UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF VIRGINIA

NORFOLK DIVISION

____________________________________

In re: )

)

JAMES DOUGLAS DICKSON, )

NIKOLE ANN DICKSON, )

) Case No. 19-70934-SCS

Debtors. )

____________________________________)

)

JAMES RIVER PETROLEUM, INC., )

) APN 19-07013-SCS

Plaintiff, )

)

v. )

)

NIKOLE ANN DICKSON, )

) Chapter 7

Defendant. )

____________________________________)

MEMORANDUM OPINION

This matter came on for trial on January 28, 2020, upon the Complaint Pursuant to 11 

U.S.C. § 523 Objecting to the Dischargeability of the Debt to James River Petroleum, Inc. and for 

Entry of Judgment filed by James River Petroleum, Inc. (“James River”). At the conclusion of the 

trial, the Court took this matter under advisement. This Court has jurisdiction over this proceeding 

pursuant to 28 U.S.C. §§ 157(b)(2) and 1334(b). Venue is proper pursuant to 28 U.S.C. §§ 1408 

and 1409. Upon consideration of the evidence, arguments presented by counsel at the trial, and 

pleadings submitted, the Court makes the following findings of fact and conclusions of law 

pursuant to Federal Rule of Bankruptcy Procedure 7052.

I. PROCEDURAL HISTORY

Nikole Ann Dickson (“Mrs. Dickson”) and James Douglas Dickson (“Mr. Dickson,” and 

collectively, with Mrs. Dickson, the “Debtors”) filed, by counsel, a petition under Chapter 7 of the 

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United States Bankruptcy Code on March 14, 2019. On their schedules, the Debtors listed 

$186,289.55 in total unsecured nonpriority debt with the amount owed to James River set forth as 

“unknown.” See Schedule E/F, Case No. 19-70934-SCS, ECF No. 1, at 35, 42. The § 341 Meeting 

of Creditors was held and concluded on April 23, 2019. The Debtors received their Chapter 7 

discharge on July 1, 2019. Seven days prior, on June 24, 2019, James River filed a Complaint 

Pursuant to 11 U.S.C. § 523 Objecting to the Dischargeability of the Debt to James River 

Petroleum, Inc. and for Entry of Judgment, which commenced the above-captioned Adversary 

Proceeding. Complaint Pursuant to 11 U.S.C. § 523 Objecting to the Dischargeability of the Debt 

to James River Petroleum, Inc. and for Entry of Judgment, Adv. Proc. No. 19-07013-SCS, ECF 

No. 1 (hereinafter, “Complaint”).

In the Complaint, James River requests the Court to determine the dischargeability of the 

debt owed by Mrs. Dickson pursuant to a lease agreement and consignment contract entered into 

between James River and Dickson Convenience Store LLC (hereinafter, “Dickson Convenience”)

on September 21, 2017, and a guaranty agreement entered into between Mrs. Dickson, Dickson 

Convenience, and James River on the same day. See id. at preamble, paras. 9-10, 12. Under the 

lease agreement, James River leased a convenience store located in Elizabeth City, North Carolina,

to Dickson Convenience. Id. at para. 9; see also id. Ex. A, Lease Agreement between James River 

Petroleum, Inc., and Dickson Convenience Store LLC, dated September 21, 2017 (hereinafter,

“Lease Agreement”), at preamble.1 As a condition precedent to the Lease Agreement, James River 

required Dickson Convenience to enter into a consignment contract for James River’s delivery of 

petroleum products to Dickson Convenience. Id. at paras. 9-10; see also id. Ex. B, Consignment 

1 The Lease Agreement was tendered among James River’s trial exhibits as Exhibit 1. See Pl. Ex. 

1.

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Contract between James River Petroleum, Inc., and Dickson Convenience Store LLC, dated 

September 21, 2017 (hereinafter, “Consignment Contract”), at para. B(1).2 When Dickson 

Convenience sold the petroleum products, the proceeds were to be paid to James River. Id. at paras. 

11, 13. James River alleges that the proceeds from the cash sales of consigned petroleum products 

constituted its property. Id. at paras. 1, 11, 13. However, Mrs. Dickson and Dickson Convenience 

purportedly failed to comply with the Consignment Contract by failing to turn over all daily cash 

proceeds to James River. Id. at paras. 1, 13. Mrs. Dickson individually guaranteed all payments

and obligations under the Lease Agreement and Consignment Contract. See id. at para. 12; see

also Consignment Contract Ex. B (Guaranty Agreement between Nikole Dickson and James River 

Petroleum, Inc., dated September 21, 2017) (hereinafter, “Guaranty Agreement”).3 James River 

seeks to have the Court declare the amounts guaranteed by Mrs. Dickson to be nondischargeable 

pursuant to 11 U.S.C. §§ 523(a)(4) and 523(a)(6) and further requests entry of judgment against 

Mrs. Dickson for breach of fiduciary duty and conversion. Complaint, at preamble, paras. 12, 18, 

25, 35, 41.

According to James River, Mrs. Dickson and Dickson Convenience had a fiduciary duty 

to turn over all proceeds from the sale of petroleum products each day under the Guaranty 

Agreement and the Consignment Contract, respectively. Id. at para. 15. James River asserts Mrs. 

Dickson intentionally caused Dickson Convenience to fail to turn over $171,575.11 of funds held 

in trust for the benefit of James River and was personally responsible for Dickson Convenience’s 

conduct. Id. at paras. 16-17. James River argues Mrs. Dickson’s actions constituted a breach of 

her fiduciary duties to Dickson Convenience. Id. at para. 18. James River further alleges that 

2 The Consignment Contract was included among James River’s trial exhibits as Exhibit 2. See

Pl. Ex. 2.

3 The Guaranty Agreement was Exhibit 3 among James River’s trial exhibits. See Pl. Ex. 3.

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Dickson Convenience and Mrs. Dickson are additionally liable for late fees equal to 10 percent of 

the funds not turned over to James River pursuant to the Consignment Contract and the Guaranty 

Agreement, for total late fees of $17,157.51. Id. at para. 19; see also Consignment Contract, at 

para. C(5)(a). Additionally, James River alleges that Mrs. Dickson agreed to indemnify and hold 

James River harmless for any loss or damages, including attorney’s fees, arising out of Dickson 

Convenience’s failure to comply with the Consignment Contract. Complaint, at para. 20; see also

Consignment Contract, at para. E(12); Guaranty Agreement, at para. 1.

Next, James River asserts that Mrs. Dickson’s failure to turn over the $171,575.11 in 

proceeds from the sale of petroleum products constituted conversion because she fraudulently 

appropriated funds belonging to James River for her own benefit or the benefit of Dickson 

Convenience. See Complaint, at paras. 22-23. James River argues that Mrs. Dickson deprived

James River of possession of the proceeds and that she wrongfully exerted dominion over that 

sum, which was inconsistent with James River’s rights to the funds. Id. at paras. 24-25. James 

River contends that Mrs. Dickson knew that the $171,575.11 constituted its property and that she 

intended to permanently deprive James River of those funds. Id. at paras. 26-27.

Third, James River alleges that Mrs. Dickson’s outstanding debt to James River, including 

the $171,575.11 in funds not turned over to it, the related late fees, and James River’s attorney’s

fees and costs, are nondischargeable because they arose from Mrs. Dickson’s and Dickson 

Convenience’s fraud and defalcation. Id. at para. 30. James River argues that Mrs. Dickson and 

Dickson Convenience owed fiduciary duties to it with respect to the funds, which it asserts were 

to be held in express trust for James River’s benefit, that Mrs. Dickson was personally responsible 

for Dickson Convenience’s conduct, and Mrs. Dickson caused Dickson Convenience to fail to turn 

over the funds that were to be held in trust. Id. at paras. 29, 32. James River contends Mrs. Dickson 

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fraudulently appropriated the funds for her own benefit or for the benefit of Dickson Convenience.

Id. at paras. 31, 34. James River alleges that Mrs. Dickson’s conduct “constitutes fraud and 

defalcation while acting in a fiduciary capacity, embezzlement and larceny” pursuant to 11 U.S.C. 

§ 523(a)(4). Id. at para. 35.

Finally, James River alleges that Mrs. Dickson caused injury to James River by converting

the latter’s funds without just cause or excuse. Id. at paras. 37, 40. James River asserts that Mrs. 

Dickson intended to wrongfully deprive James River of its funds, acting with substantial certainty 

that her actions would cause harm to James River. Id. at paras. 38-39. James River contends that 

Mrs. Dickson maliciously converted James River’s funds, demonstrating a subjective motive to 

cause harm to James River. Id. at paras. 37, 39. James River alleges that Mrs. Dickson’s actions 

constitute willful and malicious injury within the meaning of 11 U.S.C. § 523(a)(6), making the 

resulting damages nondischargeable. Id. at para. 41. The Complaint asserts that the total 

nondischargeable debt pursuant to 11 U.S.C. §§ 523(a)(4) and 523(a)(6) is not less than 

$171,575.11, plus late fees of $17,157.51, attorney’s fees and costs, and pre- and post-judgment 

interest at the federal judgment rate. Id. at prayer.

Mrs. Dickson, by counsel, filed an answer to the Complaint on July 26, 2019, admitting 

that she entered into the Lease Agreement and Consignment Contract. See Answer to Complaint,

Adv. Proc. No. 19-07013-SCS, ECF No. 5 (hereinafter, “Answer”), at paras. 9-10. Mrs. Dickson 

admits that the Consignment Contract “contains a guaranty” but does not waive any defenses with 

respect to the Guaranty Agreement and neither admits nor denies that she entered into such 

agreement. Id. at para. 12. Mrs. Dickson denies that James River, under the terms of the 

Consignment Contract, could access and track all of Dickson Convenience’s sales through James 

River’s point of sale system and demands strict proof of accounting. Id. at para. 13.

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Mrs. Dickson admits that James River owned the proceeds from the sale of the petroleum 

products. Id. at para. 1. However, Mrs. Dickson denies that she and Dickson Convenience 

intentionally failed to comply with the Consignment Contract by failing to turn over all daily 

proceeds from the cash sale of petroleum products. Id. at paras. 1, 11, 13, 16. Mrs. Dickson rejects

James River’s assertion that she and Dickson Convenience owed any fiduciary such duties to 

James River to turn over all proceeds from the sale of petroleum products. Id. at para. 15. Mrs. 

Dickson denies that she intentionally caused Dickson Convenience to fail to turn over the funds 

and that she was personally responsible for Dickson Convenience’s conduct. Id. at paras. 16-17.

Mrs. Dickson further denies that she breached her fiduciary duty to Dickson Convenience by 

causing Dickson Convenience to fail to turn over funds held for James River in trust. Id. at paras.

1, 18. Regarding conversion, Mrs. Dickson denies that she converted $171,575.11 of James River’s 

funds for her or Dickson Convenience’s benefit. Id. at paras. 1, 23-25, 27. Finally, Mrs. Dickson 

denies that her actions constitute fraud and defalcation pursuant to 11 U.S.C. § 523(a)(4) so as to 

render the debt to James River to be nondischargeable. See id. at paras. 1, 29-35. Mrs. Dickson 

also denies that her actions caused willful and malicious injury to James River and that the debt 

owed to James River is nondischargeable pursuant to 11 U.S.C. § 523(a)(6). See id. at paras. 1, 37-

41.

Prior to trial, on January 24, 2020, the parties filed a Partial Stipulation of Facts, which 

largely restated facts alleged in the Complaint and Answer. Partial Stipulation of Facts, Adv. Proc. 

No. 19-07013-SCS, ECF No. 16 (hereinafter, “Partial Stipulation”). Although not addressed by 

Mrs. Dickson in her Answer, the parties stipulated that Mrs. Dickson entered into the Guaranty 

Agreement with James River on September 21, 2017, guaranteeing payment and performance of 

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all of Dickson Convenience’s obligations under the Consignment Contract and Lease Agreement.

Id. at para. 8.

Additionally, on January 21, 2020, James River, by counsel, filed Objections to 

Defendant’s Designated Exhibits, objecting to Mrs. Dickson’s Exhibit T on two grounds.

Plaintiff’s Objections to Defendant’s Designated Exhibits, Adv. Proc. No. 19-07013-SCS, ECF 

No. 14 (hereinafter, “James River’s Objection to Exhibit”). Exhibit T contained documents 

depicting “‘e-mails with pictures of the Convenience Store.’” Id. at para. 2. First, James River

asserts that the items included in Exhibit T were not produced in response to discovery requests. 

Id. Second, Mrs. Dickson did not provide “initial disclosures pursuant to Federal Rule of Civil 

Procedure 26(a)(1) identifying any relevant documents.” Id. At the commencement of trial,

counsel for Mrs. Dickson agreed that Exhibit T was not provided during discovery and accordingly

withdrew the exhibit. See Transcript of January 28, 2020 Trial (hereinafter, “Tr.”), at 2. The Court 

accepted the parties’ resolution of James River’s Objection to Exhibit and therefore sustained the 

objection. Id. Counsel for James River also objected to Mrs. Dickson calling Mr. Dickson as a

witness because he was not included in the pre-trial disclosures. Id. at 3. However, counsel for the

parties represented that Mrs. Dickson agreed that Mr. Dickson would not be called as a witness. 

Id. The Court accepted the parties’ resolution. Id. Additionally, at the close of opening statements 

by counsel for the parties, the Court accepted the Partial Stipulation and deemed the exhibits filed 

by James River and the exhibits filed by Mrs. Dickson (with the exception of the withdrawn 

exhibit) as admitted. Id. at 8-9.

II. FINDINGS OF FACT

The factual history is uncontested. James River is a supplier of petroleum fuel products.

See Pl. Ex. 2, Consignment Contract between James River Petroleum, Inc., and Dickson 

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Convenience Store LLC, dated September 21, 2017 (hereinafter, “Consignment Contract”),4 at 

preamble; see also Tr. at 18. James River leased a convenience store in Elizabeth City, North 

Carolina, from GPACK Hughes Blvd LLC pursuant to a prime lease dated November 17, 2006. 

Pl. Ex. 1, Lease Agreement between James River Petroleum, Inc., and Dickson Convenience Store 

LLC, dated September 21, 2017 (hereinafter, “Lease Agreement”),5 at § 22.13. James River 

subleased the convenience store, along with the equipment and fixtures on the property (the “Gas 

Station”), to independent store operators, which leases included the contractual obligation to sell 

James River’s petroleum products on consignment. See Partial Stipulation, at para. 6; Lease 

Agreement, at preamble, § 4.3(b); Consignment Contract, at preamble, para. B(1); see also Tr. at 

11-12, 14, 16-18, 99 (discussing the operators of the Gas Station from 2017 to present); Pl. Ex. 39, 

Dec. 16, 2019 Deposition of Nikole A. Dickson (hereinafter, “Dep.”), at 10-11, 13, 20-22.

Mrs. Dickson’s educational background includes completion of high school and “a couple

of semesters worth” of college classes. Tr. at 60; Dep. at 8. Mrs. Dickson’s college coursework 

included a “couple of business” classes and “a couple of HR classes.” Tr. at 60. Afterward, Mrs.

Dickson worked in restaurants, including at one point managing a fast food restaurant, before 

transitioning to the convenience store industry. See id. at 10; see also Dep. at 8. Mrs. Dickson’s

convenience store employment began in 2010; she worked for Wawa, Pilot Travel Center, and 

White’s Travel Center over approximately five and a half years. Tr. at 10; see also Dep. at 8-9. All 

three of the convenience stores sold fuel products. Tr. at 11. Mrs. Dickson then worked for a truck 

4 The Consignment Contract was attached to the Complaint as Exhibit B. See Complaint, Ex. B.

5 The Lease Agreement was attached to the Complaint as Exhibit A. See Complaint, Ex. A.

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center for a few months and subsequently as a sales representative for a wholesaler of candy, 

cigarettes, and other convenience store items for another few months. Id.; Dep. at 8-10.6

In April 2017, Mrs. Dickson was hired by Mr. Rambir,7 the previous operator of the Gas 

Station, as the sole manager of the store. Tr. at 11-13; see also Dep. at 10-11, 13. Mrs. Dickson 

handled the store’s day-to-day operations, including hiring and overseeing employees, placing

orders, and making daily cash deposits into a bank account designated by Mr. Rambir. Tr. at 12-

13; Dep. at 11. Mr. Rambir “only stopped by for visits.” Tr. at 12. Mrs. Dickson worked five days 

a week, approximately ten hours each day, for a bi-weekly salary of $1,500.00. Dep. at 17-18. Mrs.

Dickson testified that the Gas Station sold James River’s fuel. Tr. at 13. While she was managing 

the Gas Station, she received letters from James River stating that Mr. Rambir failed to pay rent to 

James River. Dep. at 18. In August 2017, James River ended Mr. Rambir’s store operations at the 

Gas Station and eventually sued him. Id. at 13, 18-20; see also id. at 14.

Mrs. Dickson worked for another company for a couple of weeks before being asked by 

James River in September 2017 to become the new operator of the Gas Station. Id. at 10, 14-16;

see Tr. at 61-62. A vice-president at James River initially approached Mrs. Dickson about her 

interest in operating the Gas Station while she was working for Mr. Rambir. Tr. at 61; Dep. at 14-

15. Initially, Mrs. Dickson did not pursue the offer because she was unsure if doing so was 

financially feasible given the Gas Station’s startup costs, including licenses for the business and 

alcohol sales, as well as expenses to restock inventory.8 Tr. at 62; see Dep. at 15-16, 81. When 

6 Mrs. Dickson also obtained her real estate license in 2018 and worked for Uber and Door Dash 

between October 2018 and March 2019. Dep. at 11-13.

7 Neither Mrs. Dickson, by her testimony, nor any of the admitted exhibits provide Mr. Rambir’s 

first name.

8 During the few weeks the Gas Station was shut down, some inventory expired; items such as 

beer had to be discarded to comply with a supplier’s standards. Dep. at 82; see also Tr. at 14.

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James River contacted Mrs. Dickson in September 2017, it offered to assist her with startup costs.

