V-Belt Global Supply, LLC v. Eppinga

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF SOUTH DAKOTA
In re: 	) 	Bankr. No. 25-40132
) 	Chapter 13
DANIEL LEE EPPINGA 	)
aka Dan Eppinga 	)
SSN/ITIN xxx-xx-6627 	)
)
Debtor. 	)
)
V-BELT GLOBAL SUPPLY, LLC 	) 	Adv. No. 25-4007
)
Plaintiff 	)
)
-vs- 	) 	DECISION RE:
) 	PLAINTIFF’S MOTION FOR
DANIEL LEE EPPINGA 	) 	SUMMARY JUDGMENT
aka Dan Eppinga 	)
)
Defendant. 	)
The matter before the Court is Plaintiff V-Belt Global Supply, LLC's unopposed
Motion for Summary Judgment (doc. 29) and its supporting documents. 	The Court
has jurisdiction over this adversary proceeding under 28 U.S.C. §1334 and 28 U.S.C.
§157(a). 	This is a core proceeding pursuant to 28 U.S.C. §157(b)(2). 	The Court
enters 	these 	findings 	and 	conclusions 	pursuant 	to 	Fed.Rs.Bankr.P. 	7052 	and
9014(c).
FACTS
On May 21, 2025, Debtor-Defendant Daniel Eppinga (“Debtor”) filed a chapter
13 bankruptcy. 	Before this filing, Debtor had been a party to years of state court
litigation arising from business endeavors he had pursued with his brother Scott
Eppinga (“Scott”) and a third-party, Greg Lewis (“Lewis”).1 Debtor, Scott, and Lewis
were at one time co-owners of V-Belt Global Supply, LLC (“V-Belt”), the plaintiff in
this adversary proceeding.
1 The state court litigation began in 2015, but the Third Amended Complaint in state court
was dated June 5, 2018.
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Debtor’s chapter 13 plan was confirmed on September 9, 2025. 	As part of
the plan, Debtor’s membership interest in V-Belt was surrendered to V-Belt or Scott
subject to any valid setoff rights or security interests in Debtor’s distributions. 	Prior
to plan confirmation, V-Belt filed a proof of claim for $12,866,025.00. 	V-Belt
itemized its claim at $5,402,950.00 in principal and $7,463,075.00 in interest,
which was accruing at $3,266.00 per day. 	V-Belt asserted its claim was “being
adjudicated against numerous defendants including [Debtor] in the lawsuit captioned
Scott 	Eppinga 	v. 	Dan 	Eppinga, 	et 	al., 	Civ. 	15-3082, 	Second 	Judicial 	Circuit,
Minnehaha County, South Dakota.”
On September 5, 2025, V-Belt commenced this adversary proceeding against
Debtor, seeking the entry of judgment excepting the claims of V-Belt from any
discharge which may be granted to Debtor in accordance with 11 U.S.C. §523(a)(4),
as well as attorneys’ fees, costs, and interest. 	V-Belt asserts Debtor owes it a debt
“created 	by 	the 	fraud 	or 	defalcation 	while 	acting 	in 	a 	fiduciary 	capacity,
embezzlement, and/or larceny of the Debtor.” 	With the exception of admitting
jurisdiction, that the allegations are a core proceeding, the identity of the parties, and
acknowledging Debtor filed bankruptcy, Debtor denied “each and every” other
allegation 	in 	the 	adversary 	complaint 	but 	asserted 	certain 	documents2 filed 	in
Minnehaha County state court “speak for themselves.”
V-Belt filed a motion for summary judgment on May 7, 2026, accompanied by
a brief, approximately 400 pages in exhibits, and a statement of undisputed material
facts. 	Debtor did not respond to the motion for summary judgment.
DISCUSSION
I. 	Summary Judgment Standard
Summary judgment is appropriate when there is no genuine issue as to any
material 	fact 	and 	the 	movant 	is 	entitled 	to 	judgment 	as 	a 	matter 	of 	law.
Fed.R.Bankr.P. 7056 and Fed.R.Civ.P. 56(a); McManemy v. Tierney, 970 F.3d 1034,
2 The certain documents consist of documents referred to in the Third Amended Complaint,
answers, and responses filed in the Minnehaha County state court action.
