W. Carl Reynolds, P.C. v. Boyd

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
In re: 	)
)
TIMOTHY JOSEPH BOYD, 	) 	CHAPTER 11 BANKRUPTCY
)
Debtor. 	) 	CASE NO. 25-51694-JTL
)
)
W. CARL REYNOLDS, PC 	)
d/b/a REYNOLDS, HORNE & 	)
SURVANT 	)
) 	Adversary Proceeding No. 26-5002
Plaintiff, 	)
)
v. 	)
)
TIMOTHY JOSEPH BOYD 	)
)
Defendant. 	)
MEMORANDUM OPINION ON THE DEFENDANT’S
RENEWED MOTION TO DISMISS
SIGNED this 20 day of July, 2026.
United States Bankruptcy Judge
John T. Laney, III
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This matter comes before the Court on a renewed motion to dismiss filed by the
Defendant, Timothy Boyd. The Defendant argues that the amended complaint filed by the
Plaintiff, W. Carl Reynolds, PC, amending Counts I and III again fails to state a claim under
which relief can be granted. This Court disagrees as to Count I but agrees as to Count III.
I. 	FACTUAL FINDINGS AND PROCEDURAL POSTURE
The facts of this case are generally unchanged from this Court’s original memorandum
opinion on the Plaintiff’s first motion to dismiss. Mem. Op., Doc. 11. Those facts are
incorporated by reference. In accordance with its findings in its memorandum opinion, the Court
entered an order granting the Defendant’s original motion to dismiss as to Counts I and III and
denying the Defendant’s motion as to Counts II and IV on April 21, 2026. Order, Doc. 12. In the
Court’s order, the Court gave leave to the Plaintiff to amend its complaint. Id. Platiniff filed an
amended complaint on May 5, 2026. Pl’s. Am. Compl., Doc 15. The Defendant filed this
renewed motion to dismiss on May 18, 2026. Renewed Mot. to Dismiss, Doc. 17. After the
parties completed briefing, the Court heard the parties’ arguments on July 16, 2026, and took the
matter under advisement. Hr’g Held, Doc. 23.
II. 	LEGAL ANALYSIS
a. The Court denies the Defendant’s motion as to Count I.
The Defendant moves the Court to dismiss Count I of the Plaintiff’s complaint contenting
that the facts as pled do not support a claim for nondischargeablity. A motion to dismiss should
be granted if “it appears beyond all doubt that the plaintiffs can prove no set of facts that would
entitle them to relief.” Exec. 100, Inc. v. Martin Cnty., 922 F.2d 1536, 1539 (11th Cir. 1991). The
Court finds that the facts as pled do not preclude the Plaintiff from proving a set of facts and
circumstances under which relief could be granted.
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A claim for nondischargability under § 523(a)(2)(A) requires “(1) the debtor made a false
representation with intent to deceive the creditor; (2) the creditor relied on the representation;
and (3) the creditor sustained a loss as a result of the representation. Moreover, the creditor's
reliance must be justified.” In re Bilzerian, 100 F.3d 886, 892 (11th Cir. 1996) (citations
omitted). The Defendant’s instant motion focuses on the final element of justifiable reliance.
The Defendant argues that the Plaintiff’s amendment makes admissions that concede that
the Plaintiff’s reliance on the Defendant was unjustified. The Plaintiff’s amended complaint
states:
When a lawsuit is filed on any case, it is the responsibility of the responsible
attorney to ensure that the status of the file is changed to “litigation” in the case
management system. The Thompson complaint was filed on February 2020 by the
Debtor, but the status of the Thompson case was never changed to “litigation” in
the case management system. Two paralegals that left the firm with the Debtor
were the only paralegals that had worked on the cases for which the Debtor was
the responsible attorney. Because the status of the Thompson file had not been
changed to “litigation”, there was no means for RHS to determine that it was in
litigation at the time of the June 15, 2020 letter other than through a manual
review of each of the files in the firm’s possession… Accordingly, RHS justifiably
relied on the representation of the Debtor in his June 15, 2020 letter that it
identified all cases then in litigation taken by him in not including that case in the
Agreement[.]
Pl’s. Am. Compl., Doc 15 (emphasis added).
The Defendant states that the Plaintiff’s admission that a “manual review of each of the
files in the firm’s possession” would have revealed the status of the Thompson case concedes
that the Plaintiff could have discovered the omission and failed to do so. Renewed Mot. to
Dismiss, Doc. 17. The Defendant paints his own failure to change the status of the case as a
failure of internal controls and within the control of the Plaintiff which it should have discovered.
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Id. Because of the Plaintiff’s admissions in its complaint, the Defendant argues that the Count
should be dismissed for failure to state a claim. This Court disagrees.
The question of justifiable reliance is a “subjective test” that examines the “facts and
circumstances of the case.” In re Bucciarelli, 429 B.R. 372, 376 (Bankr. N.D. Ga. 2010) See also
Field v. Mans, 516 U.S. 59, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995); In re Vann, 67 F.3d 277, 283
(11th Cir.1995). “The inquiry will thus focus on whether the falsity of the representation was or
should have been readily apparent to the individual to whom it was made.” 4 Collier on
Bankruptcy P 523.08. Justifiable reliance does not, however, impose a duty to investigate the
veracity of a party’s statement. Field v. Mans, 516 U.S. 59, 77 (1995).