Tr. at 62; Dep. at 16. James River offered to sell her groceries and other inventory on credit, lend 

her capital to finish restocking, and purchase new oven equipment to enable her to hold a “grand 

reopening.” Dep. at 16; see also id. at 17, 81-82, 86; Pl. Ex. 4, James River Petroleum, Inc. Account 

Reconciliation of Dickson Convenience Store LLC transactions (hereinafter, “Account 

Reconciliation”), at 1. Mrs. Dickson agreed to operate the Gas Station with the financial assistance 

of James River, even though, in hindsight, she acknowledged that managing the Gas Station did 

not prepare her for all aspects of operating it.9 Tr. at 62; Dep. at 16. According to Mrs. Dickson, 

she created Dickson Convenience in July 2017, without the assistance of an attorney, to lease the 

Gas Station from James River. Tr. at 14-15; see also Dep. at 23. See generally Partial Stipulation, 

at paras. 1-4. Dickson Convenience, a limited liability company, was solely owned and managed

by Mrs. Dickson.10 Partial Stipulation, at paras. 1-2; Tr. at 14-15; Dep. at 23.

A. The Lease Agreement and Consignment Contract

James River and Dickson Convenience entered into the Lease Agreement for the Gas 

Station on September 21, 2017. Partial Stipulation, at para. 6; Lease Agreement, at preamble, p. 

14; Tr. at 16-17. Mrs. Dickson signed the Lease Agreement in her capacity as the owner of Dickson 

Convenience. Lease Agreement, at p. 14; Tr. at 16. According to Mrs. Dickson, she printed the 

Lease Agreement after it was emailed to her, and she “looked through it” for approximately a day

9 Despite Mrs. Dickson’s perceived inability to obtain financing, she thought she could

successfully operate the Gas Station because customers told her it used to be a “very good 

location . . . a very busy location.” Dep. at 21.

10 Dickson Convenience was organized under the laws of the state of North Carolina. Partial 

Stipulation, at para. 2; Tr. at 15; Dep. at 23. Due to the lack of an operating agreement, Dickson 

Convenience defaults to a manager-managed limited liability company, with Mrs. Dickson as the 

sole designated manager. See N.C. Gen. Stat. § 57D-3-20 (2020); see also Partial Stipulation, at 

paras. 1-3; Tr. at 14-15.

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before she signed it. Tr. at 16, 60-61. Mrs. Dickson did not seek legal advice before she signed and 

returned the agreement to James River. Id. at 60. James River’s chief executive officer signed the 

Lease Agreement on September 25, 2017. Lease Agreement, at p. 14.

The Lease Agreement’s term began on October 1, 2017, and was to end on June 30, 2026. 

Id. at § 1.1. The Lease Agreement required Dickson Convenience to pay base rent to James River 

on the first day of each month during the term of the lease as follows:

Base Rent Period: Base Rent Due (Per Month):

October 1, 2017 – October 31, 2017 $0.00

November 1, 2017 – January 31, 2018 $1,500.00

February 1, 2018 – April 30, 2018 $2,250.00

May 1, 2018 – July 31, 2018 $3,000.00

August 1, 2018 – October 31, 2018 $3,750.00

November 1, 2018 – October 31, 2019 $4,500.00

November 1, 2019 – October 31, 2020 $5,500.00

November 1, 2020 – October 31, 2021 $6,180.00

Id. at § 2.1; see Tr. at 79-80. Mrs. Dickson confirmed that Dickson Convenience had no obligation 

to pay rent for October 2017 and that the monthly rent “slowly increased over time.”11 Tr. at 80.

The Lease Agreement was a “triple net lease,” with Dickson Convenience responsible for 

several expenses related to the Gas Station. Lease Agreement, at § 2.3. First, Dickson Convenience 

had to pay the real estate taxes and utilities associated with the Gas Station. Id.; see also id. at § 

3.1. Second, Dickson Convenience was required to pay for any maintenance, repair, or 

replacement expenses arising from the operation of the Gas Station. Id. at § 2.3; see also id. at § 

5. Finally, Dickson Convenience was responsible for insurance premiums associated with general 

11 The base rent increased three percent per year beginning November 1, 2021. Lease 

Agreement, at § 2.1. In addition, Dickson Convenience had a duty to pay all other rent and 

monetary obligations due under the Lease Agreement. Id. at § 2.2. According to Mrs. Dickson, 

Dickson Convenience never made rent payments to James River; she “just put the cash into” the 

account designated by James River. Tr. at 79. Mrs. Dickson confirmed that she was never told 

not to pay rent for the Gas Station. Id. at 80.

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liability and property damage insurance policies, which James River required Dickson 

Convenience to maintain throughout the term of the Lease Agreement. Id. at §§ 2.3, 8.1.

In the event that Dickson Convenience defaulted on its contractual obligations or in the 

event of default under the Consignment Contract, James River was permitted to either terminate 

the lease five days after giving notice of the default or re-let the premises. Id. at § 13.1. In addition, 

James River maintained the right to make the payments or perform the acts required of Dickson 

Convenience under the Lease Agreement, at the expense of the latter, without James River waiving 

or releasing its contractual obligations. Id. at § 13.2. Failure to enforce the contractual rights for 

any length of time was not deemed a waiver of either party’s rights set forth within the Lease 

Agreement; waiver could only be achieved through a signed writing. Id. at § 22.5.

The Lease Agreement required Dickson Convenience to enter into a consignment contract 

simultaneously with and as a condition precedent to the Lease Agreement. Id. at §§ 4.3(b), 11; see 

also Consignment Contract, at preamble. James River and Dickson Convenience entered into the 

Consignment Contract on September 21, 2017. Partial Stipulation, at para. 7; Consignment 

Contract, at preamble, para. A, p. 10; see Tr. at 17. According to Mrs. Dickson, she printed the 

Consignment Contract and “look[ed] over it” for approximately a day before signing it on behalf 

of Dickson Convenience. Tr. at 17-18; see Consignment Contract, at p. 10; see also Tr. at 60-61; 

Dep. at 64. Mrs. Dickson signed the Consignment Contract voluntarily, and, like the Lease 

Agreement, she did not seek legal advice before mailing the agreement back to James River. Tr. 

at 17, 60; see also Dep. at 64. James River’s chief executive officer signed the Consignment 

Contract on behalf of James River. See Consignment Contract, at p. 10.

The Consignment Contract’s term was set to expire on June 30, 2026, the same date as the 

expiration of the Lease Agreement. Id. at para. A; see Lease Agreement, at § 1.1. Pursuant to the 

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Consignment Contract, James River consigned petroleum products to Dickson Convenience,

which the latter sold under the contract. Consignment Contract, at preamble, para. B(1); Tr. at 18,

87; Dep. at 67. Mrs. Dickson acknowledged that James River retained title to all petroleum 

products delivered to Dickson Convenience until such products were sold in Dickson 

Convenience’s regular course of business. See Consignment Contract, at para. B(2)(a); Tr. at 31;

see also Tr. at 87; Dep. at 67. James River set the retail price for the petroleum products sold by 

Dickson Convenience, which price would, at a minimum, cover “gross costs.”12 See Consignment 

Contract, at para. C(1). In addition, James River required Dickson Convenience to market the 

petroleum products under the supplier trade name, “Mobil.” See id. at preamble, para. B(4).

Dickson Convenience could neither utilize the funds, either by borrowing, offsetting, 

crediting, or otherwise taking any of the cash fuel proceeds, nor withhold or retain proceeds from 

the sale of fuel. Id. at para. C(5)(b). Rather, James River retained the right to proceeds from the 

sale of petroleum products, whether purchased with a credit or debit card or with cash, and Dickson 

Convenience had a duty to deposit all cash proceeds from such sales into James River’s bank 

account each day. See id. at paras. B(2)(b), C(5)(a); Partial Stipulation, at para. 9; Tr. at 59; Dep.

at 96-97. In the event the cash proceeds from fuel sales were not deposited into James River’s bank 

account due to an intentional act or omission, Dickson Convenience’s retention of those proceeds

would be deemed an “unauthorized retention” of James River’s property. Consignment Contract, 

at para. C(5)(b). Mrs. Dickson knew the fuel and its sales proceeds were the property of James 

12 Per the Consignment Contract, gross costs “include[d] the cost to acquire the [petroleum] 

Products, including all taxes and Impositions, freight charges, delivery charges, $0.01 per gallon 

. . . any other applicable Impositions, fees or other charges incurred by [James River], or that 

[James River] may be required to collect or pay in connection with the [petroleum] Products, 

including but not limited to, any fees related to the [point-of-sale system] or all card sales . . . .” 

Consignment Contract, at para. C(1).

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River. Tr. at 31, 59; see also Dep. at 96-97. Mrs. Dickson did not recall ever being told not to 

deposit cash fuel proceeds into James River’s bank account. Tr. at 58, 80. Mrs. Dickson testified 

at trial that she only received cash proceeds, which were supposed to be deposited into James 

River’s bank account. Id. at 29-30, 59, 90; Dep. at 67; see also Dep. at 96-97. However, at her 

deposition, Mrs. Dickson testified that a portion of the cash fuel proceeds were Dickson 

Convenience’s property because James River received all debit and credit card sales proceeds.13

Dep. at 69.

If the total daily cash sales of petroleum products did not equal the total daily cash deposits 

made to James River’s bank account, Dickson Convenience was required to deposit the difference 

into James River’s bank account by 9:00 a.m. the following day (the difference being defined in 

the Consignment Contract as the “Shortfall”). See Consignment Contract, at para. C(5)(a). Mrs. 

Dickson testified she understood this obligation. Tr. at 33. If Dickson Convenience failed to timely 

deposit the Shortfall, James River was entitled to late fees equaling ten percent of the amount of 

the Shortfall each day or portion thereof until James River received both the Shortfall and the late 

fee. See Consignment Contract, at para. C(5)(a); see also Tr. at 98-99.

James River shared the profits of petroleum product sales with Dickson Convenience. See 

Consignment Contract, at para. C(7)(a); Tr. at 107, 109; Dep. at 94. Under the Consignment 

Contract, James River was required to pay Dickson Convenience twenty percent of the net profit 

(sales proceeds less gross costs) from the sale of petroleum products. Consignment Contract, at 

para. C(7)(a); see also Tr. at 107, 109; Dep. at 94.14 Mrs. Dickson understood that Dickson 

Convenience would receive a portion of the profit from the sale of James River’s fuel. Dep. at 67,

13 Mrs. Dickson’s understanding regarding Dickson Convenience’s entitlement to a portion of 

the cash fuel proceeds is discussed further infra. 14 See supra note 12.

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94. Mrs. Dickson believed, however, that Dickson Convenience was instead entitled to twenty 

percent of James River’s profits from selling the fuel on consignment. Id. at 94. According to 

James River, the profit margin on petroleum products was “pennies per gallon.” Tr. at 109. James 

River credited Dickson Convenience’s share of the net profit from fuel sales against the store’s 

rent account monthly. See id. at 107-10; Consignment Contract, at paras. C(7), C(8); Dep. at 94.

These credits were made pursuant to James River’s right to offset and recoup any amount Dickson 

Convenience owed to it arising under either the Consignment Contract or any other agreement 

between the parties. Consignment Contract, at para. C(8).

James River supplied Dickson Convenience with a point-of-sale system (the “POS 

System”) to process and track sales of the consigned petroleum products and other goods offered 

for sale by Dickson Convenience. See id. at para. C(4)(d); Dep. at 37-38; see also Tr. at 31, 85, 88.

The POS System consisted of two components, which James River could access remotely: the 

equipment to sell petroleum products outside Dickson Convenience at the gas pump and two

registers and card readers to sell petroleum products and other goods inside Dickson Convenience. 

See Consignment Contract, at paras. C(4)(d)-(e); Tr. at 46, 64, 98, 100, 103-04; Dep. at 33, 37-38.

Dickson Convenience was prohibited from disconnecting, altering, or interfering with the 

operation of the POS System. Consignment Contract, at para. C(4)(d). The POS System transferred

proceeds from all credit and debit card sales, whether for petroleum or other products, directly to

James River. Id. at paras. C(4)(d), C(5)(a); see Tr. at 32, 89-90, 92-93, 100, 104; Dep. at 40-41,

71. These transfers consisted of the proceeds from the sale of petroleum products outside Dickson 

Convenience at the gas pump paid for by credit or debit card (hereinafter, “Outside Transactions”)

and all credit and debit card sales of petroleum products or other goods inside Dickson 

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Convenience (hereinafter, “Inside Transactions”). Consignment Contract, at para. C(4)(e); Tr. at 

100, 102-05; Dep. at 69.

James River credited the proceeds from nonfuel credit and debit card transactions against 

the amounts Dickson Convenience owed to the former for cash sales of fuel. Tr. at 94-95, 105-08;

see also Consignment Contract, at para. C(8). The crediting process was effectuated by James 

River’s accounting software, “DM2” (hereinafter, “Accounting Software”), which cross-netted 

liabilities on a daily basis. See Tr. at 85, 87-90, 97-98, 112. If Dickson Convenience’s nonfuel 

credit and debit card transactions exceeded the other amounts owed to James River, then James 

River was obligated to remit that amount to Dickson Convenience in cash.15 Id. at 97, 108.

James River’s POS System incurred network processing fees with every debit and credit 

card transaction. See Consignment Contract, at para. C(4)(e); Tr. at 93. James River paid all

processing fees for credit and debit card sales related to Outside Transactions, while Dickson 

Convenience was responsible for paying processing fees for Inside Transactions.16 See 

15 The amounts due to Dickson Convenience never exceeded the amounts otherwise owed to 

James River, and Dickson Convenience never received cash remittances from James River. Tr. at 

108.

16 The Consignment Contract states the rights and obligations of James River and Dickson 

Convenience as follows:

Card transactions shall be the responsibility of Consignee. The Consignee shall pay 

all credit card processing fees related to Inside Transactions, including but not 

limited to, point-of-sale fees and all other costs incident to its acceptance of credit 

cards in lieu of cash payment for products and services sold on the Premises which 

are not part of Outside Transactions, as hereinafter defined, (“Inside Transactions”). 

The Consignor will pay all credit card processing fees related to “Outside 

Transactions” which shall only include the fees generated from customers paying 

with a credit card for the purchase of [petroleum] Products. Consignee agrees to 

comply with any credit card and electronic funds transfer agreements that 

Consignor may enter into from time to time and/or as applicable to enter into 

directly with a credit card processor such credit card and/or electronic funds transfer 

agreements as may be required in connection with the acceptance of credit and debit 

cards at stations marketing under the Supplier trade name. Consignee shall be liable 

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Consignment Contract, at para. C(4)(e); Tr. at 93-95; Dep. at 83-84; see also Lease Agreement, at 

§ 4.3(a). James River credited Dickson Convenience for the processing fees incurred on Outside 

Transactions by applying them against Dickson Convenience’s liabilities. Tr. at 94-95. See 

generally Consignment Contract, at paras. C(4)(e), C(8).

In the event Dickson Convenience defaulted under the Consignment Contract, the 

Consignment Contract was terminated, the Gas Station closed, or Dickson Convenience prevented

James River from delivering petroleum products, James River retained the right to unilaterally 

terminate the Consignment Contract and accelerate all amounts due and payable to it. Consignment 

Contract, at paras. F(1), F(1)(a), F(2)-(3). Dickson Convenience also had to remove, at its own 

expense, all of Mobil’s marks at the Gas Station consistent with James River’s instructions and

pay for any damages asserted against James River by any third party, including Mobil, with respect 

to Dickson Convenience’s performance or non-performance under the Consignment Contract. Id.

at paras. F(1)(b)-(c).

The Lease Agreement and Consignment Contract both contain cross default provisions, 

making a breach under either the agreement a breach under both. See Lease Agreement, at § 11; 

Consignment Contract, at para. G(2). The Lease Agreement holds James River harmless for 

liabilities, obligations, and other costs and expenses incurred caused by Dickson Convenience’s 

failure to comply with the environmental compliance provisions of the Lease Agreement. See 

Lease Agreement, at § 20.7. The Consignment Contract likewise indemnifies James River for any 

failure by Dickson Convenience to comply with any environmental protection laws. Consignment 

for all credit card charge-backs resulting from the Consignee’s acceptance of credit 

cards.

Consignment Contract, at para. C(4)(e).

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Contract, at para. E(4). Dickson Convenience also agreed to hold James River harmless for 

liabilities, obligations, and costs and expenses, including reasonable attorney’s fees, asserted

against or incurred by James River arising from Dickson Convenience’s use of the Gas Station. 

Lease Agreement, at § 7. The Consignment Contract holds James River harmless against all loss,

damage, and costs and expenses arising out of Dickson Convenience’s failure to comply with the 

Consignment Contract or from the operation of the Gas Station. See Consignment Contract, at 

para. E(12). The “costs and expenses” under both the Lease Agreement and the Consignment 

Contract include reasonable attorney’s fees. See Lease Agreement, at §§ 7, 22.11; Consignment 

Contract, at para. E(12).17

The Lease Agreement and Consignment Contract also both provide that the laws of the 

Commonwealth of Virginia will govern in the event of a legal dispute. Lease Agreement, at § 

22.10; Consignment Contract, at para. R. Further, the Virginia state courts have exclusive 

jurisdiction over all disputes, claims, and controversies arising under either the Lease Agreement

or the Consignment Contract. Lease Agreement, at § 22.10; Consignment Contract, at para. R.

B. The Guaranty Agreement

Attached to the Consignment Contract is a guaranty agreement, which agreement was also 

required by the Lease Agreement. Lease Agreement, at § 12; Pl. Ex. 3, Guaranty Agreement 

between Nikole Dickson and James River Petroleum, Inc., dated September 21, 2017 (hereinafter, 

“Guaranty Agreement”); Tr. at 18.18 James River, Dickson Convenience (by Mrs. Dickson), and 

17 Section 22.11 of the Lease Agreement is more specific than either Section 7 of that document 

or Paragraph E(12) of the Consignment Contract, as Section 22.11 specifically provides for 

attorney’s fees equal to 33% of the amount owed in the event of a breach of the lease. Lease 

Agreement, at §§ 7, 22.11; Consignment Contract, at para. E(12).

18 The Guaranty Agreement was attached to the Complaint as an exhibit to the Consignment 

Contract. See Consignment Contract, at Ex. B.

