[CLBS] Question about grant of partial summary judgment under 523(a)(4)

[Holly Roark]

I obtained a partial summary judgment under 523(a)(4) as to liability. The
BK court (in CDCA) says it cannot make a determination of the amount without
further order/clarification from the family court which entered the
underlying judgment. My client is exhausted from the litigation, which is
against her vexatious litigant ex-husband (Debtor). She wants to take her
partial win and file a motion to dismiss the remaining claims. What is she
left with if she does this? She’ll have a judgment for exception from
discharge under 523(a)(4) but in an ambiguous amount. Assuming the Chapter
13 debtor completes his plan and gets his discharge and client is not paid
in full, what happens then? Can she go back to family court later after the
BK case is closed? Thereafter, would she need to return to the BK court
adversary case to get a blessing on the “amount owed” or do we have enough
with this grant of our motion?  

 

My motion for summary judgment requested judgment under 523(a)(4) and
(a)(6). The (a)(6) was always going to be tough, but the (a)(4) is clear.
The Order says,  

 

IT IS ORDERED that the Motion is Granted in Part and Denied in Part as
follows:

 

As to Plaintiff’s request for judgment in the amount of $124,689.72 which
includes accrued interest at 10% per annum through the bankruptcy petition
filing date of February 26, 2021, plus continuing accruing interest at 10%
per annum commencing February 27, 2021, until paid in full, on account of
the Judgment (the “Judgment”) entered on September 19, 2018, by the Family
Court in Superior Court Case No. ______________, in favor of Plaintiff
__________ and against Defendant _____________ and a determination that the
$124,689.72 be determined non-dischargeable under 11 U.S.C. § 523(a)(4) and
11 U.S.C. § 523(a)(6), the Motion is GRANTED, in part, as follows:

 

(a)  11 U.S.C. § 523(a)(4): The amount owing, if any, on account of
attorney’s fees and costs ordered to be paid as sanctions under the Judgment
(the

“Judgment Sanctions Award”) is determined to be non-dischargeable pursuant
to 11 U.S.C. § 523(a)(4); and

                       (b)       11 U.S.C. § 523(a)(6): (Discussion
proceeds).

 

In the Court’s memorandum, it states:

 

Based on the foregoing, the amount owing under the Judgment on account of
attorney’s fees and costs is determined to be nondischargeable pursuant to
11 U.S.C. § 523(a)(4). However, for the reasons described above, the amount
which remains owing under the Judgment on account of attorney’s fees and
costs awarded as sanctions has not been established and does not

appear capable of determination absent further ruling by the Family Court.

 

            I did not fine the court’s “reasons described above” to be very
clear at all. We have a judgment. We have proof of what client was paid. We
have proof of what remains owed. We have proof of what was ordered as a
“sanction” for breach of fiduciary duty. I am perplexed as to why the court
could not arrive at the amount we set forth. The BK court appears to want
the family court to do some kind of allocating. However, case law says that
the creditor can apply payments as creditor “sees fit,” i.e. she can apply
the payments to the dischargeable portion first, which she did. I provided
this case law to the court. 

 

I spoke with client’s family law attorney who says what the BK court is
asking for will be virtually impossible to get from the family court. 

 

My client wants out of this case. I am wondering if I should file a motion
for clarification or for reconsideration, or if, like I asked in the
beginning, we can just take our partial MSJ and walk. 

 

Thoughts? 

 

Best regards,

HOLLY ROARK

Attorney at Law 

Certified Bankruptcy Specialist -

By the State Bar of California Board of Legal Specialization

 

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Phone:  (208) 536-3638 Fax: (310) 553-2601

E-mail:   <mailto:holly at roarklawboise.com> holly at roarklawboise.com 

 

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