# U ni t e d S t a t e s B a n kr u p t c y A p p e ll a t e P a n e l

For the Eig hth Circu it

_ _ _ _ __ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _

No . 2 0 -6 0 20

_ _ _ _ __ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _

In re: J ay Do u g l as Bu ch an an , al s o k n o w n as J ay Bu ch an an

, al s o k n own as J ay

D. Bu ch an an ; Lo ri An n Bu ch an an

, al s o k n o wn

as Lo ri A. Bu ch an an , al s o k n o wn as Lo ri Bu ch an an

Deb to r s

------------------------------

Lu n d -Ro s s Co n s t ru ct o rs

, In c.

Pl a in t i f f - Ap p el l an t

v

.

J ay Do u g l as Bu ch an an ; Lo ri An n Bu ch an an

Def en d a n t s - Ap p el l ees

_ __ _ _ __ _ __ _ _

Ap p eal fro m

Un i t ed St at es Ban k ru p t cy Co u rt

fo r t h e Di s t ri ct o f Neb ras k a - Om ah a

_ __ _ _ __ _ __ _ _

Su b m i t t ed : Feb ru ary

1 8 , 2 02 1

Fi l ed : Ap ri l 2 , 2 0 2 1

_ __ _ _ __ _ __ _ _

Befo re NAIL, Ch ief J u d g e, SCHERM ER an d SHODEEN, Ban kru p t cy J u d g es

.

_ __ _ _ __ _ __ _ _NAIL, Ch i ef J u d ge.

Lu n d -Ro s s Co n s t ru ct ors

, In c. ap p eal s t h e b a n k r u p t cy co u rt ' s s u m m ary

ju d g m en t i n fav or o f Deb t o rs J ay Do u g l as Bu ch an an a n d Lo ri An n Bu ch an an

reg ard i n g Lu n d-Ro s s 's co m p lai n t t o d et erm in e t h e di sch arg eab i l it y o f a deb t it al l eg es

Deb to rs owe. 1 W e h av e ju ri s d i ct i o n ov er t h i s ap p eal p u rs uan t t o 2 8 U .S.C. § 1 5 8 (b ).

W e affi rm

.

BACKGROUND

Deb t o rs fi l ed a ch ap t er 7 p et i t i o n

. Deb t o rs i n cl ud ed " Lu n d Ro s s Co n s t ru ct o rs "

o n t hei r s c h e d ul e o f cred it o rs h o l d i n g u n secu red cl ai m s an d des cri b ed t h e cl ai m as

co n ti n g en t

, u n l i q u i dat ed

, d i s p u t ed

, an d a " Co rp o rat e De b t ; No t i ce Pu rp o s e On l y

.

Laws u i t

- CI 1 9 -9 2 7 0 (Do u g l as Co u nt y Di s t ri ct Co u rt

, NE)[.] " D e b t o r s al s o

referen ced Lu n d -Ro s s o n t h ei r s ch ed u l e of co d eb t ors

, i n d i cat i n g Si g n at ure El ect ri c,

LLC (" Si g n a t u r e E l ect ri c" ) was a co d eb t o r o n t he cl ai m h el d b y " L un d Ro ss

Co n s t ru ct o rs [.] " In t h ei r s t at em en t o f fi n an ci al affai rs

, Deb t o rs d i scl o s ed Lu n d -Ro ss

h ad a p en d i n g s tat e co u rt l aws u i t ag ai n s t Deb to rs a n d Si g n at u re El ect ri c reg ard i n g

" Co n t ract Di s p u t es [.] "

Lu n d -Ro s s t im el y co m

m en ced a n o n d i s ch arg eab i l i t y a c t i on ag ai n st Deb t o rs

u n d er 1 1 U.S.C. § 52 3(a)(2 )(A). Lu n d -Ro s s s tat ed Deb t ors were t h e s o l e o wn ers o f

Si g n at u re El ect ri c, i t h ad h i red Si g n at ure El ect ri c t o do wo rk o n v ari o u s p ro ject s fo r

wh i ch Lu n d -Ro s s was t h e g en eral co n t ract o r

, an d Si g n at u re El ect ri c h ad em p l o y ed

o r s u b co n t ract ed s o m e o f t h e wo rk o r s u p p l i es t o o t h er en t i t i es . Lu n d -Ro s s al l eg ed

Si g n at u re El ect ri c an d Deb t o rs h ad

, wh en r e q u es t i n g p ay m en t fro m Lu n d -Ro s s

,

u n t ru t h fu l l y s t at ed

, vi a li en wai v ers

, t h at a l l s u b co n tract o rs en gag ed b y Si g n at u re

El ect ri c h ad b een " fu l l y s at i s fi ed " fo r m at eri al s an d l ab or t h ey h ad p ro v i d ed , wh i ch

1 Ho n

. Th o m as L. Sal ad i no

, Ch i ef J u d g e, U n i t ed St at es Ban kru p t cy Co u rt fo r

t h e Di s t ri ct o f Neb ras k a.

-2

-res u l ted i n s u b st an t i al l i en s b ei n g p l aced o n Lu n d -Ro s s 's v ari o u s p ro ject s

. It wan t ed

t h e v al u e o f t h o s e l i en s

, wh i ch Lu n d -Ro s s h ad t o cl ea r

, p l u s r el at ed co s t s

, d ecl ared

n o n d i s ch arg eab l e

. L u n d -Ro s s d i d n o t referen ce i n i t s co m p l ai n t an y ap p l i cab l e

n o n b an k ru p t cy st at u t e or cas e l aw t h at wo u l d m ak e Deb to rs

, u n der t h e fact s

p res en t ed

, p ers o n al l y l iab l e to Lu n d -Ro s s. Deb t o rs t im el y an s wered th e co m p l ai n t

.

Aft er co m

m en ci n g t h e n o n d i s ch arg eab i l i t y ad v ers ary p ro ceed i n g ag ai n s t

Deb to rs

, Lu n d -Ro s s fi led an u n s ecu red p ro o f o f cl ai m fo r $ 6 00 ,0 4 3 .6 4 i n Deb t o rs '

b an kru p t cy cas e. On t h e cl ai m fo rm

, Lu n d-Ro s s s t at ed t h e b a s i s f o r i t s cl ai m w as :

" Cl ai m s /l i en s as s ert ed fo r am o u n ts u n p ai d t o el ec t r i c a l s u p p l i ers [.] " Lu n d -Ro ss

at t ach ed t o i t s p ro o f o f cl ai m an acco un t i n g o f t h e cl ai m t h a t w a s h e ad ed " D & J

El ect ri c," a b u s i n es s nam e u sed b y Si g n at u re E l ect ri c. L u n d -Ro s s al s o at t ach ed t o i t s

p ro o f o f cl ai m

s ev eral l i en st at em en t s

. Al l l is t ed ei th er Si g n at u re El ect ri c o r D & J

El ect ri c a s t h e co n t ract i n g p art y ; no n e l i s t ed Deb t ors

. 2 Al l t h e i n v oi ces at t ach ed to

t h e l ien s t at em en t s l is t ed ei t h er Si g n at ure El ect ri c o r D & J El ect ri c as t h e b i l l ed

p art y ; n o ne l i s t ed Deb t o rs

.

Th e ch ap t er 7 t ru s t ee o b ject ed to Lu n d -Ro s s 's an d s ev era l o t h er s i m i larl y

s i tu at ed cred i t ors ' cl ai m s . He al l eg ed :

[ E]a ch o f t h e s ai d Cl ai m s i s l i s t ed i n Deb t o rs ' Sch ed u l e s

ag ai n s t a co rp or a te or n o n -co n s u m er d eb t ag ai n st Si g nat u re

E l ect ri c, LLC d / b / a D & J El ect ri c an d each o f t h e s a i d

Cl ai m s i s p ro p ert y [s i c] a cl ai m ag ai n s t Si g n at u re El ect ri c,

LLC d / b/ a D & J El ect ri c. No n e of th e l i st ed cl ai m s

i n cl u d es an y ev i d en ce o f a p ers o n al g u aran t ee b y Deb t o rs

.

