{"id":846,"date":"2015-08-21T10:52:11","date_gmt":"2015-08-21T17:52:11","guid":{"rendered":"http:\/\/fiduciarydutiesblog.com\/?p=846"},"modified":"2015-08-21T10:52:11","modified_gmt":"2015-08-21T17:52:11","slug":"double-bogey-lp-v-enea-alter-ego-status-under-state-law-does-not-equate-with-fiduciary-status-under-bankruptcy-law","status":"publish","type":"post","link":"https:\/\/fresnolawyerblog.com\/?p=846","title":{"rendered":"Double Bogey, LP v. Enea – Alter Ego Status Under State Law Does Not Equate with Fiduciary Status Under Bankruptcy Law"},"content":{"rendered":"

The federal courts continue to narrow the circumstances in which a person can be denied relief in bankruptcy court based on breach of fiduciary duties.\u00a0 In Double Bogey, LP v. Enea<\/strong>, ___ F.3d ___ (9th Cir. July 22, 2015), an unpaid creditor sought to invoke nondischargeability on the grounds that the debtor, as the alter ego of his corporation, owed fiduciary obligations to the unpaid creditor.<\/p>\n

The Ninth Circuit disagreed, holding that \u201cthe mere fact that state law places two parties in a relationship that may have some of the characteristics of a fiduciary relationship does not necessarily mean that the relationship is a fiduciary relationship under 11 U.S.C. \u00a7 523(a)(4).\u201d<\/p>\n

\"Fresno<\/a><\/p>\n

Explained the court, \u201cpartnership law clearly and expressly imposes trust-like obligations on partners, explicitly outlining partner’s fiduciaries duties and identifying the assets of the partnership as the trust res over which partners are fiduciaries.\u201d<\/p>\n

There is a different result with respect to corporations.\u00a0 \u201cCalifornia’s alter ego doctrine does not explicitly create a trust relationship, either by raising existing legal duties or otherwise \u2026 Instead of creating, enforcing, or expounding on substantive duties, California’s alter ego doctrine merely acts as a procedural mechanism by which an individual can be held jointly liable for the wrongdoing of his or her corporate alter ego.\u201d<\/p>\n

Thus, \u201cA doctrine which merely supplies an additional judgment defendant after liability exists does not clearly and expressly impose trust-like obligations prior to the creation of that same liability.\u00a0 Therefore, we cannot conclude, as a matter of federal law, that California’s alter ego doctrine establishes that a corporate debtor’s alter ego is a trustee in that strict and narrow sense required by the Code.\u201d<\/p>\n

As a result, the individual, despite a finding of alter ego liability under state law, was not denied his discharge in bankruptcy. \u201cCommon-law doctrines \u2013 like California’s alter ego doctrine \u2013 rarely impose the trust-like obligations sufficient to create a fiduciary relationship under Section 523(a)(4).\u00a0 Indeed the kinds of trusts typically created by operation of law \u2013 constructive, resulting, or implied trusts \u2013 never satisfy Section 523(a)(4)’s rigorous requirements.\u201d<\/p>\n

Double Bogey, LP v. Enea<\/strong>, ___ F.3d ___ (9th Cir. July 22, 2015)<\/p>\n","protected":false},"excerpt":{"rendered":"

The federal courts continue to narrow the circumstances in which a person can be denied relief in bankruptcy court based on breach of fiduciary duties.\u00a0 In Double Bogey, LP v. Enea, ___ F.3d ___ (9th Cir. July 22, 2015), an unpaid creditor sought to invoke nondischargeability on the grounds that the debtor, as the alter […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,5],"tags":[],"class_list":["post-846","post","type-post","status-publish","format-standard","hentry","category-case-law","category-developments"],"_links":{"self":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/846"}],"collection":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=846"}],"version-history":[{"count":0,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=\/wp\/v2\/posts\/846\/revisions"}],"wp:attachment":[{"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=846"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fresnolawyerblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}