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Mrs. Dickson, in her individual capacity, entered into the Guaranty Agreement simultaneously 

with the Lease Agreement and Consignment Contract on September 21, 2017. Partial Stipulation, 

at para. 8; Guaranty Agreement, at preamble, p. 5; see Tr. at 18-19. According to Mrs. Dickson, 

she received the Guaranty Agreement with the Lease Agreement and looked over it for 

approximately a day before signing it voluntarily and without obtaining legal advice. Tr. at 18-19,

60-61; see also Dep. at 65. Mrs. Dickson confirmed that she signed the Guaranty Agreement twice, 

once in her individual capacity and once as the sole member of Dickson Convenience. Tr. at 18-

19. Under the Guaranty Agreement, Mrs. Dickson unconditionally guaranteed the full and prompt 

payment of Dickson Convenience’s obligations to pay James River and Dickson Convenience’s

prompt performance of all covenants, conditions, and agreements under the Lease Agreement and 

Consignment Contract. Guaranty Agreement, at para. 1.19 The Guaranty Agreement enabled James 

River to pursue Mrs. Dickson individually without first seeking recourse against Dickson 

Convenience. Id. at para. 3.

In the event that James River sought to enforce the Guaranty Agreement, Mrs. Dickson 

agreed to pay James River’s costs and expenses, including reasonable attorney’s fees equal to 

thirty-three percent of the outstanding amount due to James River arising from the latter’s 

collection efforts.20 Id. at para. 1. As with the Lease Agreement and Consignment Contract, the 

19 At her deposition, Mrs. Dickson testified that she was “not really sure” what kind of agreement 

the Guaranty Agreement was and further was unclear as to her obligations under it. Dep. at 65. 

However, at trial, Mrs. Dickson testified that she understood her obligations to pay under the 

Lease Agreement and Consignment Contract by virtue of signing the Guaranty Agreement. Tr. at 

62.

20 The Lease Agreement also provides James River with attorney’s fees and costs of no less than 

thirty-three percent of the amount owed in the event such services are required to enforce the 

lease terms. Lease Agreement, at § 22.11.

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Guaranty Agreement contains a choice of law provision designating the laws of the 

Commonwealth of Virginia as governing in the event of a legal dispute. Id. at para. 12.

C. The Operation of Dickson Convenience

On September 13, 2017, Mrs. Dickson set forth the financial assistance needed to reopen

the Gas Station in an email addressed to S. Firkins, a James River employee. Def. Ex. S, Email 

dated September 13, 2017, from Nikole Dickson to S. Firkins, employee at James River Petroleum,

Inc. (hereinafter, “September 13, 2017 Email to S. Firkins”), at 1. Mrs. Dickson requested that rent 

for September 2017 through December 2017 be waived. Id. In addition, Mrs. Dickson requested 

$50,000.00 in capital to help with the Gas Station’s startup costs, equipment, and replacement of 

expired inventory. Id. Mrs. Dickson believed that with James River’s support, the Gas Station 

could be fully operational by October 2017. Id. In anticipation of reopening, Mrs. Dickson 

represented that she had recruited vendors to donate free products for such event. Id.

Dickson Convenience reopened the Gas Station as its new operator on September 29, 2017.

See Account Reconciliation, at 5 (indicating first fuel sale occurred September 29, 2017); see also 

Tr. at 12, 14. In addition to Mrs. Dickson, Dickson Convenience employed Mr. Dickson and the 

Dicksons’ daughter. Tr. at 22; Dep. at 28-29. See generally Tr. at 70-78. Mrs. Dickson worked six 

to seven days each week for ten to twelve hours each day. Dep. at 22; see Tr. at 27, 70. Mr. Dickson 

worked Friday and Saturday nights as well as Sunday nights when his work schedule permitted.21

Tr. at 23, 27. The Dicksons’ daughter, Makayla Dickson, worked five to six nights per week. Id.

at 27. Dickson Convenience also had one full-time employee and one part-time employee. Id.;

Dep. at 31; see, e.g., Pl. Ex. 6, Dickson Convenience October 2017 Profit and Loss Statement and 

21 According to the Debtors’ schedules, Mr. Dickson was employed as a Training Specialist 

Advisor at GD Information Technology, Inc. Schedule I, Case No. 19-70934-SCS, ECF No. 1, at 

45.

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PNC Bank Statement (hereinafter, “October 2017 Profit and Loss Statement”), at 2-3.22 The fulltime employee worked forty hours per week for a wage of $10.00 an hour, and the part-time 

employee worked for a wage of $8.00 an hour. Dep. at 32.

Dickson Convenience opened an operating account at PNC Bank to receive and disburse

funds in the normal course (hereinafter, “Operating Account”). See October 2017 Profit and Loss 

Statement, at 4, 6; Tr. at 28, 51; Dep. at 41-42. In addition to the Operating Account, Dickson 

Convenience set up a second PNC Bank account for deposits and disbursements related to the sale 

of North Carolina lottery tickets, which began in December 2017 (hereinafter, “Lottery 

Account”).23 See Pl. Ex. 24, Dickson Convenience PNC Bank Statements for Lottery Account 

dated September 2017 through April 2019, at 1-2, 5-7; Tr. at 21, 51, 54; Dep. at 121-22.24 James 

River opened a BB&T bank account in November 2017 to receive deposits from Dickson 

Convenience of the cash fuel sales proceeds pursuant to the Consignment Contract (hereinafter, 

“James River’s Account”). See Pl. Ex. 5, James River Petroleum, Inc., BB&T Statements dated

November 2017 through May 2019, at 1; Tr. at 28, 30, 79, 90-91; Dep. at 67, 75; Consignment 

Contract, at para. C(5)(a).

In the normal course, Dickson Convenience received cash from the sales of fuel, nonfuel 

merchandise, and lottery tickets. Tr. at 27, 47. Dickson Convenience could deposit its cash into

22 The October 2017 Profit and Loss Statement was presented among Mrs. Dickson’s trial 

exhibits as Exhibit A. See Def. Ex. A.

23 Dickson Convenience received invoices indicating the amount of cash owed for the sale of 

North Carolina lottery tickets. Dep. at 48-49, 52, 122. To pay the lottery invoices, Dickson 

Convenience either deposited cash proceeds from lottery sales directly into the Lottery Account 

or electronically transferred funds from the Operating Account to the Lottery Account. See Tr. at 

54-55; Dep. at 121-22; see, e.g., Pl. Ex. 24, Dickson Convenience PNC Bank Statements for 

Lottery Account dated September 2017 through April 2019, at 6, 9 (December 2017 and January 

2018 Statements).

24 Mrs. Dickson’s Exhibits A through R included the Lottery Account statements. See Def. Exs.

A-R.

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either the Operating Account, the Lottery Account, or James River’s Account. See id. at 28, 34, 

51, 54-55; Dep. at 34; see also Dep. at 42-44, 111, 140-41. While Mrs. Dickson was primarily 

responsible for depositing cash into one of the three bank accounts, sometimes her daughter or 

another employee would make the deposits. Dep. at 40. If the banks were closed, the cash would 

be placed in Dickson Convenience’s safe until the banks reopened. Tr. at 28; Dep. at 44. Mrs. 

Dickson did not believe that anyone stole or took cash from Dickson Convenience during its 

operation of the Gas Station. Tr. at 30; Dep. at 40. On November 20, 2017, James River’s Risk 

Manager, Amy Bittner (hereinafter, “Ms. Bittner”), emailed Mrs. Dickson to advise that Dickson 

Convenience owed James River $15,415.35 for cash fuel sales made in October 2017 and that such 

funds should be deposited into James River’s Account. Pl. Ex. 30, Email dated November 20, 

2017, from Amy Bittner, Risk Manager for James River Petroleum, Inc., to Nikole Dickson, at 1.

On November 24, 2017, Dickson Convenience made its first deposit of James River’s cash fuel 

proceeds since its opening in the amount of $11,572.00. See Pl. Ex. 5, at 1 (November 2017 James 

River Account Statement); Tr. at 91; Dep. at 68, 76.25

When the store reopened, Dickson Convenience was not fully stocked with inventory.26

See Def. Ex. S, Email exchange dated October 5, 2017, between Nikole Dickson and Greg Natvig, 

Vice-President of Operations for James River Petroleum, Inc. (hereinafter, “October 5, 2017 Email 

Exchange”), at 1. Despite the lack of inventory, Dickson Convenience began selling James River’s 

fuel in the ordinary course of business. See Account Reconciliation, at 5. On October 5, 2017, Mrs. 

25 Mrs. Dickson deposited the cash fuel proceeds into the Operating Account until James River’s 

Account was established. Dep. at 76-77.

26 According to Mrs. Dickson, prior to the Gas Station closing in August 2017, the store was 

likewise never fully stocked with inventory. Def. Ex. S, Email exchange dated October 23-25,

2017, between Nikole Dickson and Greg Natvig, Vice-President of Operations for James River 

Petroleum, Inc., at 1; Tr. at 67.

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Dickson emailed Greg Natvig, Vice-President of Operations for James River (hereinafter, “Mr. 

Natvig”), regarding a lack of funds to restock inventory. October 5, 2017 Email Exchange, at 1.

Mrs. Dickson claimed she agreed to operate the Gas Station with the expectation that she would 

receive financial assistance from James River. Id. at 2. According to Mrs. Dickson, Dickson 

Convenience had already sold all of its most popular inventory items and was forced to turn away 

customers. Id. at 1. At that time, Dickson Convenience had, on average, $110.00 in sales each day.

Id. Mrs. Dickson believed she was “set up to fail” because Dickson Convenience was earning only 

enough money to pay staff and rent expenses. Id. at 2. In response, Mr. Natvig stated that James 

River’s accountants were busy completing a year-end financial report, and he would respond 

further later that day. Id. at 1. The next day, on October 6, 2017, James River advanced $6,550.00 

to Dickson Convenience to assist with restocking the Gas Station. See Account Reconciliation, at 

4; Dep. at 82. On October 10, 2017, the earmarked funds were electronically transferred into the 

Operating Account. See October 2017 Profit and Loss Statement, at 8.

On October 23, 2017, Mr. Natvig informed Mrs. Dickson that James River supported

changing the Gas Station’s oven equipment but required Mrs. Dickson to select the desired unit.

Def. Ex. S, Email exchange dated October 23-25, 2017, between Nikole Dickson and Greg Natvig,

Vice-President of Operations for James River Petroleum, Inc. (hereinafter, “October 23-25, 2017 

Email Exchange”), at 2. Mrs. Dickson responded that day that she had “it cover[ed].” Id. Two days 

later, Mr. Natvig inquired about inside sales. Id. Mrs. Dickson indicated that daily inside sales of 

nonfuel products averaged only $250.00, and Dickson Convenience still was not making enough

money to cover expenses.27 Id.; Tr. at 67-68. Mr. Natvig inquired if he could do anything to help

27 In contrast, prior to the August 2017 closure of the Gas Station, the store averaged sales of 

$350.00 of nonfuel products per day. October 23-25, 2017 Email Exchange, at 1; Tr. at 67.

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Dickson Convenience increase sales. October 23-25, 2017 Email Exchange, at 1; see also Tr. at 

68. Mrs. Dickson responded less than twenty minutes later, indicating that Dickson Convenience 

was selling mostly cigarettes and beer, which had “very low profit margin[s],” and that the process 

to restock the store for the November 11, 2017 grand reopening was “going really slow.” October 

23-25, 2017 Email Exchange, at 1; Tr. at 67. Mrs. Dickson believed a grand reopening would make

the store, which had a “bad history,” a “success” again. September 13, 2017 Email to S. Firkins,

at 1.

On November 26, 2017, Mrs. Dickson emailed Mr. Natvig, stating that Dickson 

Convenience was “beyond broke.” Def. Ex. S, Email exchange dated November 26-27, 2017,

between Nikole Dickson and Greg Natvig, Vice-President of Operations for James River 

Petroleum, Inc. (hereinafter, “November 26-27, 2017 Email Exchange”), at 2; Tr. at 68. Mrs. 

Dickson projected $309.00 in daily nonfuel sales for December 2017, which amount would not 

cover basic expenses.28 November 26-27, 2017 Email Exchange, at 2; Tr. at 68; Dep. at 101. Mrs. 

Dickson represented that she was not being paid and that Dickson Convenience did not have 

sufficient cash flow to keep the store fully stocked with inventory. November 26-27, 2017 Email 

Exchange, at 2; Tr. at 68; see Dep. at 100-03, 105. Contrary to the November 26, 2017 email to 

Mr. Natvig, Mrs. Dickson testified at both her deposition and at trial that she and her family 

received wages for the month of November 2017 totaling $4,400.00.29 Tr. at 22, 70-71; Dep. at 

109-10; Pl. Ex. 7, Dickson Convenience November 2017 Profit and Loss Statement and PNC Bank 

28 According to Mrs. Dickson, Dickson Convenience’s payroll exceeded income in November

2017. November 26-27, 2017 Email Exchange, at 2.

29 According to Mrs. Dickson, this amount was shared with her husband and daughter. Tr. at 70; 

Dep. at 109.

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Statement (hereinafter, “November 2017 Profit and Loss Statement”), at 3.30 Mrs. Dickson 

indicated that she had used personal funds and “maxed out [a] credit card to try to keep the store 

afloat[.]” November 26-27, 2017 Email Exchange, at 2; Tr. at 68-69. Mrs. Dickson believed

Dickson Convenience was “out of options.” November 26-27, 2017 Email Exchange, at 2; Tr. at 

68-69. The next day, Mr. Natvig requested more detail about Dickson Convenience’s inside

nonfuel sales to enable him to better understand the financial situation. November 26-27, 2017 

Email Exchange, at 1; Tr. at 69; see also Dep. at 101. Mr. Natvig believed that Mrs. Dickson’s

projected December 2017 total gross income “seem[ed] low.” November 26-27, 2017 Email 

Exchange, at 1.

On November 28, 2017, Mr. Natvig and Ms. Bittner requested that Mrs. Dickson reconcile

Dickson Convenience’s transactions from November 1, 2017, through November 3, 2017, with 

the daily transaction report James River received from the POS System. Pl. Ex. 31, Email dated 

November 28, 2017, from Amy Bittner, Risk Manager for James River Petroleum, Inc., to Greg 

Natvig, Vice-President of Operations for James River Petroleum, Inc., and Nikole Dickson

(hereinafter, “November 28, 2017 Email to Mr. Natvig and Mrs. Dickson”), at 1. See generally Tr.

at 45-46, 64, 98; Dep. at 37. Mr. Natvig wanted to ensure that James River and Dickson 

Convenience were registering the same daily fuel and nonfuel sales totals. November 28, 2017 

Email to Mr. Natvig and Mrs. Dickson, at 1. Ms. Bittner attached a “Fuel Product/Price Level 

Report” for each of the three days to the email. See id. at 1, 3-8. The reports set forth the quantities 

of the various fuel products sold, the number of fuel sales transactions, and the dollar amount of 

credit and debit card as well as cash proceeds generated each day. Id. at 3-8. In response, Mrs. 

30 The November 2017 Profit and Loss Statement was tendered as Mrs. Dickson’s Exhibit B. See

Def. Ex. B.

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Dickson emailed a daily network product report for November 1, 2017, to Mr. Natvig and Ms. 

Bittner with her calculations of Dickson Convenience’s total fuel and nonfuel sales and the amount 

of cash received. Pl. Ex. 32, Email dated November 30, 2017, from Nikole Dickson to Greg Natvig,

Vice-President of Operations for James River Petroleum, Inc., and Amy Bittner, Risk Manager for 

James River Petroleum, Inc. (hereinafter, “November 30, 2017 Email to Greg Natvig and Amy 

Bittner”), at 1. The daily network product reports were generated by the cash registers’ internal 

accounting software, the “Commander 2 system.” Dep. at 37. Dickson Convenience’s network 

product report matched James River’s report regarding the total dollar amount of fuel sales for 

November 1, 2017; however, Mrs. Dickson’s personal calculations of cash fuel proceeds differed 

from James River’s calculations, exhibiting a difference of approximately $850.00. Compare

November 30, 2017 Email to Greg Natvig and Amy Bittner, at 1, with November 28, 2017 Email 

to Mr. Natvig and Mrs. Dickson, at 3. According to James River’s calculations, cash fuel proceeds 

for November 1, 2017, totaled $1,233.71. November 28, 2017 Email to Mr. Natvig and Mrs. 

Dickson, at 3. In contrast, Mrs. Dickson calculated cash fuel receipts of $383.00 for that day.

November 30, 2017 Email to Greg Natvig and Amy Bittner, at 1.

Dickson Convenience continued to sustain losses in December 2017, just as Mrs. Dickson 

had predicted the prior month. Dep. at 103-04; see Pl. Ex. 8, Dickson Convenience December 2017 

Profit and Loss Statement and PNC Bank Statement (hereinafter, “December 2017 Profit and Loss 

Statement”), at 3 (indicating net loss of $3,349.13).31 Even though Mrs. Dickson expected Dickson 

Convenience to incur losses into 2018, the company continued to operate the Gas Station. Tr. at

69 (admitting that she kept operating the Gas Station because she “didn’t really know what else to 

31 The December 2017 Profit and Loss Statement was tendered among Mrs. Dickson’s trial 

exhibits as Exhibit C. See Def. Ex. C.

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do”); Dep. at 103-04. During that time frame, Mrs. Dickson believed that communications from 

Mr. Natvig telling her to “keep trying” represented a mutual understanding that she could use 

James River’s cash fuel proceeds to fund store operations. Dep. at 103, 105-06 (discussing the 

November 26-27, 2017 Email Exchange with Mr. Natvig and concurrent conversations); see also

Tr. at 30-31 (testifying as to her (Mrs. Dickson’s) belief that James River knew the cash fuel 

proceeds were being used for operating costs); Dep. at 106 (same).

Dickson Convenience sold a variety of non-petroleum goods, among which were groceries, 

beer, and cigarettes.32 Dep. at 32, 105. Cigarettes and beer were the best sellers but had low profit 

margins;33 groceries did not sell well. Tr. at 67; Dep. at 105; October 23-25, 2017 Email Exchange, 

at 1. According to Mrs. Dickson, Dickson Convenience sold only $300.00 of non-petroleum 

products some days. Tr. at 29. In contrast, Dickson Convenience had daily fuel sales averaging

approximately $3,000.00.34 See Account Reconciliation, at 5-16. As a result, Dickson 

Convenience struggled to operate the Gas Station at a profit. According to Elyse Hawthorne, Risk 

Manager for James River (hereinafter, “Ms. Hawthorne”), “fuel [was] the draw to get traffic into 

the store to buy other [goods].” Tr. at 112; see also id. at 83. A store operator could be profitable 

if they had “successful inside sales.” Id. at 112.

