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In re Vickery

United States District Court, D. Colorado

January 26, 2015

In re: TERRY KENNETH VICKERY, Debtor.
v.
TERRY KENNETH VICKERY, Defendant/Appellant RICHARD K. DIAMOND, Chapter 7 Trustee for IVDS Interactive Acquisition Partners, L.P., a Florida general partnership, Plaintiff/Appellee,

Page 873

Terry Kenneth Vickery, In Re, John Gustaf Nelson, Law Office of John G. Nelson, Denver, CO.

For Richard K. Diamond, Appellee, As Chapter 7 Trustee for IVDS Interactive Acquisition Partners, A Florida General Partnership, Plaintiff: Steven William Kelly, LEAD ATTORNEY, Silver & DeBoskey, P.C., Denver, CO.

For Terry Kenneth Vickery, Appellant, Defendant: Steven William Kelly, LEAD ATTORNEY, Silver & DeBoskey, P.C., Denver, CO.

Page 874

OPINION AND ORDER ON APPEAL

Honorable Marcia S. Krieger, Chief United States District Judge.

THIS MATTER is before the Court on appeal from the Bankruptcy Court's June 5, 2012 order and judgment in favor of the Plaintiff Richard K. Diamond, finding that a $4.6 million judgment debt is nondischargeable under 11 U.S.C. § 523(a)(6). In determining this matter, the Court has considered the designated record and written

Page 875

arguments of the parties, including the Debtor's Opening Brief (#12), Mr. Diamond's Response (#14), and the Debtor's Reply (#25), as well as supplemental briefing submitted by the parties (#35, 36, 39).

Exercising jurisdiction pursuant to 28 U.S.C. § 158, the Court AFFIRMS the Bankruptcy Court's judgment.

I. PROCEDURAL BACKGROUND

In 1995, IVDS Interactive Acquisition Partners (IIAP), a Florida general partnership, filed for bankruptcy protection in the Central District of California under Chapter 11. The case was converted to Chapter 7 and the Plaintiff, Mr. Richard K. Diamond, was appointed Chapter 7 trustee. In that case, Mr. Diamond, as Trustee, initiated an adversary proceeding (hereinafter, the IIAP Adversary Proceeding) against the Debtor, Mr. Terry Vickery, and others. Mr. Diamond asserted claims for fraudulent transfer and conspiracy, and sought to recover money that have been transferred from IIAP to the Debtor and the other defendants. The IIAP Adversary Proceeding culminated in a 2007 judgment in favor of Mr. Diamond and against the Debtor and other defendants in the amount of $4.6 million plus interest.

Later, the Debtor filed for bankruptcy protection under Chapter 7 in the District of Colorado. Mr. Diamond initiated the instant adversary proceeding against the Debtor, seeking to except from discharge the judgment debt arising from the IIAP Adversary Proceeding under 11 U.S.C. § 523(a). Mr. Diamond argued that the judgment debt is nondischargeable because it was (1) a debt for funds obtained " under false pretenses, false representations or actual fraud" under § 523(a)(2); (2) a debt for " fraud and defalcation, while acting in a fiduciary capacity to [IIAP]" under § 523(a)(4); and/or (3) a debt for " willful and malicious injury to [IIAP] and its property" under § 523(a)(6).

After a trial, the Bankruptcy Court found in favor of the Debtor on the first two claims (that is, that the debt is dischargeable under § 523(a)(2) and (4) ), and for Mr. Diamond on the third claim that the debt was excepted from discharge under § 523(a)(6). Mr. Diamond appealed the Bankruptcy Court's determinations on the first two claims to the Bankruptcy Appellate Panel for the Tenth Circuit (BAP). The Debtor appealed the third determination under § 523(a)(6) to this Court. This Court stayed its determination of the Debtor's appeal until after the BAP ruled. The BAP now having ruled, the appeal is ripe for determination.

II. DISCUSSION

The Debtor raises two issues on appeal. First, did the Bankruptcy Court abuse its discretion in denying his motion to withdraw admissions that were deemed admitted pursuant to Fed.R.Civ.P. 36(a)[1] ? Second, did the Bankruptcy Court err in finding that the judgment debt arose from a willful ...


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