Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-06198/USCOURTS-ca10-90-06198-0/pdf.json

Parties Involved:
Gregory L. Thornbury
Appellee
Union Bank and Trust Company
Appellant

Document Text:

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UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

FI LED 

Voiced States Court of Appeals 

Tenth Circuit 

.4UG 12 1991 

ROBERT L. HOECKER 

Clerk 

UNION BANK AND TRUST COMPANY, 

Plaintiff - Appellant, 

No. 90-6198 

-vsGREGORY L. THORNBURY, 

Defendant-Appellee. 

(D.C. No. Civ-89-1127-R) 

(W.D. Oklahoma) 

ORDER AND JUDGMENT* 

Before MCKAY and LOGAN, Circuit Judges, and WINDER, District 

Judge** 

Submitted on the briefs: 

This matter is before the court on plaintiff's appeal 

from the district court's order affirming the bankruptcy court's 

final order and judgment in favor of debtor Gregory L. Thornbury 

("Thornbury"). Plaintiff Union Bank and Trust ("Union Bank") 

* This order and judgment has no precede ntial value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for the purposes of establishing the doctrines of the law 

of the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

** The Honorable David K. Winder, United States District Judge 

for the District of Utah, sitting by designation. 

Appellate Case: 90-6198 Document: 010110131487 Date Filed: 08/12/1991 Page: 1 
sought to have the debt owed it declared nondischargeable under 

11 u.s.c. § 523(a) (6). Union Bank asserts that the bankruptcy 

and district courts erred as a matter of law by applying a 

subjective standard to conclude that Union Bank failed to 

establish the debtor's malice within the meaning of 11 U.S.C. 

§ 523 (a) (6). 

By an Order dated November 14, 1989, the district court 

remanded the case to the bankruptcy court to make additional 

findings of fact and conclusions of law so the district court 

could determine whether the bankruptcy court applied the correct 

law and to review the bankruptcy court's application of the law 

to the facts. On February 9, 1990, the bankruptcy court entered 

an "Order Making Additional Findings of Fact and Conclusions of 

Law, and Denying Plaintiff's Complaint." On May 17, 1990, the 

district court issued an order affirming the February order of 

the bankruptcy court. 

Thornbury obtained a working capital loan for his 

landscaping company from Union Bank. The company's accounts 

receivable secured this loan. When informed that alternate 

financing must be obtained for the company to stay in business, 

Thornbury sought financing through Equity Continental Bank 

("Equity"). Thornbury provided Equity with two large checks 

from the company's accounts receivable. After Thornbury filed 

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Appellate Case: 90-6198 Document: 010110131487 Date Filed: 08/12/1991 Page: 2 
for bankruptcy, Union Bank alleged that Thornbury's conversion of 

the accounts receivable, in which the bank had a perfected 

security interest, was malicious within the meaning of 11 U.S.C. 

§ 523(a)(6). 

The legal standard applied by the bankruptcy and 

district courts was whether the debtor had "actual knowledge or 

the reasonable foreseeability that his conduct [would] result in 

injury to the creditor." Order, Union Bank and Trust Co. v. 

Thornbury (In re Thornbury), Civ. No. 89-1127-R (W.d. Okla. May 

17, 1990) at 2, quoting, C.I.T. Financial Services, Inc. v. Posta 

(In re Posta), 866 F.2d 364, 367 (10th Cir. 1989). The 

bankruptcy court found that the debtor was without financial 

acumen and believed that he had a valid financing agreement with 

Equity, allowing him to pay off Union's loans and remain in 

business. The district court found these facts, coupled with the 

finding that defendant did not have the specific intent to 

defraud Union, precluded a finding of malice on the part of the 

defendant. 

This court concludes that there is ample evidence in 

the record to support the findings of the bankruptcy court and 

the district court regardless whether an objective or subjective 

standard of malice is applied. Thus, this court leaves to 

another day any clarification, if necessary, of the malice 

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Appellate Case: 90-6198 Document: 010110131487 Date Filed: 08/12/1991 Page: 3 
standard set forth in In re Pesta, 866 .2d 364 (10th Cir. 1989). 

We are in accord with the district judge's conclusion and affirm 

for substantially the reasons stated in the orders of the 

district and bankruptcy court. 

Entered for the Court 

David K. Winder 

District Judge 

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Appellate Case: 90-6198 Document: 010110131487 Date Filed: 08/12/1991 Page: 4