ACCEPTED 03-13-00025-CV 7238340 THIRD COURT OF APPEALS AUSTIN, TEXAS 10/5/2015 5:21:52 PM JEFFREY D. KYLE CLERK DARYL L. MOORE‡ DARYL L. MOORE, P.C. FILED IN 1005 Heights Boulevard 3rd COURT OF APPEALS Houston, Texas 77008 AUSTIN, TEXAS 713.529.0048 Telephone 10/5/2015 5:21:52 PM 713.529.2498 Facsimile JEFFREY D. KYLE Clerk October 5, 2015 Via Electronic Filing Mr. Jeffrey D. Kyle, Clerk THIRD COURT OF APPEALS P.O. Box 12547 Austin, Texas 78711-2545 Re: Cause No. 03-13-00025-CV; Jerry Scarbrough, et al. v. Helen Purser, et al. Dear Mr. Kyle: This case is set for submission on October 22, 2015, at 9:00 a.m., in Belton, Texas, before Chief Justice Rose, Justices Field and Bourland. Last week — in a related matter pending in federal district court — Judge Walter S. Smith, Jr. affirmed a bankruptcy court’s judgment regarding the state-court judgment at issue in this appeal. Appellees believe the bankruptcy court’s opinion may be helpful in this Court’s disposition of the issues in this appeal, Appellees have therefore attached for the panel members’ consideration: (1) the bankruptcy court’s opinion, In re Scarbrough, 516 B.R. 897 (Bankr. W.D. Tex. 2014); and (2) Judge Smith’s September 30th order affirming the Bankruptcy Court’s judgment. Thank you for distributing the attached materials to the panel members. Very truly yours, /s/ Daryl L. Moore Daryl L. Moore ‡ BOARD CERTIFIED, CIVIL APPELLATE LAW, TEXAS BOARD OF LEGAL SPECIALIZATION CERTIFICATE OF SERVICE A true and correct copy of this Letter has been forwarded to all counsel of record on October 5, 2015, as follows: Michele Barber Chimene THE CHIMENE LAW FIRM 2827 Linkwood Dr. Houston, Texas 77025-3809 michelec@airmail.net Counsel for Appellants /s/ Daryl L. Moore Daryl L. Moore In re Scarbrough, 516 B.R. 897 (2014) 516 B.R. 897 West Headnotes (28) United States Bankruptcy Court, W.D. Texas, Waco Division. [1] Bankruptcy Willful or Malicious Injury In re Jerry W. SCARBROUGH, Debtor. Debt under willful and malicious injury Hele Purser, Sue E. Purser, Gary W. Purser, exception to discharge must arise from a Jr., Joann M. Purser, and Elizabeth Tipton deliberate or intentional injury, not merely a v. deliberate or intentional act that leads to injury. Jerry W. Scarbrough. 11 U.S.C.A. § 523(a)(6). Bankruptcy No. 12–60683–RBK. | Adversary Cases that cite this headnote No. 12–6031–RBK. | Signed Aug. 29, 2014. [2] Bankruptcy Synopsis Willful or Malicious Injury Background: Creditors brought adversary proceeding seeking nondischargeability determination for multiple debts An injury is “willful and malicious” for purposes stemming from state court judgment against Chapter 7 debtor of discharge exception where there is either for sanctions, fraud, civil conspiracy, and defamation. an objective substantial certainty of harm or a subjective motive to cause harm. 11 U.S.C.A. § 523(a)(6). Holdings: The Bankruptcy Court, Ronald B. King, Chief Cases that cite this headnote Judge, held that: [3] Bankruptcy [1] state court judgment against debtor for defamation Particular cases was nondischargeable under willful and malicious injury Creditor seeking nondischargeability of debt discharge exception; under willful and malicious injury exception to discharge bears the burden to prove such a claim [2] state court judgment against debtor for fraud was by a preponderance of the evidence. 11 U.S.C.A. nondischargeable under willful and malicious injury § 523(a)(6). discharge exception; Cases that cite this headnote [3] state court judgment against debtor for fraud by failure to disclose and fraud by misrepresentation was nondischargeable under “false pretenses, false representation, [4] Bankruptcy or actual fraud” discharge exception; and In general; fraud State court judgment against Chapter 7 debtor [4] issues of privileges and First Amendment as affirmative for defamation was nondischargeable under defenses asserted by debtor in adversary proceeding were willful and malicious injury discharge exception, “actually litigated” in the state court, for purposes of state's where debtor had disseminated false allegations collateral estoppel rules. to authorities, funeral home, and relatives of deceased that creditor's family abused and murdered the deceased, who was their elderly Ordered accordingly. father, as a strategic maneuver to delay burial of the deceased and obtain an autopsy, and jury in the state court action found debtor knew the statements were false or had serious doubts as to their truth. 11 U.S.C.A. § 523(a)(6). © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 In re Scarbrough, 516 B.R. 897 (2014) Cases that cite this headnote Cases that cite this headnote [5] Libel and Slander [10] Bankruptcy Nature and elements of defamation in In general; fraud general False accusations of criminal conduct can Under Texas law, defamation is a false statement create an objective substantial certainty of harm about a person, published to a third-party, against the accused, for purposes of willful without legal excuse, which damages the and malicious injury discharge exception. 