2 In Ech o Gro u p

, In c.'s at tach ed m ech an i c's l ien fo r $ 31 ,0 6 4

. 2 2, Lu n d -Ro s s was

i d en t i fi ed as t h e g en eral co n t ract o r. W e di d n o t s ee in t h e l i en s t at em en t i t s el f a

referen ce t o ei t h er Si g nat u re El ect ri c o r D & J El ect ri c. Ho wev er, an " Ex h i b i t C" to

Ech o Gro u p

, In c.'s m ech an ic's l i en i d en t i fi ed Si gn at u re El ect ri c, d b a D & J El ect ri c,

as t h e en t i t y

recei v i n g t h e m at eri al s o r l ab o r.

-3

-Th e b an k ru p t cy co u rt h el d a heari n g aft er o n e o f t h e affect ed cred i t o rs res p o n d ed to

t h e t ru s tee's o b

ject i o n. 3 Th e b an k ru p t cy co u rt s us t ai n ed t h e t ru s t ee's o b ject i o n t o t h e

res p o n d in g cred i t o r's cl ai m an d en t ered an o ral d eci s i o n. Th e b an k ru p t cy co u rt al s o

s u s t ai n ed t he t ru s t ee's o b

ject i o n t o t h e o t h er cl ai m s

, i n cl ud i n g Lu n d -Ro s s ' s

, b u t d id

n o t d i s cu s s each i n d i vi d u al l y . No ap p eal was t ak en

.

In t h e p en d i n g ad v ers a r y p r o c eed i n g

, Lu n d -Ro s s an d Deb t o rs fi led a jo i nt

p rel i m i nary p re-t ri al st at em en t

. It s u m m ari l y st at ed Deb to rs ' " d efen ses o r o b ject i o n s "

i n cl u d ed Deb t o rs ' as s ert i o n s th at : al l act i o n s an d rep res e n t at i on s were b et ween Lu n d

Ro s s an d Si g n at ure El ect ri c, n ot Deb t ors ; t h e d eb t al l eg ed b y Lu n d -Ro s s was o wed

b y Si g n at u re El ect ri c, n o t D eb t o rs ; a n d t h e r e w as i n s u ffi ci en t ev id en ce t o s u p p o rt

l i ft i n g t h e co rp orat e v ei l

. In t hei r " s u m m ary of t h e u n co n t ro vert ed fact s ," th e p art i es

s t at ed Lu n d -Ro s s h ad ob t ai n ed a ju d g m en t in st at e c o u r t a g a i n s t Si gn at u re El ect ri c

fo r $ 6 00 ,0 43 .6 4

. Th ere is n o d i s p u t e t h e s tat e co u rt ju d g m en t ag a i n s t Si g n at u re

El ect ri c was b y

d efau l t.

3 Th e b an k ru p t cy co u rt recei v ed arg u m en t

, affi d av i ts

, an d cert ai n d o cu m en t s

al read y i n t h e cas e fi le reg ard in g t h e res p o n d i n g cred i t o r's cl ai m

. Th e res p o n d i n g

cred i t o r ack n o wl ed g ed i t d i d n o t ho l d a p e r s o n a l g u aran ty b y Deb t o rs

, b ut i t

co n ten d ed Deb t o rs becam e p ers o n al l y re s p o n s i bl e fo r Si gn at u re El ect ri c's d eb t

b ecau s e Deb t o rs fai l e d to ab i d e b y cert ai n s t at e l aws reg ard i n g t h e op erat i o n o f a

l i m i ted l i ab i l i t y co m

p an y

. Th e res p o n d i n g cred i t o r ack no wl ed g ed a st at e co u rt act i o n

wo u l d b e n eed ed t o es t ab l i s h Deb t o rs ' p ers o nal l i ab i l it y

. Th e t ru s t ee arg u ed

, i n p art

, t h e res p o n di n g cred i t o r h ad n o t t i m el y t ak en an y s tep s t o es t ab li s h i t had a cl ai m

ag ai n s t Deb to rs

. Th e ban k ru p t cy co u rt ack no wl ed g ed t h e res p on d in g cred i t o r's

arg u m en t t h at it m ay h av e a cl ai m ag ai n s t D eb t o rs un d er s t at e l aw, bu t s u s tai n ed t h e

t ru s t ee's o bject i o n

. T h e b an k ru p t cy co u rt n o ted Deb t ors h ad sch ed u l ed t h e

res p o n d in g cred it or's cl ai m as d i s p u t ed an d t h e res p o n d i n g cred i to r's p ro o f o f cl ai m

was s u p po rt ed b y i n vo i ces d i rect ed o n ly t o D & J El ect ri c an d d i d n ot refer t o Deb t o rs

p ers o n al l y

.

-4

-Deb t o rs m o v ed fo r s u m m ary ju d g m e n t i n th e ad vers ary pro ceed i n g. In t h ei r

s u p p ort i n g b ri ef, Deb t ors arg u ed t he u n d i s p u t ed reco rd s h ows th e d eb t t o Lu n d -Ro ss

was o wed by Si g n at u re El ect ri c o n ly an d L u n d -Ro s s ' s rep res en t at i v es were aware o f

Si g n at u re El ect ri c's " fi nan ci al s h o rt co m i ng s an d n eed fo r t i m el y p ay m en t s i n o rd er

t o pay pas t o b l i g at i on s t o su p p l iers ," s o th ere was n o in t en t t o d ecei v e Lu n d-Ro s s " as

t o t h e t ru e s t at e o f s u p p l ier pay m en t s at an y t i m e." Deb to rs al so arg u ed t h ere was n o

rel i an ce by Lu nd -Ro s s o n t h e l i en wai v ers b ecau s e p ro g res s p ay m en t s were m ad e by

Lu n d-Ro s s p ri o r t o i t s recei vi n g co m p l et ed l i en wai v ers

. As t o p i erci ng t h e co rp o rat e

v ei l

, D eb t o rs arg u ed t h ey d i d n ot d i v ert fo r p ers o n al u s e t h e fu n ds Si g nat u re El ect ri c

recei v ed fo r i t s wo rk fro m L u n d -Ro ss a n d t h ere was n o ev id en ce Deb t o rs u s ed

Si g n at u re El ect ri c as an al t er eg o t o co n d u ct p ers o n al b u s i n es s o r t h at t h e l i m i t ed

l i ab i l i t y co m

p an y was a " m ere s h e l l

. " Deb t o rs referen ced t h e b an kru p t cy co u rt 's

earlie r or de r disa l l o w i n g Lu n d -Ro s s's cl ai m

, bu t i n t h ei r s u m m ary ju d g m en t arg u m en t

Deb to rs d i d n o t rel y o n an y p recl u s i v e effect t h e o rd er d i s al l o wi n g L u n d -Ro s s 's cl ai m

m i g h t i m p o s e o r i m

p art

.

Lu n d -Ro s s res i s t ed Deb t o rs ' s u m m a r y ju d g m en t m o ti o n

. In it s s u p p o rt i n g

b ri ef, Lu n d -Ro s s s ai d i t was a ware Si g n at u re El ect ri c h ad reach ed t h e l i m i t s o f i t s

b o n d i n g cap aci t y

, b u t i t s ai d i t h ad n o o t h er co m m u n i cat i o n s wi t h Si g nat u re El ect ri c

o r D eb t o rs co n cern i n g Si g n at u re El ect ri c's fi nan ci al co n di t i o n p ri o r t o Si g n at u re

El ect ri c's ceas i n g bu s in es s

. Lu n d -Ro s s s t at ed to r e c e i ve pr ogr e ss pa y m e nts, S igna

tu re

E l e c t ri c h ad t o ap p l y fo r p ay m en t u s i n g a p art i cu lar fo rm

, s u pp l y s u p p o rt i n g

d o cu m en t a t i o n

, an d p ro v i d e a co m p l et ed l i en wai ver fo r t h e p rev i o u s m o n t h 's

p ro g res s p ay m en t

. L u n d -Ro s s ad m i tt ed i t d i d n o t h o l d per s o n a l g u aran t i es fro m

Deb to rs

, b u t al l ud ed t o p ers o n a l " warran t i es ." It arg u ed Si g nat u re E lect ri c h ad

,

co n trary to t h e l ien wai v ers p ro v i d ed

, fai l ed t o p ay i t s cred i t o rs fo r s i x m o nt h s b efo re

Deb to rs ad v i s ed Lu n d -Ro s s Si g n at u re El ect ri c w as go i ng o u t o f b u s i n es s

. W i th

l i m i ted d i s cu s si o n

, Lu n d-Ro s s arg u ed i t di d n o t n eed t o p i erce t he co rp o rat e v ei l to

as s ert a cl ai m ag ai n st Deb t o rs b u t was i ns t ead rel y i n g o n D e b t o rs ' al l eg ed fal s e

s t at em en t s i n Si g n at u re E l ect ri c's l i en wai v ers to creat e Deb to rs ' p ers o n al l i ab i li t y

.

