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PATRICIA HADFIELD
Nevada Bar No. 10890
BANKRUPTCY LAW GROUP
200 So. Virginia Street, 8
th
Floor
Reno, NV 89501
Tel: 775-827-9600
Fax: 888-843-7260
e-mail: PatriciaH@BankruptcyLG.com
Attorney for Debtor
ROBERT KELLER
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
In Re: Case No: 10-52639
Chapter 7
ROBERT KELLER, AP No. 10-05104

Debtor.
/
THE CADLE COMPANY, Hrg. Date: March 27, 2013
Hrg: Time: 2:00 p.m.
Plaintiff, Hrg: Place: Department 2
v. 300 Booth Street, 5
th
Floor
Reno, NV
ROBERT KELLER,
Defendant.
/
DEFENDANT/DEBTOR ROBERT KELLERS
MOTION FOR SUMMARY JUDGMENT
BASED ON TEXAS LAW OF COLLATERAL ESTOPPEL
AND EXPIRATION OF STATUTE OF LIMITATIONS
I
STATEMENT OF THE ISSUES
Plaintiff The Cadle Company, a collection agency, brought this adversary proceeding
objecting to the dischargeability of a $500,000 Final J udgment entered against Defendant
Robert Keller on May 23, 1995, by the 53
rd
District Court of Travis County, Texas. Plaintiff
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contends that the Texas J udgment is non-dischargeable because it proves Mr. Keller
committed fraud, breach of fiduciary duty, defalcation, embezzlement and larceny.
Plaintiff is wrong. That two-page, agreed-upon Judgment contained no
finding that Defendant Keller committed fraud, breach of fiduciary duty, defalcation,
embezzlement, or larceny. The Judgment referred only to Defendant Kellers actions
and conduct as described in Receivers Petition on file, and stated very clearly in the
last sentence that: All relief not expressly herein granted is expressly DENIED.
[Capitalization in the original; emphasis added.] (A copy of that J udgment is attached as part
of Exhibit A to Plaintiffs Complaint and as Exhibit H to the Declaration of Robert Keller
[hereafter Keller Decl.] filed herein.)
On March 21, 2001, the Texas Department of Insurance, by and through J ose
Montemayor, a receiver appointed to oversee the liquidation of American Guardian Insurance
Underwriters Lloyds and American Guardian Lloyds, Inc., assigned that Travis County
J udgment against Mr. Keller to The Cadle Company. (A copy of that Transfer and Assignment
is attached as Exhibit A to Plaintiffs Complaint in this action.)
Plaintiff has alleged only four Claims against Keller in this adversary proceeding:
1. First Claim: Fraud or defalcation while acting in a fiduciary
capacity, embezzlement, or larceny under 11 U.S.C. 523(a)(4);
2. Second Claim: For money, property, services, or an extension,
renewal, or refinancing of credit, to the extent obtained by false pretenses, a
false representation, or actual fraud, other than a statement respecting the
debtor's or an insider's financial condition under 11 U.S.C. 523(a)(2)(A);
3. Third Claim: This is a claim that was or could have been
listed by the debtor in a prior case concerning the debtor under this title or
under the Bankruptcy Act, pursuant to 11 U.S.,C., 523(a)(10); and
4. Fourth Claim: The debt that Defendant owes Plaintiff should
be determined to be nondischargeable according to principles of res judicata
and collateral estoppel.
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As the facts and law set forth below prove, Defendant is entitled to Summary
J udgment in his favor on all four claims in Plaintiffs First Amended Complaint.
II
STATUS OF THE CASE
This case is set for a Status Conference on December 4, 2012, at 11:00 a.m., in
Department 2 of the above entitled court.
The following matters are presently pending before this Court:
1. Motion to Dismiss Adversary Proceeding, [Docket 53]
filed April 10, 2012. Plaintiff submitted its Opposition on May 8, 2012
[Docket 56].
2. Motion to Strike Answer and Purported Counter-Claim filed by
Plaintiff on May 8, 2012 [Docket 57]. Defendants then-counsel filed an
Opposition on May 21, 2012 [Docket 62].
3. Motion for Summary Judgment filed by Defendants then-counsel
on May 23, 2012 [Docket 63].
4. Amended Motion for Summary Judgment filed by Defendants
then-counsel on J une 9, 2012 [Docket 68].
