Hiner v. Koukhtiev (In re Koukhtiev)

• Citation: 576 B.R. 107
• Decision Date: 17 November 2017
• Docket Number: Case No. 15–34425,Adversary No. 15–3338
• Parties: IN RE: Valeriy KOUKHTIEV, Debtor. Hellene Hiner, Plaintiff v. Valeriy Koukhtiev, Defendant.
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas

576 B.R. 107

IN RE: Valeriy KOUKHTIEV, Debtor.

Hellene Hiner, Plaintiff

v.Valeriy Koukhtiev, Defendant.

Case No. 15–34425

Adversary No. 15–3338

United States Bankruptcy Court, S.D. Texas, Houston Division.

Signed November 17, 2017

Christian M. Sternat, Attorney at Law, Houston, TX, James H. Stokes, Jr., Attorney at Law, Sugar Land, TX, for Plaintiff.

Reese W. Baker, Baker & Associates LLP, Houston, TX, for Defendant.

MEMORANDUM OPINION REGARDING PLAINTIFF'S FIRST AMENDED COMPLAINT TO DETERMINE DISCHARGEABILITY [This Order Relates to Adv. Doc. No. 15]

Jeff Bohm, United States Bankruptcy Judge

I. INTRODUCTION

Hellene Hiner (the "Plaintiff") initiated the instant adversary proceeding against Valeriy Koukhtiev, the debtor in the main case (the "Debtor"), and requested this Court to declare that: (1) a certain judgment that she obtained against the Debtor in state court is a non-dischargeable obligation under 11 U.S.C. §§ 523(a)(2)(A) and/or (a)(6) ;¹ and (2) certain actions taken by the Debtor after the state court entered its judgment have caused injury to the Plaintiff and that the amount of these damages is also a non-dischargeable obligation.

On February 16, 21, 22, and 23, 2017, this Court held a trial during which time the Plaintiff put on her case-in-chief. She called several witnesses and introduced numerous exhibits. She then rested. The Court then continued the trial to March 24, 2017 to afford the Debtor the opportunity to put on his case-in-chief.

On March 24, 2017, prior to beginning his case-in-chief, the Debtor, through his attorney of record, made an oral motion for directed judgment under Federal Rule 52(c).² On the same day, this Court issued an order granting in part and denying in part the Debtor's oral motion. [Adv. Doc. No. 52]. This order set forth that the motion was granted in part insofar as the Plaintiff, in her case-in-chief, had failed to meet her burden to prove that she has suffered damages arising out of any actions that the Debtor may have taken following the entry of the state court judgment. [See Pl's Ex. No. 1]. This order also set forth that the oral motion was denied in part insofar as the Debtor requested this Court to enter an order that the state court judgment is a dischargeable obligation. Finally, the order set forth that the trial would resume so that the Defendant could put on his case-in-chief.

On October 3, 2017, the trial resumed, and the Defendant put on his case-in-chief. After the Defendant adduced testimony and introduced exhibits, he rested. The Plaintiff chose to call no rebuttal witnesses. The Court then heard closing arguments, with the Plaintiff arguing that she had met her burden proving that the state court judgment is non-dischargeable under §§ 523(a)(2)(A) and/or (a)(6) and the Debtor arguing to the contrary. The Court then afforded the parties an opportunity to submit any authorities in support of their respective positions, and thereafter they each filed post-trial briefs. [Adv. Doc. Nos. 72 & 73].

The Court now issues the following Findings of Fact and Conclusions of Law pursuant to Bankruptcy Rule 7052. To the extent that any Finding of Fact is construed to be a Conclusion of Law, it is adopted as such; and to the extent that any Conclusion of Law is construed to be a Finding of Fact, it is adopted as such. The Court reserves the right to make additional Findings and Conclusions as it deems appropriate or as any party may request.

II. FINDINGS OF FACT

The relevant facts—as established by the pleadings and the evidence—are as follows:

1. The Plaintiff obtained a master's degree in musicology at a music college in the Ukraine. [Tape Recording, Feb. 16, 2017 Hearing at 9:10:55–9:11:07 A.M.]. While in the Ukraine, the Plaintiff began developing a music teaching methodology to teach students how to learn music interactively with a computer. [Id. at 9:11:42–9:11:50, 9:12:51–9:13:24 A.M.]. Upon arriving in the United States in 1993, the Plaintiff worked as a teacher's assistant in a Montessori school and taught music to students in a Ukrainian school. [Id. at 9:11:17–9:11:38 A.M.]. The Plaintiff moved to the United States in order to convert her "[music teaching] methodology to technology level." [Id. at 9:11:52–9:11:58, 9:12:51–9:13:24 A.M.].

2. The Debtor was born in Kazakhstan and received a master's degree in physics from the "Moscow Physical Technical Institute." [Tape Recording, Feb. 21, 2017 Hearing at 3:26:40–3:27:02 P.M.]. He has no background or degree in music and no experience in education or teaching programs. [Id. at 3:27:04–3:27:13 P.M.].