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1037 (8th Cir. 2020) (citing Phillips v. Mathews, 547 F.3d 905, 909 (8th Cir. 2008)).
An issue of material fact is genuine if the evidence would allow the trier of fact to
return a verdict for either party. Rademacher v. HBE Corp., 645 F.3d 1005, 1010
(8th Cir. 2011). 	A fact is material if it might affect the outcome of the case.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 	The Court considers
the pleadings, discovery, and any affidavits when reviewing for summary judgment.
Wood v. SatCom Mktg., LLC, 705 F.3d 823, 828 (8th Cir. 2013) (citing Torgerson
v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011)). 	The Court’s function
“is not ‘to weigh the evidence and determine the truth of the matter but to determine
whether there is a genuine issue for trial.’” Tolan v. Cotton, 572 U.S. 650, 656
(2014) (quoting Anderson, 477 U.S. at 249).
The party moving for summary judgment bears the burden of showing the
record does not contain a genuine issue of material fact and identifying the parts of
the record which bear out this assertion. Handeen v. LeMaire, 112 F.3d 1339, 1346
(8th Cir. 1997) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Further,
“[i]f the moving party is the plaintiff, it carries the additional burden of presenting
evidence that establishes all elements of the claim.” Ramette v. Al & Alma’s Supper
Club Corp. (In re Bame), 252 B.R. 148, 154 (Bankr. D. Minn. 2000).
Once the movant has met this burden, the non-moving party “must advance
specific facts to create a genuine issue of material fact” to avoid summary judgment.
F.D.I.C. v. Bell, 106 F.3d 258, 263 (8th Cir. 1997) (quoting Rolscreen Co. v. Pella
Prods. of St. Louis, Inc., 64 F.3d 1202, 1211 (8th Cir. 1995)). 	If the non-moving
party does not oppose the summary judgment motion, the court must still determine
whether summary judgment is appropriate as a matter of law on that claim. Canada
v. Union Elec. Co., 135 F.3d 1211, 1213 (8th Cir. 1997); see also Feickert v.
Wheeler, 2022 WL 899531, at *3 (D.S.D. March 28, 2022). However, the evidence
must be viewed in the light most favorable to the party opposing the motion. Barge
v. Anheuser-Busch, Inc., 87 F.3d 256, 258 (8th Cir. 1996) (citing Harvey v.
Anheuser-Busch, Inc., 38 F.3d 968, 971 (8th Cir. 1994)). 	The non-moving party is
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entitled to all reasonable inferences that can be drawn from the evidence without
resorting to speculation. P.H. v. Sch. Dist. of Kansas City, Mo., 265 F.3d 653, 658
(8th Cir. 2001) (quoting Sprenger v. Fed. Home Loan Bank of Des Moines, 253 F.3d
1106, 1110 (8th Cir. 2001)).
II. 11 U.S.C. §523(a)(4)
In its complaint, V-Belt seeks a determination that the debt owed to it by
Debtor cannot be discharged pursuant to 11 U.S.C. §523(a)(4). 	“Section 523(a)(4)
of 	the 	Federal 	Bankruptcy 	Code 	provides 	that 	an 	individual 	cannot 	obtain 	a
bankruptcy discharge from a debt ‘for fraud or defalcation while acting in a fiduciary
capacity, embezzlement, or larceny.’” Bullock v. BankChampaign, N.A., 569 U.S.
267, 269 (2013) (quoting 11 U.S.C. §523(a)(4)). The Eighth Circuit construes these
exceptions narrowly. Reshetar Systems, Inc. v. Thompson (In re Thompson), 686
F.3d 940, 944 (8th Cir. 2012). 	“The creditor bears the burden of proof in a
proceeding to determine the dischargeability of a debt under §523(a)(4).” Goldstein
v. Diamond (In re Diamond), 530 B.R. 451, 455 (B.A.P. 8th Cir. 2015) (internal
citations omitted).
