10 18 11 nvb 10-05104 cadle motion for leave amend complaint supports for allowing 4 10 12 filing by...

7/29/2019 10 18 11 NVB 10-05104 Cadle Motion for Leave Amend Complaint Supports for Allowing 4 10 12 Filing by Coughli

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MICHAEL P. OROURKE, ESQ.Nevada Bar No. 6764OROURKE LAW GROUP, PC

800 Fifth Avenue, Suite 4100Seattle, Washington 98104Telephone: (206) 477-1475Facsimile: (206) [email protected]

BRIAN J. SMITH, ESQ.Nevada Bar No. 11279Of Counsel to OROURKE LAWGROUP, PC700 South Third Street

Las Vegas, Nevada 89101Telephone: (702) 380-8248Facsimile: (702) 382-7595Attorneys for Plaintiff

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

In Re:

ROBERT KELLER

Debtor.

THE CADLE COMPANY,

Plaintiff,v.

ROBERT KELLER,

Defendant.

Case No.: BK 10-52639-gwzChapter 7

Adversary ProceedingNo. 10-05104-gwz

MOTION FOR LEAVE TO AMEND

ADVERSARY COMPLAINT

Hearing Date: 12/7/10Hearing Time: 10:00 AM

Case 10-05104-gwz Doc 33 Entered 10/18/11 14:39:21 Page 1 of 5


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Plaintiff, THE CADLE COMPANY, by and through its counsel of record, hereby moves this

Court for an Order granting leave to amend its Adversary Complaint against Debtor/Defendant,

Robert Keller. This Motion is based on the following Memorandum of Points and Authorities as well

as Rule 7015 Fed. R. Bankr. P. and Rule 15(2) Fed. R. Civ. P.

MEMORANDUM OF POINTS AND AUTHORITIES

I.STATEMENT OF UNDISPUTED FACTS

On July 2, 2010, Debtor/Defendant ROBERT KELLER (hereinafter Keller or Defendant)

filed a Voluntary Petition for Relief under Chapter 7 of Title 11, U.S.C. See,Declaration of Michae

ORourke, 2. The 341 Meeting was held on August 12, 2010 and Plaintiff filed its adversary

complaint against Defendant Keller on October 12, 2010 with causes of action for non-

dischargeability under 11 U.S.C. 523(a)(2)(A), 523(a)(4) and res judicata [ECF Document 1]

See,Declaration of Michael ORourke, 3,4.

Plaintiff is the assignee and holder of a judgment against Defendant Keller that was initially

obtained by a state-appointed receiver relating to Defendants activities in connection with two Texas

Lloyds insurance companies: American Guardian Underwriters Lloyds Insurance Company

(AGULIC)and American Guardian Lloyds, Inc. (AGL). See,Declaration of Michael ORourke

5. After thoroughly litigating the issues but prior to trial, Defendant Keller consented to the entry of

judgment in the amount of $500,000.00 (in May, 1995) based on causes of action for: fraud in rea

estate transactions, common law fraud, a Texas Insurance Code violation for the improper pledge or

hypothecation of AGULICs assets, corporate alter ego, Texas Deceptive Trade Practices

Consumer Protection Act violations, fraudulent conveyance, conspiracy to fraudulently convey, and



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violations of 18 U.S.C. 1962 (Racketeering Influenced and Corrupt Organizations Act). See,

Declaration of Michael ORourke, 5, 6.

A few days before the filing of the adversary proceeding, Plaintiff was able to conduct an

examination of Defendant pursuant to Rule 2004 F.R. Bankr. P. Plaintiff was also able to conduct an

examination of Defendants wife, Samantha Hall, on April 18, 2011. At both examinations, Plaintiff

learned additional facts to support the novel cause of action contained in its Amended Complaint

See,Declaration of Michael ORourke, 7.

Defendant Keller brought a Motion to Dismiss Adversary Proceeding on January 18, 2011

[ECF Document 16] but later withdrew it after Plaintiff submitted its opposition [ECF Document 26]

Defendant finally submitted his Answer on February 28, 2011 [ECF Document 29]. See, Declaration

of Michael ORourke, 8. Following Defendants answer, counsel for Plaintiff attempted numerous

times to meet with Defendant to agree on a discovery plan and submit a proposed scheduling order to

the court Defendant has never made himself available to do so. See, Declaration of Michae

ORourke, 9. To this date, the Court has not issued any pre-trial scheduling order stating nor given

a deadline to amend any pleadings. See,Declaration of Michael ORourke, 10.