11 person's reputation. U.S.C.A. § 523(a)(6). Cases that cite this headnote Cases that cite this headnote [6] Libel and Slander [11] Libel and Slander Presumption as to damage; special Words Imputing Crime and Immorality damages Texas law treats false accusations of illegal and Under Texas law, on claim for defamation per immoral conduct as defamatory per se. se, the harm caused by the words is so obviously hurtful that they require no proof of injury to be Cases that cite this headnote actionable. [12] Judgment Cases that cite this headnote Matters actually litigated and determined Judgment [7] Libel and Slander Facts Necessary to Sustain Judgment Words Imputing Crime and Immorality Under Texas law, collateral estoppel bars Falsely imputing a crime to another person is relitigation of any ultimate issues of fact actually grounds for defamation per se under Texas law. litigated and essential to the judgment in a prior suit. Cases that cite this headnote Cases that cite this headnote [8] Libel and Slander Words Imputing Crime and Immorality [13] Bankruptcy False imputation of a crime, for purposes of In general; fraud defamation per se claim, requires a statement State court judgment against Chapter 7 debtor that unambiguously and falsely imputes criminal for fraud was nondischargeable under willful conduct to a party. and malicious injury discharge exception, where jury in the state court action found debtor, who Cases that cite this headnote was an attorney, had intentionally utilized the litigation process to coerce a nuisance settlement [9] Bankruptcy of claims made in bad faith, debtor had violated Willful or Malicious Injury medical records confidentiality order of the state Objective test for “willful and malicious” court and attempted to initiate multiple meritless injury analyzes whether a reasonable person criminal investigations, and state court had would determine that a defendant's actions were awarded creditor sanctions for debtor's discovery substantially certain to cause harm. 11 U.S.C.A. abuses. 11 U.S.C.A. § 523(a)(6). § 523(a)(6). Cases that cite this headnote © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 In re Scarbrough, 516 B.R. 897 (2014) false representation, or actual fraud” discharge [14] Bankruptcy exception, where knowledge of the recordings In general; fraud and their contents at the time debtor's duty Although “false pretenses, false representation, to produce them arose would have been or actual fraud” theory is the usual vehicle for extremely beneficial to creditor in the state seeking nondischargeability of a debt based on court lawsuit and would have reduced litigation fraud, it is possible to assert a claim for willful costs because, without the recordings, it took and malicious fraud under “willful and malicious longer to build a case based on circumstantial injury” discharge exception. 11 U.S.C.A. § evidence, and creditor had justifiably relied on 523(a)(2)(A), (a)(6). the misrepresentation as she had learned of debtor's misrepresentation that the recordings did 1 Cases that cite this headnote not exist from her attorneys, who obtained the information directly from debtor. 11 U.S.C.A. § [15] Bankruptcy 523(a)(2)(A). In general; fraud Cases that cite this headnote Forcing another person to expend unnecessary money and time can serve as the basis for finding willful and malicious behavior for purposes of [18] Bankruptcy discharge exception. 11 U.S.C.A. § 523(a)(6). Purpose of exception to dischargeability Although one purpose of the Bankruptcy Code 1 Cases that cite this headnote is to give debtors a fresh start, “false pretenses, false representation, or actual fraud” discharge [16] Bankruptcy exception is designed to protect victims of fraud. In general; fraud 11 U.S.C.A. § 523(a)(2)(A). Abusing the judicial process to cause Cases that cite this headnote unnecessary delay or harassment can provide basis for finding willful and malicious behavior for purposes of discharge exception. 11 U.S.C.A. [19] Bankruptcy § 523(a)(6). Particular cases Creditor who is the victim of fraud must prove 1 Cases that cite this headnote by a preponderance of the evidence that the debt is nondischargeable under exception for “false [17] Bankruptcy pretenses, false representation, or actual fraud.” Particular representations 11 U.S.C.A. § 523(a)(2)(A). Bankruptcy Cases that cite this headnote False pretenses; conduct, concealment, omission or silence; implied representations [20] Bankruptcy Bankruptcy Fraud Cause of loss Bankruptcy Bankruptcy False pretenses; conduct, concealment, Particular cases omission or silence; implied representations State court judgment against Chapter 7 debtor, Bankruptcy who was an attorney, for fraud by failure to Actual, constructive, or implied fraud disclose certain recordings concerning parties' financial affairs and fraud by misrepresentation Fifth Circuit differentiates between “false concerning the existence of those recordings pretenses and representations” and “actual was nondischargeable under “false pretenses, fraud” under discharge exception. 