A. 	Fraud or defalcation while acting in fiduciary capacity
To succeed on its section 523(a)(4) argument based upon fraud or defalcation
while Debtor was acting in a fiduciary capacity, V-Belt must show: (1) a fiduciary
relationship existed between Debtor and V-Belt, and (2) Debtor committed fraud or
defalcation in the course of that fiduciary relationship. U.S. Dep’t of Labor v. Harris
(In re Harris), 898 F.3d 834, 842 (8th Cir. 2018) (quoting Jafarpour v. Shahrokhi (In
re Shahrokhi), 266 B.R. 702, 707 (B.A.P. 8th Cir. 2001)).
V-Belt referenced multiple documents in its pleadings but relied heavily upon
the Third Amended Complaint (the “TAC”) and Debtor’s Answer to the TAC, both
filed 	in 	the 	state 	court 	litigation; 	the 	V-Belt 	Global 	Supply, 	LLC, 	Ownership
Agreement dated February 12, 2013 (the “Ownership Agreement”); V-Belt’s Board
of Directors Resolution Authorizing Issuance of Stock to a Specific Person dated
August 	13, 	2009 	(the 	“Stock 	Issuance 	Agreement”); 	V-Belt’s 	disbursement
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agreement (the “Disbursement Agreement”); and the Expert Report of Kaustuv
Chakrabarti, CFA, CFE, CVA dated October 2, 2023 (the “expert report” or the
“report”). 	In Debtor’s Answer to the TAC, he admits entering into the Ownership
Agreement and allows the document to speak for itself and also admits the Stock
Issuance Agreement can speak for itself but states it is no longer in effect after the
Ownership Agreement was issued. 	Debtor also admits in his deposition that he
signed the Disbursement Agreement, but states in his Answer to the TAC that Scott
never signed the Disbursement Agreement and delivered it to V-Belt or its officers.
Last, the expert report relied on many exhibits and considered multiple documents
which were neither provided nor authenticated for the Court to consider as proper
evidence. 	Of the documents the expert considered in his report, there were a total
of 19 full depositions and substantial parts of 6 others that were not provided with
the report or to the Court in any manner. There were also exhibits, QuickBooks data,
and other financials attached to the report that were not properly authenticated.
These 	deficiencies 	create 	issues 	concerning 	V-Belt’s 	entitlement 	to 	summary
judgment.
With respect to the first element, "[w]hether a relationship is a 'fiduciary' one
within the meaning of §523(a)(4) is a question of federal law." In re Harris, 898 F.3d
at 842 (quoting In re Thompson, 686 F.3d at 944). 	Under this circuit’s precedent,
the term 'fiduciary' in §523(a)(4) “refer[s] only to trustees of 'express trusts.'" In re
Harris, 898 F.3d at 842 (quoting Hunter v. Philpott, 373 F.3d 873, 875 (8th Cir.
2004)). 	The court has observed “[t]he fiduciary relationship reflected in an express
or technical trust is typically created by contract.” Arvest Mortg. Co. v. Nail (In re
Nail), 680 F.3d 1036, 1039-1040 (8th Cir. 2012). 	"It is the substance of a
transaction, rather than the labels assigned by the parties, which determines whether
there is a fiduciary relationship for bankruptcy purposes." Id. at 1040 (quoting
Barclays Am./Bus. Credit, Inc. v. Long (In re Long), 774 F.2d 875, 878-79 (8th Cir.
1985)).
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In Debtor’s Answer to the TAC, he admits owing a fiduciary duty to V-Belt
“with the qualification that Scott Eppinga was invited to all member meetings but
chose not to attend.” 	Debtor’s admission in his Answer establishes a fiduciary
relationship 	between 	Debtor 	and 	V-Belt. 	Further, 	the 	Ownership 	Agreement
identifies Debtor, Scott, and Lewis as members of V-Belt and contains language in
Section 10.1 regarding the members’ fiduciary duties. 	Debtor’s admission of his
fiduciary duty combined with Section 10.1 of the Ownership Agreement proves the
first element of section 523(a)(4): a fiduciary relationship existed between Debtor
and V-Belt.
