Dantone v. Dantone (In re Dantone)

Summarized by Laura Bartell , Wayne State University Law School
13 years 5 months ago

Citation:

2012 Fed. App. 0009P (6th Cir. BAP Sept. 13, 2012)

Tag(s):

Ruling:

Reversing grant of summary judgment to plaintiffs on their claim that debtor's debt to them was nondischargeable under Section 523(a)(4) based on the issue preclusive effect of a prior state judgment, the Bankruptcy Appellate Panel held that the issues required for a finding of embezzlement were not actually litigated and necessarily detemined in state court. The case was remanded to the bankruptcy court for further proceedings.

Procedural context:

Appeal from grant of summary judgment by bankruptcy court to Bankruptcy Appellate Panel.

Facts:

Plaintiffs delivered artifacts from a famous shipwreck to debtor for display and, according to debtor, for sale in debtor's jewelry store. When they were returned, several were missing. Plaintiffs sued debtor in Michigan state court alleging breach of fiduciary duty, common law conversion, statutory conversion or negligence. Summary judgment was granted in favor of plaintiffs due to the failure of debtor to respond to discovery requests. Debtor then filed for chapter 7 bankruptcy. Plaintiffs sought to have their debt declared nondischargeable under section 523(a)(4) and the bankruptcy court granted summary judgment, holding that issue preclusion demonstrated embezzlement. The Bankruptcy Appellate Panel reversed, holding that the issue of fraud was not necessarily determinated in the state court proceeding.

Judge(s):

Harris, Preston & Shea-Stonum

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