United States Bankruptcy Appellate Panel
                            For the Eighth Circuit
                        ___________________________

                                No. 18-6001
                        ___________________________

                   In re: Richard Michael Heyl; Jennifer Heyl

                               lllllllllllllllllllllDebtors

                             ------------------------------

                          Steve Conway; LorCon LLC #1
                       lllllllllllllllllllllPlaintiffs - Appellants

                                    Lorcon LLC #4
                                lllllllll   lPlaintiff

                                           v.

                                 Richard Michael Heyl
                       lllllllllllllllllllllDefendant - Appellee

                        Heyl Partners Station Plaza, LLC
                           lllllllllllllllllllllDefendant
                                  ____________

                  Appeal from United States Bankruptcy Court
                  for the Eastern District of Missouri - St. Louis
                                  ____________

                         Submitted: September 24, 2018
                            Filed: October 18, 2018
                                ____________

Before SALADINO, Chief Judge, DOW and SANBERG, Bankruptcy Judges.
                               ____________
SALADINO, Chief Judge.

       The Appellants, Steve Conway and Lorcon LLC #1, appeal the order of the
Bankruptcy Court1 dismissing their adversary complaint, as well as an order
denying their motion to reconsider the dismissal order. We have jurisdiction over
this appeal. See 28 U.S.C. §158(b). For the reasons that follow, we affirm.

                           FACTUAL BACKGROUND

        Steve Conway, through his entity LorCon LLC #1 ("LorCon")2, invested in
Heyl Partners Station Plaza ("Heyl Partners") and Johns Folly Ocean Villas, LLC
("Johns Folly"), two real estate development ventures Debtor Richard Michael
Heyl had promoted to Conway, a principal of LorCon. In early 2007, when Heyl
Partners ran into severe financial difficulties, Heyl presented Conway andLorCon
with the option of transferring the interest from Heyl Partners to either Johns Folly
or Madaford Gardens, LLC. Appellants opted to transfer the Heyl Partners
investment into an additional investment in Johns Folly. The value of appellant's
transfer of the investment from Heyl Partners to Johns Folly was negotiated in
large part based on Debtor's representations concerning an asserted recent
investment in Johns Folly by an apparent insider, Mary Beth Kinsella. After the
2007 transfer of its interest from Heyl Partners to Johns Folly, Appellants also
fulfilled two large capital calls by Johns Folly, further increasing their investment.
Ultimately, the Johns Folly venture also failed.



      1
         The Honorable Charles E. Rendlen, III, United States Bankruptcy Judge for
the Eastern District of Missouri.
       2
         Conway continues to assert an interest in the claims appellants have against
Heyl, despite the prior appeals in which both this Bankruptcy Appellate Panel (case
no. 13-6022) and the Eighth Circuit Court of Appeals (case no. 14-1453) determined
that Conway did not have standing to appeal. That issue is immaterial to the outcome
of this appeal and will not be addressed further.
                                          2
        On August 31, 2009, Debtors Richard M. Heyl (“Heyl”) and Jennifer Ann
Heyl filed a voluntary petition for relief under Chapter 7, Title 11 of the United
States Code in the United States Bankruptcy Court for the Eastern District of
Missouri, Eastern Division. In Schedule F (general unsecured claims) of their
petition, they listed an unsecured, undisputed, non-contingent, liquidated debt in
the amount of zero dollars owed to Steven Conway (“Conway”) for “[p]otential
liability for investment in JFOV, LLC.” The bankruptcy was a “no asset” case, so
no proof of claim deadline was set. Notwithstanding, Conway filed a proof of
claim in the name of LorCon, asserting an unsecured debt in the amount of
$79,500.00, representing an investment loss related to JFOV, LLC (the “Debt”).

       On August 27, 2010, Appellants commenced an adversary proceeding in the
Bankruptcy Court (the “2010 Adversary Proceeding”) against Heyl, alleging false
pretenses, false representation and actual fraud related to the JFOV, LLC
investment and seeking a determination that the Debt is excepted from discharge
under § 523(a)(2)(A). On February 13, 2012, the Bankruptcy Court entered
Judgment in favor of Heyl. The Bankruptcy Court found that while Heyl had made
false statements to Conway that were relied upon by Conway, the Debt was not the
proximate result of the representations. Therefore, Conway failed to meet his
burden of proof as to proximate causation.