James River sent Dickson Convenience consignment calculator reports several times a 

month, notifying Dickson Convenience of the outstanding shortfall of cash fuel proceeds owed to 

James River. Id. at 42-43; Dep. at 87; see also Tr. at 96; see, e.g., Pl. Ex. 33, Email dated March 

32 Dickson Convenience also sold newspapers, ice cream, and kerosene. Dep. at 47, 51, 147-48.

Dickson Convenience controlled the markup on non-petroleum goods. Tr. at 112.

33 The profit per pack of cigarettes was between seven and fifteen cents. Dep. at 105.

34 The Court averaged the gross dollar amount of daily fuel sales set forth on James River’s 

Account Reconciliation to arrive at $3,000.00 as the approximate average gross dollar amount of 

fuel products sold per day. Account Reconciliation, at 5-16.

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8, 2018, from Amy Bittner, Risk Manager for James River Petroleum, Inc., to Nikole Dickson 

(hereinafter, “March 8, 2018 Email to Mrs. Dickson”), at 1-2. James River’s Accounting Software 

generated the consignment calculator reports. See Tr. at 45-46. Mrs. Dickson requested 

instructions from James River in 2017 regarding the interpretation of the consignment calculator 

reports but “[did not] get too far on it.” Id. at 43; see also Dep. at 69-70 (indicating that she “did 

not receive a lot of guidance” regarding how the cash amounts owed under the Consignment 

Contract were calculated); Dep. at 91 (“I had asked . . . to have a conversation, and we never—I

never followed through.”); Dep. at 95 (indicating she asked for explanations regarding assessed 

fees). At her deposition, Mrs. Dickson admitted that while there were some numbers on the 

consignment calculator reports that she did not understand, she understood calculations pertinent 

to the amounts of fuel and groceries sold and the credit card fees. Dep. at 83-85. According to Mrs. 

Dickson, she never received explanations regarding the “fuel variance,” “gross credit,” or the other 

columns on the report and did not understand what “fuel fees” were at all. Id. at 90, 92. Mrs. 

Dickson assumed that the “gross credit” total comprised all credit card receipts, that “credit fees” 

were fees charged on James River’s POS System, and that “net credit” was the amount James 

River received from the credit card company. Id. at 90-92.

Notwithstanding the lack of guidance and understanding, Mrs. Dickson admitted that the

consignment calculator figures matched “fairly closely” with the amounts on the monthly reports

she generated at the register, the latter of which she also believed were accurate.35 Tr. at 44; Dep. 

at 38-39. Despite her own differing calculations in some instances, Mrs. Dickson conceded that 

James River’s calculations were approximately accurate and had no reason to believe they were 

35 Mrs. Dickson testified that James River inadvertently treated debit card sales as cash payments

when Dickson Convenience first opened but later corrected this error on the consignment 

calculator reports. Tr. at 44, 46.

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inaccurate. See Tr. at 46-49 (acknowledging the accuracy of James River’s cash proceeds shortfall 

calculations and the amounts set forth on the consignment calculator reports); Dep. at 78, 80, 85,

88, 90 (conceding that the total fuel sales and Dickson Convenience’s total cash deposits, as 

reflected in James River’s Account Reconciliation, were “close” to the actual amounts);36 see also

Tr. at 56-57 (concurring with the accuracy of the consignment calculator reports and Account 

Reconciliation). At no point did Mrs. Dickson dispute James River’s representations on the

consignment calculator reports regarding the amount of cash fuel proceeds Dickson Convenience 

owed to James River.37 See Tr. at 48. For these reasons, the Court finds James River’s fuel reports 

as controlling.

Mrs. Dickson utilized the QuickBooks accounting software to record Dickson 

Convenience’s monthly cash flow.38 Id. at 20-21. Mrs. Dickson personally input Dickson 

Convenience’s income and expenses into QuickBooks but conceded that she “was new to using 

Quickbooks” and hoped she input the information correctly.39 See id. at 20-21. Mrs. Dickson 

admitted, however, that the information was not always complete. Dep. at 125-26 (noting that only

the January 2018 Profit and Loss Statement appeared to contain complete information). Mrs. 

Dickson used QuickBooks to generate profit and loss statements, but she did so only in anticipation 

of litigation. Tr. at 63-64 (admitting that the profit and loss statements were prepared after James 

36 Ms. Hawthorne prepared the Account Reconciliation, with assistance from James River’s chief 

financial officer, using the Accounting Software’s compilation of data acquired from the POS 

System; invoices generated from fuel sold by James River; and the Gas Station’s records. Tr. at 

85-86, 88.

37 Dickson Convenience’s profit and loss statements did not contain the total cash received each 

month. Tr. at 45, 57.

38 Dickson Convenience never had an accountant. Partial Stipulation, at para. 5; Tr. at 15; Dep. at 

32.

39 The profit and loss statements did not include income streams related to lottery sales. See Tr. 

at 21.

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River filed the Complaint); see also id. at 81-82 (conceding that Dickson Convenience’s profit and 

loss statements were never printed during its operation). Mrs. Dickson confessed that some, but 

not all, of the amounts she input were from memory.40 Id. at 82. According to Mrs. Dickson, “[she 

and her counsel] went back through and made sure all the invoices were entered in correctly.” Dep. 

at 27.

Dickson Convenience’s profit and loss statements reveal multiple discrepancies when 

compared to the Operating Account statements for the related months. For example, Dickson 

Convenience’s Operating Account statement reflects a deposit of $331.50 on November 21, 2017,

but the corresponding profit and loss statement does not list this amount. Compare November 2017

Profit and Loss Statement, at 1 (Dickson Convenience’s deposit journal entries), with id. at 6

(Operating Account deposit entry). Likewise, Dickson Convenience’s December 2017 Operating 

Account statement shows that $932.07 was deposited on December 4, 2017, but the corresponding 

profit and loss details do not reflect such amount. Compare December 2017 Profit and Loss 

Statement, at 1 (deposit journal entries), with id. at 5 (Operating Account deposit entry). Dickson 

Convenience’s May 2018 Operating Account statement indicates that $1,460.00 was deposited on

May 9, 2018; however, the corresponding profit and loss statement does not contain a like entry.

Compare Pl. Ex. 13, Dickson Convenience May 2018 Profit and Loss Statement and PNC Bank

Statement (hereinafter, “May 2018 Profit and Loss Statement”), at 3 (deposit journal entries), with 

id. at 9 (Operating Account deposit entry).41 Dickson Convenience’s Operating Account statement

indicates $707.00 was deposited on August 7, 2018, and $1,140.00 on August 13, 2018; however, 

40 Among the amounts based upon Mrs. Dickson’s memory was the number of hours she, her 

husband, and her daughter worked each month. Tr. at 82.

41 The May 2018 Profit and Loss Statement appeared as Exhibit H in Mrs. Dickson’s trial 

exhibits. See Def. Ex. H.

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the associated profit and loss statement does not include such deposits. Compare Pl. Ex. 16,

Dickson Convenience August 2018 Profit and Loss Statement and PNC Bank Statement 

(hereinafter, “August 2018 Profit and Loss Statement”), at 3 (deposit journal entries), with id. at 

12 (Operating Account ATM deposit entries).42 Finally, Dickson Convenience’s February 2019 

Operating Account statement reflects that $500.00 was deposited on February 7, 2019, but the 

corresponding profit and loss statement does not contain such deposit entry. Compare Pl. Ex. 22, 

Dickson Convenience February 2019 Profit and Loss Statement and PNC Bank Statement 

(hereinafter, “February 2019 Profit and Loss Statement”), at 3 (deposit journal entries), with id. at 

11 (Operating Account ATM deposit entry).43 Based upon the Court’s comparison of the Operating 

Account statements to the corresponding profit and loss statements and Mrs. Dickson’s testimony 

concerning the data input for the latter, including that some entries were not contemporaneously 

made, the Court finds that Dickson Convenience’s records were not prepared using reliable 

accounting principles and methods. Therefore, the Court will accord little weight to the 

QuickBooks-generated profit and loss statements.

At trial, James River introduced four emails transmitting consignment calculator reports to 

Mrs. Dickson during Dickson Convenience’s operation of the Gas Station. See Tr. at 42, 48-50

(discussing consignment calculator reports for February, April, May, and September 2018). A fifth 

consignment calculator report, for June 2018, was also included among James River’s admitted 

exhibits. On March 8, 2018, Ms. Bittner emailed Dickson Convenience’s February 2018 

consignment calculator report to Mrs. Dickson. March 8, 2018 Email to Mrs. Dickson, at 1-2; see

42 Mrs. Dickson proffered the August 2018 Profit and Loss Statement within her trial exhibits as 

Exhibit K. See Def. Ex. K.

43 Mrs. Dickson included the February 2019 Profit and Loss Statement as her Exhibit Q. See Def. 

Ex. Q.

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Tr. at 42. The report indicated that Dickson Convenience received $42,642.33 in James River’s 

cash fuel proceeds in February 2018 and owed James River a cumulative outstanding balance of 

cash fuel proceeds of $9,307.77 after cross-netting Dickson Convenience’s credits and subtracting 

the amount of cash deposited into James River’s Account. March 8, 2018 Email to Mrs. Dickson, 

at 2; Pl. Ex. 5, at 11 (February 2018 James River Account Statement) (indicating that $2,423.77 

was deposited into James River’s Account); see also Tr. at 96-97 (testimony by Ms. Hawthorne 

explaining the amounts set forth on the consignment calculator reports). Mrs. Dickson testified 

that the amount of cash fuel proceeds received by Dickson Convenience listed in the February 

2018 consignment calculator report was correct.44 Tr. at 47. Mrs. Dickson likewise agreed that

Dickson Convenience’s February 2018 Operating Account statement correctly reflected cash

deposits totaling $26,638.20. Id. at 51; Pl. Ex. 10, Dickson Convenience February 2018 Profit and 

Loss Statement and PNC Bank Statement (hereinafter, “February 2018 Profit and Loss 

Statement”), at 6.45

On May 4, 2018, Ms. Bittner sent the April 2018 consignment calculator report to Mrs. 

Dickson via email. Pl. Ex. 34, Email dated May 4, 2018, from Amy Bittner, Risk Manager for 

James River Petroleum, Inc., to Nikole Dickson (hereinafter, “May 4, 2018 Email to Mrs. 

Dickson”), at 1, 3; see Tr. at 48. The April 2018 consignment calculator report indicated that 

Dickson Convenience received $51,433.31 in James River’s cash fuel proceeds, which Mrs. 

Dickson concurred was accurate. May 4, 2018 Email to Mrs. Dickson, at 3; Tr. at 49. Dickson 

Convenience had accumulated an outstanding balance of cash fuel proceeds owed of $64,274.85,

44 Dickson Convenience’s total cash deposits into the Operating Account are reflected on the 

Operating Account statements as “Deposits” and “ATM deposits.” Tr. at 52, 54; Dep. at 42, 111,

115-16.

45 The February 2018 Profit and Loss Statement was admitted as Mrs. Dickson’s Exhibit E. See 

Def. Ex. E.

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that amount having increased by $6,662.26 in April 2018 after all credits were applied.46 May 4, 

2018 Email to Mrs. Dickson, at 3; Pl. Ex. 5, at 18 (April 2018 James River Account Statement) 

(indicating that $8,974.77 was deposited into James River’s Account). Dickson Convenience’s 

April 2018 Operating Account statement reflected total cash deposits of $29,603.61; Mrs. Dickson 

confirmed the accuracy of this amount. Pl. Ex. 12, Dickson Convenience April 2018 Profit and 

Loss Statement and PNC Bank Statement (hereinafter, “April 2018 Profit and Loss Statement”),

at 8;47 see Tr. at 53.

On June 6, 2018, Ms. Bittner provided the May 2018 consignment calculator report to Mrs. 

Dickson. Pl. Ex. 35, Email dated June 6, 2018, from Amy Bittner, Risk Manager for James River 

Petroleum, Inc., to Nikole Dickson (hereinafter, “June 6, 2018 Email to Mrs. Dickson”), at 1, 3;

see Tr. at 49. The May 2018 consignment calculator report reflected receipt of cash fuel proceeds

by Dickson Convenience of $50,215.71 and that Dickson Convenience owed James River 

accumulated cash fuel proceeds of $66,457.79. June 6, 2018 Email to Mrs. Dickson, at 3; see Tr. 

at 49; Pl. Ex. 5, at 22 (May 2018 James River Account Statement) (indicating that $5,927.58 was 

deposited into James River’s Account). Mrs. Dickson agreed that the amount of cash fuel proceeds

set forth by James River’s May 2018 consignment calculator report as having been received by 

Dickson Convenience was accurate. Tr. at 49. Dickson Convenience’s May 2018 Operating 

Account statement reflected total cash deposits of $34,524.66, the accuracy of such amount being 

confirmed by Mrs. Dickson. May 2018 Profit and Loss Statement, at 8; see Tr. at 53.

46 Mrs. Dickson testified at her deposition that she did not believe Dickson Convenience owed 

such a large amount but admitted that she lacked knowledge regarding the amount of fees and 

additional charges assessed by James River. Dep. at 93-94.

47 The April 2018 Profit and Loss Statement was tendered among Mrs. Dickson’s trial exhibits as 

Exhibit G. See Def. Ex. G.

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On July 6, 2018, Ms. Bittner emailed Mrs. Dickson the June 2018 consignment calculator 

report. Pl. Ex. 36, Email dated July 6, 2018, from Amy Bittner, Risk Manager for James River 

Petroleum, Inc., to Nikole Dickson (hereinafter, “July 6, 2018 Email to Mrs. Dickson”), at 1-2.

The June 2018 report states that Dickson Convenience received $57,760.18 in cash fuel proceeds 

that month and owed James River an outstanding balance of cash fuel proceeds of $80,159.85. Id. 

at 2; Pl. Ex. 5, at 25 (June 2018 James River Account Statement) (indicating that $7,777.38 was 

deposited into James River’s Account). Dickson Convenience’s June 2018 Operating Account 

statement listed total cash deposits of $27,869.01. Pl. Ex. 14, Dickson Convenience June 2018 

Profit and Loss Statement and PNC Bank Statement (hereinafter, “June 2018 Profit and Loss 

Statement”), at 10.48

Mrs. Dickson received the September 2018 consignment calculator report from Ms. Bittner 

on October 5, 2018. Pl. Ex. 38, Email dated October 5, 2018, from Amy Bittner, Risk Manager for 

James River Petroleum, Inc., to Nikole Dickson (hereinafter, “October 5, 2018 Email to Mrs. 

Dickson”), at 1-2; see Tr. at 49. The September 2018 report indicates that Dickson Convenience 

received $66,061.30 in James River’s cash fuel proceeds that month and had accumulated an 

outstanding balance of cash fuel proceeds due to James River of $109,197.44. October 5, 2018 

Email to Mrs. Dickson, at 2; Tr. at 50; Pl. Ex. 5, at 35 (September 2018 James River Account 

Statement) (indicating that $12,942.00 was deposited into James River’s Account). Mrs. Dickson 

testified that the amount of cash fuel proceeds listed as received by Dickson Convenience in the 

September 2018 consignment calculator report was accurate. Tr. at 50. According to Dickson 

Convenience’s September 2018 Operating Account statement, total cash deposits of $17,215.00

48 The June 2018 Profit and Loss Statement was admitted as Mrs. Dickson’s Exhibit I. See Def. 

Ex. I.

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were made that month. Pl. Ex. 17, Dickson Convenience September 2018 Profit and Loss 

Statement and PNC Bank Statement (hereinafter, “September 2018 Profit and Loss Statement”),

at 9;49 see Tr. at 53-54.

Dickson Convenience’s failure to deposit all cash fuel proceeds into James River’s 

Account is explained, at least in part, by its use of cash fuel proceeds for Gas Station expenses. 

When Dickson Convenience began operating the Gas Station, inventory orders were paid for using 

checks drawn on the Operating Account. Tr. at 34; see Dep. at 109. However, after Dickson 

Convenience had checks returned for insufficient funds in the spring or summer of 2018,50 some 

of its vendors required payments to be made either by money order or cash.51 Tr. at 34-35; Dep. at 

34-36, 109. Mrs. Dickson conceded that she deposited James River’s cash into Dickson 

Convenience’s Operating Account to fund Dickson Convenience’s operations, restock inventory,

and make payroll, then deposited the remainder into James River’s Account. Tr. at 28-29, 33; Dep. 

at 68; see also Dep. at 36-37, 72-73. Mrs. Dickson also allocated James River’s cash fuel proceeds 

for the Gas Station’s upkeep from normal wear and tear and to make repairs, such as fixing a

49 The September 2018 Profit and Loss Statement also appeared among Mrs. Dickson’s trial 

exhibits as Exhibit L. See Def. Ex. L.

50 In May 2018, Dickson Convenience received a loan of approximately $6,000.00 from Intuit 

Financing, which was repaid weekly. Dep. at 119; June 2018 Profit and Loss Statement, at 7-8,

13-14 (indicating payments to Intuit Financing of $241.68 per week). Dickson Convenience also

obtained a loan between $6,000.00 and $7,000.00 from Yellowstone Capital (later known Green 

Capital), which balance could have been as much as $10,000.00 at one point according to Mrs. 

Dickson. Dep. at 117-18, 123-24. Dickson Convenience paid Yellowstone Capital $194.00 each 

day for its outstanding loan obligations. Id. at 118; see June 2018 Profit and Loss Statement, at 8, 

14-15; Pl. Ex. 15, Dickson Convenience July 2018 Profit and Loss Statement and PNC Bank

Statement (hereinafter, “July 2018 Profit and Loss Statement”), at 8, 12-14 (also tendered among 

Mrs. Dickson’s exhibits as Exhibit J). Dickson Convenience repaid both loans. Dep. at 119-20.

51 At her deposition, Mrs. Dickson testified that she used money orders to purchase goods from 

Atlantic Dominion, Pepsi, and a beer distributor. Dep. at 53, 142, 145.

