Scarbrough v. Purser (In re Scarbrough)

• Citation: 836 F.3d 447
• Decision Date: 01 September 2016
• Docket Number: No. 15-51045,15-51045
• Parties: In the Matter of: Jerry W. Scarbrough, Debtor. Jerry W. Scarbrough, Appellant, v. Helen Purser; Joann M. Purser; Sue E. Purser; Gary W. Purser, Jr.; Elizabeth Tipton, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

836 F.3d 447

In the Matter of: Jerry W. Scarbrough, Debtor.

Jerry W. Scarbrough, Appellant,
v.
Helen Purser; Joann M. Purser; Sue E. Purser; Gary W. Purser, Jr.; Elizabeth Tipton, Appellees.

No. 15-51045

United States Court of Appeals, Fifth Circuit.

September 1, 2016

Stephen W. Sather, Barron & Newburger, P.C., Austin, TX, for Appellant.

Daryl Lane Moore, Houston, TX, Joshua John White, Haley & Olson, P.C., Waco, TX, for Appellees.

Before STEWART, Chief Judge, and CLEMENT and HAYNES, Circuit Judges.

Carl E. Stewart, Chief Judge:

Debtor-Appellant Jerry W. Scarbrough (“Scarbrough”) appeals the district court's order affirming a bankruptcy court judgment that declared nondischargeable a Texas state court judgment against him. This case involves several familial disputes stemming from an employment lawsuit, an alleged extramarital affair, the death of the family patriarch, and secret recordings. We AFFIRM.

836 F.3d 451

I.

Beginning in 2010, Scarbrough represented Melissa Deaton (“Deaton”) in a Texas state court proceeding brought by a third party against Plaintiffs-Appellees Helen Purser, JoAnn Purser, Sue Purser, Gary Purser, Jr. and Elizabeth Tipton (collectively, the “Appellees”). During the course of this representation, Appellees joined Scarbrough as a third-party defendant with Deaton and another party, Denise Steele (“Steele”). Appellees alleged that Deaton and Steele were attempting to secure financial gain from Gary Purser as his health declined. During trial, Appellees requested all discoverable evidence or known witness statements relating to the state court litigation. Scarbrough prepared responses to Appellees initial discovery requests, stating that Deaton did not possess any recorded statements involving the parties in the lawsuit. Months later, however, Deaton provided Scarbrough with “Secret Recordings” that Scarbrough had duplicated by Shawn Richeson (“Richeson”). Scarbrough failed to disclose the “Secret Recordings” to the court or Appellees but instead gave the recordings back to Deaton. The recordings contained information alleging that Deaton and Steele sought to take advantage of Gary Purser financially. Appellees had not become aware of the Secret Recordings and had not retained possession of them until Richeson produced the recordings to a friend of the Purser family. The state court sanctioned Scarbrough for his intentional withholding of the recordings among other conduct. Scarbrough's conduct is alleged as follows.

Between 2010 and 2011, Scarbrough conspired with Deaton to file a police report alleging that JoAnn Purser called Deaton and threatened to kill her; Scarbrough filed a motion to appoint a guardian ad litem for Gary Purser; and reported to the Texas Department of Adult Protective Services that Appellees were committing elder abuse against Gary Purser. Following Gary Purser's death in 2011, Scarbrough attempted to obtain an autopsy report and reported to the funeral home, local justices of the peace, two local police departments and the Texas Rangers that Appellees likely killed Gary Purser by overdosing him on prescription drugs. Also in 2011, Scarbrough uploaded a video on YouTube of multiple altercations that occurred amongst Appellees, Deaton, and other nonparties to this suit where profanity and physical altercations transpired. Scarbrough superimposed text across the video images specifically implicating JoAnn Purser, who was then running for a position with the Killeen school board. The text included the phrases “VOTED OUT” and “JoAnn Purser, running for Killeen school board.”

