Hot Shot Kids Inc. v. Pervis (In re Pervis)

• Citation: 497 B.R. 612
• Decision Date: 24 July 2013
• Docket Number: Adversary No. 10–9061.,Bankruptcy No. 10–75270–WLH.
• Parties: In re Joy A. PERVIS, Debtor. Hot Shot Kids Inc. and Brenda Pauley, Plaintiffs, v. Joy A. Pervis, Defendant.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia

497 B.R. 612

In re Joy A. PERVIS, Debtor.

Hot Shot Kids Inc. and Brenda Pauley, Plaintiffs,

v.Joy A. Pervis, Defendant.

Bankruptcy No. 10–75270–WLH.

Adversary No. 10–9061.

United States Bankruptcy Court,

N.D. Georgia,

Atlanta Division.

July 24, 2013.

Quynh–Huong Nguyen Davis, Law Offices of Betty Nguyen Davis LLC, William A. Pannell, William A. Pannell, P.C., Kevin T. Moore, Atlanta, GA, for Plaintiffs.

G. Frank Nason, IV, Lamberth, Cifelli, Stokes Ellis & Nason, Atlanta, GA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

WENDY L. HAGENAU, Bankruptcy Judge.

The parties have submitted over 1,600 pages of briefs, affidavits, depositions and evidence in an attempt to convince the Court of their rights to commissions and fees generated by discovering some of the most well-known child and teen stars in television and movies. The sheer volume of material suggests there are numerous disputed issues of fact. The Court has nevertheless reviewed the materials in order to rule on the pending motion, and to provide a framework for, and hopefully streamline, the future trial.

On June 13, 2010, Hot Shot Kids, Inc. and Brenda Pauley (collectively “Plaintiffs”) filed a Complaint Objecting to Discharge of Debtor against Joy A. Pervis (“Pervis” or “Defendant”) alleging claims of fraud, breach of fiduciary duty, usurpation of corporate opportunities, tortious interference with contractual and business relations, theft, and breach of contract and seeking a determination that such claims are non-dischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4), and 523(a)(6). The Complaint was amended on October 2, 2012.

Before the Court now is Defendant's Motion for Summary Judgment (“Motion”). On March 19, 2013, the Court heard oral argument on the issues raised by the Motion. After oral argument, Pervis filed a Supplemental Brief [Docket No. 91], in which she appears to seek summary judgment as to certain facts and claims not discussed in the original Motion. Summary judgment is appropriate as to claims, not facts, and only those claims on which Pervis sought summary judgment in the original Motion and those matters which are “a subset of the larger issue raised by the party” are properly before the Court. Ervco, Inc. v. Texaco Refining and Marketing, Inc., 422 F.Supp.2d 1084, 1086 (D.Ariz.2006). The Court can also rule on issues sua sponte that are evident from the record. Id. The original grounds for summary judgment articulated by Pervis are:

1. Summary judgment against Hot Shot Kids, Inc. (“HSKI”) with respect to any claim relating to the JBE Talent (defined herein as “Exhibit A Talent”) or commission relating thereto;

2. Summary judgment against Brenda Pauley (“Pauley”) as to any claims relating to JBE Talent (Exhibit A Talent);

3. Summary judgment against Pauley as to any HSKI claims;

4. Summary judgment against HSKI as to any claim of usurpation of corporate opportunities or “funneling” clients to Osbrink Talent Agency (“Osbrink”) or J. Pervis Talent Agency, Inc. (“JPTA”);

5. Summary judgment as to Pervis' liability for the July 21, 2007 letter to HSKI clients;

6. Summary judgment as to claims that Pervis destroyed corporate records; 7. Summary judgment as to claims for conversion of HSKI funds prior to “July 30, 2005”; and

8. Summary judgment as to any Section 523(a)(4) claim related to Pervis as fiduciary.

Since this is a request for judgment on a complaint to determine the dischargeability of certain debts, the Court has authority to hear and finally determine this proceeding under 28 U.S.C. § 157(b)(1) as a core proceeding under 28 U.S.C. § 157(b)(2)(I).

Standard for Motion for Summary Judgment

Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). “The substantive law [applicable to the case] will identify which facts are material”. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A factual dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248, 251–52, 106 S.Ct. at 2510, 2511–12. The party moving for summary judgment has “the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any’ which it believes demonstrate the absence of a genuine issue of material fact.” United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir.1991) ( citing Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2553). What is required of the moving party, however, varies depending on whether the moving party has the ultimate burden of proof on the issue at trial.

