Ke v. Wang (In re Ke)

In re Ke (Ke v. Wang), Case No. 14-3824 (2d Cir. Oct. 6, 2015) (unpublished) (per curiam)
The Second Circuit affirmed the bankruptcy court and district court's ruling that that a debt was nondischargeable by the chapter 7 debtor because it was incurred by intentional or extremely reckless conduct constituting fraud or defalcation. The Second Circuit rejected the debtor's arguments that collateral estoppel prevented the bankruptcy court from ruling on the debtor's intent and breach of a fiduciary duty, and that insufficient evidence supported the bankruptcy court's findings of fact.
Procedural context:
The Bankruptcy Court for the Northern District of New York held the debtor's debt to be nondischargeable. This holding was affirmed by the District Court. The debtor appealed to the Second Circuit Court of Appeals.
The debtor was found liable to the creditor in a state court action which did not address the issue of the debtor's intent or breach of fiduciary duties. The bankruptcy court found that the the debtor did intend to cause harm to the creditor, or did so recklessly, that the debtor's actions constituted defalcation of a fiduciary duty and, accordingly, the debt was nondischargeable. The debtor appealed, arguing that the bankruptcy court's findings were not supported by the record and were barred by the doctrine of collateral estoppel because the original trial court made no findings on these issues. These arguments were rejected by the Second Circuit Court of Appeals.
Dennis Jacobs, Peirre N. Leval, Geoffrey W. Crawford (District Judge sitting by designation).

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