Appellees obtained several orders in Texas state court against Scarbrough for fraud, civil conspiracy, and defamation. Scarbrough filed for Chapter 7 Bankruptcy in June 2012. On September 10, 2012, while the underlying suit was ongoing, Appellees brought an adversary proceeding in bankruptcy court seeking a nondischargeability determination against Scarbrough for multiple debts stemming from the state court judgment under 11 U.S.C. 523(a)(2), (4) and (6). Specifically, Appellees sought nondischargeability for, inter alia , debts (1) for money and property obtained by false pretenses, a false representation, or actual fraud and (2) due to Scarbrough causing willful and malicious injury to Appellees. Appellees filed an Amended Complaint on November 19, 2012. Scarbrough filed a motion to dismiss Appellees' Amended Complaint on November 21, 2012, for failure to state a claim.

After granting partial summary judgment and conducting a nine-day trial on the merits, the bankruptcy court concluded that (1) the judgments against Scarbrough

836 F.3d 452

for defamation and for fraud were each nondischargeable under the willful and malicious injury discharge exception in § 523(a)(6) ; (2) the judgment against Scarbrough for fraud due to Scarbrough's failure to disclose, and fraud by misrepresentation, was nondischargeable under the “false pretenses, false representation, or actual fraud” discharge exception in § 523(a)(2)(A) ; and (3) Scarbrough's privilege and First Amendment assertions as affirmative defenses were collaterally estopped, as they were “actually litigated” in state court. Scarbrough appealed the bankruptcy court decision. The district court affirmed and Scarbrough now appeals to this Court.

II.

Scarbrough does not argue that the bankruptcy court misunderstood or misapplied governing bankruptcy law, but that the court erred in granting summary judgment and clearly erred in several of its factual findings. We review the decision of the district court by applying the same standard to the bankruptcy court's findings of fact and conclusions of law that the district court did, reviewing findings of fact for clear error and conclusions of law de novo . See In re Acosta , 406 F.3d 367, 372 (5th Cir. 2005) ; In re Gamble , 143 F.3d 223, 225 (5th Cir. 1998). A finding of fact is clearly erroneous only if “on the entire evidence, the court is left with the definite and firm conviction that a mistake has been committed.” In re Dennis , 330 F.3d 696, 701 (5th Cir. 2003). We review a partial grant of summary judgment de novo and apply the same standards used by the district court. In re Criswell , 102 F.3d 1411, 1414 (5th Cir. 1997).

III.

A.

Scarbrough first argues that Appellees' late-filed Amended Complaint addressing sanction orders was time-barred. A creditor seeking to have a debt deemed nondischargeable must assert the claim in a timely manner. See In re Dunlap , 217 F.3d 311, 314 (5th Cir. 2000) ; see also In re Meyer , 120 F.3d 66, 68 (7th Cir. 1997). The deadline for filing a dischargeability complaint is inflexible. Id. (stating that Bankruptcy Rule 4007(c) imposes a firm 60-day deadline (after the first creditors' meeting) for creditors to request a nondischargeability determination for debts under §§ 532(a)(2) and (a)(6)). Notwithstanding, a party's amended complaint may determine dischargeability if “the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out ... in the original pleading.” Fed. R. Civ. P. 15(c)(1) ; Fed. R. Bank. P. 7015.

Scarbrough complains that the bankruptcy court erred when it permitted Appellees to file an amended complaint after the expiration of the 60-day filing period set forth in Bankruptcy Rule 4007(c). Scarbrough argues that Appellees' original complaint did not assert claims for nondischargeability of sanction debts as specified in the Amended Complaint, and that the Amended Complaint did not relate back to the original complaint. We disagree.

The relation back doctrine is critical here because it determines whether Appellees' Amended Complaint must be dismissed as futile. See Baker v. Carter , No. 4:12–CV–478, 2013 WL 1196106, at *7 (E.D. Tex. Mar. 22, 2013). If so, Appellees have no claim for nondischargeability of the sanction debt. We construe Appellees' original complaint to assert that Debtor “alone or in concert with others, obtained monies through false pretenses, a false representation or actual fraud; committed fraud and defalcation while acting in a fiduciary capacity, and committed a willful and malicious injury.” Appellees attached

836 F.3d 453

and incorporated by reference their state court pleading. While Appellees' initial complaint did not mention the sanctions orders, the conduct that Appellees identify in the Amended Complaint directly emanates from the conduct for which the court sanctioned Scarbrough and from the conduct specified in Appellees state court pleading: (1)...