To 	satisfy 	the 	second 	element 	of 	section 	523(a)(4), 	V-Belt 	must 	show
Debtor’s 	conduct 	during 	the 	course 	of 	the 	fiduciary 	relationship 	constituted
defalcation or fraud. 	The definition of defalcation begins with the "misappropriation
of trust funds or money held in any fiduciary capacity; [the] failure to properly
account for such funds.” Tudor Oaks Ltd. Pshp. v. Cochrane (In re Cochrane), 124
F.3d 978, 984 (8th Cir. 1997) (citing Lewis v. Scott (In re Lewis), 97 F.3d 1182,
1186 (9th Cir. 1996)). 	In addition, this misappropriation must occur with the
requisite 	mindset, 	more 	than 	a 	negligent 	mistake. 	Bullock, 	569 	U.S. 	at 	277
(articulating 	a 	”heightened 	standard” 	and 	remanding 	case 	where 	“objective
recklessness” had been applied by lower court). 	To satisfy the heightened scienter
requirement for defalcation, the misappropriation or failure to account for trust funds
must be either intentional or “of such a nature and degree that, considering the nature
and purpose of the actor’s conduct and the circumstances known to him, its
disregard involves a gross deviation from the standard of conduct that a law-abiding
person would observe in the actor’s situation.” Id. at 274. (internal citation omitted).
V-Belt may prove defalcation if it can show Debtor acted intentionally or with
gross recklessness in creating the alleged debt owed to V-Belt. 	V-Belt produced an
expert report and excerpts of depositions and exhibits from state court in support of
its position. 	The report, which is authenticated by an affidavit from its author,
Kaustuv Chakrabarti, identifies damages arising from several sources, including lost
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income arising from the following entities, which, according to the allegations, were
formed individually or jointly by Debtor and Lewis while they were co-owners of V-
Belt and owed fiduciary duties to V-Belt: MVP Industrial Supply, LLC (“MVP”); Power
Drive Holdings, LLC; Global Branding Technologies, Inc.; and Commerce Service
Group Inc. 	The report further alleged damages that arose from the cost of goods
(purchased 	by 	V-Belt 	from 	MVP 	and 	Power 	Drive) 	that 	lacked 	supporting
documentation, potential personal expenses of Debtor, a loan obligation incurred by
V-Belt for Debtor’s personal benefit, and unnecessary rent payments owed by V-Belt
under a lease it assumed from Power Drive.
However, V-Belt cannot prove these genuine material facts are undisputed
with the expert report when a number of the documents the expert considered are
not provided and when some of the documents are not properly authenticated. 	In
addition, there are inconsistencies between V-Belt’s arguments and some of the
deposition excerpts. 	For instance, Debtor asserts the Stock Issuance Agreement V-
Belt relies on for part of its argument was overridden by the Ownership Agreement.
Debtor also stated during his deposition the re-marking of the purchase price on the
belts, which MVP did for V-Belt, was for “a lesser price than the process that Power
Products was doing the same type of work for us.” 	Although the expert report
references this deposition and excerpt, the report disregards the other supplier’s
allegedly higher price and estimates a loss to V-Belt based on the possibility that the
marking up “could have been performed by V-Belt, which would have enabled V-Belt
to avoid MVP’s price markup.” Because Mr. Chakrabarti’s report relies upon potential
misstatements and other material facts that are disputed or not properly before the
Court, the value of the claim remains in dispute. 	The report also expressly states it
offers no opinions regarding liability issues in this litigation.
The determination of whether Debtor’s conduct constitutes defalcation hinges
on the nature of the obligations Debtor owed to V-Belt and, whether at each relevant
time, Debtor acted with the requisite intent or gross recklessness so his conduct
constituted a breach of his fiduciary duty. 	V-Belt may have proven sloppy business
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practices undertaken by Debtor, but the Court is unable to discern from the record if
Debtor’s conduct was intentional or a gross deviation from the standard of conduct
of a law-abiding person in Debtor’s situation. 	The Court finds genuine issues of
material fact exist as to defalcation or fraud.
B. 	Embezzlement
V-Belt also argues Debtor is not entitled to discharge the debt he owes to V-
Belt because Debtor obtained it through embezzlement under section 523(a)(4).