-5

-Lu n d -Ro s s ci t ed GT Co n t r a ct i n g Co r p

. v. Og d en ( In re Og den ), Ban k r. No

. 1 4

-

0 0 2 8 6 -5 -DM W

, Ad v

. No

. 1 4 -0 0 0 0 5 -5 -DM W

, 2 01 5 W L 9 41 2 7 4 6 (Ban k r. E.D.N.C.

Dec. 2 1

, 2 0 1 5 ), an d RW

S Bu i l d i n g Co

. v. Fr eema n

, No

. 0 4CA4 0

, 2 0 0 5 W L 3 4 4 6 3 2 0

(Oh io Ct

. Ap p. No v

. 2 3

, 2 00 5 ), fo r t h e p ro p o s i t i o n t h at a co rp o rat i o n 's p ri nci p al m ay

b e pers o n al l y l i ab l e fo r frau d ul en t act s

. In t h e n o n d i sch arg eab il i t y a c t i o n u n d er

1 1 U.S.C. § 5 2 3 (a)(4 ) i n Og d en

, at i s s u e was t h e p recl u s iv e effect o f a s t at e co u rt

ju d g m en t t h e cred i t o r had o b t ai n ed earl i er ag ai n s t t h e d e b t o r

– a co rp orat io n 's ch i ef

ex ecu t i v e offi cer– reg ard i ng t h e d eb t or's vi o l at i o n o f p ro v i s i o n s o f t h e M ary l an d

Co n s t ru ct i o n Tru s t St at u t e. In Fr eema n

, t h e Oh i o ap pel l at e co u rt affi rm ed t h e t ri al

co u rt 's s u m

m ary ju d g m en t fo r t h e p l ai nt i ff-g en eral co n t ract o r, h o l d in g th e t ri al co u rt

h ad co rrect l y h el d cert ai n d efen s es o f es t o p pel an d wai v er rai s ed b y t he d efe n d an t

s u b co n t ract o r were n o t ap p li cab l e. Th e s u b co n t ract o r's p ri n ci p al h ad b e e n h el d

p ers o n al l y l i ab l e, al o n g wi t h h i s co m p an y

, u nd er Oh i o 's R.C. § 1 7 0 1.9 3

. Lu n d -Ro s s

, ju s t as in i t s co m

p l ai n t

, h o wev er, d id n o t i d en ti fy in i t s s u m m ary j u d gm en t b ri ef an y

n o n b an k ru p t cy l aw ap p l i cab l e t o Deb t o rs th at wo u ld

, u nd er t h e fact s p res en t ed

,

ren d er t h em

p ers o n al ly

l i ab l e t o Lu n d -Ro s s

.

Aft er t ak in g Deb t o rs ' s u m m a r y ju d g m en t m o t i on un d er ad v i s em en t

, t h e

b an kru p t cy

co u rt en t ered d o ck et t ex t t h at s tat ed Lu n d -Ro s s "h as n o t s h o w n t h at t h e

d eb to rs owe a deb t t o Lu n d-Ro s s

, s o t h e d eb t o rs ' m o t i o n fo r s u m m ary ju d g m en t wi l l

b e g ran t ed an d t he co m

pl ai n t s eek i n g t o ex cep t t h e al l eg ed d eb t fro m d i s ch arg e u n d er

§ 5 2 3(a)(2 )(A) wi l l b e d is m i s s ed ." In an at t en d an t wri t ten o rd er, t h e b an k ru pt cy co u rt

d et erm i n ed t h e fi rs t an al y s i s i t n eed ed t o p erfo rm was wh et h er Deb t o rs o w ed a v al id

d eb t to Lu n d -Ro s s

. Th e b an k ru p tcy co u rt s t at ed Lu nd -Ro s s h ad n ot p l ed t h e

co rp o rat e v ei l s h o u ld b e p i erced an d h ad n o t o t h erwi s e es t ab l i s hed u n d er ap p l i cab l e

n o n b an k ru p t cy

l aw h o w Deb to rs are p ers o n al l y l i ab l e t o Lu n d-Ro s s

.

-6

-Lu n d -Ro s s t i m el y ap peal ed t h e b an k ru p tcy co u rt ' s s u m m ary ju d g m en t i n fav o r

o f Deb t o rs an d i d en t i fi ed fi ve i s s u es

, 4 wh i ch m ay b e co n d en s ed t o o n e: In g ran t i n g

s u m m ary ju d g m en t fo r Deb t o rs

, d i d t h e b an k ru p t cy co urt err in fi n d i n g Lu n d -Ro ss

fai l ed t o es t ab l i s h o n t h e reco rd Deb t o rs were p ers o n al l y li ab l e fo r th e d eb t o wed by

Si g n at u re El ect ri c.

In i t s o p en i ng b ri ef, Lu n d-Ro s s s t at es i t was as k i n g t h e b an k ru p tcy co u rt i n t h e

ad v ers ary p ro ceed i n g t o d et erm i n e it h el d a cl ai m ag ai n s t Deb t o rs p ers o n al l y an d t h at

4 Th e fi v e i s s u es l is t ed b y Lu n d -Ro s s were:

1

. Di d th e Ba n k r u p t cy Co u rt err i n g ran t i n g s u m m ary ju d g m en t t o Defen d an ts J ay D. Bu ch a n a n an d Lo ri

A. Bu ch an an ?

2

. Di d t h e Ban k ru p t cy Co urt err i n d e t e r m i n i n g t h a t

Pl ai n t i ff's cl ai m was a co m p an y [d eb t ] o f Si g nat u re

El ect ri c's an d n o t a p ers on al d eb t o f Defen d an t s ?

3

. Di d t h e B a n k r u p t c y Co u rt err i n d et erm i n i n g t hat

Pl ai n t i f f can n o t es t ab l i s h o n t h e reco rd p res en ted

t h a t Defen d an t s are li ab l e fo r t h e d eb t o wed b y

Si g n at ure El ect ri c?

4

. Di d t h e Ban k ru p t c y C o u r t e r r i n d et erm i n i n g t hat

Pl ai n t i ff h as n o t es t ab l i s h ed t h at Defen d an t s are

l i ab l e o n an en fo rceab le o b li g at i o n u n d er ap pl i cab l e

l aw?

5

. Di d t h e Ban k ru p t cy Co urt err i n d e t e r m i n i n g t hat

Pl ai n t i ff h as n o t d em on s t rat ed h o w Defen d an ts can

b e h el d p ers o n al l y l i ab l e fo r Si gn at u re El ect ri c's

d eb t s ?

-7

-t h e cl ai m was ex cep t ed fro m di s ch arg e p u rs uan t t o 1 1 U.S.C. § 5 2 3 (a)(2 )( A )

. 5 I t

i n d i cat es i t m a d e t h i s f

o ru m ch o i ce aft er D eb t o rs ' b an kru p t cy h al t ed it s s tat e co u rt

act i on ag ai n s t Deb t o rs p ers o n al ly

. 6 I t arg u es t h e b an k ru p t cy co u rt erro n eo u s l y

i g n o red s t at e l aw, Ei g h t h Ci rcu i t p reced en t

, an d o n e o f t h e b an k ru p t cy co u rt 's p ri o r

d eci s i o n s i n wh i ch a co rp orat e o ffi cer w as hel d p ers on al l y l i ab l e fo r frau d u l en t act s

an d s t at em en ts m ad e in fu rt h eran ce o f co rp o rat e b u s i n es s

. Lu n d -Ro s s fu rt h er arg u es

t h e fact t h at it h o l d s a cl ai m a g a i n s t S i g nat u re El ect ri c i s no t a b arri er t o i t s

es t ab l i s h in g Deb t ors al s o o we i t a d eb t

. Lu n d -Ro ss s t at es it n eed n o t pi erce t h e

co rp o rat e v ei l to reach Deb t o rs an d ci t es

, fo r t h e fi rs t t i m e, an earl i er d eci s i o n b y t h e

b an kru p t cy co urt i n A GP G r a i n Co o p v. W h i t e ( I n re W h i t e ), 3 1 5 B.R. 7 4 1 (Ban k r.

