Cooley-Linder v. Behrends (In re Behrends)

Summarized by Elizabeth Gunn , United States Bankruptcy Court, District of Columbia
9 years 3 months ago

Citation:

Cooley-Linder et al v. Behrends (In re Behrends), Case No 15-1420 (10th Cir. Nov. 14, 2016)

Tag(s):

Ruling:

Judgment of bankruptcy court finding that damages awarded against debtor in an arbitration award and affirmed by the Denver state district court based on violations of securities laws were nondischargable under section 523(a)(19) affirmed by the Tenth Circuit. By enacting section 523(a)(19), Congress departed from the common-law understanding of collateral estoppel and issue preclusion principles in the context of securities violations.

Procedural context:

Appeal of the order of the District Court for the District of Colorado affirming the bankruptcy court's grant of summary judgment and denying cross-motion for summary judgment.

Facts:

Pre-petition, the plaintiffs filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) naming the debtor as one of the defendants. The action was referred to arbitration at which the debtor voluntarily did not appear or participate. The arbitration panel issued an award in favor of plaintiffs on various grounds. The debtor filed chapter 7 and the plaintiffs obtained relief from stay to file an action in the Denver state district court to confirm the FINRA arbitration award. Plaintiffs then filed an adversary proceeding seeing to have the debt established by the state judgment and FINRA award declared nondischargeable under section 523(a)(19).

Judge(s):

Tymkovich, Bacharach, Moritz

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