Contemporaneously with the filing of this motion for Summary J udgment,
Defendant has withdrawn his previously filed Motion to Dismiss [Docket 56], Motion for
Summary J udgment [Docket 63] and Amended Motion for Summary J udgment [Docket 68].
III
STATEMENT OF THE FACTS
There are two court actions referred to in Plaintiffs First Amended Complaint
[Docket No 42] filed December 18, 2011:
1. The Chapter 7 personal bankruptcy filed by Robert Keller on April 20,
1990, in Arizona, and,
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2. The Texas Department of Insurance action No, 92-14679, filed
October 18, 1992, against Robert Keller and many other people and entities in
the 53
rd
District Court of Travis County, Texas.
Each of these actions will be addressed in detail below.
A. 1990 Chapter 7 Bankruptcy Petition Filed by Robert Keller in Arizona:
Plaintiff The Cadle Company alleges in the Third Claim of its First Amended Complaint
[Docket No. 42, Page 6, Lines 8-14] that:
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).
As the further facts set forth in Section B below will show, the Texas
Department of Insurance action was not filed against Mr. Keller until October 18, 1992,
two years after Mr. Keller filed for bankruptcy in Arizona. (Statement of Undisputed Facts
[SUF] filed herewith, No. 18, at 4:4-7.) Mr. Keller did not become aware of that Texas
action until he was served some 18 months after that, in J une, 1994 (SUF No. 19 at 4:8-10),
and the agreed upon J udgment against Mr. Keller in the Texas Insurance Department action was
not entered until May 23, 1995 (SUF No. 39 at 7:8-10.), five years after Mr. Keller filed his
Arizona bankruptcy case and two and one-half years after that bankruptcy case was
dismissed. Thus, it is not reasonable to assume that Mr. Keller could have or should have
listed the Texas Department of Insurance as a creditor in his1990 bankruptcy.
Plaintiff The Cadle Company also attempts to mislead this Court by alleging
in General Allegations Nos. 16-18 of its Complaint that:
16. In addition to the instant a 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.
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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.
Actually, the United Healthcare facts were totally different from the Texas
Insurance Department facts. The United Healthcare adverse proceeding arose from a default
judgment entered against Mr. Keller in Minnesota. Mr. Keller had been one of the owners of an
insurance brokerage that provided professional liability coverage to a PPO that United
Healthcare purchased. The adverse proceeding was not dismissed as a result of a factual
finding of non-dischargeability; it was dismissed at the request of United Healthcare because
Mr. Keller did not appear for his court-ordered deposition. (SUF 14 at 3:10-12 and Docket Nos.
44-48 of Exhibit L to the Keller Decl.)
The undisputed evidence in this case proves that Mr. Keller did not list the
Texas Department of Insurance as a creditor in his 1990 Arizona Bankruptcy because at that
time he had no reason to believe that it was a creditor of his or any way to predict that five years
in the future it might become one. Therefore, entry of summary judgment in Mr. Kellers favor
at this time on the Third Claim of Plaintiffs First Amended Complaint is appropriate and just.
B. Texas Department of Insurance versus Robert Keller:
In 1987, Defendant Robert Keller was one of 11 investors who founded and
funded American Guardian Insurance Underwriters Lloyds (referred to variously in court
documents as AGULIC and AGLU) in the State of Texas to issue workers compensation
insurance policies. (SUF No. 1 at 1:27-2:2.) AGIUL then formed American Guardian Lloyds,
Inc., (AGLI) to act as the attorney in fact to manage day-to-day operation of AGIUL, including
collecting premiums and paying claims. (SUF No. 2 at 2:3-5.) Defendant Keller was the first
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President of AGLI. (SUF No. 3 at 2:6.) [Both American Guardian entities will be referred to
collectively as American Guardian in this Motion and supporting documents.]
Less than one year later, in 1988, Defendant resigned from AGLI and turned
over all of its operations to the remaining officers and directors of AGLI. (SUF No. 4 at 2:7-9.)
At that same time, he surrendered his investment in AGIUL. (SUF No. 5 at 2:10-11.)
Some two years later, on October 18, 1990, the State of Texas commenced
delinquency (receivership) proceedings against American Guardian in the 53
rd
J udicial District
Court of Travis County, Texas, Case No. 492413. [See Exhibit 1 to Plaintiffs First Amended
Complaint Objecting to Dischargeability of Debt filed herein, Page 22, Paragraph 68.]
