In adversary proceeding by employee benefit funds seeking declaration that employer-debtor’s debt could not be discharged, a judgment against the funds is affirmed because:
1) ERISA fiduciaries do not automatically act in a “fiduciary capacity” for purposes of 523(a)(4) — courts must examine the substance of the relationship to see if defalcation can be found; and
2) in this case the requirements were not met.
Bankruptcy court denial of a Chapter 13 plan that would allow debtors to surrender a vehicle to a creditor and pay nothing on account of the difference between the loan’s balance and the collateral’s market value is affirmed; the court interpreted a 2005 amendment to the Code as giving creditors an unsecured deficiency judgment after surrender of collateral where the debt exceeds the collateral’s current value unless the loan contract itself provides that it is without recourse against the borrower.
District court’s affirmation of bankruptcy court’s finding that plaintiff was bound by previous orders compelling then approving the trustee’s settlement of a state court action brought by defendant is affirmed as the doctrine of res judicata precludes plaintiff from re-litigating the defenses waived in the settlement agreement and considered at the appropriate time by the bankruptcy court.
In an action brought by AT&T against several insurance carriers for breaches of certain issued Director and Officer policies, dismissal of the action is reversed where: 1) contrary to the trial court’s ruling, under California law the directors at issue suffered a covered “Loss” under the D&O policies and had a cognizable legal claim against insurers, which AT&T, as their assignee, became entitled to enforce; and 2) the trial court erred in interpreting California law to require that AT&T must have been legally (even though not primarily) obligated to indemnify the directors at issue in order to have a protectible “interest” for equitable subrogation purposes.