D. Neb

. 2 0 04 ) (M ah o n ey

, C.J .), an d an o pi n io n b y t h e Neb ras k a Co u rt o f Ap p eal s in

Hu f fma n v. Po o re

, 5 6 9 N.W .2 d 5 4 9

, 5 5 6 -5 7 (Neb

. Ct

. Ap p

. 1 99 7 ), fo r au t ho ri t y t h at

a t o rt act i o n m ay be b ro u g h t i n Neb ras k a d i r ect l y ag ai n s t a co rp o rat e o ffi cer o r

d i rect o r i f t h e el em en t s o f t h e t o rt are s at i s fi ed

.

In t h ei r ap p eal b ri ef, Deb t o rs fo rem o s t pro p o u nd r es j u d ica t a an d arg u e Lu n d

Ro s s s ho u l d h av e co nt es t ed t h e t ru s t ee's o b ject i on t o i t s cl ai m

o n t he g ro u n d s i t d id

n o t h o ld a p ers o n al cl ai m ag ai n s t Deb t o rs

.

In i t s r ep l y b ri ef, Lu n d -Ro s s ch al l en g es Deb t o rs ' rel i an ce o n r es j u d i ca ta

b ecau s e i t s ad v ers ary p ro ceed i ng was co m m en ced b efo re Lu n d-Ro ss fi l ed i t s p ro o f

o f c l a i m a n d befo re th e t ru s t ee o b ject ed t o t h e cl ai m

, b ecau s e 1 1 U.S.C. § 5 0 2 (j)

al l o ws a cl ai m t o b e reco n s i d ered at an y t i m e, an d b ecau se Deb t o rs d i d no t rai s e r es

j u d i ca t a as an affi rm at i v e d efen s e b efo re t h e b an k ru p t cy co u rt

. Lu nd

- R o s s al s o

5 W h il e F e d

. R

. B an k r. P. 3 0 0 7 (b ) p ro v i d es an ob ject io n t o a cl ai m m ay b e

i n cl u d ed i n an ad v ers ary p ro ceed i ng

, we no t e t h e fed eral ru l es o f b an k ru p t cy

p ro ced ure d o n o t co n t em

p l at e a cl ai m m ay b e fi l ed t h ro u g h an ad v ers ary p ro ceed i n g.

S ee Fed . Rs . Ban k r. P. 3 0 01 (a), 3 0 02 , an d 5 0 0 5 (a).

6 Lu n d -Ro s s di d n o t seek rel ief fro m t h e au t om at i c st ay fr o m t h e b an k ru p t cy

co u rt t o co nt i n u e i t s s t at e co u rt act i o n ag ai n s t Deb t ors

.

-8

-arg u es th e cl ai m s o bject i o n p r o c e s s d i d n o t p recl u de i t s n o n d is ch arg eab i l i t y act i o n

b ecau s e t h e cl ai m s p ro ces s o nl y d et erm i n ed Deb t o rs h ad n o t p ers o n al l y g u aran t eed

t h e d eb t t o L u n d -Ro ss an d i t was n o t rel y i n g o n a p ers o n al g uaran t y t o es t ab l i s h

Deb to rs ' l i ab i l i t y

.

STANDARD OF REVIEW

A b an k ru p tcy co u rt 's g ran t o f s u m m ary ju d g m en t i s rev i ewe d d e n o vo

.

Mwes i g wa v. DAP, In c.

, 6 3 7 F.3 d 8 8 4, 8 8 7 (8 t h Ci r. 2 01 1 ) (ci t i n g An der s o n v.

Du r ha m D & M, L.L.C.

, 6 06 F.3 d 5 1 3

, 5 18 (8 t h Ci r. 2 01 0 )). W e wi l l affi rm i f " t h ere

i s n o g en u i n e d i s p u t e as t o an y m at eri al fact an d t h e m o v an t i s en ti t l ed t o ju d g m en t

as a m at t er o f law." Fed

. R. Ci v

. P. 5 6 (a). Th e n o nm o v i n g p art y " i s en t i t l ed t o al l

rea s o n ab le i n feren ces

– t h o s e t h at can b e d rawn fro m t h e ev id en ce wi t h o u t res o rt to

s p ecu l at i o n ." Sp r en g er v. F ed

. H o me Lo a n Ba n k of

Des Mo i n es

, 25 3 F.3 d 11 0 6

, 1 1 1 0

(8 t h Ci r. 2 0 0 1 ) (i n t ern al ci t at i o n an d qu o t at i o n m ark s o m i tt ed ); B a l l v

. Ci t y of

Li n co l n

, Neb r a s ka

, 8 7 0 F.3 d 72 2

, 7 2 7 (8 t h Ci r. 2 0 1 7 ) (t h e pl ai n t i ff m u s t su b s t an t i at e

i t s al l eg at i on s wi th s uf

f i ci en t p ro b at i v e ev i d en ce t h at wo u l d p erm i t t he b an k ru p t cy

co u rt t o fi n d i n i ts fav o r wi t h o u t res o rt i n g t o s p ecu l at i o n o r co n ject u re).

DISCUSSION

Sect io n 5 2 3 (a) p ro v i d es cert ai n " d e b t s " are ex cep t ed fro m an i n d i v i d u al

d eb to r's d i s ch arg e. A " deb t " i s a " l i ab i l i t y o n a cl a i m

. " 1 1 U

. S.C. § 1 0 1 (1 2 ). A

" cl ai m " i s a:

(A) ri g h t t o p ay m en t

, wh et h er o r n o t s u ch ri g h t i s red u ced

t o ju dg m en t

, l i q u i d at ed

, u n l i q u i d at ed

, fi x ed

, co n t i n g en t

,

m a t ur e d, unm a t

u red

, d i sp u t ed

, u nd i s p u t ed

, l eg al

, e quita ble

,

s ecu red

, o r u ns ecu red ; o r

-9

-(B) ri g h t t o an eq u i t ab le rem ed y fo r b reach of p erfo rm an ce

i f s u ch b reach g i v es ri s e t o a ri g h t t o p ay m en t, wh et h er o r

n ot s u c h r i g h t to an eq u it ab le rem ed y i s red u ced t o ju d g m en t

, fi x ed

, co n tinge nt, m a tur e d, unm a tur e d

, d is p u t ed

,

u nd i s p ut ed , s ecu red , o r u n s ecu red

.

1 1 U.S.C. § 1 0 1 (5 ). St at ed an o t h er way

, a d eb t i s a l i ab il i ty o n an ob l i g at i on t o p ay

m o ney

. Co u n t

y o f S an Ma t eo , Ca l i

f or n i a v. Pea b o dy En er

g y Co r p

. ( In r e Pea b o d

y

En er g y Co r p

. ), 9 5 8 F.3 d 7 1 7 , 7 2 4 (8 t h Ci r. 2 0 2 0) (i n t ern al q uo t at i o n o m i t t ed ).