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broken ice machine, painting the building, repairing the roof and ceiling tiles, and maintaining the 

parking lot. See Tr. at 36; Dep. at 79.

Mrs. Dickson also withdrew money from the Operating Account for wages for herself and 

her family every month from October 2017 through February 2019 with the exception of two 

months.52 See Tr. at 22-23, 70-78 (discussing wages reflected on Dickson Convenience’s profit 

and loss statements for October 2017 through February 2019); see also Dep. at 109-10, 128-29.

Mrs. Dickson did not receive a set wage. Tr. at 19; Dep. at 23-24. Instead, she determined how 

much to pay herself and her family based upon their living expenses and whether Dickson 

Convenience had sufficient funds to pay them. See Tr. at 19-20, 22; Dep. at 28-29. Mrs. Dickson

paid herself via checks written on the Operating Account, which she deposited into a joint checking 

account she shared with her husband to pay their personal expenses. Dep. at 29-30, 130. For 

example, the December 2017 Profit and Loss Statement contains two $900.00 journal entries under 

the “Salaries and Wages” category: one on December 11, 2017, and the other on December 21, 

2017, which Mrs. Dickson testified represented wages for her and her family. See December 2017 

Profit and Loss Statement, at 3; Tr. at 71. Likewise, the January 2018 Profit and Loss Statement 

reflects five “Salaries and Wages” journal entries, ranging from $900.00 to $2,000.00, for a total 

52 Mrs. Dickson did not withdraw money in June 2018 from the Operating Account to pay her 

family’s living expenses. Tr. at 74; Def. Ex. I, Dickson Convenience June 2018 Profit and Loss 

Statement (included as James River’s Exhibit 14), at 5, 7. In addition, Mrs. Dickson did not 

withdraw money from the Operating Account in January 2019 to pay her and her husband wages 

but did pay her daughter, Makayla Dickson, via Dickson Convenience’s payroll system. Tr. at 

78; Def. Ex. P, Dickson Convenience January 2019 Profit and Loss Statement (also tendered 

among James River’s exhibits as Exhibit 21) (hereinafter, “January 2019 Profit and Loss 

Statement”), at 6. Makayla Dickson was paid $270.00 by direct deposit on each of January 11, 

2019, and on January 18, 2019. January 2019 Profit and Loss Statement, at 6.

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of $6,600.00. See Pl. Ex. 9, Dickson Convenience January 2018 Profit and Loss Statement and 

PNC Bank Statement (hereinafter, “January 2018 Profit and Loss Statement”), at 6;53 Tr. at 71-72.

At trial, Mrs. Dickson testified that the decision to use James River’s cash fuel proceeds 

for Dickson Convenience’s expenses was hers alone. Tr. at 30. Mrs. Dickson believed James River 

“acquiesce[d]” regarding the use of its cash fuel proceeds in that “[t]hey would call every once in 

a while” directing Dickson Convenience to deposit missing funds. Id. at 66; see id. at 59, 79, 81; 

see also id. at 30 (testimony by Mrs. Dickson asserting that James River knew the cash fuel 

proceeds were being used for store operations); Dep. at 99-100 (Mrs. Dickson recounting that she 

received emails from James River requesting that cash be deposited but that “they would be few 

and far in between,” coming sometimes only every couple months).54 In calculating the amount of 

James River’s cash fuel proceeds to deposit into the Operating Account, Mrs. Dickson reviewed 

Dickson Convenience’s “daily sales [reports] to determine what was gas and what was cash” and 

then determined if she needed a portion of those funds to make payroll or purchase inventory.55

Tr. at 28-29, 31; see also Dep. at 37-38, 70. Mrs. Dickson would then calculate the portion of the 

credit card sales she believed was Dickson Convenience’s property and retain that amount of 

James River’s cash fuel proceeds. Tr. at 32-33. Any amount not necessary for Gas Station 

operations was deposited into James River’s Account. Id. at 29. Mrs. Dickson explained her 

understanding of the contractual arrangement with James River with the following example: if

Dickson Convenience sold $100.00 in James River’s fuel but had only $90.00 in credit card

53 The January 2018 Profit and Loss Statement was admitted as Mrs. Dickson’s Exhibit D. See

Def. Ex. D.

54 Mrs. Dickson recounted that she received a letter from James River at one point indicating that 

if she did not pay approximately $5,000.00, James River would initiate a criminal proceeding. 

Tr. at 65.

55 Dickson Convenience’s Commander 2 register software generated the daily reports, which 

provided the amount of credit card and cash fuel sales. Tr. at 31; Dep. at 37.

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transactions, then Dickson Convenience would owe James River $10.00. Dep. at 70-71. On the 

other hand, if Dickson Convenience sold $100.00 in fuel and had $120.00 in credit card sales, then 

Dickson Convenience deposited less cash into James River’s Account because “[James River]

would owe [Dickson Convenience]” the difference. Id. at 71. According to Mrs. Dickson, Dickson 

Convenience’s use of James River’s cash fuel proceeds was not reflected in Dickson 

Convenience’s profit and loss statements. Id. at 54-56.

D. The Closure of Dickson Convenience

Without sufficient funds to cover all its expenses, Dickson Convenience experienced

monthly losses between $5,000.00 and $10,000.00. Dep. at 63-64, 104. Mrs. Dickson believed that 

Dickson Convenience was never profitable because it was unable to create a consistent customer 

base. Tr. at 15; Dep. at 63. In March 2019, after Dickson Convenience operated with losses for

almost eighteen months, Mrs. Dickson received a letter from James River demanding payment of 

approximately $25,000.00 within five days. Dep. at 60-62, 64; see Tr. at 16, 65; see also Tr. at 78.

Mrs. Dickson did not have funds to pay the demanded amount and instead sought legal advice, 

resulting in her decisions to close Dickson Convenience and file for bankruptcy. Dep. at 60-62.

After the closure of Dickson Convenience, a new store operator took over the Gas Station. Tr. at 

99. According to Ms. Hawthorne, the new store operator had the same contractual terms Dickson 

Convenience had with James River and was successfully operating the Gas Station. Id.

Mrs. Dickson conceded that Dickson Convenience used over $150,000.00 in James River’s 

cash fuel proceeds to fund the Gas Station’s operations. Id. at 33. At her deposition, she admitted

that Dickson Convenience owed James River some amount of cash fuel proceeds and that it was a 

“possibility” James River was owed $171,000.00. Dep. at 63, 107. Throughout Dickson 

Convenience’s operation, James River and Dickson Convenience never altered the terms of the 

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contracts, either verbally or in writing. Tr. at 58. In addition, Mrs. Dickson never challenged the 

total amount of cash due. Dep. at 95.

At trial, James River submitted its Account Reconciliation, which summarized the amounts 

owed by Dickson Convenience for fuel sales, pass-through operating expenses, rent, dealer 

operating expenses, and the note receivable, as well as credits for commissions and the amount of 

cash Dickson Convenience deposited into James River’s Account during its corporate existence.

See Tr. at 56. See generally Account Reconciliation. James River’s Account Reconciliation sets 

forth a total of $171,575.11 in cash fuel proceeds that Dickson Convenience failed to turn over to 

James River. See Account Reconciliation, at 1, 16, 31-32.

Ms. Hawthorne testified that James River sought “the difference between the consigned 

fuel sales and the credit and cash receipt[s] [of fuel proceeds]” to be declared nondischargeable.56

Tr. at 92; see Account Reconciliation, at 1, 16, 31-32. During the consignment relationship, 

Dickson Convenience sold $1,558,018.32 of consigned petroleum products. Account 

Reconciliation, at 1, 5-16. James River received credit card remittances of $1,261,452.05. Id. at 1, 

17-31; see Tr. at 89, 93. Dickson Convenience made cash deposits into James River’s Account 

totaling $124,991.16 while operating the Gas Station. Account Reconciliation, at 1, 32; Tr. at 89, 

91. However, according to Ms. Hawthorne, the $171,575.11 set forth in the Complaint as the total 

amount due from Dickson Convenience included $12,135.80 for network processing fees that 

James River was obligated to pay and for which Dickson Convenience was entitled to credit

pursuant to the terms of the Consignment Contract. Tr. at 94-95; Account Reconciliation, at 3 

(totaling James River’s share of the network processing fees); see Complaint, at prayer;

56 At trial, James River, through Ms. Hawthorne’s testimony, acknowledged that it was not seeking 

amounts due for rent and the note receivable because James River understood those amounts would 

be discharged in Mrs. Dickson’s underlying bankruptcy case. Tr. at 87; see also id. at 88.

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Consignment Contract, at paras. C(4)(e), C(8). As a result, James River reduced the amount sought 

to be declared nondischargeable to $159,439.31. Tr. at 95.

III. CONCLUSIONS OF LAW

This Court has analyzed the considerations to be weighed when determining whether a debt 

is nondischargeable under 11 U.S.C. § 523 in numerous cases.

One of the most important benefits of the Bankruptcy Code is its ability to offer 

debtors a fresh start. This concept of a fresh start demands that courts construe 

exceptions to discharge narrowly against the objecting creditor and in favor of the 

debtor. Gleason v. Thaw, 236 U.S. 558, 561-62 (1915); Foley & Lardner v. Biondo

(In re Biondo), 180 F.3d 126, 130 (4th Cir. 1999) (citing Century 21 Balfour Real 

Estate v. Menna (In re Menna), 16 F.3d 7, 9 (1st Cir. 1994)); Rezin v. Barr (In re 

Barr), 194 B.R. 1009, 1016 (Bankr. N.D. III. 1996) (citing Mayer v. Spanel Int’l 

Ltd., 51 F.3d 670, 674 (7th Cir. 1995)). Courts balance this belief in a fresh start 

with the principle that “perpetrators of fraud are not allowed to hide behind the 

skirts of the Bankruptcy Code.” In re Biondo, 180 F.3d at 130 (citing Cohen v. de 

la Cruz, 523 U.S. 213, 217 (1998)).

Commercial Cash Flow, L.L.C. v. Matkins (In re Matkins), 605 B.R. 62, 84-85 (Bankr. E.D. Va. 

2019) (quoting McCoy v. McCoy (In re McCoy), Adv. Proc. No. 15-07042-SCS, 2016 WL 

4268702, at *8 (Bankr. E.D. Va. Aug. 11, 2016)); see also Miller v. Liatos (In re Liatos), Adv. 

Proc. No. 11-07052-SCS, 2012 WL 3260350, at *5 (Bankr. E.D. Va. Aug. 8, 2012); Dominion Va. 

Power v. Robinson (In re Robinson), 340 B.R. 316, 328-29 (Bankr. E.D. Va. 2006); Elrod v. 

Bowden (In re Bowden), 326 B.R. 62, 81 (Bankr. E.D. Va. 2005).

An objection to dischargeability pursuant to Section 523(a) requires the plaintiff to carry 

the burden of proof and prove the nondischargeability of a debt by a preponderance of the 

evidence. Grogan v. Garner, 498 U.S. 279, 291 (1991); Farouki v. Emirates Bank Int’l, Ltd., 14 

F.3d 244, 249 n.17 (4th Cir. 1994); Combs v. Richardson, 838 F.2d 112, 116 (4th Cir. 1988); In re 

Matkins, 605 B.R. at 85. Therefore, James River must prove by preponderance of the evidence that 

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the debt owed to it by Mrs. Dickson is nondischargeable under 11 U.S.C. § 523(a)(4) and/or §

523(a)(6).

A. Validity of and Liability Under the Lease Agreement, 

Consignment Contract, and Guaranty Agreement

As a preliminary matter, the Court will address whether a contract was formed between 

James River and Dickson Convenience pursuant to the Lease Agreement and Consignment 

Contract. At trial, Mrs. Dickson admitted that she signed both the Lease Agreement and 

Consignment Contract voluntarily on behalf of Dickson Convenience. Tr. at 16-17. Neither 

document was subsequently altered, either verbally or in writing. Id. at 58. Further, it is undisputed 

that Mrs. Dickson individually guaranteed the obligations of Dickson Convenience under both the 

Lease Agreement and the Consignment Contract, as evidenced by her signature on the Guaranty

Agreement. Id. at 18-19. Therefore, the Court finds that legally binding agreements existed 

between James River and Dickson Convenience pursuant to the Lease Agreement and the 

Consignment Contract and between James River and Mrs. Dickson pursuant to the Guaranty

Agreement. Therefore, the Court finds that if Dickson Convenience failed to fulfill its contractual 

obligations under the Lease Agreement and/or the Consignment Contract, Mrs. Dickson is 

individually liable for the damages resulting from those failures if those actions are attributable to 

Mrs. Dickson. See Airlines Reporting Corp. v. Ellison (In re Ellison), 296 F.3d 266, 270-71 (4th 

Cir. 2002).

B. § 523(a)(4): Fraud or Defalcation While Acting in a Fiduciary Capacity

James River seeks the determination of the dischargeability of debt related to Dickson 

Convenience’s failure to deposit cash fuel proceeds pursuant to the Consignment Contract under 

Section 523(a)(4). Section 523(a)(4) provides that debts arising from fraud or defalcation while a

debtor acted in a fiduciary capacity, embezzlement, or larceny are excepted from discharge. 11 

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U.S.C. § 523(a)(4). A successful claim under § 523(a)(4) requires a creditor to prove both that “the 

debt . . . arose while the debtor was acting in a fiduciary capacity[,] and . . . that the debt arose 

from the debtor’s fraud or defalcation.” Kubota Tractor Corp. v. Strack (In re Strack), 524 F.3d 

493, 497 (4th Cir. 2008) (citing Pahlavi v. Ansari (In re Ansari), 113 F.3d 17, 20 (4th Cir. 1997));

see also Larsen v. Larsen (In re Larsen), Adv. Proc. No. 1-16-01116-NHL, 2018 WL 4006935, at 

*6 (Bankr. E.D.N.Y. Aug. 17, 2018) (“[Section] 523(a)(4) requires that the debt be ‘for,’ or arise 

out of, defalcation such that there is a causal relationship between the act constituting defalcation 

and the debt in question.”). 

1. Whether Dickson Convenience Owed a Fiduciary Duty to James River

The Court’s analysis begins with a determination of whether the debt arose while the debtor 

was acting in a fiduciary capacity. In re Strack, 524 F.3d at 497. “The fiduciaries contemplated 

under 11 U.S.C. § 523(a)(4) are ‘persons in positions of ultimate trust,’ including ‘public officers, 

executors, administrators, guardians, trustees of express trusts, attorneys, and corporate 

directors.’” Webb v. Isaacson (In re Isaacson), 478 B.R. 763, 779 (Bankr. E.D. Va. 2012) (citing 

Spinoso v. Heilman (In re Heilman), 241 B.R. 137, 169-70 (Bankr. D. Md. 1999)). Without more, 

a contractual relationship alone does not establish a fiduciary relationship. Id. at 780-81. A contract 

that creates an express or technical trust may, however, create the requisite fiduciary relationship. 

In re Strack, 524 F.3d at 498 (citing Davis v. Aetna Acceptance Co., 293 U.S. 328, 334 (1934)) 

(“[T]he creation of an express trust can give rise to the requisite fiduciary duty under Section 

523(a)(4).”); Harrell v. Merch.’s Express Money Order Co. (In re Harrell), No. 98-1728, 1999 

WL 150278, at *3 (4th Cir. Mar. 19, 1999) (citing Miller v. J.D. Abrams, Inc. (In re Miller), 156 

F.3d 598, 602 (5th Cir. 1998)) (“Under [Section 523(a)(4)], a fiduciary is limited to instances 

involving express or technical trusts.”).

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Generally, the law of the state where the trust was allegedly created determines whether a 

trust was established. Am. Bankers Ins. Co. of Fla. v. Maness, 101 F.3d 358, 363 (4th Cir. 1996) 

(“[W]hile federal law creates the bankruptcy estate, . . . state law, absent a countervailing federal 

interest, determines whether a given property falls within this federal framework.”). Where an 

agreement includes a choice of law provision, however, those provisions are presumptively valid 

and applied, barring evidence of fraud, inconvenience, deprivation of a remedy, or contravention 

of strong public policy of the forum state. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 

594-96 (1991); Albemarle Corp. v. AstraZeneca UK LTD, 628 F.3d 643, 651 (4th Cir. 2010) 

(quoting Allen v. Lloyd’s of London, 94 F.3d 923, 928 (4th Cir. 1996)); Direct Capital Grp. v. 

Hadley (In re Hadley), Adv. Proc. No. 09-07141-FJS, 2011 WL 3664609, at *8 (Bankr. E.D. Va. 

Aug. 19, 2011). It is undisputed that the Gas Station is located in North Carolina and that Dickson 

Convenience was a North Carolina limited liability corporation. Partial Stipulation, at paras. 2, 6. 

In addition, Mrs. Dickson executed the Lease Agreement, Consignment Contract, and Guaranty

Agreement at the Gas Station. Tr. at 16. However, the parties agreed that the laws of the 

Commonwealth of Virginia would govern in the event of a proceeding related to or arising under 

any of the three documents. Lease Agreement, at § 22.10; Consignment Contract, at preamble,

para. R; Guaranty Agreement, at para. 12. No evidence suggests, nor did either party assert, that 

the Court should disregard the contractual choice of law provision. Accordingly, the Court will

apply the law of the Commonwealth of Virginia to determine if an express or technical indeed 

existed.

When considering whether an express trust is created under Virginia law, the presence of 

the word “trust” in a written agreement is not necessary but is afforded great weight in determining 

a trust’s existence. In re Strack, 524 F.3d at 498 (citing Broaddus v. Gresham, 181 Va. 725, 732 

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(1943); Exec. Comm. v. Shaver, 146 Va. 73, 79 (1926)). Rather, the Court must examine the 

parties’ intentions as expressed in writing or through their actions. Id. at 498-99. As the Strack

Court held, 

All that is necessary is the “unequivocal” intent “‘that the legal estate [be] vested 

in one person, to be held in some manner or for some purpose on behalf of 

another.’” At bottom, “[i]f the intention is that the money shall be kept or used as a 

separate fund for the benefit of the payor or a third person, a trust is created. If[, 

however,] the intention is that the person receiving the money shall have the 

unrestricted use thereof, being liable to pay a similar amount whether with or 

without interest to the payor or to a third person, a debt is created.”

