Opinion
Case No. 99-20731-7; Adversary No. 99-6088
May 4, 2001
MEMORANDUM OPINION AND ORDER GRANTING SUMMARY JUDGMENT ON PLAINTIFFS' § 523(a)(2)(A) CAUSE OF ACTION
This matter comes before the Court pursuant to the Motion for Summary Judgment filed by Russell and Laura Cobb (Plaintiffs). They move for summary judgment on their Amended Complaint, which seeks a determination that Defendant's debt to them is nondischargeable under 11 U.S.C. § 523(a)(2)(A), (a)(4) and (a)(6).
JURISDICTION
The Court has jurisdiction over this proceeding. 28 U.S.C. § 1334. This is a core proceeding. 28 U.S.C. § 157(b)(2)(I).
UNCONTROVERTED FACTS
The parties stipulated to the following facts:
Plaintiffs, Russell and Laura Cobb, are creditors of Debtor/Defendant Michael L. Lewis and are the holders of an unsecured claim in the amount of $2,273,333.33. This is an action under 28 U.S.C. § 1334. This adversary proceeding is a core proceeding under 28 U.S.C. § 157(b)(2)(I).
Plaintiffs were injured in an automobile accident on August 13, 1994 ("the accident"). Russell Cobb suffered great bodily injury in the accident, including substantial brain damage. Plaintiffs' medical bills exceed one million dollars. The driver of the other vehicle, John Celuch, caused the accident by running a red light and striking Plaintiffs' vehicle. John Celuch was insured by Farm Bureau Insurance Company.
Plaintiffs retained Dan Lykins to represent them in a personal injury action, but later terminated Lykins' services. Plaintiffs thereafter retained Defendant, an attorney at law (at the time). Farm Bureau issued a check for $100,000 to settle the personal injury matter. Defendant was paid his fee of approximately $34,000 from the $100,000.
At the time of the accident, Mr. Cobb was employed with Flexel. Flexel provided its employees with ERISA insurance coverage. A lien existed on the settlement proceeds by virtue of the ERISA coverage. Plaintiffs allowed the storage facility, where the vehicle had been stored, to have the vehicle in exchange for the storage fees. The theory of crash-worthiness of the vehicle cannot now be investigated further.
Plaintiffs' claim stems from a judgment in a legal malpractice action in the amount of $2,273,333.33 rendered by the District Court of Shawnee County, Kansas, on April 22, 1997, in a proceeding entitled Russell W. Cobb and Laura Cobb vs. Michael L. Lewis, Case No. 96CV256. Plaintiffs sued Defendant for negligence, breach of contract and loss of consortium. The judgment constitutes a final determination that the Defendant was negligent and/or breached his contract with Plaintiffs and that Plaintiffs were damaged as a result.
In 1998, a proceeding in discipline was heard against Defendant as a result of eight complaints alleging violations of MRPC 1.1, 1.3, 1.4, 1.5, 1.15, 1.16, 7.3, 8.4(a), 8.4(c), 8.4(d), 8.4(g) and Supreme Court Rule 207. The disciplinary proceeding resulted in the indefinite suspension of Defendant from the practice of law. The panel of the Kansas Board for Discipline of Attorneys ("Panel") specifically found that the District Court "found that the Respondent's conduct in `pirating plaintiff's case away from capable counsel and taking a full one-third (1/3) recovery when the work had been practically done by previous counsel' was reprehensible conduct." Defendant was found to have violated several Model Rules of Professional Conduct. The Panel, in addition to agreeing with the District Court's characterization of Defendant's conduct as reprehensible, also concluded that Defendant's actions violated MRPC 1.1 (competence), 1.3 (diligence), 1.4 (communication), 1.5 (fees), 1.15 (safekeeping of property), 1.16 (declining or terminating representation), 7.3 (direct contact with prospective clients), and 8.4(a) (violate or attempt to violate the rules of professional conduct, knowingly assist or induce another to do so, or do so through the acts of another), 8.4(c) (engage in conduct involving dishonesty, fraud, deceit or misrepresentation), 8.4(d) (engage in conduct that is prejudicial to the administration of justice), 8.4(g) (engage in any other conduct that adversely reflects on the lawyer's fitness to practice law). Additionally, the Panel found no mitigating circumstances and found the following aggravating factors, including, but not limited to: 1) Defendant had been informally admonished on three previous occasions for lack of competence, diligence, and improper handling of client's funds; for lack of diligence relative to his action in filing a divorce action; and for failure to provide a client with documents and failing to protect his client's interests; 2) that Defendant's actions evidence a continuing pattern of neglect and a continuing pattern of failure to communicate with his clients and the courts and multiple offenses; 3) that Defendant's actions evidence dishonest and selfish motives; and 4) that Defendant seemingly refuses to acknowledge the wrongful nature of his conduct.
