UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1010
In Re: SHARON J. COBHAM,
Debtor.
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NICOLE LECANN, D.D.S.; JOINT ENTITIES, LLC,
Plaintiffs – Appellees,
v.
SHARON J. COBHAM,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Louise W. Flanagan,
District Judge. (5:15-cv-00137-FL; 14-00002-8-SWH)
Submitted: September 29, 2016 Decided: October 14, 2016
Before KING, DUNCAN, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Joshua H. Bennett, Roberta King Latham, Jasmine M. Pitt, BENNETT
& GUTHRIE, PLLC, Winston-Salem, North Carolina, for Appellant.
Robert E. Fields III, Samuel Pinero II, OAK CITY LAW LLP,
Raleigh, North Carolina; Jason L. Hendren, Rebecca F. Redwine,
HENDREN & MALONE, PLLC, Raleigh, North Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Sharon J. Cobham appeals the district court’s order
affirming, on alternate grounds, the bankruptcy court’s order
determining that the judgment debt at issue is nondischargeable
in Cobham’s Chapter 7 proceeding. We affirm the determination
of nondischargeability.
Cobham and Nicole LeCann are both dentists practicing in
North Carolina and were, for some years, business partners.
Together, they owned five dental practices — all professional
corporations — and three limited liability real estate
companies, all in the Winston-Salem area. Cobham served as
president of the dental practices. Eventually, LeCann learned
that Cobham had been taking funds from the businesses, either in
the form of unauthorized loans or payments for personal
expenses, and sued her in North Carolina state court, asserting
both personal and derivative causes of action.
The state court ordered a dissolution and appointed a
receiver to manage and wind up the affairs. The court later
awarded judgment in favor of LeCann and the businesses, finding
that “Cobham wrongfully and repeatedly transferred money out of
[the businesses] by making loans to [her own practice] or
herself, receiving unauthorized expense reimbursements and
providing unjustified reimbursements to herself,” and awarded
compensatory damages in the amount of $553,888. The court also
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found that punitive damages should be entered against Cobham
based on her “willful or wanton conduct and intentional
constructive fraud.”
In October 2013, Cobham filed a Chapter 7 petition. LeCann
filed the underlying complaint seeking a determination that
Cobham’s debt is nondischargeable under 11 U.S.C.
§§ 523(a)(4),(6) (2012). The bankruptcy court determined that
the state court judgment was entitled to collateral estoppel
effect and that the judgment is nondischargeable because it
resulted from Cobham’s “willful and malicious injury,” within
the meaning of § 523(a)(6). See Kawaauhau v. Geiger, 523 U.S.
57, 61 (1998). The court found it unnecessary to rule on the
applicability of § 523(a)(4) (defalcation of fiduciary
obligations).
On appeal, the district court found that the bankruptcy
court erred in determining that the debt arose out of a willful
and malicious injury. Therefore, the district court concluded,
§ 523(a)(6) did not apply. Nevertheless, the court determined
that the debt was incurred as the result of a defalcation while
Cobham was acting in a fiduciary capacity; accordingly, the
court determined that the debt is nondischargeable under
§ 523(a)(4). Cobham appeals.
We review the judgment of a district court sitting in
review of a bankruptcy court de novo, applying the same
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standards of review that were applied in the district court. In
re Shangra-La, Inc., 167 F.3d 843, 847 (4th Cir. 1999).
Specifically, the bankruptcy court’s factual findings are
reviewed for clear error, and legal determinations are reviewed
de novo. Fed. R. Bankr. P. 8013; In re K & L Lakeland, Inc.,
128 F.3d 203, 206 (4th Cir. 1997).
We have reviewed the record included on appeal, and the
parties’ briefs, and find that the bankruptcy court correctly
determined that LeCann met her burden of establishing that the
debt at issue is nondischargeable under § 523(a)(6). See Grogan
v. Garner, 498 U.S. 279, 291 (1991) (holding that the party
challenging the dischargeability of a debt bears the burden of
proving the debt nondischargeable by a preponderance of the
evidence). Accordingly, we affirm on the bankruptcy court’s
reasoning. In re Cobham (LeCann v. Cobham), Bankr. Ct. No. 14-
00002-8-SWH (E.D.N.C. Mar. 18, 2015). Because the bankruptcy
court properly concluded that the debt is nondischargeable under
§ 523(a)(6), we express no view as to the district court’s
alternative holding with respect to § 523(a)(4). We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED
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