In re Strack, 524 F.3d at 499 (quoting Old Republic Nat’l Title Ins. Co. (In re Dameron), 155 F.3d

718, 722 (4th Cir. 1998); Broaddus, 181 Va. at 732).

Judge Ellis has summarized the application of Virginia law by the Fourth Circuit Court of 

Appeals in Strack when determining if an express trust was created:

[T]he Strack opinion identifies three primary indicia of an intent to create an 

express trust rather than a mere debt. They are: (i) the designated trustee lacks legal 

title to the property at issue; (ii) the trustee is restricted in his use of the property; 

and (iii) the property remains separate from the trustee’s own property.

Racetrac Petroleum, Inc. v. Khan (In re Khan), 461 B.R. 343, 348 (E.D. Va. 2011) (hereinafter, 

“Racetrac Petroleum”) (citing In re Strack, 524 F.3d at 499); see also Broaddus, 181 Va. at 732.

Employing the guidance from Strack, as discussed in Racetrac Petroleum, the Court must consider 

the following: (1) whether James River held legal title to the cash fuel proceeds; (2) whether 

Dickson Convenience was restricted in its use of the cash fuel proceeds; and (3) whether Dickson 

Convenience was required to separately maintain the cash fuel proceeds. The facts unquestionably 

establish that all three indicia are met in the instant matter.57

57 Even if the laws of the state of North Carolina were applied, the Court would still find that a 

trust was created and the requisite fiduciary relationship was established. As summarized by 

Judge Whitley, the following elements must be present for a trust to exist under North Carolina 

law: “(1) an identifiable trust res, (2) specific fiduciary duties, and (3) its existence prior to and 

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The Consignment Contract plainly sets forth that James River retained title not only to the 

petroleum products it delivered to the Gas Station but also to all proceeds from their sale. 

Consignment Contract, at paras. B(2)(a)-(b), C(5)(a). Mrs. Dickson acknowledged these aspects 

of Dickson Convenience’s agreement with James River. See Tr. at 31, 59. The extent of James 

River’s control over the petroleum products even after delivery to Dickson Convenience is further 

evidenced by James River’s control over the retail price of the products. Consignment Contract, at 

para. C(1). 

The Consignment Contract restricted Dickson Convenience’s use of the cash fuel proceeds 

by requiring those proceeds to be deposited daily into James River’s Account. See id. at paras. 

B(2)(b), C(5)(a); Partial Stipulation, at para. 9; see also In re Matkins, 605 B.R. at 101-02 (finding 

that the duty to immediately make invoice proceeds available to the proceeds’ owner evidenced a 

restriction on the proceeds’ use by the recipient).58 Failure to do so triggered the assessment of a 

daily ten percent late fee; if the failure was the result of an intentional act or omission, such 

constituted the “unauthorized retention” of James River’s property. Consignment Contract, at 

paras. C(5)(a)-(b). The use restrictions are additionally demonstrated by the clear prohibition

without reference to the act creating the debt.” Hasalia v. Walker (In re Walker), 416 B.R. 449, 

466 (Bankr. W.D.N.C. 2009) (citing KGB Int’l, Inc. v. Watford (In re Watford), 374 B.R. 184, 

190 (Bankr. M.D.N.C. 2007)); see also Burns v. Creech (In re Creech), 350 B.R. 24, 27 (Bankr. 

M.D.N.C. 2006). Here, the trust res was the identifiable cash fuel proceeds in which James River 

retained ownership. See Partial Stipulation, at para. 9. Dickson Convenience was required by the 

terms of the Consignment Contract to deposit those cash proceeds daily into James River’s 

Account. See id. The parties entered into the Consignment Contract prior to any failure by 

Dickson Convenience to deposit the cash fuel proceeds. See id. at para. 7. See generally Account 

Reconciliation. Accordingly, if analyzed under North Carolina law, the Court would likewise 

conclude that a trust and the associated fiduciary duties existed here. 

58 Proceeds from fuel sales paid for by credit card were automatically transferred to James River. 

See Consignment Contract, at paras. C(4)(d), C(5)(a).

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against Dickson Convenience withholding, retaining, borrowing, offsetting, crediting, or otherwise 

taking any of the cash fuel proceeds. Id. at para. C(5)(b).

The Consignment Contract does not specifically require that Dickson Convenience 

maintain the cash fuel proceeds separate from its own cash. Notwithstanding the lack of such 

mandate, that Dickson Convenience was required to deposit the proceeds daily into James River’s 

Account implies that the funds would be intermingled with its own cash for only as long as needed

to determine the amount of cash fuel sales and thus the amount of cash to deposit each day. See

Consignment Contract, at para. C(5)(a). As noted by Judge Ellis, “segregation [of funds] into 

different bank accounts is not the sine qua non of separate funds; rather, it is sufficient if the parties 

intend the funds . . . to be maintained separately in terms of accounting and use.” Racetrac 

Petroleum, 461 B.R. at 350. Thus, even where funds are commingled, an express trust may still

exist if the funds at issue are traceable and identifiable. See id. at 349-50. Such capabilities existed 

here by virtue of the POS System, which tracked the sales of and sources of payment for petroleum 

products both at the gas pumps as well and the Gas Station’s cash registers. See Consignment 

Contract, at para. C(4)(d); Dep. at 37-38; see also Tr. at 31, 85. Thus, like in Racetrac Petroleum,

the POS System enabled the parties to easily identify and trace the amount of cash proceeds from 

fuel sales. See Racetrac Petroleum, 461 B.R. at 349.

The relationship between the parties here bears striking similarity to those in Strack,

Racetrac Petroleum, and numerous cases relying on them, including this Court’s own decision in 

In re Matkins. The evidence here unequivocally demonstrates that the parties intended to create an 

express trust. James River retained title to the petroleum products and the proceeds from the sales 

thereof. Dickson Convenience was not permitted to utilize the proceeds in any manner but instead 

was required to deposit the identifiable, traceable proceeds into James River’s Account on a daily 

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basis. Accordingly, the Court concludes that the Consignment Contract gave rise to an express 

trust, which placed upon Dickson Convenience the attendant fiduciary duties. Thus, the Court must 

next determine whether Dickson Convenience committed fiduciary defalcation.

2. Whether Dickson Convenience Committed Fiduciary Defalcation

Having concluded that an express trust and resulting fiduciary relationship existed between

James River and Dickson Convenience, the Court must determine whether Dickson Convenience 

committed fiduciary defalcation. This Court recently discussed the mental state required for a

finding of defalcation as outlined in Bullock v. BankChampaign, 569 U.S. 267 (2013).

In Bullock, the Supreme Court described the required state of mind as “involving 

knowledge of, or gross recklessness in respect to, the improper nature of the 

relevant fiduciary behavior.” [Bullock v. BankChampaign, 569 U.S. 267, 269

(2013)]. The Court further expounded that when “the conduct at issue does not 

involve bad faith, moral turpitude, or other immoral conduct,” defalcation requires 

a showing that the fiduciary “‘consciously disregard[ed]’ (or [was] willfully blind 

to) ‘a substantial and unjustifiable risk’ that his conduct [would] . . . violate a 

fiduciary duty.’” Id. at 274 (quoting Model Penal Code § 2.02(2)(c) (Am. Law Inst. 

1985)). Therefore, if the fraudulent conduct does not involve bad faith, moral 

turpitude, or other immoral conduct, then the conduct must involve an “intentional 

wrong,” which includes “not only conduct that the fiduciary knows is improper but 

also reckless conduct.” Id. The defendant’s state of mind is therefore crucial to 

resolving a § 523(a)(4) cause of action. Whether the culpable state of mind existed 

depends on the facts and circumstances of the case, such that the Court must infer 

the debtor’s intention. Chavis v. Mangrum (In re Mangrum), 599 B.R. 868, 876 

(Bankr. E.D. Va. 2019); MacArthur Co. v. Cupit (In re Cupit), 514 B.R. 42, 51 

(Bankr. D. Col. 2014). A corporation’s mental state is revealed though the beliefs 

and actions of its officers and agents. N.Y. Cent. & Hudson River R.R. Co. v. United

States, 212 U.S. 481, 492-93 (1909) (“Since a corporation acts by its officers and 

agents, their purposes, motives, and intent are just as much those of the corporation 

as are the things done.”). 

In re Matkins, 605 B.R. at 103 (footnote omitted).59 Mrs. Dickson was Dickson Convenience’s

sole owner and manager, as well as Dickson Convenience’s signatory on the Lease Agreement and 

59 As this Court has noted, “[p]rior to Bullock, the state of mind required to prove defalcation 

was relatively low. ‘[N]egligence or even an innocent mistake which results in misappropriation 

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Consignment Contract. In addition, she alone determined the disposition of the cash fuel proceeds.

See, e.g., Tr. at 28-33 (Mrs. Dickson describing how she calculated the amount of cash fuel 

proceeds to retain for Dickson Convenience’s expenses and the amount to deposit into James 

River’s Account). Therefore, Mrs. Dickson’s state of mind is a paramount consideration when 

determining whether Dickson Convenience violated its fiduciary duty to James River.

James River did not allege in its Complaint that the conduct in question involves bad faith, 

moral turpitude, or other immoral conduct in the context of its allegations under Section 

523(a)(4).60 Rather, James River alleges the defalcation here resulted from the intentional failure 

to deposit the cash fuel proceeds. The Court must decide, as a threshold issue, whether Dickson 

Convenience, through Mrs. Dickson, was subjectively aware of its fiduciary duties to James River,

as required for a finding that either a conscious disregard of or willful blindness to a substantial 

and unjustifiable risk of violating those duties occurred. See In re Matkins, 605 B.R. at 104 (citing 

In re Mangrum, 599 B.R. at 877). James River cannot meet its burden by merely “show[ing] that 

the debtor should have known of the fiduciary duties.” Id. (citing In re Cupit, 514 B.R. at 53). 

“Rather, the Court must examine the characteristics of the particular debtor, including whether the 

agreement to serve as a fiduciary was entered into voluntarily as well as the debtor’s knowledge 

or failure to account’ adequately proved defalcation.” In re Matkins, 605 B.R. at 103 n.46 

(quoting Rwanda v. Uwimana (In re Uwimana), 274 F.3d 806, 811 (4th Cir. 2001)).

60 Counsel for James River did assert during his closing argument that Mrs. Dickson’s conduct 

constituted either bad faith, moral turpitude, or other immoral conduct. Tr. at 118. While 

Dickson Convenience’s failure to deposit the cash fuel proceeds into James River’s Account 

could give rise to a finding of bad faith, moral turpitude, or other immoral conduct associated 

with embezzlement, the Court need not make such determination. As explained herein, Dickson 

Convenience, by Mrs. Dickson’s actions, consciously disregarded a substantial and unjustifiable 

risk that failing to deposit the cash fuel proceeds into James River’s Account would violate its 

fiduciary duties under the Consignment Contract.

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and sophistication, in determining subjective awareness.” Id. (citing In re Mangrum, 599 B.R. at 

878; Caitlin Energy, Inc. v. Rachel (In re Rachel), 527 B.R. 529, 543 (Bankr. N.D. Ga. 2015)).

If James River proves by a preponderance of the evidence that Dickson Convenience was 

subjectively aware of its fiduciary duty, the Court must then analyze whether Dickson 

Convenience’s failure to deposit the cash fuel proceeds into James River’s Account resulted from

a conscious disregard of or willful blindness to the risk of violating its fiduciary duty when doing 

so. Bullock, 569 U.S. at 274. As the Supreme Court has held, conscious disregard or willful 

blindness equates to actual knowledge of wrongdoing. Id. (citing Model Penal Code § 2.02(2)(c) 

(Am. Law Inst. 1985)). Conscious disregard, which can be inferred and need not be admitted by 

the debtor, requires proof “that the debtor was aware of the fiduciary duty and of the risk that his 

conduct would violate that duty.” In re Cupit, 514 B.R. at 51 (citing People v. Hall, 999 P.2d 207, 

220 (Colo. 2000)). “A debtor cannot consciously disregard a risk of violating a fiduciary duty if 

he or she is wholly unaware of the duty.” Id. Therefore, conscious disregard is proven by evidence 

that “the debtor was subjectively aware that his conduct might result in a breach of that fiduciary 

duty.” In re Mangrum, 599 B.R. at 877 (citing In re Rachel, 527 B.R. at 543). Willful blindness

requires a two-part showing, as announced by the Supreme Court: “(1) [t]he defendant must 

subjectively believe that there is a high probability that a fact exists and (2) the defendant must 

take deliberate actions to avoid learning of that fact.” Glob.-Tech Appliances, Inc. v. SEB S.A., 563 

U.S. 754, 769 (2011). “The debtor thus must make a purposeful decision to avoid ascertaining the 

existence of a fact he believes has a high probability of existence. The ‘willful blindness’

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requirement therefore requires a higher subjective standard of awareness.” In re Matkins, 605 B.R. 

at 104 (citing In re Mangrum, 599 B.R. at 877; In re Cupit, 514 B.R. at 52).61

In Bullock, the Supreme Court also concluded that if the debtor consciously disregarded or 

was willfully blind to the risk of violating the attendant fiduciary duties, then the risk of doing so 

must be “substantial and unjustifiable.” Bullock, 569 U.S. at 274. As summarized in the Matkins

decision:

The Court must assess both the likelihood and the magnitude of the harm that may 

occur from the debtor’s conduct to determine if the risk is substantial. In re Cupit,

514 B.R. at 52 (quoting People v. Hall, 999 P.2d 207, 218 (Colo. 2000)). The 

“unjustifiable” condition requires the Court to explore “‘the nature and purpose of 

the actor’s conduct relative to how substantial the risk is.’” Id. (quoting Hall, 999 

P.2d at 218). The “substantial and unjustifiable” inquiry must show a disregard that 

is a “gross deviation” from the conduct that a “law-abiding person” facing the same 

situation as that presented to the debtor would undertake. Bullock, 569 U.S. at 274 

(citing Model Penal Code § 2.02(2) (Am. Law Inst. 1985)); see also In re Mangrum,

599 B.R. at 877 (citing Larsen v. Larsen (In re Larsen), Adv. No. 1-16-01116-

NHL, 2018 WL 4006935, at *7 (Bankr. E.D.N.Y. Aug. 17, 2018)) (finding that the 

debtor is provided a “safe harbor” if the “law-abiding person” would have pursued 

the same conduct under the circumstances and in light of the risk of violating the 

fiduciary duty).

In re Matkins, 605 B.R. at 105.

The Court concludes that James River has proven by a preponderance of the evidence that 

Mrs. Dickson, and, consequently, Dickson Convenience, was subjectively aware of the fiduciary 

duties imposed by the Consignment Contract. Mrs. Dickson is a high school graduate who 

extended her education with approximately one year of college courses. Tr. at 60. She has 

extensive work experience in both restaurants and the convenience store industry, working in the 

61 Willful blindness is distinguished from reckless indifference in that a reckless defendant 

“merely knows of a substantial and unjustified risk of such wrongdoing.” Glob.-Tech 

Appliances, Inc., 563 U.S. at 770. Because willful blindness involves the defendant deliberately 

avoiding confirmation of a high probability of wrongdoing, its requirements are “limited [in]

scope [and] surpass recklessness and negligence.” Id. at 769.

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latter for approximately seven years before forming Dickson Convenience and undertaking 

operations at the Gas Station. See id. at 10-11; Dep. at 8-10. Her experience included serving as 

the sole manager for the prior Gas Station operator, who, by Mrs. Dickson’s testimony, was rarely 

on location. Tr. at 12. At no point did Mrs. Dickson offer any testimony or evidence that she had 

difficulty understanding or performing her job duties as the sole manager for the prior station 

operator. When contemplating James River’s initial offer to operate the Gas Station, she weighed 

the financial feasibility of doing so as it related to licensure requirements and inventory expenses. 

Id. at 62; see Dep. at 15-16, 81. Mrs. Dickson later accepted James River’s second offer to operate 

the Gas Station, which included financial assistance from James River to stock inventory and 

purchase new equipment. Tr. at 62; Dep. at 16. 

James River provided three documents—the Lease Agreement, the Consignment Contract, 

and the Guaranty Agreement—to Mrs. Dickson via email. See Tr. at 16-18, 60-61. She reviewed 

the documents for approximately one day before voluntarily signing them. See id. at 16-19, 60-61.

Mrs. Dickson indicated neither the circumstances that caused her to take only one day to review 

the contracts nor why she did not consult an attorney. See id. at 60. The latter point is underscored 

by explicit language of Paragraph L of the Consignment Contract: “[E]ach party has selected, or 

had an opportunity to select, legal counsel, such selection or non-selection was of their own free 

will, and each party had the opportunity to discuss the terms of this Consignment with their legal 

counsel.” Consignment Contract, at para. L. Further, Mrs. Dickson has not refuted that the terms 

of the Consignment Contract were “fair and mutually satisfactory” and its “provisions [were] 

reasonable.” Id. at para. J. Those provisions include the clear and unmistakable fiduciary duty

regarding the proceeds from all petroleum product sales by Dickson Convenience: “[Dickson 

Convenience] shall fully cooperate with [James River] to cause all daily payments and proceeds 

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from the sale of [petroleum] [p]roducts at the [Gas Station], whether by cash, credit card, or 

otherwise . . . to be directed and deposited into [James River]’s designated bank account each day

. . . .” Id. at para. C(5)(a). Mrs. Dickson acknowledged on multiple occasions that Dickson 

Convenience was required to deposit daily the cash fuel proceeds into James River’s Account and

that those proceeds were the property of James River. See, e.g., Tr. at 29, 31, 59; Dep. at 67. She 

further testified that she did not recall any instructions to refrain from depositing cash fuel proceeds 

into James River’s bank account. Tr. at 58, 80-81.

To be sure, Mrs. Dickson testified that she did not understand some of the information 

contained on the consignment calculator reports sent to her by James River, and her requests to 

James River for explanations regarding a portion of the content of those reports were apparently 

unheeded. Id. at 43; Dep. at 69-70, 91, 95. But see Dep. at 83-85 (testifying that she understood

amounts set forth on the consignment calculator reports regarding the amounts of fuel and 

groceries sold). Further, Dickson Convenience’s internal accounting records revealed multiple 

flaws, likely resulting from Mrs. Dickson’s relative inexperience with the QuickBooks accounting 

software. See Tr. at 20-21. However, such testimony and revelations do not negate the fact that 

she, as Dickson Convenience’s sole manager and principal, understood the core component from 

which Dickson Convenience’s fiduciary duty to James River arose—to deposit the cash fuel 

proceeds into James River’s Account on a daily basis.