In the Matter of Lewis, 265 Kan. 766, 962 P.2d 534 (1998).
CONCLUSIONS OF LAW
Plaintiffs argue that the state court judgment and disciplinary proceeding should be accorded collateral estoppel effect, thereby entitling them to summary judgment on their complaint to determine dischargeability pursuant to 11 U.S.C. § 523(a)(2)(A), (a)(4) and (a)(6). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir. 1993).
§ 523(a)(4)
Pursuant to 11 U.S.C. § 523(a)(4), a debt for fraud or defalcation while acting in a fiduciary capacity is nondischargeable. Plaintiffs must prove that: (1) a fiduciary relationship existed between the debtor and creditor, and (2) fraud or defalcation was committed by the debtor in the course of that fiduciary relationship. A fiduciary relationship must exist before the fraud or defalcation will be nondischargeable. Exceptions to discharge under § 523(a) are construed narrowly and doubt is resolved in the debtor's favor. The Court finds that Plaintiffs have failed to show a fiduciary relationship.
11 U.S.C. § 523 provides in pertinent part that:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —
. . . .
(4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny; . . . .
In re Seay, 215 B.R. 780, 785 (10th Cir. BAP 1997) (citation omitted).
In re Merrill, 252 B.R. 497, 504 (10th Cir. BAP 2000) (citations omitted).
Although the existence of a fiduciary relationship under § 523(a)(4) is determined under federal law, state law is relevant to this inquiry. To find a fiduciary relationship under § 523(a)(4), "the court must find that the money or property on which the debt at issue was based was entrusted to the debtor." Thus, an express or technical trust must be present to establish a fiduciary relationship. "Neither a general fiduciary duty of confidence, trust, loyalty, and good faith, . . . nor an inequality between the parties' knowledge or bargaining power . . . is sufficient to establish a fiduciary relationship for purposes of dischargeability." In addition, the fiduciary relationship must exist prior to the creation of the debt in controversy.
In re Young, 91 F.3d 1367, 1371 (10th Cir. 1996) (citations omitted).
Id. (citations omitted).
Id. (citations omitted).
Id. at 1372.
Id.
The majority of courts considering the issue have applied the above principles to require more than an attorney-client relationship to establish the requisite fiduciary relationship for purposes of § 523(a)(4). In Young, the Tenth Circuit noted that "[c]ourts have generally required a trust relationship to exist between an attorney-debtor and a client-creditor to find a fiduciary relationship . . . [and] courts have often found the requisite trust relationship to be created by the applicable Rules of Professional Responsibility." The court then cites cases finding a fiduciary relationship where, pursuant to the applicable Rules of Professional Responsibility, the debtor-attorney had a fiduciary duty to preserve the identity of the client's funds or was put on notice that the attorney's possession of his or her client's property placed them in a fiduciary capacity.
Id.
Id. (citations omitted).
Id. (citations omitted).
Plaintiffs argue that because their personal injury cause of action would be considered "property of the estate," they entrusted Defendant with that property interest. Plaintiffs then note that in Kansas, attorneys are subject to the Kansas Rules of Professional Conduct, and Defendant was found to have violated Rule 1.15, dealing with the attorney's responsibilities regarding clients' property. However, the disciplinary proceeding involved eight different complaints, only one of which dealt with the Plaintiffs. The opinion in the disciplinary proceeding did not distinguish which violations resulted from the various complaints. This Court finds that it is unlikely that the violation of Rule 1.15 resulted from the Plaintiffs' case.
Rule 1.15 of the Kansas Rules of Professional Conduct, Rule 226 of the Rules of the Supreme Court of Kansas.
Complaint No. A6622, which didn't involve Plaintiffs, dealt with Defendant's handling of his client's check from an insurance company.