11 U.S.C.A. § 523(a)(2)(A). © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 In re Scarbrough, 516 B.R. 897 (2014) representations were made by a formal partner or Cases that cite this headnote agent. 11 U.S.C.A. § 523(a)(2)(A). Cases that cite this headnote [21] Bankruptcy Fraud Bankruptcy [25] Bankruptcy False pretenses; conduct, concealment, Fraud committed by agent or one other than omission or silence; implied representations debtor For a debtor's representation to qualify as a “false When an agent is utilized to accomplish fraud, representation or false pretense” under discharge the debt cannot be discharged even if the debtor exception, it must have been (1) a knowing did not know or had no reason to know that and fraudulent falsehood, (2) describing past or his agent was acting fraudulently. 11 U.S.C.A. § current facts, (3) upon which the other party 523(a)(2)(A). relied. 11 U.S.C.A. § 523(a)(2)(A). Cases that cite this headnote Cases that cite this headnote [26] Bankruptcy [22] Bankruptcy Fraud committed by agent or one other than False pretenses; conduct, concealment, debtor omission or silence; implied representations In determining whether fraudulent Bankruptcy representations giving rise to debt were made Intent or knowledge by a formal partner or agent of debtor, such that they could be imputed to debtor for For purposes of “false pretenses, false nondischargeability purposes, the relationship representation, or actual fraud” discharge between the parties is analyzed under state law. exception, false representations must be made 11 U.S.C.A. § 523(a)(2)(A). knowingly and fraudulently, but a debtor's silence regarding a material fact can also Cases that cite this headnote constitute a false representation. 11 U.S.C.A. § 523(a)(2)(A). [27] Judgment Cases that cite this headnote Bankruptcy Issues of privileges and First Amendment as [23] Bankruptcy affirmative defenses asserted by Chapter 7 Reasonable or Justifiable Reliance debtor, who was an attorney, in creditor's bankruptcy court adversary proceeding against Creditor's reliance on debtor's false debtor seeking nondischargeability of creditor's representation must be justifiable under the state court judgment against debtor for circumstances for purposes of “false pretenses, defamation as debt based on “willful and false representation, or actual fraud” discharge malicious injury” and “false pretenses, false exception. 11 U.S.C.A. § 523(a)(2)(A). representation, or actual fraud” exceptions were Cases that cite this headnote “actually litigated” in the state court, for purposes of state's collateral estoppel rules, where debtor had contended in first amended [24] Bankruptcy motion for judgment notwithstanding the verdict Fraud committed by agent or one other than in the state court action that, inter alia, attorneys debtor were entitled to a qualified immunity privilege Fifth Circuit imputes the fraud of a partner and the First Amendment protected debtor's or agent to a debtor only if the fraudulent statements, and state court had denied the motion © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 In re Scarbrough, 516 B.R. 897 (2014) and rendered judgment on the verdict. U.S.C.A. This Court has jurisdiction to render a final judgment in this Const.Amend. 1; 11 U.S.C.A. § 523(a)(2)(A), (a) core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I). Venue (6). is appropriate under 28 U.S.C. §§ 1408 & 1409(a). Cases that cite this headnote II. The Parties. Jerry Scarbrough is an attorney in Killeen, Bell County, [28] Judgment Texas, who is board certified in personal injury law. He Matters actually litigated and determined represented Melissa Deaton in the Bell County lawsuit Under Texas law, requirement that an issue against the Purser Family. Because of his conduct, the Purser be “actually litigated” for collateral estoppel Family eventually joined him as a third-party defendant with purposes simply requires that the issue is Ms. Deaton and another individual, Denise Steele. Helen raised, contested by the parties, submitted for Purser seeks nondischargeability of the Bell County judgment determination by the court, and determined. against him under §§ 523(a)(2)(A) and (a)(6), and the other members of the Purser Family seek nondischargeability under Cases that cite this headnote § 523(a)(6). Helen Purser was married to Gary Purser, Sr. for 59 years until his death in 2011. She is the mother of Elizabeth Attorneys and Law Firms Tipton, Gary Purser, Jr., and Sue Purser. She was a third-party *901 Shad Robinson, Joshua J. White Haley & Olson, P.C., plaintiff in the Bell County lawsuit and obtained judgment Waco, TX, for Hele Purser, Sue E. Purser, Gary W. Purser, against Debtor for sanctions, fraud, civil conspiracy, and Jr., Joann M. Purser, and Elizabeth Tipton. defamation. In this adversary