Ohayon v. Papera

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
DAVID ROBERT PAPERA, 	No. 09-11651
Debtor(s).
______________________________________/
MICHAEL OHAYON,
Plaintiff(s),
v. 	A.P. No. 09-1111
DAVID ROBERT PAPERA,
Defendant(s).
_______________________________________/
Memorandum on Motion to Dismiss
_________________
The first amended complaint in this adversary proceeding, filed by plaintiff Michael Ohayon
pro se, may contain the kernel of a proper dischargeability complaint. However, there is so much
extraneous material that the court must require a second amended complain in order to avoid a
nightmare trial.
Defendant David Papera argues that the court should dismiss the complaint because Ohayon
has no standing. The case certainly must be dismissed if Ohayon’s claims arose before his bankruptcy
and have never been exempted or abandoned. However, that is a matter outside the four corners of the
complaint and must be the subject of a motion for summary judgment.
The original complaint alleged only that Ohayon’s claims were nondischargeable pursuant to §
Entered on Docket
January 14, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-01111 Doc# 30 Filed: 01/14/10 Entered: 01/14/10 15:22:14 Page 1 of 3

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523(a). There being no objections to discharge, the discharge has been duly entered. After entry of
the discharge, Ohayon filed his amended complaint alleging grounds for denial of discharge pursuant
to § 727. Ohayon now says he does not seek denial of the discharge, but merely makes the new
allegations to establish that his claim is nondischargeable. This is nonsense. The only grounds for
establishing a nondischargeable debt are contained in § 523. Ohayon cannot establish that his claim is
nondischargeable by proving that Papera would not have received a discharge if there had been a
timely request for one. See In re Magno, 216 B.R. 34, 42 (9th Cir. BAP 1997).
State law concepts of fiduciary duty are entirely irrelevant to nondischargeability; there must
be an express trust. If there is no express trust, nondischargeability cannot be based on § 523(a)(4).
See In re Cantrell, 329 F.3d 1119, 1125 (9th Cir. 2003); In re Niles, 106 F.3d 1456, 1463 (9th Cir.
1997) .
Section 523(a)(19) buy its own terms applies only to violation of securities laws or the sale of a
security. It does not apply to other types of settlements.
For the foregoing reasons, the first amended complaint will be dismissed, with leave to amend
one last time. The second amended complaint shall be filed within 20 days of the date of this
memorandum. It may not refer to § 727 of the Bankruptcy Code in any way. It may not allege
breach of a fiduciary duty unless it also alleges the existence of an express trust. It may not pray that a
debt is nondischargeable pursuant to § 523(a)(19) without alleging that it arises out of the sale of a
security. Ohayon is cautioned that he may not make any allegation without a reasonable basis for it
and a good faith belief that it is true.
Counsel for Papera shall submit an appropriate form of order.
Dated: January 14, 2010
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 09-01111 Doc# 30 Filed: 01/14/10 Entered: 01/14/10 15:22:14 Page 2 of 3

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CERTIFICATE OF MAILING
I, the undersigned, a regularly appointed deputy clerk of the United States Bankruptcy Court for the
Northern District of California, at Santa Rosa, hereby certify:
That I, in the performance of my duties as such clerk, served a copy of the foregoing document by
depositing it in the regular United States mail at Santa Rosa, California on the date shown below, in a
sealed envelope bearing the lawful frank of the Bankruptcy Judge, addressed as listed below.
Dated: January 14, 2010 	By : 	Katie Andersen
Katie Andersen
Deputy Clerk
Michael Ohayon
369 Santa Ana Avenue
San Francisco, CA 94127
Case: 09-01111 Doc# 30 Filed: 01/14/10 Entered: 01/14/10 15:22:14 Page 3 of 3