Allure Labs, Inc. v. Aviles (In re Aviles)

I. INTRODUCTION

In 2014, defendant Nelli Markushevska was employed as a bookkeeper at plaintiff Allure Labs, Inc. ("Allure"). While she was employed there, she embezzled $137,000 (the "Embezzlement"). When Allure discovered this, it sued her and her husband Marlon J. Aviles (collectively, with Nelli Markushevska, "Defendants") in state court and obtained an order freezing some $67,000 held in bank accounts in their names. While the state court case was still essentially in its pleading stage, Defendants filed this chapter 13 case. They have filed a chapter 13 plan through which they propose to repay Allure. Allure has objected to the confirmation of this plan on the ground that it is proposed in bad faith because it does not adequately repay the amount Allure believes it is owed. Confirmation of the plan has been postponed due to Allure's objection and this Adversary Proceeding.

In 2016, Allure filed its complaint seeking a determination that the debt of roughly $137,059 arising from the Embezzlement, trebled under the provisions of California Penal Code § 496(c), plus attorney's fees and costs, is not dischargeable. While the complaint ostensibly states claims based on…