526 B.R. 872
D. Colo.2015Background
- In 1995 IIAP (a Florida partnership) raised $6 million via DIA, which deposited funds to DIA’s account and disbursed $3.6 million for operations/consultants while only $2.4 million was placed in escrow for IIAP; IIAP later filed bankruptcy.
- In the IIAP adversary, a jury found $3.6 million was fraudulently transferred, that defendants (including Vickery) conspired, and returned punitive damages, yielding a 2007 judgment of roughly $4.6 million in favor of Richard Diamond as trustee.
- Vickery later filed Chapter 7 in Colorado; Diamond sued to except the IIAP judgment from discharge under 11 U.S.C. § 523(a)(2), (a)(4), and (a)(6).
- Bankruptcy Court denied summary judgment on (a)(2) and (a)(4) but found for Diamond on (a)(6), holding Vickery’s participation in the funding scheme was intentional and substantially certain to injure IIAP.
- Vickery appealed the (a)(6) ruling and the denial to withdraw deemed admissions under Fed. R. Civ. P. 36; the District Court affirmed both rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bankruptcy Court abused discretion denying motion to withdraw admissions under Fed. R. Civ. P. 36(b) | Diamond: admissions were properly deemed admitted; withdrawal would prejudice him | Vickery: admissions were inadvertent, withdrawal would promote adjudication on merits | Denial affirmed — no abuse: first prong (presentation of merits) not satisfied; any error harmless |
| Whether the IIAP judgment is nondischargeable under 11 U.S.C. § 523(a)(6) (willful and malicious injury) | Diamond: Vickery knowingly participated in scheme that was substantially certain to deprive IIAP of $3.6M; thus debt is nondischargeable | Vickery: lacked intent to injure IIAP; jury findings from IIAP trial do not satisfy § 523(a)(6) standard | Affirmed — record supports that Vickery knowingly participated in plan certain to injure IIAP; collateral estoppel not required but bankruptcy findings not clearly erroneous |
Key Cases Cited
- Raiser v. Utah County, 409 F.3d 1243 (10th Cir. 2005) (two-part Rule 36(b) test governs withdrawal of admissions)
- Bergemann v. United States, 820 F.2d 1117 (10th Cir. 1987) (abuse-of-discretion review for denial of Rule 36 relief)
- In re Unioil, Inc., 962 F.2d 988 (10th Cir. 1992) (standards of review for bench rulings on appeal)
- Davidovich v. Welton (In re Davidowich), 901 F.2d 1533 (10th Cir. 1990) (appellate review standards for bankruptcy findings)
- In re Miniscribe Corp., 309 F.3d 1234 (10th Cir. 2002) (clear-error standard for factual findings)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (§ 523(a)(6) requires actual intent to cause injury)
- Panalis v. Moore (In re Moore), 357 F.3d 1125 (10th Cir. 2004) (willful and malicious elements explained)
- Frandsen v. Westinghouse Corp., 46 F.3d 975 (10th Cir. 1995) (elements for collateral estoppel)