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In re Roth

United States District Court, S.D. California

September 5, 2014

In re JAMES MARVIN ROTH, Debtor. ANICE M. PLIKAYTIS, Appellee,
v.
JAMES M. ROTH, Appellant Bankr. No. 10-7659-MM11; Adversary Procedure No. 10-90359

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For James Marvin Roth, Debtor; Bankr. Case no. 10-07659-MM11, In Re: K Todd Curry, LEAD ATTORNEY, Curry Advisors, A Professional Law Corporation, San Diego, CA.

For Anice M. Plikaytis, Plaintiff: Scott A McMillan, LEAD ATTORNEY, The McMillan Law Firm, La Mesa, CA.

For James Marvin Roth, Defendant: K Todd Curry, LEAD ATTORNEY, Curry Advisors, A Professional Law Corporation, San Diego, CA.

OPINION

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Hon. Cynthia Bashant, United States District Judge.

On December 9, 2014, Appellant James Marvin Roth appealed a bankruptcy court's determination that a portion of his debt owed to Appellee Anice M. Plikaytis' was excepted from discharge. After reviewing the parties' briefing and the bankruptcy court's judgment, this Court affirms the bankruptcy court.

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I. Procedural Background

Plikaytis successfully sued Roth in California state court in 2009. She was awarded damages against Roth and other defendants. Roth filed for Chapter 11 bankruptcy on May 3, 2010. R. 4.

Plikaytis then filed a complaint, with attached exhibits, objecting to the dischargeability of the state court judgment. R. 3-18. Plikaytis alleged the judgment was nondischargeable because it was based on fraud under 11 U.S.C. § 523(a)(2), 11 U.S.C. § 523(a)(4), and 11 U.S.C. § 523(a)(6) (counts 1, 2, and 3, respectively). Compl. ¶ 4(a)-(c). Plikaytis prayed for the full amount of the judgment, $4,126,844.86, plus interest. R. 4, 18.

Her initial complaint was improperly served and failed to state a claim, so the bankruptcy court dismissed it with leave to amend. R 45-50, 55.

Plikaytis' amended complaint, filed March 3, 2011, set forth six claims for relief. R. 74-94. After an adversary proceeding, the court found a total of $2,997,000 of the debt was not dischargeable. R. 2890. Roth owed (1) a $2.8 million debt under 11 U.S.C. § 523(a)(2) because he made a fraudulent promise to convey a 25% interest in the Roth Montezuma Partnership, LLP (" RMP" ); (2) a $90,000 debt under both defalcation pursuant to 11 U.S.C. § 523(a)(4) and willful and malicious injury under 11 U.S.C. § 523(a)(6); (3) a $50,000 debt for the willful and malicious intentional infliction of emotional distress under 11 U.S.C. § 523(a)(6); and (4) a $57,000 debt for his breach of fiduciary duty by defalcation under 11 U.S.C. § 523(a)(4).

Roth appealed the judgment. R. 2897. Roth makes eight claims. First, he argues Plikaytis' fraud claim under 11 U.S.C. § 523(a)(2) should have been barred by the statute of limitations because her amended complaint should not have related back to the original complaint. Second, he argues Plikaytis did not prove the material element of justifiable reliance required for her § 523(a)[1] claims. Third, he argues that the debt in question arising from his fraud should have been the out-of-pocket injury instead of the breach of contract judgment. Fourth, he again argues that the Amended Complaint does not relate back to the initial complaint. Fifth, he argues Plikaytis was required to prove the $57,000 defalcation was predicated on the same factual allegations underlying the state court judgment. Sixth, he argues his proffered evidence of the money he and his related parties paid into Talmadge East, LLC should have been considered by the bankruptcy court. Seventh, he argues the court improperly found fiduciary capacity in the claims under 11 U.S.C. § 523(a)(4). Eighth and lastly, he argues the intentional infliction of emotional distress claim should have been allocated among dischargeable and nondischargeable claims, and that such allocation evidence was Plikaytis' burden to prove.

The Court finds no merit in Roth's appeal. Therefore the Court affirms the judgment in its entirety.

II. Standard of Review

On appeal, a bankruptcy court's legal conclusions are reviewed de novo, factual findings are reviewed for clear error, and mixed questions of law and fact are reviewed de novo. See Murray v. Bammer (In re Bammer), 131 F.3d 788, 792 (9th Cir.1997).

III. Discussion

A. Relation Back of Plikaytis' Amended Complaint

In his first and fourth issues on appeal, Roth challenges the ...


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