Litig., 311 F.3d 198, 217 (3d Cir.2002)).

Allegations

The Debtor is an attorney who represented plaintiffs in class action lawsuits. See Amended Complaint, ¶ 15. In July 2007, he entered into an agreement with the Plaintiff (the 2007 Agreement). Id. Under the agreement, Debtor assigned his interest in legal fees due him from certain class action cases. Id. In August 2008 Debtor received a fee award of $1.15 million. Id. ¶ 16. Under the 2007 Agreement, Debtor owed the Plaintiff $815,000 from that amount. Id. ¶ 18. Notwithstanding, Debtor paid the Plaintiff only $700,000. Id. ¶ 19. Debtor has never paid the Plaintiff all amounts due under the 2007 Agreement. Id. ¶ 18.

In November 2008, the Plaintiffs principals met with the Debtor to discuss his alleged breach. ¶ 25 At that meeting the Debtor is alleged to have represented that he expected future fee awards of close to $1 million. ¶ 27. In December 2008, the Debtor provided the Plaintiff with information regarding those expected fees. ¶ 31 Based on this information the Plaintiff agreed to reduce the amount that the Debtor owed from the 2007 Agreement and to advance him another $50,000 to pay off an IRS lien. ¶ 32 In exchange for that consideration, the Debtor promised to pay Plaintiff $196,000 out of the future fee awards. ¶ 38 These terms were incorporated into what is referred to as the June 2009 agreement. ¶ 35

At the time of that agreement, the Plaintiff was aware that CFS, another factor, had a pending lawsuit against the Debtor. ¶ 39.

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Cite This Page — Counsel Stack

Bluebook (online)
506 B.R. 222, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-asset-finance-llc-v-feldman-in-re-feldman-paeb-2014.