Am o n g t h e d eb t s t h at m ay b e ex cep t ed fro m d i s ch arg e i n a ch ap t er 7 cas e are

d eb ts "fo r m o n ey

, p ro p ert y

, s erv i ces

, o r an ex t en s i o n

, ren ewal

, or r e fi n an ci n g o f

cred i t , t o t h e ex t en t o b t ai n ed b y . . . fal s e p ret en s es , a fal s e rep res en t at i on , o r act u al

frau d, ot h er t h an a s tat em en t res p ect i n g t h e deb t o r's o r an in s i d er's fi n an ci al

co n di t i o n [.] " 1 1 U.S.C. § 52 3 (a)(2 )(A) an d § 7 2 7 (b ). W hi l e fed eral ban k ru p t cy l aw

g o v ern s wh et h er a p art i cu l ar d eb t s h o u l d b e ex cep t ed fro m d i s ch arg e, t h e ex i s t en ce

o f t h e d eb t i t s el f i s d et erm i n ed u n d er no n b an k ru p t cy l aw. Gr o g a n v. Ga rn er

, 4 9 8

U.S. 2 7 9

, 2 8 3-8 4 (1 9 9 1) (" T h e v al i d i t y o f a cred i to r's cl ai m i s d et erm i n ed b y ru l es o f

s t at e l aw." ) (ci t es t h e r e i n o m i t t ed ); Mi d l a n d Fu n d i n g

, LLC v. Jo h n s on

, 1 3 7 S.Ct

.

1 4 0 7

, 1 4 1 1 ( 2 0 1 7 ) (s t at e l aw u s u al l y d et erm i n es wh et h er a p ers o n h as a ri g h t to

p ay m en t ) 7 ; Ka

p's Co n s tr u ct i on v. Cr u z -Br ewer ( In r e Cr u z -Br ewer ), 6 0 9 B.R. 1

, 7

(Ban k r. M .D. Pa. 2 0 1 9 ) (a no n d i s ch arg eab i li t y act i o n p res en t s t wo q u es ti o n s : h as t h e

cred i t o r p l ed an en fo rceab l e o b l i g at i o n ag ai n s t th e d eb t o r u n d er s t at e l aw an d

, i f s o,

i s t hat d eb t n o nd i s ch arg eab l e).

In t h i s ad v ers ary p ro ceed i n g

, t h e b an k ru p t cy co u rt d i d no t f i n d a n y ma t er i al

fact s i n d i s p u t e reg ard i n g t h e fi rs t q u es t i o n b efo re i t –wh et her Lu n d -Ro s s is o wed a

d eb t b y D eb t ors

. H av i n g det erm i n ed Lu n d -Ro s s d i d n o t es t ab li s h a l eg al b as i s fo r a

7 Th i s cas e d i ffers fro m M i d l a n d Fu n di n g

, i n t h at th e i s s u e in t h i s cas e i s n ot

wh et h er a d eb t o wed b y Deb t o rs t o Lu n d -Ro s s i s t i m e-b arred or o t h erwi s e

u n en fo rceab l e. Th e i s s u e h ere i s wh et h er s u ch a d eb t ex i s t s at al l.

-1 0

-reco v ery ag ai n s t Deb t o rs p ers o nal l y

, t h e b an k ru p t cy co u rt h el d Deb t o rs were en t i t l ed

t o s u m m ary ju d g m en t a s a m at t er o f l aw. Affo rd i n g Lu n d-Ro ss al l reas o n ab l e

i n feren ces , we s ee n o erro r i n t h e b an k ru p t cy co u rt 's d eci s i on

.

W h i l e t h e b an k ru p t cy co u rt ack n o w l ed g ed i t h ad earl i er s u st ai ned t h e ch ap t er 7

t r u s t e e ' s o b

j e ct i on t o Lu n d -Ro s s 's cl ai m

, i t d i d n o t rel y o n th at p ri o r ru l i n g i n i t s

s u m m ary ju d g m en t d eci si o n i n Lu n d -Ro s s 's n on d i s ch arg eab i li t y act i o n

. 8 In st ead

, t h e

b an kru p t cy co u rt no t ed Lu n d -Ro s s h ad n o t p l ed t h e co rp o rat e v ei l s h o u ld b e p i erced

.
Th e b an k ru p t cy co u rt ci t ed a Neb ras k a d eci s i o n t h at st at es

, i n a d i s cu s s i o n reg ard i n g

p i erci n g t h e co rp o rat e v ei l

, a m em b er o r m an ag er o f a li m i ted l iab i l i t y co m p an y m ay

b e h el d p ers o n al l y res p o n s i b l e fo r an o bl i g at i o n o f th e co m p a n y " o n l y wh ere t h e

co m p an y h as been u s ed t o co m m i t frau d

, v i o l at e a l eg al d u ty

, o r p erp et rat e a

d i s h o n es t o r u n

ju s t act i n co n trav en t i o n o f t h e ri g h t s o f an o t h er." Th o ma s & Th o ma s

Co u r t Rep o r t er

s, L.L.C. v. S

wi t z er

, 8 1 0 N.W .2 d 6 7 7

, 6 8 5 (Neb

. 20 1 2 )

. Th e

b a n k ru p t cy co u rt d i st i n g u i s h ed t h e Og den d eci si o n an d t he Fr eema n o p in i o n t h at

Lu n d-Ro s s had c i t ed

, n o t i n g each " i n v ol ved st at e l aws [i n o t h er ju ri sd i ct i o n s ]

ex p li ci t l y h o l d in g o ffi cers an d ag en t s o f co n t ra c tor s lia bl e fo r m ak i n g fal s e st at em en t s

o r v i o l at i n g fi d u ci ary

res po ns i bi l i t i es ." Th e b an k ru pt cy co u rt t h en h el d :

Th ere is n o ev id en ce b efo re t h i s co u rt t hat [Deb t o rs ] h av e

b een accu s ed o f o r h el d res p o ns i b l e fo r v i ol at i n g a s i m i l ar

l aw. . . .

. . . .

. . . W h i l e [Lu n d -Ro s s] cl ai m s [Deb to r J ay

Bu ch an an ] k n o wi n g l y an d in t en t i o nal l y m ad e frau du l en t

8 Th e d i s sen t d i s ag rees

. T o t h e ex t en t th e b an k ru p t cy co u rt m ay h av e rel i ed o n

i t s earl i er d eci si o n di s al l o wi n g Lu n d -Ro s s's cl ai m i n Deb t o rs ' at t en d an t b an k ru p t cy

cas e, w e s ee n o ab u s e i n t he co u rt 's d i s cret i on

. Al l i s o n v. Cen t r i s Fed

. Cr ed i t Un i o n ( In r e Tr i-S t at e Fi na n ci al

, LLC ), 8 8 5 F.3 d 5 2 8

, 5 3 3 (8 t h Ci r. 2 0 1 8 ) (l aw o f t h e cas e

i s a d o ct ri ne o f di s cret io n ; a b an k ru p tcy c o u r t ' s deci s i o n wh et h er t o ap p l y i t i s

rev i ewed fo r an ab u s e o f d i s cret i o n ).

-1 1

-rep res en t at i o ns t h at p ro xi m at el y cau s ed i t d am ag e, [Lu n d

Ro s s ] h as no t d em o n s t rat ed h o w [D e b t o rs ] can be h el d

p ers o n al l y

l i ab l e fo r t h ei r b u si nes s 's d eb t s

.

Lu n d -Ro s s Co n s t r u ct o r

s

, In c. v. Bu ch a n a n (

In r e Bu ch a n a n ), Ban k r. No

. 1 9 -8 1 7 9 3

-
TLS, Ad v . No . A2 0 -8 0 0 2 -TLS, s l i p o p . at 7 -8 (Ban k r. D. Neb . No v. 1 2 , 2 0 2 0 ).