Two years after that, on October 18, 1992, Sandra A. Aubrey, Permanent
Receiver of American Guardian Underwriters Lloyds Insurance Company, filed her Original
Petition in the District Court of Travis County, Texas, Action No. 92-14679, in which the
agreed-upon Final J udgment against Mr. Keller was eventually entered on May 23, 1995.
(Exhibit 1 to Plaintiffs First Amended Complaint Objecting to Dischargeability of Debt filed
herein [Document 42]).
The first knowledge Defendant Keller had about the Texas Receivers action
that named him was sometime after J une 2, 1994, when Defendant received a Citation
[Summons] issued on that date, together with a copy of the Receivers First Amended Petition
filed on December 31, 1992, a year and a half before he was served. (Copies of that Citation
and the First Amended Petition are attached as Exhibits A and B, respectively to the
Declaration of Robert Keller filed herewith.)
Defendant was not living in Texas in 1994 and his lawyer of choice, Chet
Brown, was admitted to practice only in California. Therefore, it was agreed with the attorney
representing the Department of Insurance that while Mr. Brown would act as Defendants
personal lawyer and advisor, Mr. Keller would appear in propria persona in the Receivers
action in Travis County, Texas. (Keller Decl. 3:19-22 and SUF No. 20 at 4:11-12.)
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In or about J une, 1994, Defendant filed a general Answer to the Receivers
First Amended Petition denying all of the charges made against him in the Receivers action.
(SUF No. 21 at 4:13-15.)
Thereafter, Attorney Daniel C. Bitting, a partner in Austin, Texas, firm of
Scott, Douglass, Luton & McConnico, L.L.P., who represented the Receiver in the Travis
County action, and Defendant dealt directly with each other and Attorney Bitting also
communicated with Defendants counselor, Chet Brown, to reach a conclusion of the matter
as to Defendant Keller. (SUF Nos. 22-24 at 4:16-21.)
The Receivers case against Defendant Keller was never litigated, nor
were any facts supporting the allegations against him contained in the Receivers Petition
or First Amended Petition ever proven against him. Defendants deposition was never
noticed or taken by anyone representing any party in the Receivers case and Mr. Keller
never produced any documents or other evidence in Travis County Action No. 92-14679.
(SUF Nos. 25-27 at 4:23-5:3.)
The Receivers case was set for trial on March 27, 1995. On March 21, 1995,
Attorney Bitting sent a letter to Defendants counsel, Chet Brown, confirming the agreement
that had been worked out among Attorneys Bitting and Brown and Defendant Keller that
Mr. Keller would sign a J udgment for $500,000 to end his involvement in the Receivers case.
(SUF 28-29 at 5:4-9; Keller Decl. Exhibit C.)
Two days later, Mr. Keller signed and returned to Mr. Bitting via Federal
Express the Final J udgment Defendant had prepared. (Keller Decl. Exhibit D.) Mr. Kellers
cover letter also confirmed the agreement with Mr. Bitting that Mr. Brown would prepare a
document stating that: this judgment is not indicative of admission of guilt of any of the
allegations, including but not limited to the fraud and RICO charges, but rather as a
method of concluding the matter without additional expense on the part of all concerned.
[Emphasis added.] (SUF Nos. 30-31 at 5:10-18.)
On March 28, 1995, Mr. Bitting sent a letter to Attorney Brown confirming
that pursuant to the settlement agreement, the Receiver would apply to the receivership court
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for approval to enter into the Final J udgment with Defendant Keller. Mr. Bitting stated that if
that could not be accomplished before the new April 24, 1995, trial date, he would either pass
the setting at trial call or sever the claims against Mr. Keller so that he would not have to go to
trial. (Keller Decl. Exhibit E.) (SUF Nos. 32-33 at 5:19-27.)
On April 11, 1995, Defendant sent a letter to Mr. Bitting enclosing a
Settlement Agreement which Defendant prepared with the assistance of Attorney Brown (the
additional document referred to at Page 7, Lines 20-26 above). That Agreement expressly
states:
In complete and total settlement of all claims and
liability to PLAINTIFF it is hereby understood and agreed that
DEFENDANT would, on or before March 24, 1995, execute a
FINAL JUDGMENT in favor of PLAINTIFF in the amount of
$500,000., AND;
. . . .
That on March 22, 1995, it was FURTHER AGREED
that the parties hereto would execute a SETTLEMENT
AGREEMENT reflecting the fact that DEFENDANT denies
any wrongdoing, fraudulent conduct, and any other illegal
activity, and has executed the FINAL JUDGMENT only
because it is in his best interest to do so at this time. . . .
