Aamodt v. Narcisi (In re Narcisi)
Aamodt v. Narcisi (In re Narcisi)
Opinion of the Court
MEMORANDUM OPINION AND ORDER ON PLAINTIFFS’AMENDED MOTION FOR SUMMARY JUDGMENT
Over thirty years ago, Plaintiffs entered into a consignment agreement with Defendant for the sale of personal property in which they were guaranteed net sales proceeds of $25,000.00. Plaintiffs claimed that Defendant breached the agreement and, twenty years ago, obtained a judgment against him. The question before the Court is whether the debt owed to Plaintiffs is excepted from discharge in Defendant’s Chapter 7 bankruptcy case under 11 U.S.C. § 523(a)(4).
FACTS AND PROCEDURAL BACKGROUND
On September 27, 1984, Mr. and Mrs. Aamodt (“Plaintiffs”) entered into a one-
Although the Agreement specified that Plaintiffs’ items would be sold at public auction, Defendant sold many of the items that should have been included in the auction prior to the actual auction at “Friday night sales.”
Because Plaintiffs received less than the $25,000.00 net payment guaranteed by the Agreement, Plaintiffs sued Defendant in Pennsylvania state court.
The Pennsylvania court calculated Plaintiffs’ damages as being $55,000.00,
Defendant filed this Chapter 7 bankruptcy case on July 28, 2014. Plaintiffs timely filed their complaint to determine the dischargeability of their debt under 11 U.S.C. § 523(a)(4) (the “Complaint”).
Plaintiffs initially moved for summary judgment solely on the claim plead in their Complaint: that their debt is for Defendant’s fraud while acting in a fiduciary capacity.
Although Plaintiffs did not re-file the affidavits originally submitted with the Complaint to support the Summary Judgment Motion, the Court has also considered those affidavits.
LEGAL ANALYSIS
I. Jurisdiction
The Court has jurisdiction over this proceeding under 28 U.S.C. § 1334 and the
II. Motion for Leave to File Amended Complaint
Rule 4007(c) of the Federal Rules of Bankruptcy Procedure sets a deadline for parties to file complaints to determine the dischargeability of a debt of no later than 60 days after the first date set for the meeting of creditors under § 341(a). The court may extend that deadline but only if a party files a motion, establishing cause, prior to the date on which the deadline expires. The provisions of Rule 4007(c) are mandatory, and courts do not have discretion to grant a late-filed motion to extend the deadline.
The Clerk’s office mailed a notice to all creditors informing them of the January 17, 2015 deadline for filing § 523 complaints under Federal Rule of Bankruptcy Procedure 4007(c).
In treating the Summary Judgment Motion as a motion for leave to file an amended complaint, the Court must determine whether the newly filed claims “relate back” to the filing of the original Complaint. It would be futile to allow an amended complaint to be filed if the newly added claims do not relate back to the date of the initial complaint, as such claims would be subject to dismissal as time-barred.
Motion for Summary Judgment
A. Summary Judgment Standard
Fed. R. Civ. P. 56(a), incorporated by Fed. R. Bankr. P. 7056, applies in adversary proceedings. To prevail on summary judgment, Rule 56(a) requires the moving party to show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” In reviewing a motion for summary judgment, courts must review the record and draw all reasonable inferences in the light most favorable to the non-moving party.
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of fact, after which the opposing party must provide evidence establishing a genuine issue of material fact. Poole v. Davis (In re Davis), 2012 WL 4831494, at *2 (Bankr.D.Idaho Oct. 10, 2012) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). But even if the opposing party fails to establish the existence of disputed facts, the moving party must nevertheless establish it is entitled to judgment as a matter of law. See North Slope Borough v. Rogstad (In re Rogstad), 126 F.3d 1224, 1227-28 (9th Cir. 1997) (holding the trial court erred by resting its grant of summary judgment on the opposing party’s failure to file a response).FN5
Additionally, “ ‘Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts’ are inappropriate at the summary judgment stage.” Oswalt v. Resolute Indus., Inc., 642 F.3d 856, 861 (9th Cir. 2011) (alteration in original) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). And all justifiable inferences must be drawn in favor of the nonmoving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
A court may grant summary judgment in favor of the non-moving party if no genuine dispute of material fact exists, the moving party has had an opportunity to present evidence on the issue on which summary judgment is granted, and the non-moving party is entitled to judgment as a matter of law.