3. In February of 2001, the Plaintiff first corresponded with the Debtor after meeting him through an online website; thereafter, the Plaintiff met the Debtor in person in New York. [Tape Recording, Feb. 16, 2017 Hearing at 9:17:04–9:17:52 A.M.]; [Tape Recording, Feb. 21, 2017 Hearing at 3:27:20–3:27:36 P.M.]. Towards the end of 2001, the Debtor moved into the Plaintiff's house in Houston. [Tape Recording, Feb. 16, 2017 Hearing at 9:19:29–9:19:36 A.M.]. They lived in the Plaintiff's house as "husband and wife" even though they were never officially married. [Tape Recording, Feb. 22, 2017 Hearing at 1:27:51–1:28:20 P.M.]. In fact, at this time, the Debtor was separated from his ex-wife (Tatyana Zadorskaya) and undergoing a divorce proceeding pending in a family law court in Massachusetts. [See Pl's Ex. No. 16]; [Adv. Doc. No. 44, p. 2 ¶ 2].

4. Eventually, the Plaintiff hired the Debtor to assist her in converting her music teaching methodology into a digitized computer program. [See Tape Recording, Feb. 16, 2017 Hearing at 9:20:33–9:21:17 A.M.]; [Pl's Ex. No. 2]. Specifically, she hired the Debtor "to do everything that was in connection with technology ... [such as] software, computer games, website, and helping [her] with writing [a] patent application." [Tape Recording, Feb. 16, 2017 Hearing at 9:23:40–9:23:55 A.M.]. To memorialize the terms of the Plaintiff's hiring of the Debtor, the Plaintiff and the Debtor, on January 29, 2002, executed a "Work For Hire Agreement" between Cottage Music Academy, a sole proprietorship that the Plaintiff owned at that time, and the Debtor (the "Work Agreement"). [Id. at 9:21:08–9:21:50 A.M.]; [Pl's Ex. No. 2]. The Work Agreement, in pertinent part, set forth the following terms:

Work product ownership. Valeri Koukhtiev waives any interest in the ownership of the work product, including but not limited to copyrightable works, ideas, discoveries, inventions, patents, products or other information, developed in whole or in part as a result of this agreement and such work product is the exclusive ownership of "[Cottage] Music Academy."

Confidentiality. Valeri Koukhtiev will not at any time or in any matter, either directly or indirectly ... divulge, disclose, or communicate in any manner any information that is proprietary to [Cottage] Music Academy. Valeri Koukhtiev will protect such information and treat it as strictly confidential. This provision shall continue to be effective after the termination of this Agreement. Upon termination of this Agreement, Valeri Koukhtiev will return to Cottage Music Academy all records, notes, documentation and other items that were used, created, or controlled by [Cottage] Music Academy during the term of this Agreement.

[Pl's Ex. No. 2].

5. Prior to the formal execution of the Work Agreement, in September of 2001, the Debtor was already assisting the Plaintiff by developing the "Soft Way to Mozart's" computer program (the "Soft Way Program"). [Tape Recording, Feb. 21, 2017 Hearing at 3:35:40–3:35:57 P.M.].

6. On March 10, 2003, the Plaintiff and the Debtor filed a provisional patent application with the U.S. Patent and Trademark Office, which named both of them as "inventors" (the "Patent Application"). [Id. at 3:28:34–3:28:49 P.M.]; [Pl's Ex. No. 6]. The Patent Application was signed by both the Plaintiff and the Defendant and was identified as application number 10/384,965. [Pl's Ex. No. 6, pp. 1 & 6]

7. Sometime at the end of 2002 or beginning of 2003, the Debtor and the Plaintiff began selling the Soft Way Program on compact discs for approximately $200.00 per disc either directly to the Plaintiff's students or through an online website that the Debtor had created. [Tape Recording, Feb. 21, 2017 Hearing at 3:37:49–3:37:15, 3:44:29–3:44:38, 3:45:07–3:45:16, 3:46:22–3:46:27 P.M.]; [Tape Recording, Oct. 3, 2017 Hearing at 2:27:41–2:28:26 P.M.]. The Plaintiff and the Debtor sold the Soft Way Program to customers in the United States, Russia, and other countries. [Tape Recording, Feb. 21, 2017 Hearing at 3:46:20–3:46:42 P.M.]. The Debtor deposited the proceeds of these sales into the Plaintiff's account. [Id. at 2:38:14–2:38:32 P.M.].

8. On May 25, 2005, the family law court in Massachusetts presiding over the Debtor's divorce proceeding entered a judgment of divorce that expressly required the Debtor and his ex-wife to comply with the terms of the separation agreement that was incorporated in the judgment (the "Divorce Agreement"). [Pl's Ex. No. 16]. Attached to the Divorce Agreement is a "Financial Statement" that was signed by the Debtor under the penalty of perjury. [Id. at p. 4]. In the Financial Statement, the Debtor represented to the family law court that the value of all his assets totaled $2,500.00, which comprised only the fair market value of certain real estate property. [Id. at p. 7]. In the section entitled "Other (such as—stocks, bonds, collections)", the Debtor did not list any "other" assets that he owned at that time. [Id. ]; [Tape Recording, Feb. 21, 2017 Hearing at 3:31:00–3:31:35 P.M.]. Further, in the Financial Statement, the Debtor did not list any interests—existing or prospective—that he had in any trademarks, patents, or patent applications associated with the Soft Way Program. [Tape Recording, Feb. 21, 2017 Hearing at 3:31:39–3:32:00 P.M.]. Nor did he list the Soft Way Program on the Financial Statement. [Pl's Ex. No. 16]. The

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