Albro v. Leonelli-Spina (In re Leonelli-Spina)

Summarized by Michael Herz , Fox Rothschild LLP
14 years 10 months ago

Citation:

No formal citation (3d Cir., docket no. 10-2072, May 4, 2011)

Tag(s):

3rd Circuit

Ruling:

NOTE: This Opinion is stamped as "Not Precedential" Where a debt stems from a state court judgment based on the debtor's fraudulent conduct or defalcation while acting as a fiduciary, collateral estoppel prevents the issues from being re-litigated in the debtor's bankruptcy proceedings where the state court's determination arose directly from the debtor's fraudulent conduct or defalcation.

Procedural context:

Appeal of grant of summary judgment in favor in creditor in adversary proceeding seeking a determination of non-dischargeability of debt.

Facts:

Debtor/appellant, a former attorney, represented the respondent in a suit against his employer, and directed that proceeds of his pension checks be held in trust by his attorney while the suit was pending. The suit eventually reached a settlement which included compensation for attorney's fees. In addition the fees provided in settlement, the appellant took additional fees by withdrawing funds from the trust account holding the respondent's pension payments. The respondent obtained a state court judgment against the appellant holding that in withdrawing funds from the trust account, the appellant violated the rules of Professional Conduct, committed common-law fraud, tortiously converted funds, committed breach of contract, and breach of fiduciary duty, and awarded compensatory and punitive damages. The appellant filed for bankruptcy under Chapter 11 and the respondent brought an adversary proceeding objecting to discharge of the state court judgment. The Bankruptcy Court granted summary judgment in favor of the respondent, finding that collateral estoppel prevented re-litigation of the issues in the bankruptcy proceeding. The District Court for N.J. upheld the decision on appeal.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!