Nicole LeCann v. Sharon Cobham

Filing

UNPUBLISHED PER CURIAM OPINION filed.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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UNPUBLISHED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Affirmed by unpublished per curiam opinion.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.

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Unpublished opinions are not binding precedent in this circuit.

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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

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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

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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

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