Plaintiff was appointed guardian ad litem in defendant/debtor’s divorce case, to represent the interests of defendant’s infant daughter. At the conclusion of the divorce and custody proceedings, defendant filed a chapter 7 bankruptcy case and took the position that the guardian ad litem fees he owed were dischargeable. Plaintiff argued that the fees were in the nature of child support and therefore nondischargeable. The court ruled that under Tenth Circuit precedence, the fees were nondischargeable child support.

Plaintiff brought an adversary proceeding, alleging that Defendants embezzled $136,342.67 and seeking a nondischargeable judgment. Defendants moved for partial summary judgment, arguing that most of the alleged instances of embezzlement were time barred. Plaintiff argued that all claims should be allowed because the discovery rule provided an exception to the four-year statute of limitations. The Court granted Defendants’ motion, reasoning that discovery rule did not save the claims because, had Plaintiff exercised ordinary diligence, it would have discovered the alleged embezzlement instantly.

a

Prior to Motiva Performance Engineering, LLC’s bankruptcy filing, the state district court adjudged Motiva to be the owner of Settlement Funds paid by an insurance company as compensation for the loss of use of a vehicle owned by Motiva, which Defendant William Ferguson (part owner of Motiva) had claimed belonged to him. The district court ordered that if Ferguson had not already disbursed the Settlement Funds to Motiva, he was required to turn them over to a state court plaintiff in partial satisfaction of his judgment against Motiva. Ferguson did not abide by the state court’s order and Motiva filed bankruptcy. The trustee filed this adversary proceeding against Ferguson and his affiliates seeking, inter alia, turnover of the Settlement Funds. Ferguson claims that he already turned over the Settlement Funds by causing his wholly owned law firm to (1) pay Motiva’s bankruptcy counsel retainer, and (2) to deposit funds in Motiva’s DIP account. In a motion for summary judgment, the trustee argued that the retainer and the deposit were loans from Ferguson’s law firm to Motiva and sought an order requiring Ferguson to turn the Settlement Funds over to Motiva’s bankruptcy estate. Concluding that genuine issues of material fact preclude summary judgment, the Court denied the trustee’s motion.

Plaintiff (the United States Government) sought summary judgment on its Section 523(a)(2)(A) claim against Defendant. The debt at issue is a money judgment arising from Defendant’s violations of the False Claims Act, 31 U.S.C. Section 3729. The Court holds that the principle of issue preclusion bars relitigating three of the five requisite elements of a Section 523(a)(2)(A) claim (false representation, reliance, and damages).  The remaining elements (intent to deceive and justifiable reliance) were not at issue in the False Claims litigation and issue preclusion does not apply. If Plaintiff proves the remaining elements at trial, the entire judgment (including treble damages and punitive damages) will be nondischargeable. The summary judgment motion is granted in part and denied in part pursuant to Fed. R. Civ. P. 56(g).