      Appellants did not appeal the judgment in the 2010 Adversary Proceeding.
However, on February 11, 2013, Conway and LorCon filed their Motion for Relief
from Judgment, alleging that “newly discovered evidence” had been obtained,
warranting relief from the judgment in the 2010 Adversary Proceeding. On April
8, 2013, the Bankruptcy Court denied that motion.

      Appellants appealed the denial of their motion to the Bankruptcy Appellate
Panel. LorCon was subsequently dismissed from the appeal after its lawyer
withdrew from representation. On December 12, 2013, the Bankruptcy Appellate
Panel entered an order dismissing the appeal, concluding that Conway lacked

                                        3
standing to pursue the appeal because he did not have a pecuniary interest in the
outcome. On further appeal, the Eighth Circuit Court of Appeals affirmed.

       Meanwhile, in October of 2012, Conway made a written complaint to the
Enforcement Section of the Missouri Securities Division of the Office of Secretary
of State (the “Enforcement Section”), raising claims against Heyl and an affiliated
limited liability company known as Heyl Partners Station Plaza, LLC (“HPSP”)
asserting the fraudulent sale of investment interests in HPSP and JFOV. The
Enforcement Section investigtated and on April 23, 2015, a Consent Order (the
“Consent Order”) was entered into by Heyl, HPSP, and the Enforcement Section.

       In the Consent Order, Heyl and HPSP expressly did not admit or deny any of
the allegations made, but rather consented to the entry of the Consent Order solely
for the purpose of resolving that proceeding before the Enforcement Section. The
Consent Order required Heyl and HPSP to pay a fine and costs to the state of
Missouri only in the event that they violated the Consent Order within a two-year
period after its execution. The Consent Order acknowledged that the Missouri
Resident who initiated the complaint had incurred a $79,500.00 investment loss but
did not include a monetary judgment or any other form of relief in favor of
Conway, LorCon #1, and/or any other creditors.

      On October 14, 2015, Conway, LorCon #1, and LorCon, LLC #43 filed a
new adversary complaint with the Bankruptcy Court, which is the adversary
proceeding from which this appeal arose (the “2015 Adversary Proceeding”). This
time, Appellants sought to except the Debt from Heyl’s discharge under 11 U.S.C.
§ 523(a)(19).

     On March 8, 2017, Heyl filed his Amended Motion to Dismiss the 2015
Adversary Proceeding pursuant to Fed. R. Civ. P. 12(b)(6), for failure to state a
      3

LorCon #4 was not made a party to the instant appeal.
                                        4
claim upon which relief can be granted. Conway and the LorCon entities filed a
Response to the Amended Motion to Dismiss objecting to dismissal. On
December 11, 2017, the Bankruptcy Court entered its Order granting the Motion to
Dismiss (“Dismissal Order”) on seven (7) separate grounds. Thereafter, the Court
entered its Order denying a Motion to Reconsider. Conway and LorCon #1 have
appealed.

                            STANDARD OF REVIEW

       “A bankruptcy court’s findings of fact are reviewed for clear error and its
conclusions of law are reviewed de novo.” Larson v. Foster (In re Foster), 

, 541 (B.A.P. 8th Cir. 2014). The granting of a motion to dismiss by a
bankruptcy court is reviewed de novo by the Bankruptcy Appellate Panel. Schaaf
v. Residential Funding Corp., 

, 549 (8th Cir.2008); GAF Holdings,
LLC v. Rinaldi (In re Farmland Indus., Inc.), 

, 503 (B.A.P. 8th Cir.
2009).