proceeding, she is the only plaintiff alleging nondischargeability based on § 523(a)(2)(A) Elizabeth Tipton, pro se. against Debtor. Along with her children and daughter-in-law, she also brought a claim against Debtor under § 523(a)(6). Stephen W. Sather, Barron & Newburger, P.C., Austin, TX, for Jerry W. Scarbrough. Elizabeth Purser Tipton is the older daughter of Helen and Gary Purser, Sr. Gary Purser, Jr. and Sue Purser are her brother and sister, respectively. She was the last Purser OPINION Family member added to the Bell County lawsuit, and through counsel, obtained a defamation judgment against RONALD B. KING, Chief Judge. Debtor. She is an attorney and elected to represent herself in this adversary proceeding. She seeks nondischargeability of In this adversary proceeding, the Plaintiffs (the “Purser the Bell County defamation judgment under § 523(a)(6). Family”) seek nondischargeability of multiple debts stemming from a state court judgment rendered against *902 Gary W. Purser, Jr. (“Bubba Purser”) is his father's Jerry W. Scarbrough (“Debtor”). Debtor filed a Chapter 7 namesake and the son of Helen and Gary Purser, Sr. His bankruptcy petition on June 25, 2012, the same day as a sisters are Elizabeth Tipton and Sue Purser. He is married to scheduled state court trial in Bell County, Texas (the “Bell JoAnn Purser, who is also a plaintiff. Along with his mother, County lawsuit”) in which he was a third-party defendant. On wife, and sisters, Bubba Purser is asserting a § 523(a)(6) June 26, 2012, the Court granted the Purser Family's motion to claim based on the Bell County defamation judgment against modify the automatic stay to allow the Bell County lawsuit to Debtor. proceed. After obtaining judgment on the jury verdict against Debtor for over ten million dollars in the Bell County lawsuit, JoAnn Purser is Bubba Purser's wife and is related to the rest the Purser Family initiated this adversary proceeding. of the Purser Family by marriage. She obtained a defamation judgment against Debtor in the Bell County lawsuit and seeks I. Jurisdiction and Venue. to have it held nondischargeable under § 523(a)(6). © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 In re Scarbrough, 516 B.R. 897 (2014) Sue E. Purser 1 is the younger daughter of Helen and Gary IV. Background Facts Leading to the Bell County Purser, Sr. She is the sister of Elizabeth Tipton and Bubba Lawsuit. Purser. She was a party in the Bell County lawsuit against Some background information is necessary to give context to Debtor and now seeks nondischargeability of the defamation the Purser Family's *903 dispute with Debtor. Gary Purser judgment under § 523(a)(6). met Ms. Steele in 2006 at a Red Lobster restaurant in Killeen where she was employed. At that time he was in his mid- III. The Non–Parties. seventies and she was in her late twenties. Ms. Steele lived with and had a romantic relationship with Clayton Olvera, Gary W. Purser, Sr. (“Gary Purser”) 2 passed away on July whom she introduced to Gary Purser. Mr. Olvera was later 28, 2011. He was Helen Purser's husband of 59 years and hired by Gary Purser to manage an entity called Freytag the father of Elizabeth Tipton, Bubba Purser, and Sue Purser. Irrigation, Inc. Ms. Steele also introduced Gary Purser to her He was a successful construction contractor and real estate friend, Melissa Deaton, who was in her early forties. developer in Killeen, Texas, who earned significant wealth during his lifetime. During the last few years of his life, his At that time, Gary Purser's health was deteriorating and he relationship with and monetary gifts to Melissa Deaton and was exhibiting early signs of dementia. His condition caused Denise Steele led to his family's lawsuit against Ms. Deaton, loss of memory, disinhibition, and hypersexuality, such that Ms. Steele, and eventually, Debtor. he began acting inappropriately and out of character. Gary Purser started visiting Ms. Steele at a Red Roof Inn hotel room Melissa Deaton was a party in the Bell County lawsuit in Temple, and later began seeing her at Ms. Deaton's house and was sued in connection with her interactions with Gary in Temple. He was giving the women large amounts of money Purser. She resided in Temple, Texas, which is also located in Bell County, and was close friends with Ms. Steele. and there was also a romantic aspect to the relationship. 