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In re Ormsby

January 8, 2010


Appeal from the United States District Court for the Eastern District of California. Morrison C. England, Jr., District Judge, Presiding. B.C. No. 2005-28840-A-7. D.C. No. 2:07-CV-00447-MCE.

The opinion of the court was delivered by: Roth, Circuit Judge



Argued and Submitted June 11, 2009 -- San Francisco, California

Before: Marsha S. Berzon, Jane R. Roth,*fn1 and Mary M. Schroeder, Circuit Judges.

This is a bankruptcy case, in which a creditor, First American Title Company (FATCO), seeks to prevent the discharge of a state court judgment against the debtor, Lawrence Ormsby, under 11 U.S.C. §§ 523(a)(4) and (a)(6). The Nevada state court found Ormsby had converted and misappropriated property belonging to FATCO. Ormsby filed for bankruptcy protection, and FATCO moved to prevent the discharge of the state court judgment. The Bankruptcy Court granted summary judgment in favor of FATCO; the District Court, acting in an appellate capacity, affirmed. For the reasons given below, we affirm the District Court's order granting summary judgment in favor of FATCO. We also affirm the District Court's determination with regard to the withdrawal of FATCO's prior motion for attorney fees.


We repeat here the findings of fact the Nevada state court made when it found Ormsby had engaged in misappropriation and conversion. FATCO, the creditor in this case, is a title company that provides escrow services and title insurance for real property transactions. Ormsby, the debtor in this case, is the owner of Inter-County Title Company of Nevada (Inter-County), which also provides escrow and title services.

Title companies like FATCO and Ormsby's Inter-County facilitate title searches that could otherwise only be conducted through an onerous search of the official public records for transactions affecting real property. Such records in Washoe County, Nevada, date back to the mid-1800s and reflect deeds, deeds of trust, mortgages, judgments, among other documents related to real property. The Washoe County Recorder organizes the various documents by creating a grantor/grantee index. To make the title search process easier, title companies create base files, subdivision files, and preliminary title reports, which in turn are used as aids for examining and insuring title. Title companies also compile documents in the form of title plants, which constitute a separate method of assembling recorded information based on the location of the property and which offer search capabilities far beyond the grantor/grantee index available at the county recorder.

In Washoe County, title companies use title plants covering four separate periods: 1901-1964, 1965-1978, 1979-1999, and 2000 to the present. These plants are leased to subscribers, who are not free to transfer, sell, assign, or allow others to access the plants. FATCO owned a one-seventh interest in the 1979-1999 plant and leased the other plant data.

In the spring of 2000, FATCO had possession of the three title plants covering the 1900s on microfiche and stored them in a non-public area for its use only. In addition, FATCO compiled a substantial number of base files, subdivision files, and preliminary title reports. Though these documents were made available to customers and sometimes to other title companies, FATCO considered most of these records private and proprietary.

In June of 1994, Joseph McCaffrey was hired to head FATCO's commercial title business. McCaffrey had access to all of FATCO's records and title plant microfiche and used them on a regular basis. He was aware that these were not public records but were private and proprietary.

In early 2000, Ormsby prepared Inter-County to begin operations in Washoe County. He purchased rights to the title plant for 2000 until the present but not to any of the plants covering the 1900s. Additionally, Ormsby solicited employees of FATCO to work for Inter-County. McCaffrey was one of the employees Ormsby was able to lure from FATCO. The two discussed the importance of access to the title plants to any new title company in the Washoe County area.

While he still had access to his office at FATCO, McCaf-frey downloaded and e-mailed FATCO's proprietary base files, subdivision files, preliminary title reports, and other business records. McCaffrey, with the encouragement, cooperation, and assistance of Ormsby, appropriated the 1901-1964, 1965-1978, and 1979-1999 title plants from the possession of ...

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