Darlene Robinson, Acnpc & Glite Healthcare Alliance, PLLC v. Thompson (In re Thompson)

• Decision Date: 03 April 2020
• Docket Number: No. 4:19-bk-11439-SDR,4:19-bk-11439-SDR
• Parties: IN RE: Robert Michael THOMPSON, Debtor; Darlene Robinson, ACNPc and Glite Healthcare Alliance, PLLC, Plaintiff; v. Robert Michael Thompson, Defendant.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

617 B.R. 296

IN RE: Robert Michael THOMPSON, Debtor;Darlene Robinson, ACNPc and Glite Healthcare Alliance, PLLC, Plaintiff;

v.Robert Michael Thompson, Defendant.

No. 4:19-bk-11439-SDR

United States Bankruptcy Court, E.D. Tennessee, Southern Division.

Signed April 3, 2020

Philip Douglas Irwin, Neal & Harwell, PLC, Nashville, TN, for Plaintiff.

Robert S. Peters, Swafford, Peters, Priest & Hall, Winchester, TN, for Defendant.

MEMORANDUM

Shelley D. Rucker, UNITED STATES BANKRUPTCY JUDGE

I. Introduction

On June 14, 2019, Darlene Robinson, ACNPc, and Elite Healthcare Alliance, PLLC, ("Ms. Robinson" or "the Plaintiff") filed a complaint in this adversary proceeding against Robert Michael Thompson, D.C., ("Dr. Thompson" "the Debtor," or "the Defendant") seeking a judgment from this Court that a debt in the amount of $2,587,123.29 is nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4), and 523(a)(6). [Doc. No. 1].¹ The debt arises from a judgment Ms. Robinson obtained against Dr. Thompson on August 24, 2010, in the Chancery Court for Davidson County, Tennessee ("Chancery Court") for $1,200,000 in compensatory damages and $200,000 in punitive damages based on findings of breach of contract, fraud, intentional misrepresentation, and conversion. Ms. Robinson seeks a finding in this Court that the entire judgment plus post-judgment interest is nondischargeable.

On August 20, 2019, Dr. Thompson filed an answer while acting pro se. [Doc. No. 9]. After later obtaining counsel, Dr. Thompson filed an amended answer through counsel. [Doc. No. 29]. On March 9, 2020, Ms. Robinson filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56, as incorporated into this adversary proceeding by Federal Rule of Bankruptcy Procedure 7056. [Doc. No. 38]. On March 19, 2020, Dr. Thompson through counsel filed a response in opposition to Ms. Robinson's motion for summary judgment. [Doc. No. 44]. Ms. Robinson filed a reply on March 26, 2020. [Doc. No. 45].

The parties' dispute arises out of the ownership and operation of a pain management and chiropractic clinic, Tennessee Wellness Centers, PLLC ("TWC"). The Chancery Court found that Ms. Robinson, a nurse practitioner, and Dr. Thompson, a chiropractor, had formed a contract in which either: (1) they each "jointly own[ed] TWC and shared on a 50/50 basis, the net profits ... plus their salaries and benefits"; or (2) Dr. Thompson solely owned TWC but he and Ms. Robinson had agreed to "share equally the net profits of TWC, plus their salaries and benefits." [Doc. No. 41-1, at 6]. The Chancery Court found, inter alia , that Dr. Thompson had "breached the parties' contract by failing to pay Ms. Robinson half of the net profits of TWC;" that he had "engaged in a pattern of fraud and misrepresentation in order to deprive" Ms. Robinson of her share; that Dr. Thompson had "converted funds of TWC" that would otherwise have benefitted Ms. Robinson to his personal use and benefit; and that "as a direct and proximate cause of [Dr. Thompson's] breach of contract, fraud, misrepresentation and conversion, Ms. Robinson suffered compensatory damages in the amount of $1,200,000." [Id. at 7-9]. The Chancery Court also found by clear and convincing evidence that punitive damages in the amount of $200,000 were warranted because Dr. Thompson had "acted intentionally, fraudulently and maliciously to induce Ms. Robinson to remain at TWC and to both build and manage a highly successful pain management practice based on an agreement that Ms. Robinson would share equally with Dr. Thompson the net profits of TWC, with no intent to follow through with that agreement." [Id. at 11].

Ms. Robinson now seeks a summary judgment finding that the Chancery Court's award of damages is nondischargeable in Dr. Thompson's bankruptcy case. Ms. Robinson argues that she is entitled to judgment as a matter of law because the doctrine of collateral estoppel prevents Dr. Thompson from relitigating the issues decided in the Chancery Court judgment. [Doc. No. 39, at 23]. Dr. Thompson does not object to the admittance of the Chancery Court's findings in this adversary proceeding. [Doc. No. 44-1, at 1-2, 8]. Rather, Dr. Thompson argues that the findings the Chancery Court made do not correspond to the elements of a nondischargeability claim under sections 523(a)(2)(A), (a)(4), or (a)(6) and that, therefore, summary judgment is improper.