Here, the parties sufficiently pled a claim under § 523(a)(2)(A). The justifiability of the
Plaintiff’s reliance on the Defendant’s statements that the “remainder of [his] cases in litigation”
and “all cases” as expressed in his letter to the Plaintiff remains a question requiring more facts
and evidence that may prove the Plaintiff’s reliance was justified. The Plaintiff adequately pled
that the Defendant’s failure to change the status of the case in the firm’s database and subsequent
omission of the Thompson case from his letter formed the basis of the Plaintiff’s justifiable
reliance on the Defendant’s representation. The Defendant’s claim that the Plaintiff admitted an
investigation would have uncovered the Defendant’s omission of the Thompson case is merely
one fact relevant to the inquiry of justifiable reliance, not a dispositive admission. The same is
true as to the Defendant’s claim that the employees of the Plaintiff’s law firm would have been
imputed to know that the litigation status had not been changed. These facts may be relevant to
proving the element at trial, but are not sufficient to find that, as a matter of law, no set of facts
could be proven to support this claim. The Court, therefore, will not dismiss Plaintiff’s Count I.
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The Defendant argues, in the alternative, the Plaintiff’s allegations fail to plead fraud with
particularity as required by Rule 9(b). Federal Rule of Bankruptcy Procedure Rule 7009
incorporates Federal Rules of Civil Procedure Rule 9. Rule 9(b) states, “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.”
To comply with 9(b), the Eleventh Circuit has stated a complaint must:
set forth (1) precisely what statements or omissions were made in which documents
or oral representations; (2) the time and place of each such statement and the person
responsible for making (or, in the case of omissions, not making) them; (3) the
content of such statements and the manner in which they misled the plaintiff; and
(4) what the defendant obtained as a consequence of the fraud.
FindWhat Inv'r Group v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011) (citations
omitted).
Here, the amendments to the Plaintiff’s allegation adequately pled fraud under 9(b). In its
amended Complaint at inserted paragraph 25(b), the Plaintiff alleges that the Thompson case was
omitted in the June 15, 2020 Letter sent from the Defendant to the Plaintiff satisfying the
identification of the statement or omission and the time and place requirements set by the
Eleventh Circuit. Pl’s. Am. Compl., Doc 15. The Plaintiff also described in paragraph 22 of its
original complaint that the Defendant represented that the cases in the letter represented all the
cases in litigation omitting the Thompson case which satisfied the third element. Pl.’s Compl,
Doc. 1. Finally, paragraph 24 of the Plaintiff’s original complaint states the share of the fees that
belonged to the Plaintiff were directed to the Boyd Law Firm and to the Defendant for his own
benefit enumerating what the defendant obtained by making the misstatement as required by the
Eleventh Circuit. Id. Thus, the elements required by the Eleventh Circuit are met and the Court
will not dismiss Plaintiff’s Count I on these grounds.
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b. The Court grants the Defendant’s motion as to Count III and dismisses
the claim with prejudice.
The Defendant also moves the Court to dismiss Count III of the Plaintiff’s complaint.
Count III of the Plaintiff’s complaint alleges that the Defendant had a fiduciary duty to the
Plaintiff because their correspondence created a trust making the debt nondischargeable under §
523(a). This Court finds that a trust has not been alleged to and dismisses Count III.
The fiduciary duty and trusts protected by the Eleventh Circuit and by the Supreme Court
are narrow in nature. A trust must have the following elements:
First, the fiduciary relationship must have (1) a trustee, who holds (2) an
identifiable trust res, for the benefit of (3) an identifiable beneficiary or
beneficiaries. This tracks the traditional and narrow definition of trusts in early
Supreme Court cases as well as our own approach and the approach taken by
bankruptcy courts in this Circuit. Second, the fiduciary relationship must define
sufficient trust-like duties imposed on the trustee with respect to the trust res and
beneficiaries to create a technical trust. Based on our caselaw, the two most
important trust-like duties, and the ones that we have held create a technical trust,
are the duty to segregate trust assets and the duty to refrain from using trust assets
for a non-trust purpose. Third, the debtor must be acting in a fiduciary capacity
before the act of fraud or defalcation creating the debt.
In re Forrest, 47 F.4th 1229, 1241 (11th Cir. 2022) (citation omitted).
This Court previously found that the parties did not create a trust in the Letter
Agreements because the parties did not include enumerated duties for the Plaintiff to segregate
the Defendant’s owed funds or to refrain from using the funds for any non-trust purpose. Mem.
Op., Doc. 11. In an attempt to cure these deficiencies, the Plaintiff inserts paragraph 32(a) into its
complaint, which includes facts that it was the parties’ “intention” to create a trust and that the
Defendant would hold the funds and then disperse the funds upon collection of a settlement. Pl’s.