B. Analysis of Plaintiffs’ Claims
The Eleventh Circuit Court of Appeals has held that exceptions to discharge should be construed strictly in favor of the debtor.
1. Claim for Fraud While Acting in a Fiduciary Capacity
To prevail on their non-dischargeability claim for fraud while acting in a fiduciary capacity under § 523(a)(4), Plaintiffs must establish that Defendant, while acting in a fiduciary capacity, committed fraud against them.
a. Defendant did not act in a fiduciary capacity.
For purposes of § 523(a)(4), the term “fiduciary” is narrowly construed; it refers to technical or express trusts.
Here, the purpose of the Agreement was to authorize Defendant to serve as auctioneer of Plaintiffs’ property. The Agreement itself creates no express or technical trust. Bankruptcy courts have consistently held that an individual who serves as an auctioneer or consignee under a private contract does not act in a fiduciary capacity.
The Court then looks to the possibility of whether, under the locus of the Agreement, a statutory fiduciary relationship is express or implied. Under Pennsylvania law, auctioneers must deposit moneys received from the sale of an owner’s property into a separate custodial or trust fund account and then account to the owner for the full amount received.
Because neither the Agreement nor Pennsylvania law imposed fiduciary duties upon Defendant with respect to the actions about which Plaintiffs complain, the Court finds that Defendant was not acting in a fiduciary capacity for purposes of the allegations that support Plaintiffs’ § 523(a)(4) claim.
b. Plaintiffs cannot establish that Defendant committed fraud.
Even if Plaintiffs could establish the existence of a fiduciary relationship between them and Defendant, they cannot establish that he committed a fraud upon them. Under § 523(a)(4), “fraud” refers to conduct involving intentional deceit and must be distinguished from the mere breach of a contractual obligation.
To support their fraud claim, Plaintiffs contend that Defendant “could only have conducted the auction in a less than vigorous manner, (‘carelessly’), because he intended to do so, whereas [Plaintiffs], understandably, took [Defendant] at his word.”
(1) Narcisi’s false statement of material fact by promising an auction of their items on a date certain and guarantee to pay the Aamodts a minimum of $25,000, net, ... and (2) Narcisi’s intent to falsify by guarantee of $25,000, net, after appraisal of approximately $20,000, ... and (3) Narcisi’s intent to deceive the Aamodts as shown by his immediate disposal of most of the Aamodts items by private sales for approximately $2,000, ... and (4) the Aamodts’ justifiable reliance on Narcisi due to his agreement to auction their items near Philadelphia and guarantee of a minimum payment of $25,000, net, ... and (5) the Aamodts’ loss is shown by the Pennsylvania court findings.44
Each of these contentions demonstrates Defendant’s breach of the Agreement. But other than the issues they have raised regarding the conduct of the auction and that the fact that Defendant commenced individual sales prior to the auction—a breach that would have operated in Plaintiffs’ favor had those sales resulted in higher sales prices—Plaintiffs have presented no evidence that Defendant did not intend to comply with the Agreement as of the date it was entered into. Although not dispositive on the issue of fraud, it is noteworthy that the Pennsylvania state court did not find that Defendant had committed a fraud upon Plaintiffs, but only that Defendant had breached his contract with Plaintiffs in three material regards. Plaintiffs’ claim has always sounded in contract, and that remains true today—thirty years after this dispute began. And, of course,
2. Claim for Larceny
Even though the Complaint does not state a claim to except Plaintiffs’ debt from discharge under § 523(a)(4) as a larceny, the Court will consider the Motion for Summary Judgment as an amendment to the complaint that relates back to the filing of the Complaint.,
Larceny is interpreted in the common law for purposes of § 523(a)(4). Under the common law, larceny is defined as “a felonious taking of another’s personal property with intent to convert it or deprive the owner of the same.”
