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In re Kuenstler

United States District Court, E.D. Texas

June 28, 2018

IN RE TODD WILLIAM KUENSTLER Appellant
v.
HALF PRICE BOOKS, RECORDS, MAGAZINES, INC. Appellee

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Todd William Kuenstler's Appeal of an order issued by the United States Bankruptcy Court for the Eastern District of Texas granting Half Price Books, Records, Magazines, Inc.'s Motion to Deem “Motion for Determination of Dischargeability” as a Complaint and Motion for Leave to File Amended Complaint (Dkt. #5).

         BACKGROUND

         On August 8, 2016, Half Price Books, Records, Magazines, Inc.'s (“Appellee” or “Creditor”) filed suit in the 162nd District Court of Dallas County, Texas, asserting claims against Todd Kuenstler (“Appellant” or “Debtor”), Maggie Kuenstler, Group 23, Inc., Group 523 LLC, Group 2323 LLC, and Group 52323 LLC1F, in addition to Cartridge World North America, LLC and Flexbone LLC (collectively, the “Kuenstler Defendants”). Creditor alleged in part:

Between 2009 and January 2016, the Kuenstler Defendants fraudulently invoiced Plaintiff for alleged products sold by Defendants to Plaintiff. In good faith, and in reliance upon the representations made by the Kuenstler Defendants, Plaintiff paid Defendants' invoices during such time period. Under this nefarious and criminal scheme to steal from and defraud Plaintiff, the Kuenstler Defendants stole and/or resold to Plaintiff, in excess of $1, 000, 000.00.

(Dkt. #2 at pp. 25-26).

         On May 15, 2017, Debtor filed a petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Texas (the “Main Case”). Kuenstler v. Half Price Books, Records, Magazines, Inc. (In re Kuenstler), Ch. 7 No. 17-41046, Adv. No. 17-04089, slip op (E.D. Tex. May 15, 2017), (Main No. 17-41046, Dkt. #1). Pursuant to 11 U.S.C. § 362(b), the state court case was automatically stayed.

         The Section 341 creditors meeting was held on June 16, 2017. The 341 Notice stated that the filing deadline to file a complaint objecting to the discharge of certain debts was August 15, 2017. The Notice further stated

         You must file a complaint:

• if you assert that the debtor is not entitled to receive a discharge of any debts under any of the subdivisions of 11 U.S.C. § 727(a)(2) through (7), or • if you want to have a debt excepted from discharge under 11 U.S.C. § 523(a)(2), (4), or (6).

(Dkt. #5 at p. 9).

         On August 14, 2017, Creditor filed its Motion for Determination of Dischargeability (“Motion for Determination”), objecting to the discharge of the debts owed by the Debtor, and objecting to the discharge (Main No. 17-41046, Dkt. #8). On that same date, Creditor filed its Motion for Relief from Stay on State Court Proceedings (“Motion for Relief”). (Main Case No. 17-41046, Dkt. #7) The Motion for Determination specifically objected to the discharge of the following debts:

(i) Debtor Kuenstler's liability to Creditor for felony theft, pursuant to 11 U.S.C. § 523(a)(4); (ii) Debtor Kuenstler's liability to Creditor for civil conversion, pursuant to 11 U.S.C. § 523(a)(4); (iii) Debtor Kuenstler's liability to Creditor for fraud, pursuant to 11 U.S.C. § 523(a)(2); (iv) Debtor Kuenstler's liability to Creditor for tortious interference with a business contract, pursuant to 11 U.S.C. § 523(a)(6); and (v) Debtor Kuenstler's liability to Creditor for conspiracy to commit fraud and felony theft, pursuant to 11 U.S.C. § 523(a)(2). . . .
Furthermore, Creditor requests this Court enter an Order declaring none of Debtor Todd Kuenstler's debts to be dischargeable because he has failed to explain satisfactorily the loss of millions of dollars which he obtained by fraud, theft, and other malicious acts over the course of several years . . . . . . .
This Court has the authority to discharge debts unless the debtor has failed to explain satisfactorily any loss of assets or deficiency of assets to meet the debtor's ...

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