Court Opinion

ID: 3007386
Source: CourtListenerOpinion
Date Created: 2015-10-06 15:00:34.378429+00
Date Added: 2024-06-11T11:46:05.679053
License: Public Domain

14-3824
     In re: Shao Ke

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 6th day of October, two thousand fifteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                PIERRE N. LEVAL,
 8                              Circuit Judges,
 9                GEOFFREY W. CRAWFORD,*
10                              District Judge.
11
12       - - - - - - - - - - - - - - - - - - - -X
13       SHAO KE,
14                Defendant-Appellant,
15
16                    -v.-                                               14-3824
17
18       JIANRONG WANG,
19                Plaintiff-Appellee.
20       - - - - - - - - - - - - - - - - - - - -X
21
22       FOR APPELLANT:                        EDWARD E. KOPKO, EDWARD E. KOPKO
23                                             LAWYER, P.C., Ithaca, New York.

                *
               The Honorable Geoffrey W. Crawford, United States
         District Judge for the District of Vermont, sitting by
         designation.
                                                  1
 1
 2   FOR APPELLEE:              EDWARD Y. CROSSMORE, THE
 3                              CROSSMORE LAW OFFICE, Ithaca,
 4                              New York.
 5
 6        Appeal from a judgment of the United States District
 7   Court for the Northern District of New York (Suddaby, J.).
 8
 9        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
10   AND DECREED that the judgment of the district court be
11   AFFIRMED.
12
13        Shao Ke appeals from a judgment of the United States
14   District Court for the Northern District of New York
15   (Suddaby, J.), which affirmed an earlier judgment of the
16   United States Bankruptcy Court for the Northern District of
17   New York (Davis, J.)(“bankruptcy court”), that a debt owed
18   by Ke to his one-time business partner, Jianrong Wang, was
19   nondischargeable in personal bankruptcy. See also 11 U.S.C.
20   § 523(a)(4). The bankruptcy court and the district court
21   held that Ke’s debt was nondischargeable because it was
22   incurred by intentional or extremely reckless conduct
23   constituting fraud or defalcation of Peace Food Inc. (“Peace
24   Food”), a business Ke co-owned with Wang between 2004 and
25   2006.
26
27        “Our review of a district court decision affirming a
28   bankruptcy court order is plenary . . . We therefore
29   independently review the factual findings and legal
30   conclusions of the bankruptcy court . . . We must accept the
31   bankruptcy court’s findings of fact unless clearly
32   erroneous; conclusions of law are reviewed de novo.” In re
33   Petrie Retail, Inc., 304 F.3d 223, 228 (2d Cir. 2002).
34
35        1.   Ke argues that the bankruptcy court should have
36   been precluded from deciding the issue of Ke’s intent
37   because Wang failed to raise that issue in a prior
38   litigation in the New York State Supreme Court (“state
39   court”).
40
41        Collateral estoppel applies to findings only if [i]
42   they were “actually determined” and necessary to support
43   judgment in a prior action, Bobby v. Bies, 556 U.S. 825, 834
44   (2009); and [ii] the party opposing preclusion had a “full
45   and fair opportunity” to litigate the identical issue in the
46   prior action. In re Hyman, 502 F.3d 61, 65 (2d Cir. 2007).
47   Neither consideration supports preclusion here. The issue

                                  2
 1   decided in the state court was whether Ke breached his
 2   fiduciary duty when he failed to account for Peace Food’s
 3   corporate revenue during his tenure as a fiduciary of that
 4   business. As construed under New York state law, breach of
 5   fiduciary duty does not require proof of a particular mental
 6   state. See Hyman, 502 F.3d at 69 (“[M]isappropriation and
 7   breach of fiduciary duties apparently do not, under New York
 8   law, consistently require proof of a culpable mental
 9   state.”). By contrast, defalcation under 11 U.S.C. §
10   523(a)(4) requires a showing that the faithless fiduciary
11   committed an “intentional wrong,” which incorporates a
12   standard of conscious misbehavior or extreme recklesness.
13   Bullock v. BankChampaign N.A., 133 S. Ct. 1754, 1759 (2013).
14   The state court therefore had no occasion or necessity to
15   make a finding as to Ke’s mental state or intent.
16
17        2.  Ke argues that the New York Supreme Court,
18   Appellate Division’s (“state appellate court”) decision to
19   restore Ke's ownership stake in Peace Food implies a finding
20   that Ke did not intentionally breach his fiduciary duty. We
21   disagree. See Bacon v. Texas, 163 U.S. 207, 226 (1896)
22   (“This particular finding is in no way dependent upon the
23   others, and they are all entirely separate and distinct from
24   one another.”). Ke has conflated two distinct issues. The
25   state appellate court’s modification in no way inhibits a
26   separate and distinct conclusion that Ke also breached his
27   fiduciary duty to that business. The “finding on which [Ke]
28   seek[s] to . . . appeal involves issues entirely separate
29   and distinct from the . . . analysis at issue” before the
30   bankruptcy court and on appeal before this Court. Jones v.
31   Parmley, 465 F.3d 46, 65 (2d Cir. 2006).
32
33        3. We further reject Ke’s arguments addressing the
34   bankruptcy court’s fact finding and the sufficiency of the
35   evidence; they are without merit.
36
37        For the foregoing reasons, and finding no merit in Ke’s
38   other arguments, we hereby AFFIRM the judgment of the
39   district court.
40
41                              FOR THE COURT:
42                              CATHERINE O’HAGAN WOLFE, CLERK
43

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