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The Court denied the Plaintiffs’ motion to amend their complaint, concluding that the proposed new claims were barred by the confirmed Chapter 11 Subchapter V Plan. The claims arose from pre-confirmation conduct and were not preserved. The Court also rejected the attempt to extend the automatic stay to a non-debtor guarantor, finding no unusual circumstances to justify such relief. With the only original claim previously denied, the adversary proceeding was dismissed.
The Court granted the Defendants’ second motion to dismiss, finding that the Plaintiff failed to adequately plead a claim for nondischargeability of a debt under 11 U.S.C. § 523(a)(2). The Court held that the alleged fraudulent conduct was attributable to the Defendants’ LLC rather than the individual Defendants and that the Plaintiff failed to allege any specific fraudulent acts by the individuals themselves. Additionally, the Plaintiff did not properly allege facts to pierce the corporate veil under applicable Arizona law, which governed the LLC.
The Court denied the Plaintiffs’ motion for summary judgment and granted summary judgment in favor of the Defendant, Citibank, N.A. The Plaintiffs alleged that Citibank violated the West Virginia Consumer Credit and Protection Act by continuing collection efforts after being notified that the debtor was represented by counsel. However, the Court found that the notice was ineffective because it was not sent to Citibank’s registered agent, as explicitly required by statute. Since the statutory language was clear and unambiguous, the Court held that liberal construction in favor of consumers could not override the failure to comply with the statute’s specific notice requirement.
The court granted Defendants’ motion to dismiss finding that the complaint failed to plead fraud with sufficient particularity as required under Rule 9(b). Because the state court judgment lacked specific findings of fraud, issue preclusion did not apply. Although the deadline for filing dischargeability complaints had passed, an amendment was still permissible under Rule 15(c) as it related back to the original filing. Thus, the court granted dismissal without prejudice, allowing Plaintiff to amend the complaint to meet the heightened pleading standard.