Rule 1.15 deals with "Safekeeping Property." A reading of the Rule indicates that it does not apply to causes of action, but rather to tangible property. The Rule concerns a lawyer holding property of clients or third persons in connection with their representation. The Rule states that "[f]unds shall be kept in a separate account maintained in the state of Kansas. Other property shall be identified as such and appropriately safeguarded." The Rule speaks to "funds" and property coming into the "possession" of the lawyer. The Rule does not deal with causes of action.
This Court declines to extend the fiduciary relationship as set forth in Young to include the situation where the client entrusts his or her cause of action to the attorney. Because Rule 1.15 does not deal with causes of action, the Court cannot find the requisite trust relationship to be created by the applicable Rules of Professional Responsibility as set forth in Young.
The three requirements for a state statute to satisfy § 523(a)(4) are: 1) that the trust res must be defined by the statute; 2) that the statute must spell out the fiduciary duty; and 3) that the statute must impose a trust on funds prior to the act creating the debt.In re Kelley, 215 B.R. 468, 473 (10th Cir. BAP 1997) (citing In re Novak, 97 B.R. 47, 59 (Bankr.D.Kan. 1987)).
§ 523(a)(6)
Plaintiffs also seek a determination that the debt is not dischargeable under § 523(a)(6), which excepts from discharge, debts "for willful and malicious injury by the debtor to another entity or to the property of another entity." Plaintiffs have the burden of proving by a preponderance of the evidence that the debt is nondischargeable under § 523(a)(6). Under this section, the Court must determine whether the debt is for an injury that is both willful and malicious. InKawaauhau v. Geiger, the Supreme Court defined "willful" as a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury. The Court finds that even if collateral estoppel effect is given to the state court action or the disciplinary action, there is no finding of an intentional injury. The state court malpractice action was based on negligence, breach of contract, and loss of consortium. Although the courts found Defendant's conduct to be negligent, reprehensible, dishonest and selfish, these findings do not show an intentional injury. Summary judgment must be denied on Plaintiffs' claim under § 523(a)(6).
Grogan v. Garner, 498 U.S. 279, 285 n. 11 (1991).
523 U.S. 57 (1998).
Some courts have held that under Geiger, intent to cause injury can be proven by showing that the actor desires to cause the consequences of his act, or that he believes that the consequences are substantially certain to result from it. See, e.g., In re Longley, 235 B.R. 651, 657 (10th Cir. BAP 1999) (citing Restatement (Second) of Torts § 8A (1965)).
§ 523(a)(2)(A)
Plaintiffs allege that the District Court and/or the Kansas Supreme Court found that Defendant made the following misrepresentations:
1) that Dan Lykins was incompetent;
2) that Plaintiffs should get rid of their car;
3) that Defendant would take care of any ERISA liens on a judgment; and
4) that Defendant would do further work on the personal injury case to recover one million dollars for Plaintiffs.
Although Defendant denies these allegations in his affidavit, the issue is whether the prior state court proceedings supply the requisite findings through the doctrine of collateral estoppel.
The doctrine of collateral estoppel requires the court to refrain from relitigating factual matters already decided in a previous state court proceeding. The Court is bound by factual determinations made in a previous state court on issues when:
See Grogan v. Garner, 498 U.S. 279, 284-85 n. 11 (1991) (finding that collateral estoppel applies in dischargeability proceedings in bankruptcy).
(1) the issue previously decided is identical with the one presented in the action in question; (2) the prior action has been finally adjudicated on the merits; (3) the party against whom the doctrine is invoked was a party or in privity with a party to the prior adjudication; and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.
Frandsen v. Westinghouse Corp., 46 F.3d 975, 978 (10th Cir. 1995) (quotation omitted).
The Court must first determine whether the issue to be precluded is the same as that involved in the prior state action. The malpractice action was based on negligence, breach of contract, and loss of consortium. The Court finds that the issues Plaintiffs seek to preclude are not the same as those involved in the malpractice action. However, the disciplinary action found a violation of Rule 8.4(c) of the Kansas Rules of Professional Conduct, which provides that it is professional misconduct for a lawyer to "engage in conduct involving dishonesty, fraud, deceit or misrepresentation." This is the same issue involved in Plaintiffs' § 523(a)(2)(A) cause of action. Under 523(a)(2)(A), a debt is not dischargeable to the extent it is obtained by false representations, false pretenses or actual fraud. The findings in the disciplinary action establish that Defendant's debt to Plaintiffs arising from the malpractice action was caused by Defendant's dishonesty, false representations or actual fraud.
