Bank of Kentucky, Inc v. Ruhe

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re
DANIEL JOSEPH RUHE
Debtor
THE BANK OF KENTUCKY,
INC.
Plaintiff
vs.
DANIEL JOSEPH RUHE
Defendant
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Case No. 04-11202
Chapter 7
Judge Hopkins
Adversary Case No. 04-1142
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: June 06, 2005
____________________________________________________________
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ORDER GRANTING MOTION FOR LEAVE TO AMEND
COMPLAINT
This matter is before the Court on a motion to amend complaint (“Motion”)
(Doc. 22) filed by the Plaintiff, The Bank of Kentucky, Inc. (“the Bank”). By its
Motion, the Bank seeks to amend its complaint to seek relief under 11 U.S.C. §
523(a)(6). The Defendant, Daniel Joseph Ruhe (“Ruhe”), opposes the Motion.
The Bank commenced this adversary proceeding with a complaint to determine
dischargeability. See Doc. 1. The complaint alleges that: (1) Ruhe is a principal
stockholder of a dealership known as Mid West Truck Center, Inc. (“MWTC”); (2)
MWTC obtained financing from the Bank and secured the same with a blanket
security interest in, among other things, all inventory and equipment; (3) MWTC
failed to make payment on over $400,000 in federal excise tax from the sale of its
inventory; (4) Ruhe thereafter closed MWTC and sold the Bank’s collateral “out of
trust in violation of the [Bank’s] security interest”; and (5) Ruhe used the proceeds
to retire personal liabilities, including his personal liability for the federal excise
taxes. The complaint alleges that the debt to the Bank is nondischargeable under 11
U.S.C. § 523(a)(4). Ruhe filed a timely answer to the complaint. See Doc. 6.
The Bank now seeks leave to amend its complaint to change the statutory basis
for relief from § 523(a)(4) to § 523(a)(6). Ruhe opposes the Motion, arguing that
the § 523(a)(6) claim is time barred because it was not asserted within 60 days of the
first meeting of creditors. See Fed. R. Bankr. P. 4007(c).
The Bank does not dispute that its Motion was filed more than 60 days after
the first meeting of creditors. Nonetheless, the Bank contends that its § 523(a)(6)
claim is not time barred because it relates back to the original complaint under Fed.
R. Civ. P. 15(c)(2). The Court agrees.
Rule 15(c)(2) provides:
An amendment of a pleading relates back to the date of the original
pleading when
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. . . .
(2) the claim or defense asserted in the amended
pleading arose out of the conduct, transaction, or
occurrence set forth or attempted to be set forth in the
original pleading[.]
The Sixth Circuit has expounded upon Rule 15(c)(2) as follows:
“The thrust of Rule 15 is to reinforce the principle that cases ‘should be
tried on their merits rather than the technicalities of pleadings.’” Thus,
a court will permit a party to add even a new legal theory in an
amended pleading as long as it arises out of the same transaction or
occurrence. Likewise, “[a]n amendment that alleges added events
leading up to the same injury may relate back.”
Miller v. American Heavy Lift Shipping, 231 F.3d 242, 248 (6th Cir. 2000) (citations
omitted).
In the instant proceeding, the proposed amendment (see Ex. to Doc. 22) varies
little from the original complaint other than the statutory basis for relief. There is
absolutely no difference in the factual predicate to the claim. The only difference
effectuated by the amended complaint is found in paragraphs 14-18, where the Bank
asserts a claim under § 523(a)(6) instead of § 523(a)(4). The amendment does not
even contain “added events” permitted by the Sixth Circuit. The § 523(a)(6) claim
is based upon the exact same facts alleged in the original complaint. Because the
alleged injury remains the same, the § 523(a)(6) amendment relates back to the
original complaint under Rule 15(c)(2).
This conclusion is consistent with the only reported decision, to the Court’s
knowledge, that involves a § 523(a)(6) amendment to a § 523(a)(4) complaint. See
Tester v. American Honda Finance Corp., 56 B.R. 208 (W.D. Va. 1985). Although
Rule 15(c)(2) decisions are somewhat fact specific, the facts in Tester are remarkably
analogous to the facts in this proceeding. In Tester, the creditor filed an adversary
complaint under § 523(a)(4) based upon an alleged failure to account for funds
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received from the sale of inventory under a floor plan financing arrangement. When
the creditor moved to amend the complaint to add § 523(a)(6) as an alternative basis
for relief, the debtors argued that the amendment was time barred because it was
filed more than 60 days after the first meeting of creditors. The district court,
reversing the bankruptcy court, held that the amendment related back to the original
complaint under Rule 15(c)(2) where the amendment only added an additional basis
for relief.
For the foregoing reasons, the Motion is hereby GRANTED.
Copies to:
Dennis R. Williams
DWilliams@aswdlaw.com
Richard Boydston
rb2@gdm.com
U.S. Trustee
ustpregion09.ci.ecf@usdoj.gov
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