Li k e t h e b an k ru p t cy co u r t

, we c an n o t s ee wh ere i n t h e reco rd Lu n d -Ro ss

i d en t i fi ed fo r t h e b an k ru p t cy co u rt t h e n o n ban k ru p t cy l aw t h at w o u l d m ak e Deb t o rs

p e r s o n a l l y l i ab l e to L u n d -Ro s s

. 9 Th ere i s n o d i s p u t e Lu n d -Ro s s d id n o t p l ead t h e

co rp o rat e v ei l s h o u l d b e p i e r c e d

, a n d i t d i d n o t arg u e t h e co rp o rat e v ei l s h o u l d b e

p i erced wh en co n tes ti n g Deb t ors ' m o t i o n fo r s um m ary ju d g m en t. M o reo ver, i t d id

n o t al l eg e s p eci fi c fact s t hat d em o n s t rat e Deb t o rs u s ed Si g nat u re El ect ri c o r D & J

El ect ri c t o co m

m i t frau d

, v i o l at e a l eg al du t y

, o r p erp et rat e a d i sh o nes t o r u n ju s t act

i n co n t rav e n t i on o f t h e ri gh t s o f an o t her. S ee Th o ma s & Th o ma s Co u r t Rep o r t er s

,

L.L.C

. , 8 1 0 N.W .2 d at 6 8 5

. Fu rt h er, a cl o s e read i n g of L u n d -Ro s s ' s ad v ers ary

co m p l ai n t an d s u m

m ary ju dg m en t b ri ef d o es n o t s h o w Lu n d -Ro ss i d en ti fi ed an y s t at e

s t at u te o r o t h er n o n b an k ru p t cy l aw t h at wo u l d g ov ern Deb t o rs ' act i o ns as p ri n ci p al s

o f Si g n at u re El ect ri c an d creat e a p e r s o n al d eb t to L u nd -Ro s s

. Fi nal l y

, Lu n d -Ro ss

o ffered i ts rel i an ce o n W

h i t e an d Hu

f f ma n o n ly o n ap p eal

. 1 0

9 W h il e d i sag reei n g wi t h o u r as s es s m en t, t h e d i s s en t do es n o t p o in t t o an y t h i n g

i n t he reco rd t h at wo u l d l ead u s t o b el i ev e o t h erwi s e.

1 0 An ap p el l at e co u rt wi ll o rd in ari l y n o t co n si d er an arg um en t rai s ed fo r t h e fi rs t

t i m e o n ap p eal

. Or i o n Fi na n ci a l Co r p

. o f So u t h Da ko t a v. Amer i ca n Fo o d s Gr o u p,

In c.

, 2 8 1 F.3 d 7 3 3

, 7 4 0 (8 t h Ci r. 2 0 0 2 ). It do es s o o n l y i f t h e n ew arg u m en t i s p u rel y

l eg al an d req u i res n o ad d i t i o n al fact u al d ev el o p m en t o r i f a m an i fes t i n ju s t i ce wo u ld

o t h erwi s e re s u l t

. Id

. L u n d -Ro s s has n o t arg u ed ei t h er ex cep t i on ap pl i es

, an d we

can n ot s ay a m an i fes t i n

ju s t i ce wo u l d res u l t i f we d o n o t co n s id er t he n ewl y ci t ed cas e

l aw, w h ere Lu nd -Ro s s h ad t h e o p p o rt un i t y to rai s e i t s l eg al t h eo ry n ot o n l y d u ri n g t h e

s u m m ary ju d g m en t pro ceed i n g b u t al so earl i er w h en th e t ru s t ee o b j ect ed t o it s cl ai m

.

-1 2

-In s ho rt

, Lu n d

- R o s s ' s l eg al t h eo ry fo r t h e reco very o f a d eb t fro m Deb t o rs

p ers o n al l y an d t h e p ro b at i v e ev i d en ce Lu nd -Ro s s wo u l d o ffer i n s up p o rt o f t h at

t h eo ry were ab s en t fro m t h e su m m ary ju d g m en t reco rd befo re t h e b an k ru p t cy co u rt

.

Acco rd in g ly

, we ag ree wi t h t h e b an k ru p t cy co u rt t hat Deb t ors are en t i tl ed t o s u m m ary

ju d g m en t as a m at t er o f l aw.

Becau s e Lu n d-Ro s s d i d n o t fi rs t dem o n s t rat e fo r t h e ban k ru pt cy co u rt h o w i t

co u ld es t ab l i s h a p ers o n al d eb t o wed b y Deb t o rs u n d er n o n b an k ru pt cy l aw, we, l i k e

t h e b an k ru p t cy co u rt

, d o n o t reach t h e i ss u e o f wh et h er s u ch a d eb t wo u l d b e

n o n d i s ch arg eab le u n der § 5 2 3 (a)(2 )(A).

CONCLUSION

Hav i n g rev i ewed t h e reco rd d e n o vo

, we ag ree wi t h t h e b an k ru p t cy co u rt t h at

Lu n d-Ro s s di d no t al leg e sp eci fi c f a ct s an d law s h owi n g i t h o l ds a d eb t ag ai n s t

Deb to rs p ers o n al ly u n d er n o n b an k ru p t cy l aw. Co n s eq u en t l y

, we affi rm t h e

b an kru p t cy co u rt 's s u m m ary ju d g m en t i n fav or of Deb t o rs o n Lu n d -Ro s s 's

n o n d i s ch arg eab il i t y

act i o n

.

SHODEEN, Ban kru p t cy

J u d g e, d i s s en ti n g

.

Th e m ajo ri t y o p in i o n

, affi rm i n g t h e b an k ru p t cy co u rt 's o rd er, is p rem is ed u p o n

t h e co n cl us i o n t h at no deb t i s p ers o n al l y owed b y J ay an d Lo ri Bu ch an an (h erei n aft er

" Bu ch an an s " ) an d t hat t h e reco rd d o es n ot s u p p o rt an y cl ai m t h at co u l d b e en fo rced

ag ai n s t t h em

, warran t i n g ju d g m en t as a m at t er of l aw i n t h ei r fav o r. Un d er t h e

ap p li cab l e l aw, d efi n it i o n s an d t h e reco rd i n t h is ap p eal I d is ag ree w i t h t h at

co n cl u s i o n , an d res p ect fu l l y d i s s en t

.

Th e Bu ch an an s ' r e q u es t fo r s u m m ary ju d g em en t al l eg es t h at t h e u n d i s p u t ed

m at eri al ev i den ce es t ab l i s hes t h at t h e deb t o wed t o Lu n d -Ro s s i s a co rp o rat e

-1 3

-o b l i g at i o n o f Si g n at u re El ect ri c, LLC d / b / a D & J El ect ri c (h erei n aft er " Si g n at u re" )

an d th at t h ere i s n o ev i d en ce t o es t ab l i sh t h at t h ey are p ers on al l y l i ab l e fo r Si gn at u re's

o b l i g at i o ns

. 1 1 Rel y i n g u p o n i t s o rd er s u s t ai n in g t h e Ch ap t er 7 Tru s t ee's o m n i bu s

o b ject i on t o L u n d -Ro s s 's Pro o f o f Cl ai m No

. 9

, t he b an k ru pt cy co u rt co n cl ud es t h at

t h e req u i si t e d eb t fo r p u rp o ses o f 1 1 U.S.C. 5 2 3(a)(2 )(A) d o es n o t ex i s t

. In i ts ap p eal

Lu n d-Ro s s rai s es t h e i ss u e o f wh et h er t he o rd er en tered o n t h e o b ject i o n t o Pro o f o f

Cl ai m No

. 9 cl ai m i s di s po s it i v e o f th e act u al frau d cl ai m rai s ed i n t h e ad v ers ary

p ro ceed in g

.

O n J an u ary 1 6

, 20 2 0

, Lu n d -Ro s s fi l ed an ad v ers ary p ro ceed i n g al l eg i n g t h a t

t h e am o u n t o f $ 6 0 0

, 0 4 3

. 6 4 is n on -d i s ch arg eab l e p urs u an t t o 11 U.S.C. 5 23 (a)(2 )(A)

fo r act u al frau d rel at ed to t h e s ub m i s s i o n o f p ay ap pl i cat i o n s. Lat er, cred i t o rs l i s t ed

i n t h e Bu ch an an s ' b an k ru p t cy fi l i n g w ere n o t i fi ed t o s u b m i t Pro o fs o f Cl ai m b y M ay

1 1 , 2 0 2 0 . Th at i n v it at i o n was accep t ed b y Lu n d -Ro s s b y

fi l i n g Pro o f o f Cl ai m

No

.