Although the disciplinary proceeding involved several complaints against Defendant, the panel found that in two of the complaints, one of which was Plaintiffs', Defendant's actions evidenced "dishonest and selfish motive." Thus, it appears as though the violation of Rule 8.4(c) applied to Plaintiffs' complaint.
Next, the Court must determine whether the issue was finally adjudicated on the merits. The Tenth Circuit in In re Young, stated that preclusive effect should be given to the findings of a disciplinary proceeding if the law of the state in which the proceeding took place gives preclusive effect to the findings of administrative tribunals in that state. In Young, the Disciplinary Board's decision did not have preclusive effect because the parties were not permitted to conduct discovery, to examine witnesses, or to have a hearing of any type. Defendant argues that although there was an opportunity for him to appear at the hearing, he had no opportunity to conduct discovery or examine witnesses. Thus, applying the Young standard, the issues before the disciplinary committee were not "fully litigated." However, the Supreme Court Rules show that Defendant did have an opportunity to conduct discovery, cross-examine witnesses, and present evidence.
91 F.3d 1367 (10th Cir. 1996)
Id. at 1374.
Rule 211 of the Rules of the Supreme Court of Kansas provides in pertinent part that:
(b) Formal disciplinary proceedings shall be instituted by the Disciplinary Administrator by filing a formal complaint with the secretary of the Board. The complaint shall be sufficiently clear and specific to inform the respondent of the alleged misconduct. A copy of the complaint shall be served upon the respondent. The respondent shall serve an answer upon the Disciplinary Administrator within twenty days after the service of the complaint unless such time is extended by the Disciplinary Administrator or the hearing panel.
(c) Following the service of the answer, or upon respondent's failure to answer, and upon completion of any additional investigation deemed necessary or advisable by the Disciplinary Administrator, the matter shall be set for hearing by the presiding officer of the panel.
(d) The Disciplinary Administrator shall serve a notice of hearing upon the respondent, respondent's counsel, and the complaining parties. The notice shall state that the respondent is entitled to be represented by counsel, to cross-examine witnesses, and to present evidence. The notice shall also state the date and place of the hearing and shall be served at least fifteen days in advance of the hearing date. The hearing shall be governed by the Rules of Evidence as set forth in the Code of Civil Procedure. (K.S.A. 60-401 et seq.)
(e) All witnesses shall be sworn and all proceedings and testimony shall be recorded, either by stenographic means or by electronic recording.
Rule 212 deals with the proceedings before the Supreme Court and provides in pertinent part that:
(c) Upon docketing of said case the Clerk of the Appellate Courts shall mail a copy of the report to the respondent and, if represented, to his or her attorney, and shall issue a citation directing the respondent to file with the Clerk either (1) a statement that respondent does not wish to file exceptions to the report, findings, and recommendation, or (2) respondent's exceptions to the report. Any part of the hearing report not specifically excepted to shall be deemed admitted.
The Court finds that the issue was fully adjudicated on the merits.
Next, the Court must find that the party against whom the doctrine is invoked was a party or in privity with a party to the prior adjudication. Defendant does not dispute that he was a party to the prior adjudication.
Lastly, the Court must determine whether Defendant had a full and fair opportunity to defend on the merits. Defendant acknowledges that he had an opportunity to appear and defend, but again argues that he did not have an opportunity to conduct discovery or confront witnesses. The Court has already cited the rules showing that Defendant did in fact have the opportunity to conduct discovery and confront witnesses. He just chose not to avail himself of the opportunity. And, although he filed exceptions to the panel report, he did not avail himself of the opportunity to appear at the hearing. The court noted that:
First, the Disciplinary Administrator served respondent with notice of the hearing before the panel by both regular and certified mail. Respondent failed to claim the certified mailing, and it was returned before the January 6, 1998, panel hearing. The regular mailing was returned after the hearing and marked "return to sender." Service by mail is complete upon mailing. Supreme Court Rule 224(b) (1997 Kan.Ct.R.Annot. 253); K.S.A. 60-205(b).
Second, at the first show cause hearing on December 9, 1997, in respondent's presence, Deputy Disciplinary Administrator Frank Diehl, in his oral argument to the court, stated that the complaints against respondent were originally set for hearing in April 1997 and were continued at that time by respondent and reset for hearing before the panel on January 6, 1998. He concluded his comments to the court indicating his satisfaction that this matter would be resolved very shortly by the panel.
