492 B.R. 321
Bankr. D. Colo.2013Background
- Debtor owns and controls Econo Auto Sales, which sells used cars.
- Plaintiffs buy consumer vehicle installment contracts from Econo under two agreements requiring Debtor and Econo to remit payments to Plaintiffs.
- Debtor allegedly collected borrower payments but failed to remit them to Plaintiffs, creating a non-dischargeable debt under 11 U.S.C. §§ 523(a)(4) and (a)(6).
- Debtor moves to dismiss the first and second claims under Fed.R.Civ.P. 12(b)(6) as applied by Bankr. P. 7012.
- Court applies Rule 12(b)(6) standard, accepting well-pled facts as true and judging whether the Amended Complaint plausibly states a claim for relief.
- Court denies Debtor’s Motion to Dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether larceny under § 523(a)(4) is plausibly pled | Plaintiffs allege unlawful taking of Monies without authorization. | Debtor contends lack of unlawful taking and absence of requisite intent. | Plaintiffs plausibly plead larceny under § 523(a)(4). |
| Whether embezzlement under § 523(a)(4) is plausibly pled | Plaintiffs allege Debtor was entrusted with Monies and misappropriated them. | Debtor challenges the element of misappropriation and fraudulent intent. | Plaintiffs plausibly plead embezzlement under § 523(a)(4). |
| Whether allegations concern both Plaintiffs and their property satisfy the complaint | Allegations refer to property/contracts of both Alternity Capital 2 and 4. | Claims focus on one plaintiff’s property; other plaintiff not clearly implicated. | Allegations adequately refer to both plaintiffs’ property. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court 2009) (plausibility standard for pleading; not a heightened standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court 2007) (pleading must contain enough facts to state a claim plausibly)
- Ash Creek Mining v. Lujan, 969 F.2d 868 (10th Cir. 1992) (Rule 12(b)(6) analysis favors plaintiff on plausibility)
- Duran v. Carris, 238 F.3d 1268 (10th Cir. 2001) (court cannot weigh evidence; must assess legal sufficiency)
- J&M Constr. v. Musgrave, (In re Musgrave) (10th Cir. BAP 2011) (definition of larceny emphasizes unlawful taking)
- Klemens v. Wallace (In re Wallace), 840 F.2d 762 (10th Cir. 1988) (larceny may prove non-dischargeability absent fiduciary relationship)
- Morissette v. United States, 342 U.S. 246 (1952) (intent required in larceny-type offenses; animus furandi concepts)
- Stockton, 788 F.2d 210 (4th Cir. 1986) (embez- zlement requires initial lawful possession and intent to permanently deprive)