Am. Compl., Doc 15. The amended complaint, however, still fails to plead, and the Letter
Agreements do not contain any facts that support, the allegation that the Defendant was to
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segregate the funds or that the Defendant had a duty to refrain from using the settlement funds
for a non-trust purpose required by the Eleventh Circuit to form a trust. The Plaintiff asked the
Court during oral argument to infer these implicit duties from the written agreements and the
conduct of the parties. Such inferences would be inappropriate given the facts and evidence as
pled. Therefore, the Court finds that the Plaintiff did plead facts and circumstances that the
execution of the agreement created an express trust for purposes of § 523(a)(4).
The Plaintiff also alleges that the Defendant had a technical trust that imposed a fiduciary
duty on the Defendant for purposes of § 523(a)(4). The Plaintiff also claims that Rule1.15(I) of
the Georgia Rules of Professional Conduct required the Defendant to hold the funds in trust for
the benefit of the Plaintiff. This Court disagrees.
The Eleventh Circuit states that “‘constructive’ or ‘resulting’ trusts, which generally serve
as a remedy for some dereliction of duty in a confidential relationship, do not fall within the §
523(a)(4) exception ‘because the act which created the debt simultaneously created the trust
relationship.’” In re Fernandez-Rocha, 451 F.3d 813, 816 (11th Cir. 2006) (quoting Quaif v.
Johnson, 4 F.3d 950, 953 (11th Cir. 1993)) (emphasis in original). Thus, recovering based on the
written agreement alone, without the creation of an express trust as defined by the Forrest case is
insufficient to impose a fiduciary duty under § 523(a)(4).
The Plaintiff’s argument that Rule 1.15(I) creates an express trust for the benefit of the
Defendant. This argument also fails. Rule 1.15(I) states, in part,
(a) A lawyer shall hold funds or other property of clients or third persons that
are in a lawyer's possession in connection with a representation separate from the
lawyer's own funds or other property. Funds shall be kept in one or more
separate accounts maintained in an approved institution as defined by Rule 1.15
(III) (c) (1). Other property shall be identified as such and appropriately
safeguarded. Complete records of such account funds and other property shall be
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kept by the lawyer and shall be preserved for a period of six years after
termination of the representation.
(b) 	For the purposes of this rule, a lawyer may not disregard a third person's
interest in funds or other property in the lawyer's possession if:
(1) the interest is known to the lawyer, and
(2) the interest is based upon one of the following:
(i) A statutory lien;
(ii) A final judgment addressing disposition of those funds or
property; or
(iii) A written agreement by the client or the lawyer on behalf
of the client guaranteeing payment out of those funds or
property.
The lawyer may disregard the third person's claimed interest if the lawyer
reasonably concludes that there is a valid defense to such lien, judgment, or
agreement.
The Plaintiff argues that these professional requirements imposed on the Defendant by the State
Bar create an express trust for its benefit. This argument is unpersuasive.
The Georgia Supreme Court reads the obligations imposed by Rule 1.15(I) on lawyers
practicing within the jurisdiction very narrowly. In Matter of Brown, 904 S.E.2d 343 (Ga. 2024),
the Georgia Supreme Court limited the protections of the trust to only between the lawyer and
the lawyer’s client. Furthermore, in Matter of Ferguson, 929 S.E.2d 231 (Ga. 2026) the Georgia
Supreme Court narrowed the “third person’s interest” in funds in a lawyer’s trust to only those
interests enumerated in Rule 1.15(I)(b), stating the entire rule should be read in “harmony.” The
Court applied the reading of third person to Rule 1.15(I) parts (c) and (d) as well. Id. These
opinions do not create a trust or impose a general fiduciary duty to an outside party that may
have an interest in the trust’s funds outside of the types of interests written into the rule.
The Plaintiff, a law firm outside of the representation between the Defendant and his
clients, is not protected by the trust requirements of Rule 1.15(I). The Plaintiff pled no facts that
its interests would have been protected by Rule 1.15(I)(b) and the Letter Agreements do not
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provide any support to that claim. The Plaintiff argued during the hearing that the funds were
being held in trust so the Plaintiff would not sue the Defendant’s clients for quantum meruit, but
such a claim for the funds is still outside the bounds of the types of third-party claims protected
under Rule 1.15(I)(b). Rule 1.15(I), therefore, does not create a trust for the benefit of the
Defendant under which the Defendant would have owed the Plaintiff a fiduciary duty for
purposes of § 523(a)(4).
For the reasons stated, the Court dismisses the Plaintiff’s Count III. The Plaintiff has
previously been given leave by this Court to amend its complaint. The Court finds that, based on
the facts presented in the original complaint and the Plaintiff’s amendment, the Plaintiff cannot
prove a set of facts that entitle the Plaintiff to relief. See Exec. 100, Inc. v. Martin Cnty., 922 F.2d
at 1539. Thus, the Court dismisses Count III with prejudice.
III. CONCLUSION
For the aforementioned reasons, the Court DENIES the Plaintiff’s motion as to Count I
and GRANTS the motion as to Count III and DISMISSES the claim with prejudice. The Court
will enter an order accordingly.
END OF DOCUMENT
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