AP notice received today ... scared ... stressed ... long story thanks for helping

[scbendel]

Thank you for your reply, Des. We wrote a letter to our insurance company revoking any power of attorney(s) the contractor may have had on any payments. This letter was written before the check was drafted, and our 3rd party adjuster was also in contact with the insurance company letting them know what was happening and pleading with them not to include the contractor's name on future payments (which they complied with after the first check was drafted). Perhaps this will shed some light on your question?

I sincerely appreciate your help. If you'd like, I can email you a copy of their complaint with exhibits. Would that help also?

You're a hero to me. Thanks again!

[despritfreya]

In response, your arguments are for pleadings to be filed in the future. You must answer the Complaint first (or file a Motion to Dismiss if you believe there are grounds). An Answer is very simple. Either you admit the allegation, deny the allegation or lack sufficient knowledge to form a belief as to the allegation. An Answer is not used for legal argument. In addition, you want to incorporate into your Answer all of the affirmative defenses available to you. Failure to assert an affirmative defense can be deemed waiving such. Look for Answers filed in other Adversary Proceedings. If you do not want to run up $$ on the PACER account, go down to the bk court and use the computers in the Clerk's Office.

When you get to the legal argument, the below may help. I took it from a brief I did a few years ago. It is a few years old and new cases come out all the time. Further, I do not know how the USSC decision that just came out impacts what I did in the past but . . . For whatever it is worth. . . Here it is:

_______________________________


A debt is non-dischargeable under § 523(a)(4) where 1) an express trust existed, 2) the debt was caused by fraud or defalcation, and 3) the debtor acted as a fiduciary to the creditor at the time the debt was created. (See In re Niles, 106 F.3d 1456 (9th Cir., 1997)).

A "defalcation"has been deemed to be the misappropriation of trust funds or money held in any fiduciary capacity, or the failure to properly account for such funds. The Ninth Circuit has sided with those jurisdictions that narrowly define “fiduciary”. For an obligation to rise to the level of non-dischargeability under 11 U.S.C. § 523(a)(4), the debtor must have been a trustee in the “strict or narrow sense through an expressed or technical trust”. (See Banks v. Gil Distribution Center, Inc. 263 F.3d 862 (9th Cir. 2001)). Before a “defalcation” can be shown, the creditor must show that there was, in fact, an express or technical trust giving rise to a fiduciary duty. The question to be decided, therefore, is whether under Arizona law, a mere debtor-creditor relationship rises to the level of an "express" or "technical" trust as meant by 11 U.S.C. § 523(a)(4).

“Section 523(a)(4) of the Bankruptcy Code states that a debtor is not discharged from any debt for fraud or defalcation while acting in a fiduciary capacity. The term "fiduciary" is given a very narrow definition under this section. The broad general definition of fiduciary—a relationship involving confidence, trust, and good faith—does not apply in the dischargeability context. The trust giving rise to the fiduciary relationship must be imposed prior to any wrongdoing, which means that the debtor must have been a "trustee" before the wrong. These requirements eliminate constructive, resulting or implied trusts.. . . The intent to create a trust relationship rather than a contractual relationship is the key element in determining the existence of an express trust.” In re Schneider, 99 B.R. 974, 976 (9th Cir. BAP, 1989) (Emphasis added.). The holding of Schneider confirms centuries old distinctions that narrowly restrict the scope of who is a fiduciary.

In Chapman v. Forsyth, 43 U.S. (2 How.) 202 (1844) the Supreme Court considered the issue of whether a factor who retained his principal's money from the sale of 150 bales of cotton was a fiduciary within the meaning of the Bankruptcy Act of 1841 and thus the obligation would be non-dischargeable. The Court held, “If the [A]ct embrace such a debt, it will be difficult to limit its application. It must include all debts arising from agencies; and indeed all cases where the law implies an obligation from the trust reposed in the debtor. Such a construction would have left but few debts on which the law could operate. In almost all the commercial transactions of the country, confidence is reposed in the punctuality and integrity of the debtor, and a violation of these is, in a commercial sense, a disregard of a trust. But this is not the relation spoken of in the first section of the [A]ct.” Id., 43 U.S. (2 How.) at 208.