Mrs. Dickson’s comprehension of Dickson Convenience’s fiduciary duty is further borne 

out by her actions of regularly making deposits into James River’s Account as reflected on the

related bank statements. See generally Pl. Ex. 5 (BB&T Statements for James River’s Account 

dated November 2017 through May 2019). Thus, despite testifying that her immediate prior 

experience as Gas Station manager did not prepare her for operating the business in terms of 

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preparing a budget and ensuring adequate inventory, the Court finds that Mrs. Dickson was 

sufficiently sophisticated, as evinced not only by her background but by her experience and 

ensuing actions, to comprehend the fiduciary duty placed upon Dickson Convenience by the 

Consignment Contract to deposit the proceeds of cash fuel sales into James River’s Account. See

Consignment Contract, at para. C(5)(a); see Tr. at 62. Therefore, the Court concludes that Dickson 

Convenience, through Mrs. Dickson, was subjectively aware of its fiduciary duty. 

The Court now turns to whether the failure of Dickson Convenience to deposit the cash 

fuel proceeds into James River’s Account resulted from a conscious disregard of or willful

blindness to the risk of violating its fiduciary duty. The record before the Court is replete with 

evidence that Dickson Convenience, through Mrs. Dickson, consciously disregarded the risk of 

violating its fiduciary duty to deposit cash fuel proceeds into James River’s Account on a daily 

basis. See March 8, 2018 Email to Mrs. Dickson, at 2 (February 2018 consignment calculator 

report); May 4, 2018 Email to Mrs. Dickson (April 2018 consignment calculator report); June 6, 

2018 Email to Mrs. Dickson (May 2018 consignment calculator report); July 6, 2018 Email to 

Mrs. Dickson (June 2018 consignment calculator report); October 5, 2018 Email to Mrs. Dickson

(September 2018 consignment calculator report). See generally Account Reconciliation; Pl. Ex. 5, 

James River Petroleum, Inc., BB&T Statements dated November 2017 through May 2019. Further 

and equally compelling is Mrs. Dickson’s testimony in this regard. Mrs. Dickson confessed that 

James River’s cash fuel proceeds were intentionally used to sustain Dickson Convenience’s 

operations, including purchasing inventory, maintaining the Gas Station, and making payroll. See

Tr. at 28-29, 33, 36; Dep. at 36-37, 68, 72-73, 79. Payroll expenses included wages for herself and 

her family members that worked at the Gas Station, the amounts for which depended upon the 

family’s monthly living expenses and Dickson Convenience’s ability to pay. See Tr. at 19-20, 22; 

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Dep. at 28-29. On a daily basis, Mrs. Dickson made the decision to deposit any remaining cash

unnecessary for Dickson Convenience’s operations into James River’s Account without regard for

the true amount of cash attributable to fuel sales. Tr. at 29; Dep. at 36-37. In so doing, Mrs. Dickson 

undeniably prioritized Dickson Convenience’s financial position over its contractual obligations.

Therefore, the Court finds that Mrs. Dickson caused Dickson Convenience to consciously 

disregard the risk of violating its known fiduciary duty owed to James River. The Court thus need 

not determine whether Dickson Convenience was willfully blind to the risk of violating its 

fiduciary duty.

Finally, the Court must decide if James River has proven by a preponderance of the 

evidence that the risk of violating the fiduciary duty was substantial and unjustifiable. The 

substantiality aspect is viewed through lenses of both the likelihood and magnitude of harm that

may have resulted from Dickson Convenience’s failure to fulfill its fiduciary duty. James River 

has sufficiently proven that both facets are present here. The likelihood of harm to James River as 

a result of Dickson Convenience’s failure to deposit cash fuel proceeds into James River’s Account 

was unquestionably high, given that the fiduciary duty to do so fell squarely to Dickson 

Convenience. Economic harm was certain to befall James River if Dickson Convenience failed to 

deposit the total amount of cash fuel sales proceeds into James River’s Account. Correspondingly, 

the magnitude of the harm was significant, particularly as the balance due to James River grew.

While James River had the ability to see daily cash fuel sales, the cash that was to be deposited 

into its account under the Consignment Contract was purely under the control of Dickson 

Convenience. 

James River has also proven that Dickson Convenience’s conduct, through Mrs. Dickson, 

was not justifiable on any level in light of the nature and purpose of Mrs. Dickson’s conduct as the 

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same relates to the substantiality of the risk. Mrs. Dickson attempted to rationalize her conduct by 

citing insufficient inventory levels, lack of a customer base, and the failure of James River to 

uphold its promise to financially assist Dickson Convenience in operating the Gas Station. See, 

e.g., Tr. at 15, 68-69; October 5, 2017 Email Exchange, at 1-2 (raising concerns regarding lack of 

funds to purchase inventory, leading to lost sales and insufficient funds after paying payroll and 

rent); November 26-27, 2017 Email Exchange, at 2 (discussing insufficient cash flow and inability 

to fund payroll expenses). Mrs. Dickson further believed that she and James River’s Vice-President 

of Operations, Mr. Natvig, had a mutual understanding that she could use James River’s cash fuel 

proceeds to fund store operations. Dep. at 103, 105-06 (discussing the November 26-27, 2017 

Email Exchange and concurrent conversations); see also Tr. at 30-31 (testifying that James River 

knew the cash fuel proceeds were being used for operating costs); Dep. at 106 (same). She further 

opined that James River acquiesced to her use of the funds. See, e.g., Tr. at 79. These explanations, 

however, fall far short of justifying her conduct and the use of the cash fuel proceeds for Dickson 

Convenience’s expenses. Similar to the Court’s finding in Matkins, Mrs. Dickson also

unquestionably acted only in the interest of Dickson Convenience. In re Matkins, 605 B.R. at 107. 

As the Court noted concerning Mr. Matkins’s conduct and the resulting fiduciary defalcation on 

behalf of his company, “[w]hile desiring to pay one’s employees is noble as it relates to those 

employees’ well-being, such nobility of action does not obviate the unjustifiable nature of [the 

debtor]’s conduct here. The same can be said for [the debtor]’s attempts to maintain his pipeline 

of materials from other creditors by paying them.” Id. In the instant case, James River’s cash fuel 

proceeds were used to fund Dickson Convenience’s operations, purchase inventory, maintain the 

Gas Station premises, and to pay payroll not only for the store’s two employees but also for Mrs. 

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Dickson and her family. While there may be a limited amount of virtue in these actions, the conduct 

here cannot be countenanced as justifiable. 

On the whole, Mrs. Dickson’s conduct that caused Dickson Convenience to consciously 

disregard the risk of violating its fiduciary duty to James River represents “‘a gross deviation from 

the standard of conduct that a law-abiding person would observe[.]’” Bullock, 569 U.S. at 274

(quoting Model Penal Code § 2.02(2)(c) (Am. Law Inst. 1985)). Repeatedly, and seemingly daily, 

despite having full awareness of the requirement to deposit the cash fuel proceeds into James 

River’s Account, Mrs. Dickson consciously disregarded Dickson Convenience’s fiduciary duty 

with respect to James River’s property and instead utilized the cash fuel proceeds to financially 

buoy Dickson Convenience. Tr. at 32-33. The risk that her actions would violate Dickson 

Convenience’s fiduciary duty was substantial and unjustifiable. This Court earlier summarized a 

similar instance of fiduciary defalcation exhibited in MacArthur Co. v. Cupit (In re Cupit), 514 

B.R. 42 (Bankr. D. Colo. 2014): 

In [In re Cupit], the debtor testified that he misdirected funds belonging to the 

creditor to improve his company’s poor financial condition and to pay material 

suppliers. The Court noted that, in the context of defalcation, the risk would be 

justified if there were some possible interest or benefit to the trust beneficiary that 

outweighed misuse of the trust funds. However, the debtor used the funds to 

improve his company’s position, not the trust beneficiary’s position; thus, the Court 

found that “[s]uch a self-serving interest [could] not justify a risk of harm to the 

[trust beneficiary].”

In re Matkins, 605 B.R. at 107 (quoting In re Cupit, 514 B.R. at 52-53). As in both Matkins and 

Cupit, no commensurate benefit to James River resulted from Dickson Convenience’s use of James 

River’s cash fuel proceeds. As such, the Court finds that Dickson Convenience’s conscious 

disregard of the risk of violating its fiduciary duty to James River was both substantial and 

unjustifiable. Therefore, the Court concludes as a matter of law that James River has met its burden 

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to prove by a preponderance of the evidence that Dickson Convenience committed fiduciary 

defalcation under Section 523(a)(4).

3. Mrs. Dickson’s Defenses Raised at Trial

While not asserted in her answer to the Complaint, in his closing argument, counsel for 

Mrs. Dickson urged the Court to consider several defenses to James River’s allegations. First, Mrs. 

Dickson’s counsel asserts that James River “convinced” Mrs. Dickson to enter into the Lease 

Agreement, Consignment Contract, and Guaranty Agreement and caused her to become

“indentured” to James River. Tr. at 128, 132. The Court will construe counsel’s contentions as 

asserting that the Consignment Contract is unconscionable by its terms and that Mrs. Dickson 

entered into the contract as a result of duress.

The Fourth Circuit Court of Appeals has summarized unconscionability under Virginia law

as follows:

Traditionally, for a contract to be unconscionable, it must have been “such as no 

man in his senses and not under delusion would make on the one hand, and as no 

honest and fair man would accept on the other.” In other words, “[t]he inequality 

must be so gross as to shock the conscience.” 

Unconscionability has both a substantive and procedural element. The 

former requires a “gross disparity in the value exchanged.” The latter necessitates 

inequity and bad faith in “the accompanying incidents . . . , such as concealments, 

misrepresentations, undue advantage, oppressions on the part of the one who 

obtains the benefit, or ignorance, weakness of mind, sickness, old age, incapacity, 

pecuniary necessities, and the like.”

Lee v. Fairfax Cnty. Sch. Bd., 621 F. App’x 761, 762-63 (4th Cir. 2015) (alteration in original)

(quoting Chaplain v. Chaplain, 54 Va. App. 762, 773-74 (Va. Ct. App. 2009)). Allegations that a 

contract is unenforceable due to unconscionability must be proven by clear and convincing 

evidence. Fransmart, LLC v. Freshii Dev., LLC, 768 F. Supp. 2d 851, 871 (E.D. Va. 2011) (citing 

Pelfrey v. Pelfrey, 25 Va. App. 239, 244 (Va. Ct. App. 1997)). It is insufficient for a showing of 

unconscionability that a party becomes unhappy with the terms of a contract or decides that the 

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contract was entered into imprudently. Id.; Granati v. Stone St. Capital, Inc. (In re Granati), 307 

B.R. 827, 832 (E.D. Va. 2002), aff’d, 63 F. App’x 741 (4th Cir. 2003). In such circumstance, the 

law is clear that “‘courts [are not] at liberty to rewrite the contractual language, even if the plain 

language of the contract produces what some may consider a harsh result.’” Midlothian Enters., 

Inc. v. Owners Ins. Co., 439 F. Supp. 3d 737, 742 (E.D. Va. 2020) (alteration in original) (quoting 

Trex Co. v. ExxonMobil Oil Corp., 234 F. Supp. 2d 572, 575 (E.D. Va. 2002)).

Mrs. Dickson introduced no evidence to sustain a claim of unconscionability. In hindsight,

Mrs. Dickson may wish that she had not accepted James River’s offer and entered into the various 

agreements. However, she has neither cited any conscience-shocking provisions in any of the three 

documents nor any support that a gross disparity in exchanged value existed. Further, Mrs. Dickson 

has proffered no evidence of inequity or bad faith by James River when entering into the contracts.

In short, other than the blanket assertions made by counsel in his closing argument, the record is 

devoid of evidence sufficient to satisfy the clear and convincing standard to prove 

unconscionability. 

The Court likewise finds that Mrs. Dickson failed to satisfy the burden of proving by clear 

and convincing evidence her apparent claim that she entered into the contracts as a result of duress

and thus they are unenforceable. See Lee, 621 F. App’x at 762 (quoting Pelfrey, 25 Va. App. at

246). Duress results from the commission of “a wrongful act sufficient to prevent a plaintiff from 

exercising his free will, thereby coercing the plaintiff’s consent.’” Id. (quoting Goode v. Burke 

Town Plaza, Inc., 246 Va. 407, 411 (1993)). Mrs. Dickson has tendered no evidence showing that 

James River committed “a wrongful act” nor has she presented proof that James River prevented 

her “from exercising her free will” when deciding whether to sign the various agreements. Mrs. 

Dickson’s “financial hardship, standing alone, is insufficient to invalidate a contract due to duress 

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under Virginia law.” Id. Mrs. Dickson declined James River’s initial offer to operate the Gas 

Station. When James River approached her a second time, it offered certain financial assistance,

and she accepted the offer. Mrs. Dickson’s deposition testimony highlighted her hopeful approach 

to the endeavor. Mrs. Dickson thought she could successfully operate the Gas Station despite the 

prior operator being unable to do so based upon information received from customers that the Gas 

Station was previously a “very good location . . . a very busy location.” Dep. at 21. Such testimony 

is in stark contrast to the requirements necessary for a showing of duress. 

Counsel for Mrs. Dickson urged the Court’s to exercise its “equitable powers” to find the 

debt owed to James River to be dischargeable. Tr. at 132. Parties often rely upon Section 105(a) 

of the Bankruptcy Code as the source of the “equitable powers” of this Court. Section 105(a) 

permits the Court to “issue any order, process, or judgment that is necessary or appropriate to carry 

out the provisions of this title.” 11 U.S.C. § 105. Section 105(a) may be invoked only in furtherance 

of the Bankruptcy Code, “not to negate the legal effect of a specific code provision.” S. Bank and 

Trust Co. v. Alexander (In re Alexander), Adv. Proc. No. 13-07146-SCS, 2014 WL 3511499, at 

*14 (Bank. E.D. Va. July 16, 2014), aff’d, 524 B.R. 82 (E.D. Va. 2014). The Supreme Court has 

cautioned, “‘whatever equitable powers remain in the bankruptcy courts must and can only be 

exercised within the confines of’ the Bankruptcy Code.” Law v. Siegel, 571 U.S. 415, 421 (2014)

(quoting Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988)). Counsel for Mrs. 

Dickson fails to enumerate with specificity the basis upon which he believes Section 105(a) should 

be invoked to provide relief to Mrs. Dickson. Accordingly, the Court declines to further explore 

this apparent proposed mitigation. 

Finally, counsel for Mrs. Dickson asserted that James River has unclean hands and should 

be estopped from asserting its rights under the Consignment Contract. Tr. at 132. To this end, 

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counsel argued that Mrs. Dickson informed James River on multiple occasions about insufficient 

nonfuel sales to cover expenses, to which James River only responded by urging her to continue 

operations. Id. at 129. For additional support, he contended that James River acquiesced to Dickson 

Convenience’s use of the cash fuel proceeds, positing that doing so allowed Dickson 

Convenience’s debt to James River to grow. See id. at 129-31. According to Mrs. Dickson’s 

counsel, James River’s failure to enforce the provisions of the Consignment Contract caused the 

debt owed to James River to increase to an amount that Mrs. Dickson will never be able to repay. 

See id. at 131-32.

The doctrine of unclean hands prevents a party from achieving the relief sought “only when 

there is a close nexus between [that] party’s unethical conduct and the transaction on which that 

party seeks relief.” Rwanda v. Uwimana (In re Uwimana), 274 F.3d 806, 810 (4th Cir. 2001),

abrogated on other grounds by Bullock v. BankChampaign, 569 U.S. 267 (2013), (citing Keystone 

Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245 (1933); Wetzler v. Cantor, 202 B.R. 573, 

577 (D. Md. 1996)). The purpose of the doctrine is “to prevent a party from using the courts to 

reap the benefits of wrongdoing.” Id. at 811. This exact defense was offered by the debtor in 

Racetrac Petroleum, Inc. v. Ahmed (In re Ahmed), Adv. Proc. No. 12-01045-BFK, 2012 WL 

6093446 (Bankr. E.D. Va. Dec. 7, 2012) (hereinafter, “In re Ahmed”). The debtor there argued 

that Racetrac Petroleum had unclean hands because it advised the debtor’s business partner to open 

a separate bank account to which the debtor did not have access, and as a result Racetrac Petroleum 

should not recover on its assertion of fiduciary defalcation. Id. at *6. Judge Kenney of this Court

rejected this defense and concluded that the debtor’s failure to monitor the original bank account 

to which both the debtor and his business partner had access and his subsequent failure to seek 

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access to the new bank account, not the advice to the business partner to open a new account,

caused the loss for which Racetrac Petroleum sought recovery. Id. at *6-7.

The Court likewise rejects the application of the unclean hands doctrine in the instant 

matter. The losses here resulted directly from Dickson Convenience’s use of the cash fuel proceeds 

for its own needs, the decisions to do so being made solely, and repeatedly, by Mrs. Dickson. 

Further, the decision regarding when and even whether to enforce a contract is the prerogative and 

business decision of James River. Nothing unethical arises from James River exercising its option

to, in essence, not save Mrs. Dickson from herself and her choice to divert James River’s cash fuel 

proceeds for Dickson Convenience’s purposes on practically a daily basis. The Court will not 

permit Mrs. Dickson to shift the responsibility for her own actions to James River based upon the 

facts before it. 

4. Mrs. Dickson’s Liability for Dickson Convenience’s Fiduciary Defalcation

James River seeks the denial of discharge of the debt arising from Dickson Convenience’s

fiduciary defalcation as to Mrs. Dickson individually by application of the provisions of the 

Guaranty Agreement. Therefore, in addition to demonstrating that Dickson Convenience

committed fiduciary defalcation as relates to James River, James River must also show that

Dickson Convenience’s actions are attributable to Mrs. Dickson. This Court recently summarized 

the legal effect of a personal guarantee on the indebtedness of that individual’s business.