II.CONTROLLING LAW

Rule 7015 Fed. R. Bankr. P., incorporating Rule 15 Fed. R. Civ. P., provides a liberal

standard for the amendment of pleadings. Rule 15 states in pertinent part:

(1)A party may amend its pleading once as a matter of course within:(A) 21 days after serving it, or(B) if the pleading is one to which a responsive pleading is required, 21 days afterservice of a responsive pleading or 21 days after service of a motion under Rule 12(b),(e), or (f), whichever is earlier.



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(2) Other Amendments. In all other cases, a party may amend its pleading only withthe opposing partys written consent or the courts leave. The court should freely give

leave when justice so requires.

Rule 15 Fed. R. Civ. P. The policy of favoring amendments is applied liberally by courts in the Ninth

Circuit. Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). Under Rule

15(a), leave to amend should be granted as a matter of course, at least until the defendant files a

responsive pleading. After that point, leave to amend should be granted unless amendment would

cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue delay.

Johnson v. Mammoth Recreations, 975 F.2d 604, 607 (9th Cir. 1992).

In this case, Plaintiff should be accorded leave to amend its adversary complaint as additional

information regarding Defendants actions and the underlying judgment came to light after the filing

of the initial adversary proceeding. Plaintiffs amendment will not delay theproceedings any further

since each cause of action overlaps to some extent and relates back to the original complaint. Finally

defendant will not be prejudiced as very little discovery has taken place to date. Since the court has

not yet issued a pre-trial scheduling order which makes any mention of any timetable for amending

pleadings, the liberal standards of Rule 15 should apply.

III.CONCLUSION

For the reasons cited above, Plaintiff respectfully requests that this Court enter an Order

granting it leave to amend its Adversary Complaint. A copy of the proposed Amended Adversary

Complaint is submitted with this Motion.

DATED this 11thday of October, 2011.

/s/ Michael P. O'Rourke



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Michael P. O'RourkeAttorney for Plaintiff



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DISTRICT OF NEVADA

In Re:

ROBERT KELLER

Debtor.

THE CADLE COMPANY,

Plaintiff,v.

ROBERT KELLER,

Defendant.



DECLARATION OF MICHAEL

OROURKE IN SUPPORT OF THE

CADLE COMPANYS MOTION FOR

LEAVE TO AMEND ADVERSARY

COMPLAINT

Hearing Date: 12/7/10Hearing Time: 10:00 AM

Case 10-05104-gwz Doc 33-1 Entered 10/18/11 14:39:21 Page 1 of 3


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I, Michael ORourke, declare that:

1. I am over the age of 18 years and I am competent to testify regarding the following

information. I am counsel for Plaintiff, The Cadle Company, in the above-referenced matter and

have personal knowledge regarding the circumstances and events recounted below.

2. On July 2, 2010, Debtor/Defendant Robert Keller filed a Voluntary Petition for Relief under

Chapter 7 of Title 11, U.S.C.

3. Mr. Kellers 341 Meeting was held on August 12, 2010.

4. Plaintiff filed the instant adversary proceeding against Mr. Keller on October 12, 2010 with

causes of action for non-dischargeability under 11 U.S.C. 523(a)(2)(A), 523(a)(4) as well as res

judicata [ECF Document 1].

5. Plaintiff is the assignee and holder of a judgment against Defendant Keller that was initially

obtained by a state-appointed receiver relating to Defendants activities in connection with two Texas

Lloyds insurance companies: American Guardian Underwriters Lloyds Insurance Company

(AGULIC)and American Guardian Lloyds, Inc. (AGL).

6. After thoroughly litigating the issues but prior to trial, Defendant Keller consented to the entry

of judgment in the amount of $500,000.00 (in May, 1995) based on causes of action for: fraud in real

estate transactions, common law fraud, a Texas Insurance Code violation for the improper pledge or

hypothecation of AGULICs assets, corporate alter ego, Texas Deceptive Trade Practices

Consumer Protection Act violations, fraudulent conveyance, conspiracy to fraudulently convey, and

violations of 18 U.S.C. 1962 (Racketeering Influenced and Corrupt Organizations Act).