CONCLUSION
The Court has given careful consideration to whether, if this case were to go to trial, there might be any additional evidence that Plaintiffs could present to support their claims. After giving every favorable inference possible to Plaintiffs, the Court has concluded that, absent direct testimony by Defendant that he did not intend to honor the terms of the Agreement at the time he negotiated it with Plaintiffs (the chances of which are nonexistent), there is no likelihood that Plaintiffs will prevail on their claims. In light of the distance that Plaintiffs must travel from their Lake Placid, New York, home to the Fort, Myers Courthouse and their health conditions as described in their Motion for Continuance of Trial,
Accordingly, it is
ORDERED:
1. The Court, treating the Summary Judgment Motion as a motion to amend the Complaint, DENIES the motion as to Plaintiffs’ claim to except the debt from discharge under § 523(a)(4) as a claim for embezzlement and GRANTS the motion as to Plaintiffs’ claim to except the debt from discharge under § 523(a)(4) as a claim for larceny.
2. Plaintiffs’ Motion for Summary Judgment Motion is DENIED.
3. Summary judgment is GRANTED in favor of Defendant and against Plaintiffs on Plaintiffs’ claims to except the debt from discharge for fraud while acting in a
4. The Court will enter a separate judgment declaring Plaintiffs’ claim to be dischargeable.
5. The final evidentiary hearing scheduled for October 27, 2015, is CAN-CELLED.
. All statutory references are to the United States Bankruptcy Code, 11 U.S.C. § 101, et seq.
. Doc. No. 30, Exh. No. 1 (p. 46 of 83).
. Doc. No. 30, Exh. No. 5 (p. 64 of 83) (denoting Main Line as the "t/a” or "trading as” name for Defendant).
. See Mrs. Aamodt's Affidavit (Doc. No. 1, pp. 3-4); Doc. No. 30, p. 13.
. Mrs. Aamodt's Affidavit (Doc. No. 1, p. 4, ¶ 9). See also Doc. No. 30, Exh. No. 2 (pp. 18-44 of 83) (listing 157 items for a total sales price of $3,050.50).
. Mrs. Aamodt’s Affidavit (Doc. No. 1, p. 4, ¶ 10).
. Mrs. Aamodt’s Affidavit (Doc. No. 1, p. 4, ¶ 11).
. Doc. No. 30, Exh. No. 4 (p. 62 of 83).
. Plaintiffs admitted bidding on their own items at the auction. See Doc. No. 30, ¶ 6. Their purchases are reflected as a deduction in Exh. No. 4 to the Motion.
. Plaintiffs contend that they received only $10,490.83 from Defendant, but they are bound by the Pennsylvania state court's finding that they received payment of $14,795.83 and are collaterally estopped from asserting otherwise in this proceeding. In re Thacker, 2015 WL 2455539, at *4 (Bankr.N.D.Fla. May 22, 2015). In any event, the discrepancy in the amount that Plaintiffs claim to have been paid is immaterial to the Court’s ruling.
. See Mrs. Aamodt’s Affidavit (Doc. No. 1, pp. 3-4).
. Doc. No. 30, Exh. No. 5 (pp. 65-66 of 83).
. Doc. No. 30, Exh. No. 5 (p. 65 of 83).
. Doc. No. 30, Exh. No. 5 (pp. 65-66 of 83).
. Doc. No. 30, Exh. No. 5 (p. 66 of 83).
. See Case No. 9:07-09555-ALP, Claim No. 2, pp. 4-5. In ruling on a motion for summary judgment, a court may take judicial notice of its own records and files. St. Louis Baptist Temple, Inc. v. Federal Deposit Ins. Corp., 605 F.2d 1169, 1171-72 (10th Cir. 1979).
. Doc. No. 1.
. See 11 U.S.C. § 523(a)(4). The Complaint does not mention any of the other theories of recovery under that sub-section.
. Doc. No. 29. (Note: pages from the original Summary Judgment Motion appear to be missing.)
. Doc. No. 30.
. Gilmour v. Gates, McDonald and Co., 382 F.3d 1312, 1314-15 (11th Cir. 2004) (noting plaintiffs may not raise new claims at the summary judgment stage and that the proper procedure for plaintiffs to assert a new claim is to amend the complaint).
. Doc. No. 1, pp. 3-5.
. Doc. No. 33.