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To me the question is whether or not, under Arizona law, you had a duty to utilize the funds in a specific way and/or to only cash/deposit the check with the Plaintiff’s endorsement. I do not know the answer to this and, so far, have been unable to find a case right on point. But I will continue to look. I believe that if there was no duty then no express trust could have arisen.

Des.

[ValleYum]

Valle, the option you are pointing him to does not appear in his profile. I looked to see if I could PM him through his profile. I cannot.

I have reported this problem.

I can't either but in the other vBulletin forum I Mod on - this means they haven't turned them on. How bizarre... LOL Thanks for reporting it Miss AC!!

[scbendel]

Also, I don't seem to be getting any more email notifications on this thread anymore. How can I turn those back on??

[scbendel]

Des thank you SO much!

[AngelinaCat]

Valle, the option you are pointing him to does not appear in his profile. I looked to see if I could PM him through his profile. I cannot.

I have reported this problem.

[ValleYum]

This is where you go first Step 1 and Step 2 (sorry so small - trying to show you my whole screen):



Then you have to scroll down to get to the Private Messaging option in the middle of the page and do as I showed you in message #61.

ALSO, scroll a little bit further down and make sure under the Miscellaneous Options > Message Editor Interface option in the middle of the page that you have Standard Editor selected.



If that doesn't work, then hopefully the Admins will have an idea.

[despritfreya]

Scbendel,

My time on the forum is limited this week - vacation/family thing - I will try to review and respond tomorrow.

Des.

[scbendel]

I've checked all my settings and still can't PM. I've sent a request to admin for help. I've posted on a couple threads and the PM option is still not coming up in settings. Weird and mildly frustrating.

[scbendel]

Okay, I have a question or seven. First thing they need to prove is that there was "an express trust", correct? How can they prove this, and how can I disprove this?

If they can't prove that, I can't be a fiduciary, right? If I can prove that we weren't acting in a fiduciary capacity, since there was no express trust, at that point the defalcation argument goes out the window, no?

Defalcation, I'm finding, has an extremely broad definition depending on which circuit my state resides in. Arizona is in the 9th circuit, which states there is no intent required to prove defalcation; but if I wasn't a fiduciary and there was no trust, how can this apply to me?

Thank you all again for your help. Can someone buzz Des and ask him his opinion on this? You all have been great thus far...I'm sort of seeing the light now.

[scbendel]

I don't see the "private messaging" option in general settings...like it skips over that option. :-/

[ValleYum]

Up to the top right - choose Settings (not shown in screenshot above)

Left hand side of next screen, scroll down to General Settings

Scroll down main screen to Private Messages and make sure they are enabled (turned on).

[ValleYum]

I've got twenty days to submit out answer...so there's a little time, but I want to get it done as quickly (yet thoroughly convincing) as possible.

I can't private message you at all - check your settings! There also is a minimum number of posts required to avoid spamming ads in PMs but the number seems to vary (to keep it trickier!). Maybe you could answer some of the polls and movie and book threads to bump your post count if it isn't something in your settings.

[scbendel]

I've got twenty days to submit out answer...so there's a little time, but I want to get it done as quickly (yet thoroughly convincing) as possible.

[scbendel]

Okay so I downloaded the complaint today. It's almost word for word what Des says, exact sections and everything. Basically their supporting "complaint" to the fraud or defalcation is a copy of the check written to us, them, and our 3rd party adjuster (who told us what to do, and didn't contest our depositing without his signature), and a copy of the "contract" we signed when they performed services at our house. They conveniently leave out the fact that we paid someone else to do work, and then paid that second company even more for additional work, and that we paid $3k out of our own pockets for extra hotel time. The complaint is PDF of course, but it's not one I can copy-paste text out of so I'd like to send it to one of the lawyers on forum as an attachment to see if there's anything that stands out. If they are ok with that, of course. I still can't PM. Weird, right?

Anyhow, I'm kinda feeling positive about our chances, but now I have to dig and find the arbitration summary, all they sent is a copy of the judgment; which doesn't say anything about the reasoning for the award to the plaintiff. Thoughts anyone, please?

Thank you all again.