3 She retained Debtor as counsel in the Bell County lawsuit, During the first few years that Gary Purser was acquainted but he had to withdraw from representing her when he with Ms. Deaton and Ms. Steele, however, Gary Purser became a third-party defendant. The Purser Family obtained a concealed their interactions. judgment against her for fraud, civil conspiracy, defamation, and sanctions. She is not a party to this adversary proceeding Gary Purser terminated Clayton Olvera's employment, and but testified as a witness on behalf of Debtor. in January 2009, a demand letter disclosed that Mr. Olvera intended to sue Gary Purser. It also alleged that Gary Purser Denise Steele was a party in the Bell County lawsuit and was had an affair with Ms. Steele and that he had been giving sued in connection with her interactions with Gary Purser. her $500.00 a week. The demand letter was circulated to the The Purser Family obtained a judgment against her for fraud, members of the Purser Family, marking the first time that any civil conspiracy, and defamation. She is not a party to this of the family became familiar with Ms. Steele. adversary proceeding. The allegations about the extramarital affair and the monetary Shawn Richeson was employed by Debtor on a contract basis gifts caused the Purser Family to intervene to terminate as an information technology (“IT”) technician in Killeen, what they viewed as an inappropriate relationship. Based on Texas. He handled several pieces of digitally recorded cash withdrawals from a home safe and from bank accounts evidence that were relevant to the Bell County lawsuit. by Gary Purser, they also believed that Ms. Steele was He has injected himself into this controversy by recanting taking advantage of Gary Purser financially. In January 2009, his previous testimony and destroying potentially relevant Elizabeth Tipton and Gary Purser's lawyer, Jack Crews, evidence. This Court previously sanctioned him for spoliation interviewed Ms. Steele about the allegations and requested of evidence. The district court affirmed this Court's sanctions that she stop seeing Gary Purser. The family also began order and sanctioned Mr. Richeson for filing a frivolous tracking Gary Purser's movements with global positioning appeal. He is not a party to this adversary proceeding but system devices installed on his car and cellular telephone. testified as a witness for Debtor. The family tracked him to Ms. Deaton's home on several occasions in February 2009. On one occasion, JoAnn Purser videotaped Gary Purser backing his vehicle out of Ms. Deaton's garage. On another occasion, several members of the © 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 In re Scarbrough, 516 B.R. 897 (2014) Purser Family tracked Gary Purser to Ms. Deaton's home and JoAnn Purser was able to take the money away from Gary a confrontation occurred that became known as “the Backyard Purser as Ms. Deaton called 911 to report an altercation. 5 The Incident.” Temple Police Department arrived at the scene, as did Bubba Purser. Upon Bubba Purser's arrival, the police permitted him to leave with over $9,000.00 of the cash, while Gary Purser A. The Backyard Incident. was allowed to retain the remaining money. The police made The Backyard Incident is relevant for two reasons. The first is a report of the incident. that JoAnn Purser recorded video of a portion of the events. 4 The second is that this event served as a partial basis for This Driveway Incident was part of the basis of the the counterclaims *904 Debtor advanced against the Purser counterclaim Debtor filed in the Bell County lawsuit on Family on behalf of Ms. Deaton when he represented her in behalf of Ms. Deaton based upon her allegation that the Bell County lawsuit. JoAnn Purser shoved her, which allegedly caused significant hip injuries to Ms. Deaton. Despite her alleged injuries, Despite the video, the events at the Backyard Incident were however, Ms. Deaton went to a previously scheduled doctor remarkably disputed; in particular, whether an assault against appointment that same day and did not report any injury. She Ms. Deaton occurred. Elizabeth Tipton, Bubba Purser, and did not begin to allege these injuries until many months later. JoAnn Purser arrived at Ms. Deaton's residence in Temple, Texas, on February 25, 2009, while Gary Purser was sitting on the back patio with Ms. Deaton and Ms. Steele. Elizabeth C. The Bell County Lawsuit. Tipton and Bubba Purser entered the backyard through a On May 11, 2009, Clayton Olvera filed a lawsuit in Bell gate. With her video camera recording, JoAnn Purser walked County, Texas, against *905 Freytag Irrigation, Inc., Gary around the backyard to the front of the house and filmed Purser, individually and as trustee of the 1999 Gary Purser, Sr. through a glass door that provided partial visibility of the Trust, and Helen, Bubba, JoAnn, and Sue Purser. Elizabeth backyard. Tipton was not a party to the lawsuit at that time. Jack Crews originally represented all of the defendants. Eventually, The video captured Elizabeth Tipton, Bubba and Gary Purser, attorney Jeff Ray substituted as counsel to represent Helen, and Ms. Deaton grouped together in discussion. Ms. Deaton Bubba, JoAnn, and Sue Purser. threw a blanket over Gary Purser's head, and he and Bubba began grappling with one another's hands. JoAnn Purser then Ms. Deaton and Ms. Steele were joined as third-party opened the front door, walked into the home, and exited defendants in the Bell County lawsuit in June 2010, through the glass sliding door to the backyard. There was when the Purser Family asserted