. In re Standing Order of Reference—Cases Arising Under Title 11, United States Code, Case No. 6:12-mc26-ORL-22.
. In re Alton, 837 F.2d 457, 459 (11th Cir. 1988).
. Doc. No. 23, Case No. 9:14-bk-08659-FMD.
. Doc. No. 30, pp. 7 and 13.
. In re Slaughter Co. and Associates, Inc., 242 B.R. 97, 100 (Bankr.N.D.Ga. 1999).
. See In re Chiasson, 183 B.R. 293 (Bankr. M.D.Fla. 1995).
. Doc. No. 30, p. 14.
. Bedoya v. Travelers Property Cas. Co. of America, 773 F.Supp.2d 1326, 1328 (M.D.Fla. 2011).
. In re Sciarrino, 2013 WL 3465920, at *2 (Bankr.M.D.Fla. July 10, 2013).
. 2015 WL 4735658, at *2 (Bankr.D.Idaho, August 10, 2015).
. As the Ninth Circuit BAP has noted, “Even a complete lack of opposition to a motion for summary judgment does not relieve the moving party of its obligation to meet its burden of showing entitlement to judgment as a matter of law.” Salehi v. Global Auto. Grp., Inc. (In re Salehi), 2014 WL 2726149, at *4 n. 7 (9th Cir. BAP, June 9, 2014) (citing Rogstad, 126 F.3d at 1227).
. Meyer v. AmerisourceBergen Drug Corp., 264 Fed.Appx. 470, 474 (6th Cir. 2008); In re Energy Co-op. Inc., 832 F.2d 997, 1005 (7th Cir. 1987).
. Schweig v. Hunter (In re Hunter), 780 F.2d 1577, 1579 (11th Cir. 1986).
. Quaif v. Johnson, 4 F.3d 950, 953 (11th Cir. 1993) (citing Davis v. Aetna Acceptance Co., 293 U.S. 328, 55 S.Ct. 151, 79 L.Ed. 393 (1934)).
. Matter of Bennett, 989 F.2d 779, 785 (5th Cir. 1993).
. Doc. No. 30, Exh. No. 7 (p. 72 of 83).
. In re Blaszak, 397 F.3d 386, 391 (6th Cir. 2005) (noting that while an ordinary principal-agent relationship can involve fiduciary duties, that relationship, standing alone, is insufficient to establish the type of fiduciary duty contemplated by § 523(a)(4)).
. See, e.g., In re Teta, 2011 WL 2435948, at *9-10 (Bankr.D.Colo. June 16, 2011); In re Beetler, 368 B.R. 720, 726 (Bankr.C.D.Ill. 2007); In re Mask, 2007 WL 7138339, at *3 (Bankr.N.D.Ga. Mar. 19, 2007); In re Perryman, 191 B.R. 196, 199 (Bartkr.E.D.Okla. 1996); Matter of Hyers, 70 B.R. 764, 771 (Bankr.M.D.Fla. 1987); In re Rigsby, 18 B.R. 518, 520 (Bankr.E.D.Va. 1982); In re Marshall, 24 B.R. 105, 107 (Bankr.W.D.Mo. 1982) (auctioneer is mere agent, not a fiduciary, notwithstanding agreement to hold money in escrow).
. 63 Pa. Cons.Stat. § 734.21 (2008).
. In re Huntington, 2012 WL 3073129, *10 (Bankr.W.D.Wash. July 30, 2012); In re Tyson, 450 B.R. 514, 522 (Bankr.E D.Pa. 2011).
. Doc. No. 30, p. 10.
. Doc. No. 30. p. 10-11.
. See, e.g., In re McClelland, 2011 WL 2461885, at *14 (Bankr.N.D.Ga. June 8, 2011) (breach of contract claim is fully dischargea-ble).
. In re Langworthy, 121 B.R. 903, 907-908 (Bankr.M.D.Fla. 1990).
. In re Ankoanda, 495 B.R. 599, 605 (Bankr. N.D.Ga. 2013).
. Doc. No. 34.
Reference
- Full Case Name
- IN RE: Pasquale B. NARCISI, II, Debtor. Marjorie and Norman Aamodt v. Pasquale B. Narcisi
- Cited By
- 4 cases
- Status
- Published