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Successful defendants on a motion to strike were awarded enhanced costs due to unproved fraud allegations, payable by the trustee personally if the estate lacks funds.
The McKillips, successful defendants in a motion to strike, sought substantial indemnity costs against the plaintiff Trustee in Bankruptcy.
The court awarded costs on a substantial indemnity basis for the period when fraud allegations were pleaded and partial indemnity thereafter, totaling $42,836.
The court found the fraud allegations, even if later clarified, warranted enhanced costs due to their serious nature and the Trustee's recklessness in pleading them without sufficient particulars.
The court also ruled that the costs should be paid by the Estate, or personally by the Trustee if the Estate lacked funds, rejecting the Trustee's argument for set-off against amounts owed by Susan McKillip in a separate unjust enrichment action.
Motion to strike re-amended statement of claim granted in part; serial attacks on pleadings constitute abuse of process.
The defendants brought a second motion to strike the plaintiff's re-amended statement of claim in an action arising from a Ponzi scheme.
The court found that the plaintiff had addressed the deficiencies identified in a previous decision regarding the damages claimed against most defendants.
However, the court struck the claim against two defendants (the McKillips) without leave to amend, finding no material facts were pleaded to establish a duty of care.
The court also held that the defendants were precluded from raising new arguments about the duty of care that they could have raised on their first motion to strike, as serial attacks on a pleading constitute an abuse of process.