[Emphasis added.]
(Keller Decl. Exhibit F.) (SUF No. 34 at 6:1-19.)
Attorney Bitting subsequently had that agreement retyped to add
Plaintiff/Receivers position on the agreement at the end of the penultimate paragraph:
and that, notwithstanding Defendants denials, Plaintiff
maintains the allegations in its pleadings and has decided to
accept the final judgment because it is in Plaintiffs best
interests at this time. . . .
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Attorney Bitting then signed and returned the Settlement Agreement to Mr. Brown and
Defendant Keller signed it on May 9, 1995. (Keller Decl. Exhibit G and SUF Nos. 35-36
at 6:20-28.)
The Receivers case was continued to May 23, 1995, for trial. On that date
when the case was called, counsel for the Receiver appeared and announced that the Receiver
and Defendant Keller had agreed to the entry of the Final J udgment. The Court then signed the
Final J udgment prepared by Mr. Bitting. That Final J udgment was filed by the Court on
May 23, 1995, at 1:57 p.m. (Keller Decl. Exhibit H.) (SUF Nos. 37-39 at 7:1-9.)
One minute later, at 1:58 p.m., the Court entered a document entitled Notice
of Non-Suit of Certain Defendants, in which counsel for the Receiver represented to the Court
that the Receiver had entered into agreed judgments with eight defendants, including
Mr. Keller, and that: the Receiver hereby non-suits its claims against all Defendants other than
the Settling Defendants. The non-suited defendants included seven individuals and a number
of companies that had been named by the Receiver. (Keller Decl. Exhibit I.)
(SUF Nos. 40-41.)
On May 24, 1995, Attorney Steven J . Wingard of Mr. Bittings law firm sent
a letter to Defendant Kellers counsel, Chet Brown, enclosing Mr. Kellers Final J udgment and
the Notice of Non-Suit. (Keller Decl. Exhibit J.) (SUF No. 42 at 7:18-20.)
Not only was no allegation in the Receivers Petition or Amended Petition in
Action No. 92-14679 ever litigated or otherwise proven against Defendant Keller, so far as
Mr. Keller is aware, none was ever litigated or proven against any of the other named
defendants in the Insurance Departments case, either.
IV
LEGAL ARGUMENT
A. LEGAL STANDARD FOR SUMMARY JUDGMENT
Federal Rule of Civil Procedure 56, applicable this Adversary Proceeding, via
Federal Rule of Bankruptcy Procedure 7056, provides for summary judgment where there is no
genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a
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matter of law. Fed.R.Civ.P. 56( c). [A]t the summary judgment stage the judges function
is not himself to weigh the evidence and determine the truth of the matter but to determine
whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S., 242
(1986). A motion for summary judgment in an adversary proceeding under 523(a)(2)(A) is
governed by the same standards applicable to motions under Fed. R. Civ. P. 56.
B. LEGAL STANDARD FOR EXCEPTIONS TO DISCHARGE
Dischargeability exceptions are narrowly construed, and complainants must
show by a preponderance of the evidence that their claim comes squarely within an exception
specifically enumerated in the Bankruptcy Code. Grogan v. Garner, 498 U.S. 287, 288 (1991).
As noted above, Plaintiff The Cadle Company alleges only four Claims for
Relief in its First Amended Complaint, in the following order:
1. First Claim - 11 U.S.C. 523(a)(4) fraud, defalcation while acting in a
fiduciary capacity, embezzlement or larceny;
2. Second Claim - 11 U.S.C. 523(a)(2)(A) - fraud, false pretenses or false
representations by Mr. Keller;
3. Third Claim - 11 U.S.C. 523(a)(10) Mr. Keller could have listed the
Texas Department of Insurance action in Travis County, Texas, in his 1990
Chapter 7 bankruptcy in Arizona;
4. Fourth Claim - Application of res judicata and collateral estoppel to
determine the nondischargeability of the Final J udgment in Travis County, Texas,
Action No. 92-14679 entered May 23, 1995..
As evidence presented in support of this Motion shows, The Cadle Companys First
Amended Complaint is so factually and legally flawed that it cannot be amended to state a
cause of action against Mr. Keller. Therefore, summary judgment in favor of Defendant Robert
Keller should be entered at this time.
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C. TEXAS LAW PREVENTS APPLICATION OF RES JUDICATA AND
COLLATERAL ESTOPPEL TO THIS ADVERSARY PROCEEDING.