claims against them. Ms. verbal commotion and cursing. Ms. Deaton could be seen Deaton originally retained an attorney named John Redington and heard on a telephone call to 911. The Purser Family to represent her. After filing her original answer and gathered Gary Purser, exited the yard, and the camera stopped counterclaim for assault, personal injuries, and infliction of recording. Thereafter, the police arrived, interviewed the emotional distress against the Pursers, Mr. Redington referred parties, and allowed the Pursers to leave with Gary Purser Ms. Deaton to Debtor. Debtor officially appeared in the Bell in tow. Ms. Deaton testified that after much persuasion and County lawsuit on August 23, 2010. Debtor amended her with Debtor's assistance, she was able to have the police pleadings to include a third-party action against Elizabeth investigate the incident almost two years after it occurred. Tipton, which joined her in the lawsuit. Ironically, the original Bell County lawsuit filed by Clayton Olvera was later settled with mutual releases and no money paid by either side. The B. The Driveway Incident. third-party actions and counterclaims remained on file and Another significant event was the so-called “Driveway were extensively litigated after realignment of the parties. Incident” that happened on April 29, 2010, in Ms. Deaton's Notably, despite Debtor's aggressive demands for millions of driveway. Once again, JoAnn Purser tracked Gary Purser to dollars, Ms. Deaton nonsuited all of her counterclaims against Ms. Deaton's residence in Temple, Texas. Gary and JoAnn the Purser Family at trial. Purser arrived at roughly the same time, and JoAnn Purser confronted Gary Purser before he could enter the residence. Gary Purser had brought approximately $10,000.00 in cash in D. Helen Purser Filed for Divorce from Gary Purser. his vehicle. Harsh words were exchanged by all parties, and © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 In re Scarbrough, 516 B.R. 897 (2014) To stop the outflow of community funds from Gary Purser They suggested that he leave them his money because, as one to Ms. Deaton and Ms. Steele, Helen Purser filed for divorce of them exclaimed, “Don't leave all your money to your dog. on May 18, 2010. Jeff Ray, Helen Purser's attorney, testified You've got two good bitches right here!” that he sought to utilize the divorce proceeding to obtain an expedited protective order. Helen Purser joined Ms. Deaton The recording was also salacious. The women discussed a and Ms. Steele in this action, thus marking the time they fantasy with Gary Purser where they would travel with him officially became parties in state court. As previously noted, to Las Vegas, and he would buy them fancy dresses and take the women were also joined in the Bell County lawsuit a little them out gambling and to dinner. He would then get married over a month later. to Ms. Deaton at a chapel. Thereafter, they would all return to the hotel, undress, and lounge in a hot tub together. Then At some point, Helen Purser moved out of the marital the women would put on bathrobes and lie in bed with Gary home she shared with Gary Purser. Eventually, she moved Purser. The next evening, the trio would repeat the same back to the home and Gary Purser moved out. Gary Purser activities. The women mentioned on the tape that they often later moved back with Helen to reconcile the marriage, and created these types of impromptu fantasies with Gary Purser she dismissed the divorce proceeding. Near this time, Gary and that he seemed to enjoy hearing them. Purser's health worsened and he required in-home medical care. The women also hatched a business plan with Gary Purser on the recording. Gary Purser owned some undeveloped acreage, and the women volunteered their assistance in developing it E. The Secret Recordings. for him. Gary Purser valued the deal at 10 million dollars, The most notorious pieces of evidence in this case were and the women suggested splitting the profits with 5 million what the parties have consistently referred to as the “Secret dollars to Gary Purser and them taking 2.5 million dollars Recordings.” These were a series of recordings that began apiece. Ms. Deaton assured Gary Purser that they would around the time that Helen Purser first filed for divorce from “work it” to make it a profitable endeavor and attempted to Gary Purser in the spring of 2010. These recordings were somehow make the verbal discussions enforceable by stating important for two reasons. First, they confirmed the Purser “a promise is a promise.” Family's suspicions about Ms. Deaton and Ms. Steele seeking to take advantage of Gary Purser financially. Second, Debtor Also captured on the recording were various discussions knew of these recordings and had them in his possession, but about Gary Purser's personal affairs. The women brought up intentionally failed to turn them over to the Purser Family the fact that Helen Purser was filing for divorce. They told despite specific and repeated discovery requests. Gary Purser that he could not trust his family members and his family was after his money. They encouraged Gary Purser to sign away all of his property before the divorce settled. 