The Fourth Circuit Court of Appeals addressed a similar fact pattern in Airlines 

Reporting Corp. v. Ellison, where the debtors owned a travel agency that incurred 

debts as a result of fiduciary defalcation. Both the Bankruptcy and District Courts 

concluded that the debtors’ personal guarantee of their travel agency’s indebtedness 

to the plaintiff caused them to be personally liable to the plaintiff. On appeal, the 

Fourth Circuit Court of Appeals held that (1) the debtors personally guaranteed 

their travel agency’s debt to the plaintiff; (2) the travel agency’s debt arose from a 

breach of its fiduciary duty to the plaintiff; (3) the travel agency’s breach of 

fiduciary duty was caused by the debtors’ personal conduct; and (4) the debtors’ 

conduct constituted a breach of their fiduciary duty to their travel company. As a 

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result, the Fourth Circuit determined that the indebtedness under the debtors’ 

personal guarantee resulted from their defalcation while acting in a fiduciary 

capacity and thus was not dischargeable under 11 U.S.C. § 523(a)(4).

In re Matkins, 605 B.R. at 108 (discussing Airlines Reporting Corp. v. Ellison (In re Ellison), 296 

F.3d 266, 269-71 (4th Cir. 2002)); see also Kubota Tractor Corp. v. Strack (In re Strack), 524 F.3d 

493, 500-01 (4th Cir. 2008) (finding “[t]he same ‘confluence’ of factors present” as in Airlines 

Reporting and concluding that the debt owed by the debtor’s corporation was not dischargeable in 

the debtor’s personal bankruptcy under Section 523(a)(4)). The Airlines Reporting factors and 

analysis are further supported by the proposition that “while an officer of a corporation is in no 

way personally liable for corporate torts solely on account of his corporate position, where the 

officer actually participates in or otherwise sanctions the tortious acts, personal liability may lie.” 

Airlines Reporting, 296 F.3d at 271 (citing Bowling v. Ansted Chrysler-Plymouth-Dodge, Inc., 188 

W.Va. 468, 473 (1992)).

The four factors announced by the Fourth Circuit Court of Appeals in Airlines Reporting

unquestionably are met here. It is uncontroverted that “Mrs. Dickson executed a Guaranty 

Agreement dated September 21, 2017, wherein [she] guarantied payment and performance of all 

of Dickson Convenience’s payments and obligations under the Consignment Contact and Lease

[Agreement].” Partial Stipulation, at para. 8; see also Guaranty Agreement, at para. 1. As discussed 

in great detail above, James River has proven by a preponderance of the evidence that Dickson 

Convenience’s debt to it arose from fiduciary defalcation, thus satisfying the second Airlines 

Reporting factor. Dickson Convenience was required to deposit the totality of the cash fuel 

proceeds into James River’s Account on a daily basis. Despite her subjective awareness of Dickson 

Convenience’s fiduciary duty to deposit the funds, Mrs. Dickson, on behalf of Dickson 

Convenience, consciously disregarded a substantial and unjustifiable risk of violating its fiduciary 

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duty when she decided to use the funds for Dickson Convenience’s expenses. Regarding the third 

factor, Mrs. Dickson does not dispute her personal conduct in this case as it relates to Dickson’s 

Convenience’s actions and its resulting breach of fiduciary duty to James River. She admitted that 

she alone made the decisions on behalf of Dickson Convenience to use the cash fuel proceeds 

instead of depositing the total amounts of those proceeds into James River’s Account.

With respect to the final factor, as the sole officer and managing member of Dickson 

Convenience, Mrs. Dickson was obligated to discharge her fiduciary duties to Dickson 

Convenience. Because Dickson Convenience was a North Carolina member-managed limited 

liability company, Mrs. Dickson was charged by statute with exercising her duties in a prudent 

fashion and in good faith. See N.C. Gen. Stat. § 57D-3-21(b) (2020) (“Each manager shall 

discharge that person’s duties (i) in good faith, (ii) with the care an ordinary prudent person in a 

like position would exercise under similar circumstances, and (iii) subject to the operating 

agreement, in a manner the manager believes to be in the best interests of the LLC.”). Dickson 

Convenience did not have an operating agreement; therefore, Mrs. Dickson’s statutory obligations 

as a member of the limited liability company remained unchanged.62 The facts here plainly 

demonstrate that Mrs. Dickson did not execute her duties with the requisite good faith or with the 

care and prudence of an ordinary person in similar circumstances. As a fiduciary to Dickson 

Convenience, the sole decision maker for the company, and Dickson Convenience’s signatory on 

the Consignment Contract, she was acutely aware of the duty to deposit the cash fuel proceeds on 

a daily basis. Her actions directly caused Dickson Convenience to violate its fiduciary duty to 

James River. The Court cannot conclude that Mrs. Dickson’s conduct reflects good faith or the 

62 See supra note 10.

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care of an ordinary prudent person. Instead, the Court must find that Mrs. Dickson breached her 

fiduciary duty to Dickson Convenience.

Taking the four Airlines Reporting factors together, the Court concludes that Mrs. Dickson 

is liable for Dickson Convenience’s fiduciary defalcation by reason of the Guaranty Agreement 

because she was acting in a fiduciary capacity to Dickson Convenience. Accordingly, the Court 

concludes as a matter of law that the debt owed to James River should be determined 

nondischargeable under 11 U.S.C. § 523(a)(4) in Mrs. Dickson’s bankruptcy case.63

C. Amount of Nondischargeable Debt

To determine the amount of debt that is nondischargeable in Mrs. Dickson’s bankruptcy 

case, the Court must first calculate the amount of James River’s cash fuel proceeds that Dickson 

Convenience failed to deposit pursuant to the Consignment Contract. The base amount of debt will 

permit the Court to then calculate the applicable late fees as set forth in the Consignment Contract 

and attorney’s fees pursuant to the Guaranty Agreement. See Consignment Contract, at paras.

C(5)(a), E(12); Guaranty Agreement, at para. 1. 

At trial, James River reduced the amount of cash fuel proceeds it asserted Dickson 

Convenience failed to deposit from $171,575.11 as set forth in the Complaint to $159,439.31 to 

account for network processing fees that were the responsibility of James River. Complaint, at 

prayer; Tr. at 94-95; Account Reconciliation, at 3. The Court has thoroughly reviewed James 

River’s Account Reconciliation and supporting documentation, all of which was uncontested by 

Mrs. Dickson. The Court finds as a finding of fact that Dickson Convenience sold a gross dollar 

63 In light of the conclusion that the debt owed to James River is nondischargeable pursuant to 

Section 523(a)(4), the Court need not determine whether the debt would also be found to be 

nondischargeable under the remaining counts set forth in the Complaint.

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amount of James River’s fuel of $1,558,018.32. Account Reconciliation, at 1, 5-16.64 The Court 

further finds that James River received credit card remittances equaling $1,261,452.05. Id. at 1, 

17-31. During its operation of the Gas Station, Dickson Convenience made cash deposits into 

James River’s Account totaling $124,991.16. Id. at 1, 32; see Pl. Ex. 5, James River Petroleum, 

Inc., BB&T Statements dated November 2017 through May 2019. Ms. Hawthorne testified that 

James River was obligated to pay $12,135.80 for network processing fees, such that the total 

amount owed by Dickson Convenience should be reduced by that amount. Tr. at 94-95.

Accordingly, the Court concludes that the base amount of the debt owed to James River, 

representing total cash fuel proceeds that Dickson Convenience, through Mrs. Dickson’s actions, 

failed to deposit into James River’s Account, equals $159,439.31. The Court finds that this amount 

should be determined to be nondischargeable for the reasons stated above.

Pursuant to Paragraph C(5)(a) of the Consignment Contract, James River is also entitled to 

late fees equal to ten percent of the total dollar amount of fuel sold for which the cash proceeds 

were not deposited into James River’s Account. Therefore, because the Court has determined that 

Dickson Convenience failed to deposit $159,439.31 in cash fuel proceeds, the Court concludes 

64 The supporting documentation contained within the Account Reconciliation exhibit indicates 

that Dickson Convenience sold $2,588.48 of James River’s fuel products both on May 3, 2018,

and May 4, 2018. Account Reconciliation, at 10. The documentation further indicates that 

Dickson Convenience sold the same amount of 87, 89, and 93 octane fuels and diesel fuel each 

day. Id. It does not appear from the evidence before the Court that this represents a doublecounting error by James River. The represented dollar amount of fuel products sold on the 

specified dates falls within the typical range of fuel products sold by Dickson Convenience. See 

supra note 34 (noting an approximate average daily gross dollar amount of fuel products sold of 

$3,000.00). As Mrs. Dickson has not contested the amounts contained within James River’s 

records, the Court will accept the amount as stated, even if it is perhaps improbable that the same 

amounts of fuel were sold on both days. 

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that late fees of $15,943.93 should be added in the amount determined to be nondischargeable in 

Mrs. Dickson’s bankruptcy case.65

James River also requests the Court award attorney’s fees. The Complaint fails to specify 

the provision(s) of the document(s) under which reimbursement is sought. During his closing 

argument, counsel for James River referenced the provision for attorney’s fees contained in the 

Guaranty Agreement, which provides for “reasonable attorneys’ fees in the amount of 33% of the 

amount owed, as a result of [James River]’s efforts in collecting any amount due under this 

Guaranty Agreement.” Guaranty Agreement, at para. 1; see Tr. at 114, 125. Counsel for Mrs. 

Dickson did not contest the applicability of this provision. Further, as the mechanism for finding 

Mrs. Dickson liable for Dickson Convenience’s fiduciary defalcation is the Guaranty Agreement, 

the Court finds that the attorney fee provision from that agreement governs. This provision also 

satisfies the requirement that an enforceable contract exist for a prevailing party to recover

attorney’s fees. See Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257 (1975)

(holding that, absent a statute or an enforceable contract, litigants in the United States generally 

bear their own attorney’s fees); Prospect Dev. Co. v. Bershader, 258 Va. 75, 92 (1999) (citing 

Gilmore v. Basic Indus., Inc., 233 Va. 485, 490 (1987)) (holding the same for litigants in the 

Commonwealth of Virginia).

65 The Court’s calculation of the amount of late fees comports with that by James River, both as 

set forth in the Complaint (see Complaint, at para. 19, prayer) and in the closing argument 

delivered by counsel for James River (see Tr. at 125). The Consignment Contract could be 

interpreted as providing for a different calculation. See Consignment Contract, at para. C(5)(a) 

(providing for “a late charge of 10% of the total [petroleum] Product Sales for each day (and any 

part thereof) that elapses without deposit of the Shortfall until such time as [James River] 

receives a deposit for the Shortfall plus the late charges into its designated bank account”). The 

Court defers to James River’s interpretation of the Consignment Contract, as James River is the 

presumed drafter of the document.

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This Court has previously concluded, based upon Virginia law (applicable here by virtue 

of the choice of law provision), that “a[n attorney] fee stipulated by contract is prima 

facie reasonable and should be paid unless excessive or unreasonable.” Elrod v. Bowden (In re 

Bowden), 326 B.R. 62, 99 (Bankr. E.D. Va. 2005) (citing First Am. Bank v. MacDonald, 30 Va. 

Cir. 299, 1993 WL 946014, at *2 (Va. Cir. Ct. 1993)). Accordingly, the defendant has the burden 

of proving either “‘that the plaintiff did not incur the amount expressed in the agreement or that 

the fee agreed upon was excessive or unreasonable.’” Id. (quoting MacDonald, 1993 WL 946014,

at *2). In the absence of such proof, the plaintiff’s attorney’s fees are chargeable against the 

defendant and constitute nondischargeable debt. See id. at 98-99 (discussing Wegmans Food Mkts.,

Inc. v. Lutgen (In re Lutgen), No. 98-CV-0764E, 1999 WL 222605, at *1-3 (W.D.N.Y. Apr. 5, 

1999)).

Mrs. Dickson did not contest, either through evidence or by argument of counsel, James 

River’s request for attorney’s fees in the amount of thirty-three percent of the amount sought 

pursuant to the Guaranty Agreement. See Tr. at 128-33. The total cash fuel proceeds not deposited 

into James River’s Account equals $159,439.31.66 Therefore, the Court finds that James River is

entitled under the Guaranty Agreement provision to attorney’s fees equaling $53,146.44, which 

amount the Court finds should also be determined to be nondischargeable pursuant to 11 U.S.C. §

523(a)(4).

Last, the Complaint requests the assessment of pre- and post-judgment interest at the 

federal judgment rate. Complaint, at prayer. “An award of prejudgment interest is compensatory 

in nature ‘and is designed to compensate the plaintiff who has been without deserved relief for an 

66 During his closing argument, counsel for James River represented that the attorney’s fees 

should be calculated based upon the total cash fuel proceeds that were not deposited into James 

River’s Account; he did not include in his calculation the ten percent late fees. Tr. at 125.

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extended period of time.” Alfred C. Cordon, P.C. v. Urban Telecomms. Corp., No. 90-2464, 1991

WL 161501, at *3 (4th Cir. Aug. 23, 1991) (quoting Gill v. Rollins Protective Servs. Co., 836 F.2d 

194, 198 (4th Cir. 1987)). Under Virginia law, while a plaintiff may seek prejudgment interest,

such awards are made at the discretion of the trial court. McLean v. Ray, 488 F. App’x 677, 683 

(4th Cir. 2012) (citing Upper Occoquan Sewage Auth. v. Blake Constr. Co., 275 Va. 41, 63-64

(2008) (citing Va. Code Ann. § 8.01-382)). The Court must “weigh the equities in a particular case 

to determine whether an award of prejudgment interest is appropriate.” Moore Bros. Co. v. Brown 

& Root, Inc., 207 F.3d 717, 727 (4th Cir. 2000) (citing McDevitt & St. Co. v. Marriott Corp., 754

F. Supp. 513, 515 (E.D. Va. 1991)). Those equities include “the desire to make the prevailing party 

whole, including compensation for its lost ability to use the money to which it was rightfully 

entitled, [versus] the losing party’s right to litigate a bona fide legal dispute.” Tech. & Supply 

Mgmt., LLC v. Johnson Controls Bldg. Automation Sys., LLC, Civ. Action No. 1:16-cv-303, 2017 

WL 3219281, at *20 (E.D. Va. July 28, 2017) (citing Wells Fargo Equip. Fin., Inc. v State Farm 

Fire & Cas. Co., 823 F. Supp. 2d 364, 366 (E.D. Va. 2011)).

Balancing the equities presented here, the Court declines to exercise its discretion to award 

James River prejudgment interest. First, James River provided no justification to support its 

request for prejudgment interest, including but not limited to why such award is appropriate here

and the basis for calculating an award of prejudgment interest. See Bickley v. Gregory, Civ. Action

No. 2:16cv131, 2016 WL 6306148, at *11 (E.D. Va. Oct. 7, 2016) (recommending denial of award 

of prejudgment interest where the plaintiff failed to offer an explanation as to the appropriateness 

of such award), report and recommendation adopted, 2016 WL 6398804, at *1 (E.D. Va. Oct. 26,

2016). In fact, during his closing argument, counsel for James River specifically requested 

postjudgment, but not prejudgment, interest. Tr. at 126. Additionally, the litigation in this matter 

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has not been overly protracted. Dickson Convenience ended operations in March 2019, and the 

trial on this matter was held approximately ten months later. Further, neither the Consignment 

Contract nor the Guaranty Agreement makes specific provision for interest of any type. Urban 

Telecomms. Corp., 1991 WL 161501, at *3 (affirming denial of prejudgment interest where 

agreement did not provide for interest). Finally, the Consignment Contract provides for late fees, 

which this Court finds adequately compensates James River for its loss of use of funds. See 

Johnson v. Washington, Civil Action No. 2:07cv204, 2008 WL 11432184, at *2 (E.D. Va. May 2,

2008) (“The award of the late fee served the same purpose as an award of prejudgment interest 

would serve; namely, to compensate [the counterclaim plaintiff] for his loss for not receiving the 

monthly payment when it was due. The court, therefore, finds that . . . it would also be inequitable 

to award [the counterclaim plaintiff] prejudgment interest.”). The Court finds that the determined 

nondischargeable debt here, which includes an award of late fees, serves to make James River 

whole and that the application of prejudgment interest is not necessary to accomplish that goal.

While Mrs. Dickson has not challenged James River’s request for prejudgment interest, such 

failure is not determinative of this issue when such decision rests in the Court’s discretion. For the 

reasons stated, the Court finds that awarding prejudgment interest in this matter is not appropriate

In contrast to prejudgment interest, “the application of post-judgment interest for all money 

judgments is mandatory.” Upper Occoquan Sewage Auth., 275 Va. at 63 (citing Va. Code Ann. § 

8.01-382; Dairyland Ins. Co. v. Douthat, 248 Va. 627, 631 (1994)). “[P]ostjudgment interest is not 

an element of damages, but is a statutory award for delay in the payment of money actually 

due.” Dairyland Ins., 248 Va. at 632 (citing Nationwide Mut. Ins. Co. v. Finley, 215 Va. 700, 702 

(1975)). Accordingly, the Court finds that postjudgment interest shall accrue at the federal 

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judgment rate set forth in 28 U.S.C. § 1961 from the date of entry of the separate Order to be 

entered consistent with the findings herein.

IV. CONCLUSION

James River has proven by preponderance of the evidence, for reasons stated herein, that 

Dickson Convenience committed fiduciary defalcation under 11 U.S.C. § 523(a)(4). For the 

reasons stated herein, by operation of the Guaranty Agreement, Mrs. Dickson is liable for the debt

related to this action, and the Court finds that Mrs. Dickson owes James River nondischargeable 

debt totaling $228,529.68 plus postjudgment interest as set forth above.

The Court will enter a separate Order consistent with the findings and conclusions in this 

Memorandum Opinion.

The Clerk is directed to transmit a copy of this Memorandum Opinion to Christian K. 

Vogel, counsel for James River Petroleum, Inc.; and Kenneth A. Moreno, counsel for Nikole Ann 

Dickson.

Entered at Norfolk in the Eastern District of Virginia on this 29th day of September, 2020.

_________________________________

STEPHEN C. ST. JOHN

United States Bankruptcy Judge

Sep 29 2020 /s/ Stephen C St-John

Entered On Docket: Sep 29, 2020

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