490 B.R. 633
Bankr. N.D. Ga.2013Background
- Mr. Presley and Ms. Presley were principals in Gateway Title and members of Wolf, LLC, with Gateway sharing office space with Wolf.
- Plaintiff Old Republic issued a title insurance policy insuring the primacy of Athens’ deed on Lots 77 and 78 based on representations by Gateway Title that there were no senior liens.
- Defendants allegedly knew those representations were false and Plaintiff relied on them, leading to disputed senior liens.
- On 8004 Rosemere Way, Gateway Title handled the closing; Defendants allegedly misrepresented lien priority while senior liens existed; title policy insuring Gateway Bank’s priority was issued.
- Defendants refinanced Gateway Bank’s loan without subordinate consent and again allegedly misrepresented lien priority to obtain title insurance.
- Across various Stormy Hollow and related Crosswinds transactions, Defendants allegedly failed to disclose senior liens and caused Plaintiff to issue title insurance based on false representations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 523(a)(2)(A) claim is plausibly pled | Diehl argues misrepresentations induce reliance and damages. | Presleys contend the complaint lacks plausible fraud allegations. | Plaintiff's § 523(a)(2)(A) claim survives (fraud standard met). |
| Whether § 523(a)(4) claim is plausibly pled | Diehl asserts fiduciary relationship and misappropriation occurred. | Presleys argue insufficient fiduciary theory and involvement. | Plaintiff's § 523(a)(4) claim survives (fiduciary and misappropriation alleged). |
| Whether summary judgment is appropriate as to Ms. Presley | Disputed facts show Ms. Presley’s involvement in Gateway Title and related entities. | Defendants contend lack of undisputed facts about Presley’s involvement. | Summary judgment denied as to Ms. Presley; genuine disputes remain. |
Key Cases Cited
- In re Wood, 245 Fed.Appx. 916 (11th Cir.2007) (elements of § 523(a)(2)(A) align with common law fraud)
- Quaif v. Johnson, 4 F.3d 950 (11th Cir.1993) (fiduciary defalcation standard and trust concept)
- In re Brown, 457 B.R. 919 (Bankr.M.D.Ga.2011) (embezlement/larceny not subject to Rule 9(b) pleading in § 523(a)(4))
- Davis v. Aetna Acceptance Co., 293 U.S. 328 (1934) (fiduciary duty breadth under § 523(a)(4))
- In re Fernandez-Rocha, 451 F.3d 813 (11th Cir.2006) (fiduciary element not necessarily satisfied where statute omits explicit fiduciary duties)
- In re XYZ Options, Inc., 154 F.3d 1262 (11th Cir.1998) (intent may be inferred under Rule 9(b))