The Court has reviewed the motion for summary judgment, the pleadings and briefing filed by the parties, the record, and the applicable law. For the reasons explained below, the Court will GRANT in part and DENY in part Ms. Robinson's motion for summary judgment. The Court will GRANT the motion for summary judgment to the extent that it will enter an order finding that the debt owed to Ms. Robinson is nondischargeable under sections 523(a)(2)(A) and (a)(6). The Court will DENY the motion for summary judgment with respect to section 523(a)(4). Although Dr. Thompson has not moved for summary judgment, the Court will consider granting summary judgment for Dr. Thompson on the section 523(a)(4) claim. In accordance with Federal Rule of Civil Procedure 56(f), the Court will postpone the trial scheduled for April 20, 2020, and will give Ms. Robinson until April 24, 2020, in which to file a responsive brief if she wishes to proceed to trial on her section 523(a)(4) claim. If no response is filed, the Court will dismiss the section 523(a)(4) claim and close this adversary proceeding.

II. Jurisdiction

The Court has jurisdiction to hear and decide this adversary proceeding pursuant to 28 U.S.C. §§ 157 and 1334, as well as the general order of reference entered in this district. An action to determine the dischargeability of a particular debt is a core proceeding, and the parties have consented to entry of a final judgment by this Court. See 28 U.S.C. § 157(b)(2)(H).

III. Undisputed Facts

The following facts are taken from Ms. Robinson's statement of undisputed facts and attached exhibits, to which Dr. Thompson has stated he has no objection. [Doc. No. 41; Doc. No. 44-1, at 1, 2, 8]. The Court notes that Dr. Thompson intentionally did not file a response to Ms. Robinson's statement of undisputed facts, contending that there was no requirement for him to do so found in Federal Rule of Civil Procedure 56. [Doc. No. 44-1, at 8]. Regardless, the Local Bankruptcy Rules of the United States Bankruptcy Court for the Eastern District of Tennessee require a "response to the [summary judgment] movant's statement of undisputed material facts" and provide that "[a]bsent a response ... the material facts set forth in the movant's statement will be deemed admitted." E.D. Tenn. LBR 7056-1(b). Accordingly, the facts set forth below are deemed admitted for purposes of summary judgment. See Schulz Brau Brewing, LLC v. Evans (In re Evans) , No. 3:16-bk-32647-SHB, Adv. No. 3:17-ap-3001-SHB, 2018 WL 1577716, at *1 (Bankr. E.D. Tenn. Mar. 28, 2018).

On November 25, 2009, Dr. Thompson filed a lawsuit against Ms. Robinson styled Tennessee Wellness Centers, PLLC and Michael Thompson, DC v. Elite Healthcare Alliance, PLLC, Darlene Robinson, ACNPc and Larry McCoy, DC , in the Chancery Court of Davidson County, Tennessee, Docket No. 09-2247-III. At the time Dr. Thompson filed suit, he was represented by counsel.

On February 19, 2010, Ms. Robinson filed her answer and counterclaim in the Chancery Court. On February 22, 2010, she filed and served an amended counterclaim against Dr. Thompson alleging claims of breach of contract, fraud, intentional misrepresentation, conversion and for an accounting. Dr. Thompson was required to file an answer within thirty days; however, no response was ever filed.

Dr. Thompson's attorney moved to withdraw from representation of Dr. Thompson on April 1, 2010. On April 20, 2010, Ms. Robinson filed a response to the motion to withdraw requesting that, upon the granting of the motion, the Chancery Court require Dr. Thompson to obtain substitute counsel within thirty days or be presumed to be proceeding pro se. By order entered May 24, 2010, the Chancery Court granted the motion to withdraw but required Dr. Thompson to have new counsel file a notice of appearance by June 30, 2010, or else Dr. Thompson was to file a notice indicating that he would be proceeding pro se. The order granting withdrawal also provided that failure to comply with the deadline would result in Dr. Thompson's claims being dismissed without prejudice for failure to prosecute.

On May 28, 2010, Ms. Robinson filed a motion for default judgment, as to liability only, against Dr. Thompson regarding the claims in her counterclaim. Ms. Robinson gave notice to Dr. Thompson that the hearing on her motion for default judgment was set for June 11, 2010, and that Dr. Thompson's failure to appear or otherwise respond might result in the motion being granted without further notice. The Chancery Court held a default judgment hearing on June 11, 2010; however, Dr. Thompson did not appear nor file a response.

On June 29, 2010, Dr. Thompson filed pro se a "Petition to the Court for Additional Time" within which to obtain counsel and/or notify the Chancery Court that he was proceeding pro se. Ms. Robinson objected, but the Chancery Court extended Dr. Thompson's deadline to obtain counsel to September 3, 2010. The Chancery Court order indicated that noncompliance with the deadline would result in an automatic dismissal without prejudice of his complaint. Dr. Thompson failed to meet the September 3, 2010 deadline.

Following the hearing held on June 11, 2010, the Chancery Court entered a default judgment on July 6, 2010, against Dr. Thompson as to liability only and set a damages hearing for August 5, 2010. The Chancery Court's order provided notice to Dr. Thompson of the granting of the default judgment and of the evidentiary hearing set for August 5, 2010.

On August 5, 2010, the Chancery Court held an evidentiary hearing regarding Ms. Robinson's...