7. A few days before the filing of the adversary proceeding, Plaintiff was able to conduct an

examination of Defendant pursuant to Rule 2004 F.R. Bankr. P. Plaintiff was also able to conduct an



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examination of Defendants wife, Samantha Hall, on April 18, 2011. At both examinations, Plaintiff

learned additional facts to support its cause of action pursuant to 11 U.S.C. 523(a)(10) contained in

its Amended Complaint.

8. Defendant Keller brought a Motion to Dismiss Adversary Proceeding on January 18, 2011

[ECF Document 16] but later withdrew it after Plaintiff submitted its opposition [ECF Document 26]

Defendant finally submitted his Answer on February 28, 2011 [ECF Document 29].

9. Following Defendants answer, counsel for Plaintiff attempted numerous times to meet with

Defendant to agree on a discovery plan and submit a proposed scheduling order to the court

Defendant has never made himself available to do so.

10. To this date, the Court has not issued any pre-trial scheduling order stating nor given a

deadline to amend any pleadings.

I declare under penalty of perjury under the laws of the State of Washington that the

foregoing is true and correct.

Electronically signed at Seattle, Washington on the 18 thday of October, 2011.

/s/ Michael P. O'RourkeMichael P. O'RourkeAttorney for Plaintiff



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DISTRICT OF NEVADA

In Re:

ROBERT KELLER

Debtor.

THE CADLE COMPANY,

Plaintiff,v.

ROBERT KELLER,

Defendant.



THE CADLE COMPANYS FIRST

AMENDED COMPLAINT OBJECTING

TO DISCHARGEABILITY OF DEBT



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COMES NOW Plaintiff-creditor THE CADLE COMPANY, by and through its counsel of

record, Michael P. O'Rourke of the law firm of ORourke Law Group, PC and files thisfirst

amendment to its Adversary Complaint Objecting to the Dischargeability of Debtor/Plaintiffs Debt.

PROCEDURAL POSTURE

1. On July 2, 2010, Defendant-debtor ROBERT KELLER (hereinafter Keller or

Defendant) filed a Voluntary Petition for Relief under Chapter 7 of Title 11, U.S.C.

2. This Court has jurisdiction of the subject matter of this adversary proceeding under 28

U.S.C. 1334(b) and 157(b) as well as 11 U.S.C. 523.

3. Defendant is subject to the personal jurisdiction of this Court and venue is proper in

the District of Nevada.

4. This adversary proceeding is a core proceeding under 28 U.S.C. 157(b)(2)(I).

GENERAL ALLEGATIONS

5. For a number of years in the late 1980s, Defendant was an officer, director and

underwriter of two Lloyds Insurance companies organized pursuant to the Insurance Code of the

State of Texas: American Guardian Underwriters Lloyds Insurance Company (hereinafter

AGULIC) and American Guardian Lloyds, Inc. (hereinafter AGL).

6. AGULIC was in the business of issuing workers compensation insurance policies and

AGL acted as AGULICs attorney-in-fact and managed AGULICs daily operations. AGL collected

AGULICs premium payments and was supposed to hold these funds in trust.

7. AGL, under the control of Keller and others, failed to maintain these premium

payments in trust and instead used them to fund other business ventures and for personal gain.



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6. During the same time period, Defendant was also an officer and/or director of the

following companies: Arbuckle Adventures, Inc., A-B Inspections & Audit, Inc.; Comtell, Inc.

Comtell Travel, Inc.; Sheldrake Underwriting Managers, Inc.; and, Aegis Administrators, Ltd.

Defendant also did business under the assumed named of East Valley European. Keller regularly

directed AGULIC and AGL to engage in business transactions with these companies.

7. AGULIC became insolvent and the State of Texas commenced delinquency

proceedings against AGULIC on October 18, 1990 by filing a Petition in the District Court of Travis

County, Texas. A permanent receiver was appointed to investigate the entitys affairs. (The Petition

and Amended Petition from Travis County Cause No. 92-14679 are attached hereto as Exhibits 1 and

2, respectively).