                                   DISCUSSION

       Federal Rule of Civil Procedure 8(a)(2), made applicable to bankruptcy
proceedings by Federal Rule of Bankruptcy Procedure 7008, requires pleadings
that state a claim for relief to contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” F.R.Civ.P. 8(a)(2); Fed. Rules
Bankr.Proc. 7008. A complaint which fails to state a claim to relief that is plausible
on its face may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6):

      To survive a motion to dismiss, a complaint must contain sufficient
      factual matter, accepted as true, to “state a claim to relief that is
      plausible on its face.” A claim has facial plausibility when the plaintiff
      pleads factual content that allows the court to draw the reasonable

                                          5
      inference that the defendant is liable for the misconduct alleged. The
      plausibility standard is not akin to a “probability requirement,” but it
      asks for more than a sheer possibility that a defendant has acted
      unlawfully. Where a complaint pleads facts that are “merely
      consistent with” a defendant's liability, it “stops short of the line
      between possibility and plausibility of ‘entitlement to relief.’”

Ashcroft v. Iqbal, ––– U.S. ––––, ––––, 

, 1949, 

(2009) (internal citations omitted; quoting Bell Atlantic Corp. v. Twombly, 

, 

, 

(2007)). “[W]e accept as true all of the
factual allegations contained in the complaint, and review the complaint to
determine whether its allegations show that the pleader is entitled to relief.” Schaaf
v. Residential Funding Corp., 

, 549 (8th Cir. 2008). However, “the
tenet that a court must accept as true all of the allegations contained in a complaint
is inapplicable to legal conclusions.” Ashcroft at 1949. “Determining whether a
complaint states a plausible claim for relief will ... be a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.”

“Where the allegations show on the face of the complaint there is some
insuperable bar to relief, dismissal under Rule 12(b)(6) is appropriate.” Benton v.
Merrill Lynch & Co., Inc., 

, 870 (8th Cir. 2008).

      Here, Appellants assert that the Debt is excepted from the discharge Heyl
received in his underlying bankruptcy case pursuant to 11 U.S.C. § 523(a)(19).
That section provides that “[a] discharge under section 727 . . . does not discharge
an individual debtor from any debt –

             (19) that –
                    (A) is for –
                           i. the violation of any of the Federal
             securities laws . . ., any of the State securities laws, or
             any regulation or order issued under such Federal or State
             securities laws; or

                                          6
                           ii. common law fraud, deceit, or
             manipulation in connection with the purchase or sale of
             any security;

             and
                   (B) results . . ., from –
                          i. any judgment, order, consent order, or
             decree entered in any Federal or State judicial or
             administrative proceeding;
                          ii. any settlement agreement entered into by
             the debtor; or
                          iii. any court or administrative order for any
             damages, fine, penalty, citation, restitutionary payment,
             disgorgement payment, attorney fee, cost, or other
             payment owed by the debtor.

11 U.S.C. § 523(a)(19). To discern the requirements of section 523(a)(19), this
Court begins its inquiry with the statutory language itself. Lamie v. United States
Trustee, 

, 534, 

, 

(2004). “It is well
established that ‘when the statute's language is plain, the sole function of the
courts—at least where the disposition required by the text is not absurd—is to
enforce it according to its terms.’ ” 

Underwriters Ins. Co. v.
Union Planters Bank, N.A., 

, 6, 

, 

(2000)).
Under the statutory languge, it is clear that two elements must exist to state a claim
under § 523(a)(19): (A) a violation of securities law or fraud in connection with the
sale of securities; and (B) a resulting debt that was memorialized in a judgment,
settlement or decree. McKinny v. Allison (In re Allison), 

, at * 3
(Bankr. E.D.N.C., Aug. 29, 2012).

      The bankruptcy judge gave several alternative reasons for granting the
motion to dismiss and the Appellants assert in their briefs on appeal no less than
twenty-eight separate assignments of error by the Bankruptcy Court. However, we
need only address one issue--that is, whether the Bankruptcy Court erred in finding


                                          7
that the debt at issue did not “result … from” the Consent Order as required by 11
U.S.C. § 523(a)(19)(B).