9 i n t h e am o u n t of $ 6 0 0,0 4 3.6 4

. Th at fi l i n g i n cl u d ed d o cu m en t at i o n o f t h e am o u n t s

o wed t o

, an d li en s fi l ed b y

, Si g n at u re's un p ai d su p pl i ers

, wh i c h L un d -Ro ss

i n d em ni fi ed

. In an Om

n i b u s Ob ject i o n t o C l a i m s t h e Ch ap t er 7 Tru s t ee st at ed t h at

Pro o f o f Cl ai m No

. 9 d i d n o t " i ncl u d e an y ev i d en ce of a p ers o n al gu aran t ee." Lu n d

Ro s s an d t h e Bu ch an an s ag ree t h at n o p ers on al g u aran t ee ex i s t s

. Lu n d -Ro s s d i d n ot

fi le a res p o n s e to th e Tru s t ee's al l eg at i o n an d t h e b an k ru p t cy co urt s u st ai n ed t h e

o b ject i on o n t h e s t at ed g ro u n d s

. In it s o rd er g ran t i n g s u m m a r y j u d g m en t an d

d i s m i s s i n g t h e c om

p l ai n t t he b an k ru p t cy co u rt co n cl u d es t h at Lu n d -Ro s s can n ot

es t ab l i s h t h e ex i s t en ce o f a d eb t wh ich i s a p re-req u i s i t e t o i t s ad vers ary pro ceed i n g

1 1 In i t s ru l i ng , t h e b an k ru p tcy co u rt al s o ad d res s es t h e t h eo ry o f p i erci n g t h e

co rp o rat e v ei l as s u g ges t ed b y Bu ch an an as t h e on l y t h eo ry un d er wh i ch Lu n d -Ro ss

co u ld b ri n g an act i o n ag ai n s t t hem

. W h y Lu n d -Ro ss wo ul d b e l im i t ed t o t h i s s i n g l e

l eg al t heo ry

o n i t s co n ti n g en t cl ai m

i s n o t fu l l y

ex p l ai n ed

.

-1 4

-u n d er 11 U.S.C. § 52 3 (a)(2 )(A) an d h as n o t es tab l i s h ed an y fact s wh i ch co u l d l ead to

p ers o n al l i ab i l it y

fo r Bu ch an an

. 1 2

" Cl ai m al l o wan ce an d d eb t l i ab i l i t y are d i fferen t co n cep ts ." Bel l v. Ed uc.

Cr ed i t M g mt

. Co rp (In r e Bel l)

, 2 36 B.R. 4 2 6

, 4 3 0 (N.D. Al a. 1 99 9 ). Th e ru l i n g

i n v o l v i n g Pro o f o f Cl a i m N o

. 9 i s u nrel at ed t o wh et h er a d eb t ex i s t s an d d o es n ot

res o l v e t h e q u es t i o n o f wh et h er Lu n d -Ro s s h as an en fo rceab l e cl ai m ag ai n s t

Bu ch an an f

o r a c t u a l frau d

. See Al l i ed Dev. of A la

. LLC v. Fo rever 2 1

, In c. (In r e

Fo r ever 2 1

, In c), 6 2 3 B.R. 5 3

, 6 1 (Ban k r. D. Del

. 2 0 2 0 ) ; St u a r t Mi ll s Da ven p o rt v.

Dj o ur a b ch i

, 3 1 6 F. Su p p . 3 d 5 8 , 6 6 -7 (D.D.C. 2 0 18 ).

A t i m el y fi l ed p ro o f o f cl ai m t h at co n t ai n s t h e req u i s i t e i nfo rm at i o n co n s t i t u t es

" p ri m a faci e ev i d en ce o f th e val i d i t y an d am o u n t o f [a cred i t or’ s] cl ai m " an d i s

d eem ed al lo wed un l es s a p art y i n i n t eres t ob ject s

. Fed

. R. Ban k

. P. 3 0 0 1 (f); 1 1

U.S.C. 5 0 2

. T h i s l an g u ag e co n tai n s n o referen ce t o deb t

. " Th e o b ject iv e o f t h e cl ai m s

al l o wan ce p ro ces s i s t o i d en t i fy t h o s e cl ai m s w h i c h are en fo rceab l e ag ai n s t t h e

b an kru p t cy es t at e." In re D o w Co r n i n g Co r p

., 2 7 0 B.R. 3 9 3, 39 9 (Ban k r. E.D. M i ch

.

2 0 0 1 ); s ee In r e De La S

a l l e

, 2 0 1 2 Ban k r. LEXIS 6 12 4

, * 9 (Ban k r. E.D. Cal

. J u n e 1 5,

2 0 1 2 ) (" Th e Ch ap t er 7 Tru s t ee i s t h e l e g a l rep res en tat i v e o f t he es t at e an d 'o n l y a

t ru s t ee can p u rs u e a cau s e o f act i o n b el o n g in g t o t h e b an k ru p t cy es t at e,' i n cl u d i n g t h e

al l o wan ce an d d i sal l o wan ce o f cl ai m s ." ). Th e l ack o f a p ers o n al g uaran t ee fro m t h e

Bu ch an an s fo r Si g n at u re's o b l ig at i o n si m p l y m ean s t h at Pro o f of Cl ai m No

. 9 fai l ed

t o es tab l i s h an en fo rceab l e cl ai m fo r t he pu rp o s e o f recei v i n g a p ro -rat a d is tri b u t i o n

p ay m en t fro m

t h e b an k ru p t cy

es t at e – n o th i n g m ore, n o t h i ng l es s

.

1 2 A p art y i s en t i t l ed t o S um m ary J u d g m en t wh ere i t s o p p o nen t h as fai l ed "t o

es t ab l i s h t h e ex i s t en ce o f an el em en t es s en t i al t o [i t s ] cas e, an d o n wh i ch [i t] wi l l b ear

t h e b u rd en o f p ro o f at t ri al ." Cel o t ex Co r p

. v. Ca t r et t

, 4 7 7 U

. S. 3 1 7

, 3 2 2

, 1 0 6 S. Ct

. 2 5 4 8

, 2 5 52 (1 9 8 6). In s u ch a cas e, n o g en u i n e i s s ue o f m at eri al fact wi l l b e fo u n d to

ex i s t b ecau s e "a co m

p l et e fai l ure o f p ro o f co n cern i n g an e s s e n t i al el em en t o f [t h at

p art y ’ s ] cas e n eces s ari ly

ren d ers al l o t h er fact s i m m at eri al ." Id

. at 3 2 3

.

-1 5

-W h et h er pers on al li ab i l i t y can b e i m p o s ed o n Bu ch an an u nd er a t h e o r y o f

act u al frau d i s a s ep arat e cl ai m t h at ex i st s o nl y o n b eh al f o f Lu n d -Ro s s an d m u s t b e

res o l ved b y

ad v ers ary

p ro ceed i n g

. 1 3

Co u rt s m ay em

p l o y a t w o s t ep an al y s i s to d et erm i ne t he wh et h er a co m p l ai nt

o b ject i ng t o d i s ch arg eab i l i t y i s p ro p er.

" Deb t " i s defi n ed i n t h e Co de as " l iab i li t y o n a cl ai m ," an d

" cl ai m " i s d ef

i n e d i n tu rn as a " ri g ht t o p ay m en t." Fo r

p urp o s es o f § 52 3 (a)(2 )(A), " d eb t" m e an s l i ab i li t y on " an

e n fo rceab le o b l i g at i o n ." W h et h er a d eb t ex i s t s i s

1 3 Di s ch arg eab il i t y o f an u n d erl y i n g d eb t i s a co m p let e l y s e p arat e is s u e fro m

al l o wan ce or d i s al l owan ce of t h e cl ai m

. Fl a

. Dep ’t o f Reven u e v. Di az (In r e Di a z )

, 6 4 7 F.3 d 1 0 7 3

, 1 0 9 0 (1 1 t h Ci r. 2 0 11 ); Zi ch v. W h eel er W o l f At t ys

. (In re Zi ch

)

, 2 9 1

B.R. 8 8 3

, 8 8 6 (Ban k r. M .D. Ga. 2 0 0 3 ). T h e t wo qu es ti o ns are p ro ced u ral l y d i s t i n ct

as wel l

. “ A p ro ceed in g o n o b j ect i o n t o p ro o f o f cl ai m u n d er 1 1 U

. S

. C

. § 5 0 2 i s a

co n tes t e d m at ter u nd er Ru l e 9 0 1 4 o f t h e Fed eral Ru les o f Ban k ru p t cy Pro ced u re; a

d et erm i n at i o n o f d i s ch arg eab i l it y u n d er § 5 2 3 i s an ad vers ary p ro ceed in g u n d er Ru l e

7 0 0 1 (6 ), al t h o ug h an o b

ject i o n t o cl ai m m ay b e i n cl u d ed

, t o o

, u n d er Ru l e 3 0 0 7 (b ).”