8. The permanent receiver alleged numerous violations of 18 U.S.C. 1962 against the

directors of AGULIC and AGL, including defendant Keller, for self-dealing and the improper

handling and conversion of funds for illicit personal gain. The permanent receiver also alleged that

Keller and the other defendants commingled and improperly used AGULIC funds; paid themselves

exorbitant salaries, retainers and consulting fees; created shell companies to avoid income taxes and

misstate profits; funneled uncompetitive contracts and huge consulting fees to Keller-controlled third

companies; misstated travel expenses to funnel funds to Keller-controlled companies; purchased

homes using these funds; committed credit card abuse; misrepresented the financial condition of

AGULIC in order to disburse illegal dividends to Keller and certain other directors; intentionally

misrepresented the issuance of a surplus $600,000.00 debenture on behalf of AGL payable to

AGULIC and then took payments against the debenture; and concealed their activities through

fraudulent accounting methods and trickery.



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9. Against the defendants, including Keller, the permanent receivers Petitions stated

causes of action for: fraud in real estate transactions, common law fraud, a Texas Insurance Code

violation for the improper pledge or hypothecation of AGULICs assets, corporate alter ego, Texas

Deceptive Trade PracticesConsumer Protection Act violations, fraudulent conveyance, conspiracy

to fraudulently convey, and violations of 18 U.S.C. 1962 (Racketeering Influenced and Corrupt

Organizations Act). See Exhibit 1.

10. Keller answered the Petitions and litigated the matter thoroughly.

11. On the eve of trial, Keller consented to the entry of a final judgment against him for

the causes of action stated in the permanent receivers petitions (including those for fraud, fraudulent

conveyance and RICO violations). As a result of Keller's conduct, the Receiver suffered damages in

the amount of $500,000. This judgment was signed and entered by the presiding judge on May 23,

1995 (the Final Judgment). A copy of the Final Judgment is attached hereto as Exhibit 3.

12. On March 21, 2001, for valuable consideration the permanent receiver for AGULIC

and AGL transferred and assigned this Final Judgment to plaintiff The Cadle Company. A copy of

this Transfer and Assignment is attached hereto as Exhibit 4.

13. Plaintiff then domesticated this Final Judgment in Washoe County, Nevada on June

19, 2006. A copy of the domestication notice is attached hereto as Exhibit 5.

14. Plaintiffs former counsel began proceedings to execute on this judgment when

Defendant filed for bankruptcy protection.

15. The value of Plaintiffs judgment was $1,623,402.94 on the date that Defendant filed

this bankruptcy case.



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16. In addition to the instant bankruptcy case, Defendant had filed a Voluntary Petition for

Relief under Chapter 7 of Title 11, U.S.C. in the Bankruptcy Court for the District of Arizona

(Phoenix) in 1990, case number 90-04058.

17. Although the AGULIC matter had not yet been reduced to judgment but his liability

was clear, Keller sought to discharge in bankruptcy a similar judgment in favor of United Healthcare

Corporation resulting from his dubious business practices.

18. After an adversary proceeding that stretched out for two and a half years due to delays

and procedural maneuvers, the Court issued an Order Denying Discharge on November 25, 1992.

United Healthcare Corporations judgment remains unsatisfied.

CLAIMS FOR RELIEF

FIRST CLAIM11 U.S.C. 523(a)(4)

19. Plaintiff repeats and realleges the allegations contained in Paragraphs 1 18 of this

Complaint.

20. As Defendant was a director, officer and underwrite of both AGULIC and AGL, his

illegal acts giving rise to the Final Judgment occurred while he was a fiduciary to both organizations.

21. The debt that Defendant owes Plaintiff was incurred by fraud, defalcation while acting

in a fiduciary capacity, embezzlement, or larceny and is therefore non-dischargeable under 11 U.S.C

523(a)(4).

SECOND CLAIM11 U.S.C. 523(a)(2)(A)


Complaint.



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23. The debt that Defendant owes Plaintiff was incurred by fraud, false pretenses or false

representations by Keller and his co-conspirators for money, property, services or credit and is

therefore non-dischargeable under 11 U.S.C. 523(a)(2)(A).

THIRD CLAIM11 U.S.C. 523(a)(10)


Complaint.

25. The debt that Defendant owes Plaintiff could have been listed or scheduled by the

debtor in his earlier case in the United States Bankruptcy Court of the District of Arizona and it is

therefore non-dischargeable under 11 U.S.C. 523(a)(10).

26. Although not the subject of this Adversary Proceeding but indicative of Defendants

state of mind, Defendant failed to list or schedule the non-dischargeable United Healthcare

Corporation judgment in his latest petition for relief under the bankruptcy code.

