Confidential
Settlement – $400,000Facts
The defendant and his partner became co-trustees in 1991. The plaintiffs filed an action for an accounting and for
the appointment of a permanent successor trustee in the L.A. Superior Court on Aug. 4, 1998.
On Oct. 16, 1998, the plaintiffs filed an adversary proceeding to determine dischargeability of debt in the
Chapter 7 bankruptcy case. The complaint asserted that the defendant was indebted to the plaintiffs. The
plaintiffs asserted that this obligation is non-dischargeable pursuant to Bankruptcy Code Section 523(a)(2),
(a)(4) and (a)(6). Counsel obtained an Order lifting the automatic stay and the state court entered judgment
against the defendants.
Thereafter, the plaintiffs and the defendant entered into a settlement agreement
approved by the probate court. One of the terms required that the parties would stipulate, in the
defendantÆs bankruptcy case, that the defendantÆs indebtedness to the plaintiffs was not
dischargeable. In the event, that the defendant breached the settlement agreement, the initial
judgment would be reinstated.
Other Information
JULY 27, 2001 VERSION
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