Ho l la n d v. McCa r t n ey (In r e Ho l l a n d)

, No

. 1 4-2 0 9 9 0

, 20 1 5 Ban k r. LEXIS 2 5 3 0

, at

* 5 -6 (Ban k r. S.D. Ga. Ju l y 3 0

, 2 0 1 5 ). “ Th e o bject i v e o f t he cl ai m s-al lo w an ce p ro ces s

i s t o i d en t i fy t h o s e cl ai m s wh i ch are en fo rceab l e ag ai n s t t he ban k ru p t cy es t at e.” In r e

Do w Co r n i n g C o r

p

. , 2 7 0 at

, 3 9 9

. “ Al t h o u g h a cred i t o r wh o s e cl ai m i s d i s al l o wed

m ay n o t co l l ect fro m t he b an k ru p t cy es t at e, ‘ di s al l o wan ce o f a cl ai m d o es n ot

n eces s ari l y d i s ch arg e [t h e u n derl y i n g ] d eb t ’ an d el im i n at e t h e d eb t o r’ s p ers o n al

l i ab i l i t y o u t s i d e o f b an kru p t cy .” In r e Di a z

, 6 4 7 F.3 d a t 10 9 0 ; See al s o In r e Cr u z
, 2 7 7 B.R. 7 9 3

, 7 9 5 (Ban k r. M .D. Ga. 2 0 0 0 ); In r e S h el ba ya h

, 1 65 B .R

. 3 3 2

, 3 3 5
(Ban k r. N.D. Ga. 1 9 9 4 ) (h o l d in g t h at “ t h e al lo wan ce or d i s al lo w an ce o f cl a i m s i s

u n rel at ed t o t he d i s ch arg eab i l i t y o f t h o s e cl ai m s u nd er s ect i o n 5 23 .”); MMM

Hea lt h ca r e In c. v. Qu es ad a (In r e Qu es a d

a)

, No s. 1 3 -0 2 0 5 7 BKT, 1 3 -0 0 1 7 4 BKT,

2 0 1 4 Ban k r. LEXIS 1 3 4 6, at * 1 2 (Ban k r. D.P.R. A p r. 1

, 2 01 4 ) (h ol d i n g t h at e v e n

t h o u g h Pl ai n t i ff d i d n o t h av e a ri g ht t o p ay m en t fro m t he ban k r u p t c y e s t a t e wi th

reg ard s t o a d i s al l o wed cl ai m

, i t ’ s cl ai m m ay s t i l l q u al i f y as a “ deb t ” t hat can b e

ex cep t ed fro m

d i s ch arg e u n d er 1 1 USC § 5 2 3.).

-1 6

-d et erm i ned b y l o o k i n g t o ap p l icab l e l aw, freq u en t l y s t at e

l aw. Sect i o n 5 2 3(a)(2 )(A)’ s u s e o f t h e t erm " a n y d eb t "

(em p has i s ad d ed ) i n d i cat es t h at " d eb t " as u sed in §

5 23 (a)(2 )(A) i s n ot r e s t r i c t ed t o a d eb t es t ab l i sh ed u nd er

an y p art icu l ar th eo ry o f reco very

. To es t ab l i s h t he val i di t y

o f t h e d e b t u n d er § 5 2 3 (a)(2 )(A), t h e cl ai m an t m u s t

es t ab l i sh t hat t h e d eb t o r i s li ab l e o n an en f o rceab l e

o bl ig at i o n u n d er ap p l i cab l e l aw, n ot h in g m o re n o r l es s

.

Lu n d -Ro s s Co ns t r u ct o rs

, In c. v. Bu ch a n a n (In re B uc h anan)

, N os. B K 1 9- 81793 -TLS,

A2 0 -8 0 0 2 -TLS, 2 0 2 0 Ban k r. LEXIS 3 1 78

, at * 1 0 ( B a n k r

. D. N eb

. No v

. 1 2

, 2 0 2 0 )

ci t i n g Ha t f i el d v. Th o m

p so n (In Re Th o mp so n

), 5 55 B.R. 1

, 9 (B.A.P. 1 0 t h Ci r. 2 0 1 6 ).

Lu n d -Ro s s b ears t h e b u rd en t o p ro v e b y a prep o n deran ce of ev id en ce t h e

fo l l o w i n g fi ve el em en t s :

( 1 ) t h e d eb t o r m ad e a fal se rep res en t at i o n; (2 ) at t h e t i m e

t h e rep res en t at i o n was m ad e, t h e deb to r k new i t w as fal s e; (3 ) t h e d eb t o r m ad e t he r ep res en t at io n d el i berat el y an d

i n t en t i o n al l y wi t h t h e i n t en t i o n an d pu rp o s e o f d e c ei v i n g

t h e cred i t o r; (4 ) t h e cred i t o r j u s ti fi ab ly rel i ed o n th e

rep res en t at i o n; an d (5 ) t he cred i t o r su s t ai n ed l o s s a n d

d am ag e as a p ro x i m at e res u l t o f t h e m i s rep res en t at i o n

.

Is l a mo v v. Un g a r (In r e Un g a r ), 4 2 9 B.R. 6 6 8 ,6 7 2 (B.A.P. 8 t h Ci r. 2 0 10 ). El em en t s

o n e t h ro u g h fo u r rel at e to t h e en fo rceab il i t y o f Lu n d -Ro ss 's cl ai m un d er s t at e l aw.

El em en t fi v e rep res en t s th e d eb t res u l t i n g fro m an en fo rceab le cl ai m o f act ual frau d.

Th e s t at u t o ry l an g uag e at 1 1 U.S.C. 5 23 (a)(2 )(A) h as b een s at i s fi ed i n t h i s cas e

u n d er t h e t wo -s tep an al y s i s

. A d eb t ex i s t s

. 1 4 L u n d -Ro s s al leg es t h at t h e Bu ch an an s

1 4 Th e b an k ru p t cy s ch ed u l es i den t i fy Lu n d-Ro ss as an u n s ecu red cred i t o r t h at

i s o wed $ 0 .0 0

. Ad d i t io nal d e t a i l s ch aract eri ze t h i s o bl i g at i o n as " Co rp o rat e Deb t ;

-1 7

-c o m m it t ed act u al frau d t o o b t ai n p ro g res s p ay m en t s o n b eh al f o f Si g n at u r e o r f o r

Si g n at u re's b en efi t an d arg ues t h at s t at e l aw p erm i ts p ers on al l i ab i l i t y t o be i m p o s ed

u n d er s u ch ci rcu m s t an ces

. 1 5

Un d er de n o vo rev i ew an d fo r t h e reas o n s s t at ed

, I w o u l d r e v ers e t h e

b an k ru p t cy co u rt 's o rd er g ran t i n g s u m m ary ju d g m en t an d d is m i ss i n g t h e ad v e r s a r y

p ro ceed in g

.

No t ice Pu rp o s e On l y

. Laws u i t

- C I 1 9

- 9 2 7 0 (Do u g l as Co u n t y Di st ri ct Co u rt

, NE)"

t h at i s co n t i n g en t

, un l i q u i d at ed an d d i sp u t ed

. Th i s l i st in g

, at a m i n im u m

, refl ect s t h at

Bu ch an an s

, at l eas t t aci t l y

, ack n o wl ed g e t h at a b o t h a d eb t an d cl ai m m ay ex i s t

, an d

t h at p ers o n al res p o ns i bi li t y fo r p ay m en t i s d en i ed

.

1 5 " [Sect io n] 1 0 1 (5 )(A) s ay s t h at a 'cl ai m ' is a ' ri g h t t o p ay m en t ' 'wh et h er o r n ot

s u ch ri g h t i s

. . . fi x ed

, co n t i n g en t

, . . . [o r] 'd i s p ut ed '

. Mi d l a n d Fu n d i n g

, LLC v.

Jo h ns o n

, 1 3 7 S. Ct . 1 4 0 7, 1 4 1 2 (2 01 7 ).

-1 8

-