As a matter of full faith and credit, 28 U.S.C. Section 1738 requires courts to
apply the collateral estoppel principles of the state in which the J udgment was entered.
Grogan v. Garner, 498 U.S. 279, 284 (1991). The judgment which Plaintiff The Cadle
Company seeks to enforce against Defendant Robert Keller was entered in favor of the Receiver
for the Department of Insurance of the State of Texas in Travis County, Texas, on May 23,
1995. Almost six years later, on March 21, 2001, that judgment was assigned by the receiver to
The Cadle Company. A copy of that Assignment is Exhibit A to Plaintiffs Complaint for Non-
dischargeability. Therefore, this Court must apply Texas collateral estoppel principles to
determine dischargeability of Plaintiffs J udgment against Defendant Robert Keller.
Plaintiffs Fourth Claim against Defendant incorporates the allegations of the
First, Second and Third Claims described in detail above and alleges that:
28. The Debt that Defendant owes Plaintiff results
from a Final J udgment which was reviewed, ordered and
entered by a court of competent jurisdiction after thoroughly
being litigated.
29. Defendant Keller consented to this Final J udgment
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. [Docket
No. 42, Plaintiffs First Amended Complaint 6:17-26.
Emphasis added.]
1. Res Judicata Does Not Apply: Plaintiff The Cadle Company assumes
that res judicata applies to this case; it does not. The doctrine of res judicata
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does not apply in bankruptcy nondischargeability proceedings. Fielder v. King
(In re King), 103 F.3d 17, 19 (5
th
Cir.) (citing Brown v. Felsen , 442 U.S., 127, 99
S.Ct. 2205 (1979), cert denied 117 S. Ct. 2454 (1997). Therefore, the Judgment
entered against Defendant Keller in Texas 17 years ago cannot be used to,
ipso facto, give The Cadle Company a victory in this adversary proceeding.
2. Collateral Estoppel: The doctrine of collateral estoppel likewise does
not favor Plaintiff in this case. The United States Supreme Court has explicitly
stated that collateral estoppel, or issue preclusion, principles apply in bankruptcy
dischargeability proceedings, Grogan v. Garner, supra, at 285 n.11, 111 S.Ct. 654,
658, n. 11, although the bankruptcy court retains jurisdiction to ultimately determine
the dischargeability of the debt. Gober v. Terra + Corp (In re Gober), 100 F.3d
1195, 1201 (5
th
Cir. 1996).
However, when the Texas rules of preclusion are applied, as they must
be to this Texas judgment, Plaintiff loses again. Under Texas law, collateral
estoppel bars relitigation of any ultimate issue of fact actually litigated and
essential to the judgment in a prior suit, regardless of whether the second suit is
based upon the same cause of action. Id, at 689 (quoting Bonniwell v Beech
Aircraft Corp., 663 S.W.2d 816, 818 (Tex 1984). [Emphasis added.]
The elements of collateral estoppel under Texas law are:
(1) the facts sought to be litigated in the second action were fully
and fairly litigated in the prior action;
(2) those facts were essential to the judgment in the first action; and
(3) the parties in the second action were also parties to the first action.
Bonniville v. Beech Aircraft Corp., supra.
The Final J udgment entered on May 23, 1995, against Mr. Keller does not
meet the first two criteria:
--- No facts were fully and fairly litigated in the Insurance Departments
1992 Action No. 92-14679. The case did not go to trial before either a jury
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or a judge. Defendant Keller was never deposed nor did he provide any
other evidence in the case. (SUF Nos. 25-26 at 4:21-24.)
--- The Final Judgment against Mr. Keller was entered as a result of a
Settlement Agreement entered into in the weeks preceding the trial date
of May 23, 1995, between Mr. Keller and the attorney representing the
Insurance Department Receiver. That Settlement Agreement specifically
states:
THAT on March 22, 1995, it was FURTHER
AGREED that the parties hereto would execute a
SETTLEMENT AGREEMENT reflecting the fact
that DEFENDANT denies any wrongdoing,
fraudulent conduct, and any other illegal activity,
and has executed the FINAL JUDGMENT only
because it is in his best interest to do so, and that,
notwithstanding Defendants denials, Plaintiff
maintains the allegations in its pleadings and has
decided to accept the final judgment because it is in
Plaintiffs best interest at this time. . . .
(SUF No. 34 at 6:1-18.)
