Nicole LeCann v. Sharon Cobham


UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 5:15-cv-00137-FL,14-00002-8-SWH Copies to all parties and the district court/agency. [999947430].. [16-1010]

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Appeal: 16-1010 Doc: 24 Filed: 10/14/2016 Pg: 1 of 5 UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 16-1010 In Re: SHARON J. COBHAM, Debtor. ------------------------NICOLE LECANN, D.D.S.; JOINT ENTITIES, LLC, Plaintiffs – Appellees, v. SHARON J. COBHAM, Defendant - Appellant. Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Louise W. Flanagan, District Judge. (5:15-cv-00137-FL; 14-00002-8-SWH) Submitted: September 29, 2016 Decided: October 14, 2016 Before KING, DUNCAN, and FLOYD, Circuit Judges. Affirmed by unpublished per curiam opinion. Joshua H. Bennett, Roberta King Latham, Jasmine M. Pitt, BENNETT & GUTHRIE, PLLC, Winston-Salem, North Carolina, for Appellant. Robert E. Fields III, Samuel Pinero II, OAK CITY LAW LLP, Raleigh, North Carolina; Jason L. Hendren, Rebecca F. Redwine, HENDREN & MALONE, PLLC, Raleigh, North Carolina, for Appellees. Appeal: 16-1010 Doc: 24 Filed: 10/14/2016 Pg: 2 of 5 Unpublished opinions are not binding precedent in this circuit. 2 Appeal: 16-1010 Doc: 24 Filed: 10/14/2016 Pg: 3 of 5 PER CURIAM: Sharon J. Cobham appeals the district court’s order affirming, on alternate grounds, the bankruptcy court’s order determining that the judgment debt at issue is nondischargeable in Cobham’s Chapter 7 proceeding. We affirm the determination of nondischargeability. Cobham and Nicole LeCann are both dentists practicing in North Carolina and were, for some years, business partners. Together, they owned five dental practices — all professional corporations companies, — all and in three the limited liability Winston-Salem president of the dental practices. area. real Cobham estate served as Eventually, LeCann learned that Cobham had been taking funds from the businesses, either in the form of unauthorized loans or payments for personal expenses, and sued her in North Carolina state court, asserting both personal and derivative causes of action. The state court ordered a dissolution and receiver to manage and wind up the affairs. appointed a The court later awarded judgment in favor of LeCann and the businesses, finding that “Cobham wrongfully and repeatedly transferred money out of [the businesses] by herself, receiving providing unjustified making loans unauthorized to [her expense reimbursements to own reimbursements herself,” compensatory damages in the amount of $553,888. 3 practice] and or and awarded The court also Appeal: 16-1010 Doc: 24 Filed: 10/14/2016 Pg: 4 of 5 found that punitive damages should be entered against Cobham based on her “willful or wanton conduct and intentional constructive fraud.” In October 2013, Cobham filed a Chapter 7 petition. filed the Cobham’s underlying debt complaint is seeking a nondischargeable §§ 523(a)(4),(6) (2012). LeCann determination under 11 that U.S.C. The bankruptcy court determined that the state court judgment was entitled to collateral estoppel effect and that the judgment is nondischargeable because it resulted from Cobham’s “willful and malicious injury,” within the meaning of § 523(a)(6). 57, 61 (1998). applicability See Kawaauhau v. Geiger, 523 U.S. The court found it unnecessary to rule on the of § 523(a)(4) (defalcation of fiduciary obligations). On appeal, the district court found that the bankruptcy court erred in determining that the debt arose out of a willful and malicious injury. Therefore, the district court concluded, § 523(a)(6) did not apply. Nevertheless, the court determined that the debt was incurred as the result of a defalcation while Cobham was acting court determined § 523(a)(4). We review a that fiduciary the capacity; accordingly, nondischargeable the debt is under of a district court sitting de novo, applying the Cobham appeals. review of in a the judgment bankruptcy court 4 in same Appeal: 16-1010 Doc: 24 Filed: 10/14/2016 Pg: 5 of 5 standards of review that were applied in the district court. re Shangra-La, Specifically, Inc., the 167 F.3d bankruptcy 843, 847 court’s (4th factual Cir. In 1999). findings are reviewed for clear error, and legal determinations are reviewed de novo. Fed. R. Bankr. P. 8013; In re K & L Lakeland, Inc., 128 F.3d 203, 206 (4th Cir. 1997). We have reviewed the record included on appeal, and the parties’ briefs, and find that the bankruptcy court correctly determined that LeCann met her burden of establishing that the debt at issue is nondischargeable under § 523(a)(6). See Grogan v. Garner, 498 U.S. 279, 291 (1991) (holding that the party challenging the dischargeability of a debt bears the burden of proving the debt nondischargeable by a preponderance of the evidence). Accordingly, we affirm on the bankruptcy court’s reasoning. In re Cobham (LeCann v. Cobham), Bankr. Ct. No. 14- 00002-8-SWH (E.D.N.C. Mar. 18, 2015). Because the bankruptcy court properly concluded that the debt is nondischargeable under § 523(a)(6), we express no view as to the district alternative holding with respect to § 523(a)(4). court’s We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before this court and argument would not aid the decisional process. AFFIRMED 5

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