Thomas v. Causey (In re Causey)

519 B.R. 144
CourtUnited States Bankruptcy Court, M.D. North Carolina
DecidedOctober 1, 2014
DocketBankruptcy No. 13-10833; Adversary No. 13-02071
StatusPublished
Cited by9 cases

This text of 519 B.R. 144 (Thomas v. Causey (In re Causey)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thomas v. Causey (In re Causey), 519 B.R. 144 (N.C. 2014).

Opinion

MEMORANDUM OPINION REGARDING MOTIONS FOR SUMMARY JUDGMENT, MOTION FOR RELIEF FROM STAY, REQUEST FOR COSTS, AND DISMISSAL OF CLAIMS AS MOOT AND FOR LACK OF STANDING

BENJAMIN A. KAHN, Bankruptcy Judge.

This case is before the Court on the Motion for Summary Judgment [Adv. No. 13-10833, Doc. #43] (the “First Motion for Summary Judgment”) and the Second Motion for Summary Judgment [Adv. No. 13-10833, Doc. # 44] (the “Second Motion for Summary Judgment”) (collectively, the “Motions for Summary Judgment”) filed by the Plaintiff, Efird N. Thomas, on June 17 and June 18, 2014, respectively. Defendant Donna Kay Thomas Causey (“Defendant Donna Causey” or “the Debtor”), against whom the Motions seek relief, filed her Response and Objection to Motions for Summary Judgment on July 8, 2014 [Adv. No. 13-10833, Doc. # 52] (the “Response”). Thereafter, the Plaintiff filed his Reply to Defendant Donna Causey’s Response and Objection to Motions for Summary Judgment [Adv. No. 13-10833, Doc. # 54] (the “Reply to Response”) on July 22, 2014. Pursuant to Local Rule 7007-l(d), the Court has considered the Motions on the pleadings, admissible evidence in the record, and motion papers and briefs without hearing or oral argument.1

FACTS

1. On June 25, 2013, Defendant Donna Causey filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code (the “Code”) in this Court [Ch. 7 Case No. 13-10833, Doc. # 1]. The Court established September 27, 2013, as the deadline for commencing actions to determine the dischargeability of any debts or objecting to Debtor’s discharge (the “dis-chargeability deadline”).

2. On September 20, 2013, the Trustee moved to extend the dischargeability deadline on behalf of all parties in interest [Ch. 7 Case No. 13-10833, Doc. # 14], and on October 11, 2013, this Court entered an order extending the time within which to file any discharge or dischargeability complaints to November 28, 2013 [Ch. 7 Case No. 13-10833, Doc. # 21],

3. On November 26, 2013, the Trustee again moved to extend the dischargeability deadline on behalf of all parties in interest [147]*147[Adv. No. 13-10833, Doc. #28], and on December 13, 2013, the Court entered an order granting this request, extending the dischargeability deadline through and including December 30, 2013 [Adv. No. 13-10833, Doc. # 33].

4. On December 20, 2013, the Plaintiff timely instituted the current adversary proceeding by filing a Complaint [Adv. No. 13-02071, Doc. #1] (the “Complaint”) seeking to except certain obligations from the Debtor’s discharge. According to the Complaint, the Plaintiff is the beneficiary of the Efird N. Thomas Trust (the “Trust”), of which Defendant Donna Cau-sey was the Trustee. (Complaint ¶¶ 5-6). The Trust was created pursuant to the Last Will and Testament of the Plaintiffs wife and funded by 4,244 shares of Bell-South Common Stock. Id. ¶ 7.

5. The Complaint does not contain a claim seeking to bar the Debtor’s discharge, and, on January 29, 2014, the Court entered an order granting the Debt- or’s discharge [Ch. 7 Case No. 13-10833, Doc. # 41],

6. Although the Trust provided for mandatory distribution of Trust income and discretionary distribution of Trust corpus to the Plaintiff, the Plaintiff asserts that Defendant Donna Causey diverted both for her own use, depriving him of the actual amount of Trust income from the years 2002-2008, depleting Trust corpus, and lowering future Trust income. Id. ¶¶ 8-14.

7. As a result of Defendant Donna Causey’s actions, and prior to the institution of this bankruptcy proceeding, the Plaintiff filed a lawsuit in the General Court of Justice, Guilford County, North Carolina, Superior Court Division, No. 12 CVS 4898 (the “State Court Proceeding”), and obtained a judgment and award in the amount of $504,069 for actual and punitive damages against Defendant Donna Causey on April 19, 2013 (the “State Court Judgment”). See (Motions for Summary Judgment, ex. 21).

8. The Complaint in this case asserts that: (i) the State Court Judgment established a debt which is non-dischargeable under 11 U.S.C. § 523(a)(4) (the “First Claim for Relief’); (ii) Defendant Donna Causey’s actions as Trustee constituted a defalcation, excepting the Plaintiffs damages from these actions from discharge under 11 U.S.C. § 523(a)(4) (the “Second Claim for Relief’); and (iii) Defendants Donna and Brian Causey violated 11 U.S.C. § 548 when the former fraudulently conveyed an interest in real property to the latter on January 18, 2012 (the “Third Claim for Relief’). The complaint also contains a motion for relief from stay for “cause,” in that the Plaintiff “asserts that Defendant Donna Causey initiated the proceeding in Bankruptcy Court with improper motive with respect to the [State Court Judgment],” (Complaint ¶ 48) (the “Motion for Relief from Stay”). The prayer for relief requests that the costs of the action be taxed against the Defendants (the “Prayer for Costs”).

9. This Court issued a scheduling order on March 21, 2014 [Adv. No. 13-02071, Doc. #20] (the “Scheduling Order”) setting August 6, 2014 as the last day for filing dispositive motions and supporting materials.

10. On June 17, 2014, the Plaintiff filed his First Motion for Summary Judgment, requesting that the Court enter an order: (i) finding that the debt rendered by the State Court Judgment is non-dischargea-ble pursuant to 11 U.S.C. § 523(a)(4); (ii) determining that the actions of Defendant Donna Causey constituted such willful and malicious injury by a debtor as contemplated by 11 U.S.C. § 523(a)(6), so that the debt rendered by the State Court Judg[148]*148ment is non-dischargeable; and (iii) finding that the Plaintiff is entitled to an appropriate award of attorney fees.

11. On June 18, 2014, the Plaintiff filed his Second Motion for Summary Judgment, adding distinct prayers for relief, and requesting that the Court enter an order confirming: (i) that Defendant Donna Causey is collaterally estopped from re-litigation of the issues of breach of fiduciary duties, constructive fraud and punitive damages with respect to 11 U.S.C. § 523(a)(4) and 11 U.S.C. § 523(a)(6);2 and (ii) that the debt created by the State Court Judgment is nondischargeable under the Doctrine of Unclean Hands, with Defendant Donna Causey prohibited from receiving any equitable relief from the Court (including a discharge) under the Doctrine of Unclean Hands.

12. Included among the exhibits attached to the Motions for Summary Judgment are the State Court Judgment and the instructions given to the jury in the State Court Proceeding. (First Motion for Summary Judgment ¶¶ 31-32); (Second Motion for Summary Judgment ¶¶ 31-32). See also (First Motion for Summary Judgment, ex. 1, at 18).

13.

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Cite This Page — Counsel Stack

Bluebook (online)
519 B.R. 144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thomas-v-causey-in-re-causey-ncmb-2014.