《楊清泉律師專欄》CREDITOR MUST CLEARLY ESTABLISH LEGAL LIABILITY OF BK DEBTOR (PART II)

《楊清泉律師專欄》CREDITOR MUST CLEARLY ESTABLISH LEGAL LIABILITY OF BK DEBTOR (Part I)

After the debtor and his wife filed for bankruptcy protection, the plaintiff filed an adversary proceeding challenging the dischargeability of his claim against the debtor. Although the parties had a contract, the court did not find that it established a trust, so the plaintiff could not prove that the debtor committed fraud or a defalcation while acting in a fiduciary capacity. In addition, the plaintiff could not prove that the debtor received money from him because the plaintiff gave the money to the Honduran corporation which both parties were shareholders of, not to debtor. Indeed, the corporation received the money from plaintiff then invested the money into the project. Hence, if debtor did in fact misappropriate funds, he misappropriated funds that belonged to the corporation, not to plaintiff. It would be the corporation that would have a misappropriation claim against debtor, not plaintiff. If plaintiff was seeking a claim for other property, then he failed to make clear the exact nature of the claim he had against the debtor. “A plaintiff who seeks recovery of a non dischargeable debt should not leave the court to speculate about the debt,” the court said. “The court has no doubt that the plaintiff feels the defendant wronged him in connection with the resort development, and the various items shipped to Honduras. The plaintiff certainly succeeded in communicating that conviction to the court. Nevertheless, the record developed at trial does not support his theory of the case.”

Hence, the court ruled that the plaintiff’s claim was NOT EXCEPTED from discharge because plaintiff did not clearly establish that debtor owed plaintiff money. Plaintiff gave the money to the corporation, not to debtor. It was the corporation that invested in the project, not plaintiff.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than four thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.