In the Matter of Lewis, 265 Kan. 766, 777, 962 P.2d 534 (1998).
The Court finds that all the elements are present and collateral estoppel should be invoked to preclude relitigation of the issues decided in the disciplinary action.
In the disciplinary action, the Panel unanimously concluded that there was clear and convincing evidence to establish the following findings of fact with regard to the Plaintiffs:
The disciplinary proceedings involved eight different complaints.
63. Laura and Russell Cobb were injured in an automobile accident in August 1994. Russell Cobb suffered great bodily injury in the accident and was still in the hospital when Mrs. Cobb was given a leave from the hospital and went to Shoney's restaurant in Topeka, Kansas.
64. At the Shoney's restaurant, Laura Cobb was approached by the Respondent and the Respondent inquired as to what was happening. Mrs. Cobb told Mr. Lewis that she had hired Dan Lykins to handle the personal injury matter resulting from the automobile accident. Respondent told Laura Cobb that she should fire Mr. Lykins since he was an ambulance chaser and that she should hire the Respondent and that the Respondent would recover $1,000,000.00 for the Cobbs. He dictated letters terminating Mr. Lykins and then had Mrs. Cobb sign a contingency fee contract with him.
65. At the time of his discharge, Mr. Lykins had been able to obtain the policy limits of the other driver's insurance company, Farm Bureau, in the amount of $100,000.00 for the claimants. He was willing to only charge the Cobbs an hourly rate fee [for a total] amount of $2,500.00 for his work on the file.
66. Upon being hired by the Cobbs, the Respondent did nothing on the case other [than] finalize the paperwork with the insurance company to settle for the policy limits of $100,000.00. Respondent then took one-third (1/3) of the settlement amount and did nothing further.
67. The Cobbs filed suit against the Respondent in Case NO. 96-CV-256, Cobb vs. Michael L. Lewis. That case was assigned to Judge Marion Chipman because all of the Shawnee County judges recused themselves in the Respondent's case.
68. During the course of litigation the Respondent failed to respond to discovery requests or to appear for hearings and allowed a default judgment to be taken against him on March 20, 1997.
69. A default judgment was entered against Respondent in the amount of $2,273,333.33. The court found that the Respondent had breached his fee agreement contract and found that the Cobbs were damaged in the amount of $33,333.33 since that fee was excessive when Mr. Lykins had agreed to do the work for approximately $2,500.00.
70. Mr. Lykins testified that he was hired on a contingency basis but he knew that the policy limits of the driver who was a fault were only $100,000.00. Because of the catastrophic damage to Mr. Cobb, he agreed to take the case on an hourly basis and his fee was approximately $2,500.00 for settling for the policy limits. Mr. Lykins took the case on an hourly basis because of the injuries to Mr. Cobb and the fact that a contingency fee recovery of one-third (1/3) would have left very little for the Cobbs to recover.
71. Mr. Lykins testified he had also contacted an expert to check the crash worthiness of the Cobb vehicle to find any possible defects which may have contributed to Mr. Cobb's injury. Mr. Lykins advised the Cobbs that he would enter into a contingency fee arrangement with them in the products case and assume the risk in that case for his fee. Mr. Lykins was also looking to other means of recovery for Mr. Cobb's loss of wages.
72. Upon his hire, Respondent told the Cobbs to get rid of the car and said that Mr. Lykins was incompetent and there was no reason to keep the automobile. The Cobbs let the car go for storage fees. Mr. Lykins testified that the car should have been retained for the expert to check the crash worthiness of the vehicle.
73. The Cobbs were never successful in being able to contact the Respondent although they made numerous attempts to find out what was going on with their case. The Respondent told Laura Cobb that the $100,000.00 was a drop in the bucket and that he would do further work on the personal injury case but the Respondent never did anything further. Mrs. Cobb even attempted to call the Respondent's wife to try to locate the Respondent to gather information about the case when she could not find the Respondent.
74. The court in 96-CV-256 found that the Respondent was negligent in handling the case and awarded damages in the amount previously stated. The court ruled that the Cobbs were damaged in the amount of $740,000.00 for medical bills; $1,000,000.00 for loss of wages; $250,000.00 for the plaintiff's pain and suffering and $250,000.00 for the plaintiff's loss of consortium. In addition, the previously mentioned sum of $33,333.33 was awarded in attorney's fees.