--- The Final Judgment against Mr. Keller explicitly states in the last
sentence that, All relief not expressly herein granted is expressly
DENIED. [Emphasis in the original.]
Therefore, collateral estoppel prevents Plaintiff The Cadle Company from
using the May 23, 1995, J udgment to establish any of the allegation of fraud, breach of
fiduciary duty, defalcation, embezzlement or larceny against Mr. Keller in this adverse
proceeding.
D. LEGAL STANDARD FOR DETERMINING RIGHTS OF ASSIGNEE:
. The Cadle Companys rights to collect on the J udgment assigned to it by the
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Texas Department of Insurance are only as good as the rights the Department had to collect the
original judgment against Mr. Keller. Texas law has been clear for over a hundred years that
the assignee of a judgment takes just such interest as the assignor had and subject to such
defenses, legal and equitable, as existed against it in the hands of the assignor. McManus, et al.,
v. Cash & Luckel, No. 1760 decided J anuary 8, 1908, Texas Supreme Court Reporter (1908)
Vol. 101. Thus, The Cadle Company has no greater rights now to directly sue Defendant
Keller for fraud, false pretenses, false representations, defalcation while acting in a fiduciary
capacity, embezzlement or larceny than the Texas Department of Insurance would now have
had it retained the J udgment.)
E. THE CADLE COMPANYS PRESENT ACTION FOR NON-
DISCHARGEABILITY IS BARRED BY THE TEXAS STATUE OF LIMITATIONS.:
The Texas Statute of Limitations on civil actions is found in its Civil Practice
and Remedies Code, Title 2, Chapter 16, entitled, Limitations. Section 16.004(a)(3), (4) and
(5) provide that a suit must be brought not later than four years after the day the cause of
action accrues on debt, fraud or breach of fiduciary duty, respectively. Section 16.003(a)
provides a two-year statute of limitations on acts of conversion of property.
In Texas, as in most other states, a cause of action for fraud or breach of
fiduciary duty accrues when the fraud or breach is discovered, or could have been discovered
through reasonable diligence. (See Computer Associates Intern. v. Altai, 918 S.W.2d 453,
455456 (Tex. 1994); Ruebeck v. Hunt, 142 Tex. 167, 176 S.W.2d 738, 739 (1943); Woods v.
William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988).)
Mr. Keller severed his ties with American Guardian in 1989. The Receiver
for the Texas Department of Insurance began its investigation into the activities of American
Guardian in 1990 and filed its Original Petition in Travis County Action No. 92-14679 on
October, 1992, alleging many acts of breach of fiduciary duty and fraud against all of the dozen
or so defendants named in its action, including Mr. Keller. Thus, for the Texas Department of
Insurance, the four-year statute of limitations for fraud and breach of fiduciary duty against
Mr. Keller for acts he may have done while associated with American Guardian began to run, at
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the latest, during the Departments two-year investigation of American Guardian from 1990 to
October, 1992, when it filed Action No. 92-14679 in the 53
rd
District Court of Travis County,
Texas. The statute of limitations for suits against Mr. Keller by the Texas Insurance
Department would, therefore, have expired, at the latest, on or before October 18, 1996
more than 16 years ago. Any rights that assignee The Cadle Company, had to bring a
new action for fraud, defalcation, embezzlement or larceny against Mr. Keller likewise
expired on or before October 18, 1996.
V
CONCLUSION
Any direct cause of action for non-dischargeability of debt by The Cadle Company
against Robert Keller is barred by the four-year Texas Statute of Limitations on actions for
fraud and breach of fiduciary duty, which expired , at the latest, on October 18, 1996.
The principle of res judicata does not apply in bankruptcy cases.
The principle of collateral estoppel does not apply to save Plaintiff, either, since the
issues of fraud, breach of fiduciary duty, defalcation, embezzlement and larceny were never
litigated at all in the Texas Insurance Departments action against Mr. Keller. Instead, the Final
J udgment entered in that action against Mr. Keller was part of a Settlement Agreement between
him and the Department which expressly stated that Defendant Keller admitted no wrongdoing,
and the Final J udgment expressly limits its effect to only those matters stated on its face.
Therefore, Summary J udgment in favor of Defendant Keller on all issues raised in
Plaintiffs Complaint is just and proper at this time.
DATED: December 3, 2012.
/s/ Patricia Hadfield
PATRICIA WILSON HADFIELD NV Bar No. 10890
Bankruptcy Law Group
Attorneys for Debtor/Defendant Robert Keller
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