1. Content of the Secret Recordings. They offered to help him do that and were willing to sign some papers to “do it legal.” The women were concerned that The Secret Recordings contained a few unremarkable the divorce was “going to get real ugly” because there was a conversations such as an apparent test of the recording device lot of money at stake. The women suggested, and discussed and another conversation between Ms. Deaton and Ms. Steele at length, a plan where Gary Purser would purchase a safe in a bathroom. Another brief recording simply stated that to be kept at Ms. Deaton's home where he could keep all of the date was May 15, 2010. Most relevant was a recording his money out of his family's reach. Ms. Deaton mentioned referred to as the “Two Good *906 Bitches” conversation. this plan at least eight times. The women assured Gary Purser The lengthy recording occurred while Gary Purser, Ms. that he would have complete access to the safe and that only Deaton, and Ms. Steele sat on the back patio of Ms. Deaton's he would know the combination. Ms. Deaton expressed her residence. Gary Purser did not know he was being recorded. confidence that she could prevent any of his family members from accessing it. The recording began with one of the women recounting a story she had heard where a wealthy woman died and left her entire estate to a dog. The women encouraged Gary Purser not to do such a thing with his money after he passed away. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 8 In re Scarbrough, 516 B.R. 897 (2014) who testified that she either threw it away or gave it away. She also testified that it mysteriously reappeared in her house on 2. Concealment and Subsequent Discovery of the her night stand shortly before the start of trial in this adversary Secret Recordings in the Bell County Lawsuit. proceeding. The Secret Recordings were the subject of much controversy in the Bell County lawsuit, and Debtor was ultimately For motivations that are unclear, Mr. Richeson produced the sanctioned and held liable for fraud for his failure to produce Secret Recordings to a friend of the Purser Family on April them. Jack Crews testified about his belief, based on the 21, 2011. The Purser Family received the Secret Recordings divorce discussion in the recording, that the “Two Good on April 22, 2011. That same day, Jeff Ray sent Debtor Bitches” recording captured a conversation that occurred on a letter again requesting production of any recordings of May 15, 2010. In another recording, the same date was stated. Gary Purser. Four days later, Debtor mendaciously responded that he had already produced everything in his possession Beginning in August 2010, the Purser Family began and Ms. Deaton's possession. Debtor was unaware that propounding discovery requests *907 to Ms. Deaton for the Purser Family had obtained the Secret Recordings. her to produce any discoverable evidence or known witness Despite providing the recording device to the IT contractor statements related to the Bell County lawsuit. Although himself, Debtor denied the existence of additional recordings Debtor did not file her initial answer and counterclaims, during his sanctions hearing on the matter. Eventually, after he later filed amended pleadings. He prepared her initial multiple day hearings, the state court granted monetary discovery responses that he served on September 2, 2010. sanctions and contempt sanctions against Debtor in four These responses stated that Ms. Deaton did not possess any separate orders, one of which stated that Debtor was also recorded statements involving any parties to the lawsuit. In sanctioned and held in contempt for violating confidentiality actuality, Ms. Deaton was in possession of recordings of orders relating to Gary Purser's medical records. Debtor was conversations between Gary Purser and herself at that time. sanctioned for “[r]epeated refusal and failure to produce audio recordings through discovery, and ... intentional concealment On December 2, 2010, Debtor again served discovery and deception regarding the existence of audio recordings.” responses on behalf of Ms. Deaton, stating that she had *908 (emphasis added). 