FOURTH CLAIMRES JUDICATA


Complaint.

28. The debt that Defendant owes Plaintiff results from a Final Judgment which was

reviewed, ordered and entered by a court of competent jurisdiction after thoroughly being litigated.

29. Defendant Keller consented to this Final Judgment which is based on and incorporates

the allegations and causes of action raised in the permanent receivers Original and Amended

Petitions.

30. The debt that Defendant owes Plaintiff should be determined to be non-dischargeable

according to principles of res judicata and collateral estoppel.



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WHEREFORE the Plaintiff prays for the following relief:

(a) That the Court enter judgment determining that the debt that Defendant owes Plaintiff

pursuant to the underlying Final Judgment is non-dischargeable and further excepting such

debt from the discharge of the Debtor pursuant to 11 U.S.C. 523(a)(2)(A);

(b) That the Court enter judgment determining that the debt that Defendant owes Plaintiff

pursuant to the underlying Final Judgment is non-dischargeable and further excepting such

debt from the discharge of the Debtor pursuant to 11 U.S.C. 523(a)(4);

(c) That the Court affirm the amount of Plaintiffs judgment in the amount of

$1,623,402.94 as of the date that defendant filed this bankruptcy case;

(d) That the Court award Plaintiff attorneys fees and costs for having to bring this

Adversary Proceeding, and;

(e) That the Court grant such other relief as the Court deems just and proper.

RESPECTFULLY SUBMITTED this 18thday of October, 2011.

/s/ Michael P. O'RourkeMichael P. O'RourkeAttorney for Plaintiff



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MICHAEL P. OROURKE, ESQ.Nevada Bar No. 6764

OROURKE LAW GROUP, PC

800 Fifth Avenue, Suite 4100Seattle, Washington 98104

Telephone: (206) 477-1475

Facsimile: (206) 470-1150

[email protected]

BRIAN J. SMITH, ESQ.

Nevada Bar No. 11279

Of Counsel to OROURKE LAWGROUP, PC

700 South Third Street

Las Vegas, Nevada 89101Telephone: (702) 380-8248

Facsimile: (702) 382-7595

Attorneys for Plaintiff


DISTRICT OF NEVADA

In Re:

ROBERT KELLER

Debtor.

THE CADLE COMPANY,

Plaintiff,v.

ROBERT KELLER,

Defendant.



NOTICE OF HEARING ON PLAINTIFFS

MOTION FOR LEAVE TO AMEND

ADVERSARY COMPLAINT

Hearing Date: 12/7/10

Hearing Time: 10:00 AM



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NOTICE IS HEREBY GIVENthat a MOTION FOR LEAVE TO AMEND ADVERSARY

COMPLAINT was filed by Plaintiff, The Cadle Company, on October 18, 2011. The Motion seeks

the following relief: amendment of Plaintiffs Adversary Complaint to contain two additional causes

of action. Any opposition must be filed pursuant to Local Rule 9014(d)(1).

NOTICE IS FURTHER GIVEN that if you do not want the court to grant the relief sought in the

Motion, or if you want the court to consider your views on the Motion, then you must file an

opposition with the court, and serve a copy on the person making the Motion no later than 14 days

preceding the hearing date for the Motion, unless an exception applies (see Local Rule 9014(d)(3)).

The opposition must state your position, set forth all relevant facts and legal authority, and be

supported by affidavits or declarations that conform to Local Rule 9014(c).

NOTICE IS FURTHER GIVEN that the hearing on the said Motion will be held before a United

States Bankruptcy Judge, in the C. Clifton Young Federal Building, 300 Booth Street, Fifth Floor,

Courtroom 1, Reno, Nevada 89509 on December 7, 2011 at the hour of 10:00 A.M.

DATED this 18th

day of October, 2011.

/s/ Michael P. O'Rourke

Michael P. O'RourkeAttorney for Plaintiff

If you object to the relief requested, you mustfile a WRITTEN response to this pleading

with the court. You must also serve your written response on the person who sent you

this notice.

If you do not file a written response with the court, or if you do not serve your written

response on the person who sent you this notice, then:

The court may refuse to allow you to speakat the scheduled hearing; and The court may rule against you without the formality of calling the matter at the

hearing.


10 18 11 nvb 10-05104 cadle motion for leave amend complaint supports for allowing 4 10 12 filing by...

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