75. Judge Chipman found that the Respondent's conduct in `pirating plaintiff's case away from capable counsel and taking a full one-third (1/3) recovery when the work had been practically done by previous counsel' was reprehensible conduct and the court ordered that the transcript of the hearing be delivered to the Office of Disciplinary Administrator.
76. The case was assigned to Jack Ford for investigation. The Respondent ignored the letters from the Office of Disciplinary Administrator and then stated that counsel was to represent him and file his response. Counsel had previously withdrawn and notice was sent to Mr. Lewis. Mr. Ford gave Lewis a deadline of October 17, 1997 for his response but the Respondent failed to respond even though he was personally served with the letter giving him the October 17, 1997 deadline. Respondent failed to cooperate with this investigation.
In the Matter of Lewis, 265 Kan. 766, 773-75, 962 P.2d 534 (1998).
Under 523(a)(2)(A), a debt is not dischargeable to the extent it is obtained by false representations, false pretenses or actual fraud. The creditor bears the burden of proving that the debtor made a false statement, that was intended to deceive, that the creditors relied on the statement, that their reliance was justified, and that the debtor's representation caused the creditor to sustain a loss.
In re Young, 91 F.3d 1367, 1372 (10th Cir. 1996) (elements of § 523(a)(2)(A)); Field v. Mans, 516 U.S. 59, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995) (fraud exception to discharge requires justifiable, not reasonable reliance); Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 659, 112 L.Ed.2d 755 (1991) (creditor must prove elements by a preponderance of the evidence).
The findings in the disciplinary action show that Defendant made false representations. Defendant denies that he made these representations but acknowledges that if he did make them, Plaintiffs relied upon them. But, he argues, Plaintiffs' reliance was not reasonable. However, the standard is whether they justifiably relied, not whether they reasonably relied on the representations. The Court concludes that Plaintiffs' reliance was justifiable. Plaintiffs were distraught, vulnerable and thought they were in need of Defendant's legal counsel. So they retained Defendant as counsel. They were justified in relying on Defendant's statements.
See Field v. Mans, 516 U.S. 59 (1995).
Under § 523(a)(2)(A), the debtor must have made a false statement with knowledge of its falsity and must have acted with the intent to deceive. These two elements, knowledge and intent to deceive, are analytically linked. If one knowingly makes a false statement, that is evidence of an intent to deceive. Intent and knowledge can rarely be proven by direct evidence absent a debtor's admission of knowledge or intent. Rather, courts usually have to rely on circumstantial evidence to determine the debtor's state of mind. The Court must consider whether the totality of circumstances "presents a picture of deceptive conduct by the debtor which indicates an intent to deceive the creditor." The Court may consider not only the debtor's conduct at the time of the representations, but may consider subsequent conduct, to the extent that it provides an indication of the debtor's state of mind at the time of the actionable representations. The court in Woolley, noted that:
3 William L. Norton, Jr., Norton Bankruptcy Law and Practice 2d, § 47:15, n. 40 (1997 Supp.) (citing In re Devers, 759 F.2d 751 (9th Cir. 1985)).
In re Woolley, 145 B.R. 830, 836 (Bankr.E.D.Va. 1991) (citations omitted).
A defendant who asserts a fact to be of his own knowledge, or so positively as to imply that he has knowledge, when he knows that he does not in fact know whether what he says is true, is found to have the intent to deceive.
Id. at 835.
The Court finds that Defendant intended to deceive Plaintiffs. The court in the disciplinary action found that Defendant's conduct evidenced dishonest and selfish motive and that his motives were for purely personal gain. Defendant made the representations in order to "pirate" the case away from Mr. Lykins. Plaintiffs' motion for summary judgment on their § 523(a)(2)(A) cause of action shall be granted.
IT IS THEREFORE ORDERED BY THE COURT that Plaintiffs' Motion for Summary Judgment is GRANTED on Plaintiffs' cause of action under 11 U.S.C. § 523(a)(2)(A), and DENIED on Plaintiffs' cause of action under 11 U.S.C. § 523(a)(4) and (a)(6).
This Memorandum shall constitute findings of fact and conclusions of law under Rule 7052 of the Federal Rules of Bankruptcy Procedure and Rule 52(a) of the Federal Rules of Civil Procedure. A judgment based on this ruling will be entered on a separate document as required by Rule 9021 of the Federal Rules of Bankruptcy Procedure and Rule 58 of the Federal Rules of Civil Procedure.
IT IS SO ORDERED.