When the nonmoving party has the burden of proof at trial, the moving party is not required to ‘support its motion with affidavits or other similar material negating the opponent's claim’ (cites omitted) in order to discharge this ‘initial responsibility’. Instead, the moving party simply may ‘show—that is, point out to the ... court—that there is an absence of evidence to support the nonmoving party's case. (cites omitted). Alternatively, the moving party may support its motion for summary judgment with affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.

Four Parcels of Real Prop., 941 F.2d at 1437 ( citing Celotex, 477 U.S. at 323–31, 106 S.Ct. at 2553–57).

Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings. Fed.R.Civ.P. 56(e). Rather, the nonmoving party must present specific facts that demonstrate there is a genuine dispute over material facts. Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir.1993). Lastly, when reviewing a motion for summary judgment, a court must examine the evidence in the light most favorable to the nonmoving party and all reasonable doubts and inferences should be resolved in favor of the nonmoving party. Hairston, 9 F.3d at 918.

At its core, this dispute arises from the failed business relationship among Pervis, Pauley and Rebecca Shrager (“Shrager”) while they worked in the child and teen talent industry. Pervis ultimately left HSKI on August 1, 2007. Plaintiffs filed suit against Pervis in Gwinnett County on June 19, 2009, making many of the allegations made here (“Gwinnett County Litigation”).While discovery was underway, Pervis filed this bankruptcy petition on May 24, 2010. Plaintiffs then brought the litigation to this Court in the form of the dischargeability complaint. The Plaintiffs' claims fall into three primary categories. The first category encompasses all claims related to certain talent listed on “Exhibit A” to HSKI's Shareholder Agreement, which Pervis calls JBE Talent (“Exhibit A Talent Claims”). The second category encompasses those claims related to non-Exhibit A Talent, which arise before Pervis resigned from HSKI (“Non–Exhibit A Pre–Resignation Claims”). The third category includes those claims related to non-Exhibit A Talent which arise after Pervis' resignation from HSKI (“Non–Exhibit A Post–Resignation Claims”). The undisputed facts will be discussed as each category of claims is discussed.¹

A. Exhibit A Talent Claims

Exhibit A Talent Claims are Pauley's and HSKI's claims of fraud, breach of an oral contract and conversion related to money generated by the list of names referenced in Section 6.1 of the HSKI Shareholder Agreement and attached to it as Exhibit A (“Exhibit A Talent”). Pauley asserts that Pervis committed fraud by concealing the fact that Osbrink was paying commissions on Exhibit A Talent. Pauley also asserts that Pervis breached her oral agreement with Pauley and converted the commissions. In total, Pauley asserts damages of $178,278.92. Pauley points to the list of Exhibit A Talent as well as the Osbrink Ledger (the “Ledger”) as evidence that Pervis was receiving payments on Exhibit A Talent from Osbrink. (Pauley Dec. ¶ 30, Exs. A and B).

Pervis seeks summary judgment on the Exhibit A Talent Claims on the grounds (i) HSKI had no interest in the Exhibit A Talent; (ii) Pauley cannot assert any Exhibit A Talent claim directly as such claim must be asserted by JB Entertainment Group (“JBE”); and (iii) Pauley cannot assert any claim because Pervis was entitled to retain the money for independent work not covered by any agreement with Pauley.

The undisputed facts are as follows except where noted: In 1997, Pauley, Pervis, and Shay Griffin met and formed the talent agency, TG Inc. In 1999, TG Inc. held an open call and discovered the actress Dakota Fanning. In February 2000, Pauley and Pervis referred Ms. Fanning to Osbrink, a talent agency based in Los Angeles owned equally by Cindy Osbrink and its vice president, Scott Wine. The parties entered into an oral “mother/agency” agreement, whereby the agency receiving the referral pays agreed upon commissions for a period of time. Pursuant to this agreement, Osbrink paid a 3% commission for the work done by Ms. Fanning. (Pervis Dec. ¶¶ 4, 11, 12; Pauley Dec. ¶¶ 3, 5, 8; Declaration of Scott Wine [Docket No. 44], ¶¶ 2, 3, 4, 6, herein after “Wine Dec.”).

In June 2000, Pauley and Pervis formed and became equal owners of JBE. Osbrink was instructed to make the checks previously payable to TG Inc., to JBE. In October 2002, TG Inc. was dissolved, all adult bookings and contracts were transferred to PeopleStore, Inc., and HSKI was formed to take over the child and teen responsibilities of TG Inc. Shay Griffin did not continue in the business. Shrager was a 20% owner...