“Embezzlement, for purposes of section 523(a)(4), is the fraudulent appropriation of
property of another by a person to whom such property has been entrusted or into
whose hands it has lawfully come.” In re Thompson, 686 F.3d at 947 (quoting In re
Nail, 680 F.3d at 1042). 	This Court has previously recognized that intent is an
element of embezzlement under section 523(a)(4) and been unwilling to make a
summary determination of embezzlement where intent is not clear from the record.
First Dakota National Bank, N.A. v. James J. Scoblic (In re Scoblic), Bankr. No. 04-
40923, Adv. No. 04-4071, slip op. at 7-8 (Bankr. D.S.D. May 18, 2005) (citing
United States v. One 1989 Jeep Wagoneer, 976 F.2d 1172, 1176 (8th Cir. 1992)).
V-Belt supports its position with the expert’s report previously discussed
herein. In the report, the expert identifies various pieces of V-Belt property entrusted
to Debtor, who was elected President of V-Belt in 2010, and appears to have had
lawful control over V-Belt property during those relevant times. 	Those pieces of
property include funds of V-Belt used to pay consulting fees to Debtor’s consulting
company, fees to incorporate one of Debtor’s companies, “marked-up or inflated”
rates, the purchase price of a building, unnecessary lease payments, a loan for
Debtor’s 	personal 	use, 	personal 	expense 	reimbursements 	to 	Debtor 	with 	no
supporting documentation, and others.
However, V-Belt cannot prove the existence of undisputed genuine material
facts with the expert report when a number of the documents the expert considered
are not provided, some of the documents are not properly authenticated, and when
there are inconsistencies in V-Belt’s arguments based upon the expert report and the
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excerpts 	from 	the 	depositions. 	V-Belt relies 	upon 	the 	expert 	report 	to 	prove
fraudulent intent, but the report is based upon material facts that are disputed or not
properly before the Court. 	Therefore, intent is not clear from the record and V-Belt
has failed to meet its burden of proof in regard to its embezzlement claim against
Debtor under section 523(a)(4).
C. 	Larceny
V-Belt briefly argues its claim against Debtor is non-dischargeable because the
Debtor committed “larceny” under section 523(a)(4). 	This Court addressed the
elements of larceny under section 523(a)(4) in Cheryl Reed v. Lloyd C. Johnson (In
re Johnson), Bankr. No. 05-30023, Adv. No. 05-3004, slip op. (Bankr. D.S.D. May
30, 2006). See also 	Mitchell v. Iverson (In re Mitchell), 2007 WL 1302652, at *5
(Bankr. D.S.D. Apr. 30, 2007). 	As a sister court has explained, “[t]he essential
difference between larceny and embezzlement is the manner in which property
comes into the possession of the person charged. 	Embezzlement involves a lawful
or authorized possession. 	In the case of larceny, however, the original taking and
possession is unlawful.” Eletech, Inc. v. Jones (Matter of Jones), 648 B.R. 371, 385
(Bankr. D. Neb. 2022) (citing Rech v. Burgess (In re Burgess), 106 B.R. 612, 622
(Bankr. D. Neb. 1989)). See also Werner v. Hofmann, 5 F.3d 1170, 1172 (8th Cir.
1993) (concluding larceny did not apply where original possession was lawful).
Because the allegations in this case relate to property V-Belt entrusted to
Debtor as president of the company, the analysis under “embezzlement” is more
appropriate, which V-Belt recognized in its brief. Because the alleged original takings
and possession of V-Belt property by Debtor were lawful, larceny does not apply
here.
CONCLUSION
V-Belt has failed to meet its burden of proof under 11 U.S.C. §523(a)(4), and
genuine issues of material fact remain. 	As such, V-Belt is not entitled to judgment
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as a matter of law. 	The Court will therefore enter an order denying V-Belt’s motion
for summary judgment, and a second pre-trial conference will be scheduled.3
So ordered: 	September 17, 2026.
3 With over a ten-year history in state court regarding this alleged debt between the parties
and, as a result, it appearing the matter would be more trial ready in state court, V-Belt may
wish to seek relief from the automatic stay and return to state court to properly determine
the debt owed to it by Debtor and then return to this Court to properly determine if such
debt is nondischargeable.
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