The court granted the Defendant’s motion to dismiss the Debtor’s second complaint with prejudice. Despite the Defendant’s arguments, the Debtor was permitted to amend its complaint for a second time. Moreover, res judicata did not bar litigation of the second amended complaint, because the court dismissed the previous complaint without prejudice. However, the Debtor ultimately failed to state a plausible claim regarding equitable subrogation under West Virginia law.
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Honorable David L. Bissett
The court denied the Plaintiff’s motion for judgment on the pleadings. In the case, the Plaintiff obtained a money judgment against the Debtors by the Maryland State Court and a subsequent judicial lien by the West Virginia State Court. The Plaintiff did not argue that the indebtedness relating to the Maryland State Court Judgment should be excepted from discharge, but rather the judicial lien granted by the West Virginia State Court. Notably, the Debtors did not contest whether they committed actual fraud; however, they did dispute whether the debt was “obtained by” fraud. The court ultimately held that the judicial lien obtained by the Plaintiff in the West Virginia State Court was not a debt for money obtained by actual fraud which could be excepted from the Debtors’ dischargeable under § 523(a)(2)(A) of the Bankruptcy Code. As a result, the court also dismissed the Plaintiff’s adversary proceeding as it could not state a plausible claim to relief.