       In their Amended Complaint, Appellants describe their cause of action as:
“This is a Complaint requesting that the Court declare that, as a result of a Consent
Order entered against Debtor on April 23, 2015, the Debt described below is
nondischargeable under 11 U.S.C. § 523(a)(19).” Appellants continued this theme
in their briefs on appeal and at oral argument, asserting that their Ҥ 523(a)(19)
claims did not exist” until the Consent Order was issued. Appellants’ entire case is
premised on a purported debt that “results … from” the Consent Order.

       The Consent Order was issued by the Enforcement Section of the Missouri
Securities Division of the Office of Secretary of State in an administrative
proceeding it commenced against debtor Richard Heyl and his company, Heyl
Parnters Station Plaza, LLC. Appellants are not parties to or signatories on the
Consent Order. However, appellant Steven Conway asserts that he is the
“Missouri Resident” referenced in the Consent Order and whose written complaint
to the Enforcement Section resulted in the investigation and Consent Order.4

       The Bankruptcy Court found that no debt to Appellants resulted from the
Consent Order, and we agree. The only debt that resulted from the consent order is
a debt from Heyl and his company to the Enforcement Section for a civil penalty
and costs. By its plain languge, the Consent Order does not establish any debt
owed to Appellants or anyone else. The closest the Consent Order comes to doing
so is a finding of fact that the “Missouri Resident” lost a total of Seventy Nine
Thousand Five Hundred Dollars ($79,500.00) from investments with Heyl. As the
Bankruptcy Court noted, that is not a judgment or a right of collection; it is just a
finding of a loss on investments.


      4
       There is some dispute as to whether both appellants or just Mr. Conway filed
the Complaint with the Enforcement Division, but that distinction is irrelevant.
                                         8
       Appellants seem to be arguing that the mere finding by the Enforcment
Section of a securities law violation by Heyl automatically results in a debt owed to
Appellants. However, Appellants seem to be combining the two separate elements
of a claim under § 523(a)(19)—a debt that is “for” a violation of securities law or
fraud in connection with the sale of securities; and “results from” a judgment,
settlement or decree. While the Consent Order may help Appellants satisfy the
“for” element, it simply does not “result” in a debt owed to Appellants.

      A similar situation was presented to the Ninth Circuit Court of Appeals in
Tradex Glob. Master Fund Spc Ltd. v. Chui, 

, 525-26 (N.D. Cal.
2016), aff'd sub nom. Tradex Glob. Master Fund SPC LTD v. Chui, 

(9th Cir. 2017). In Tradex, the debtor/investment advisor entered into a
consent order with the SEC, but there was no finding of any debt owed to the
investor. 

the debt allegedly owed to the investor did not “result
from” the SEC order, that order did not satisfy Section 523(a)(19). 

only debt established by the Consent Order is the debt to the
Enforcment Section for civil penalty and costs. There was no finding of any other
liability. We agree with the Ninth Circuit’s analysis in Tradex that the debt must
actually result from the order the plaintiff is relying upon. We also agree with the
Bankruptcy Court that the Consent Order—which is the order Appellants are
relying upon--does not result in a debt owed to Appellants. There simply is no
causal relationship between the Consent Order and Appellants’ claim. Stated
another way, Appellants may or may not have a claim against Heyl that resulted
from their investments in his company. But they have not established any such
claim in any judicial or administrative proceeding.5 Certainly, no such claim
resulted from the Consent Order.



      5
       In fact, appellants were denied such a claim in the 2010 Adversary Proceeding
seeking an exception from discharge under section 523(a)(2)(A).
                                         9
       Finally, Appellants argue that by requiring a causal connection between the
Consent Order and the claim of Appellants against Heyl, we are somehow
rendering § 523(a)(19)(B)(iii) superfluous—apparently because it would simply be
repeating in more detail the requirements of § 523(a)(19)(B)(i). However, we fail
to see how this interpretation of those two subsections of the statute benefits
Appellants. Both subsections are prefaced with the requirement that the claim
“results…from” the Consent Order.

      Accordingly, Appellants have failed to state a claim upon which relief can
be granted under § 523(a)(19).

                                 CONCLUSION

      For the reasons stated above, we affirm the Bankruptcy Court.
                       ______________________________




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