7 no recordings of any parties or witnesses. Ms. Deaton's first deposition occurred on December 14, 2010, and Debtor attended as her defense counsel, but Ms. Deaton failed F. Summary of the Purser Family's Allegations to produce any recordings in response to the subpoena Concerning Debtor's Conduct. duces tecum. Jeff Ray testified that he doubted the veracity The Purser Family alleged that on October 3, 2010, Debtor of Debtor's responses on behalf of Ms. Deaton because conspired with Ms. Deaton to orchestrate a false police discovery had already revealed more recorded conversations report that JoAnn Purser called her and threatened to kill than Mr. Ray had experienced in his entire legal career and her. Ms. Deaton testified that she called 911 because JoAnn Clayton Olvera had mentioned other undisclosed recordings Purser called her and made a death threat. The Purser Family existed. At Ms. Deaton's second deposition on January 7, offered copies of Ms. Deaton's phone records. Jeff Ray 2011, she referred to two recordings not produced to the testified that he verified and collected all of the telephone numbers associated with any of the Purser Family or their Purser Family. 6 Yet she failed to produce either of these in businesses, and none matched any of the numbers depicted on response to the subpoena duces tecum. Ms. Deaton's phone records. On the contrary, the telephone records reflect that Ms. Deaton called Debtor both before and Shortly after the January 2011 deposition, Ms. Deaton after she called 911 to report the alleged death threat. The gave a recording device to Debtor that contained the Purser Family contended the proximity of Debtor's contact Secret Recordings. Debtor took the recording device to the with Ms. Deaton before and after her 911 call revealed a home office of Shawn Richeson. Mr. Richeson copied the conspiracy to file a false report. Debtor's testimony confirmed recordings from the device and stored them in a server. He that Ms. Deaton called him and informed him that JoAnn also enhanced the audio clarity of one of the recordings. He Purser called her with a death threat, and he encouraged her to duplicated some or all of the recordings and placed them on contact the authorities. She later called him back to confirm a CD that Debtor picked up along with the actual recording that she had called 911 to make the report. device. Debtor gave the recording device back to Ms. Deaton, © 2015 Thomson Reuters. No claim to original U.S. Government Works. 9 In re Scarbrough, 516 B.R. 897 (2014) The authorities to whom Debtor spoke took no action On November 8, 2010, Debtor filed a specious motion to to obtain an autopsy and the Killeen Police Department appoint a guardian ad litem for Gary Purser. The Purser determined the accusations were “unfounded.” While making Family cited this as an example of Debtor's harassment the murder accusations, Debtor violated the Bell County because Gary Purser was already represented by his attorney, court's confidentiality order by disclosing Gary Purser's Jack Crews, in the Bell County lawsuit. Debtor testified medical information without court permission. that he filed this motion to call the Purser Family's bluff. Throughout the lawsuit, the Purser Family had taken the In August 2011, after Gary Purser's funeral and after he position that Gary Purser's mental condition was deteriorating had been joined as a third-party in the lawsuit, Debtor to the point where he could no longer control his actions cold-called Carolyn Purser Bolling, a cousin of the Pursers and was susceptible to the influence of Ms. Deaton and Ms. who lived out of state but had attended the funeral. Debtor Steele, who were interfering with the community estate of implied that he represented Gary Purser and discussed his Gary and Helen Purser. Because Debtor did not believe that theories of alleged illegal drug use by Bubba and JoAnn Gary Purser was incompetent, he wanted to test whether Purser, and that the family abused and killed Gary Purser by his family would contest the ad litem proceedings, which overdosing him on prescription drugs. Debtor recorded the would require them to take the opposite position from their telephone conversation with Ms. Bolling, and the recording theory in the Bell County lawsuit. On November 16, 2010, was admitted into evidence at the Bell County trial and in this the state court denied the motion for the appointment of a adversary proceeding. Because of this telephone call, Debtor guardian ad litem. Moreover, Ms. Deaton testified on multiple was held in contempt and monetary sanctions were assessed occasions that Debtor did not have her permission to initiate against him for once again violating confidentiality orders the guardian ad litem proceeding and that she did not agree relating to Gary Purser's medical records. 9 that Gary Purser was incompetent. In another instance of Debtor acting without permission, he later filed a Motion for Seven weeks after Gary Purser's death, Debtor prepared and Summary Judgment on Ms. Steele's behalf although he did sent written interrogatories to Gary Purser, by and through not represent her. his attorney, on September 19, 2011. Debtor was well aware that Gary Purser had passed away since he had within days As Gary Purser's health declined in 2011, Debtor reported to requested an autopsy and alleged foul play by the Purser the Texas Department of Adult Protective Services that the Family. The interrogatories inquired into, among other things, Purser Family was committing elder *909 abuse. Debtor sexual practices and habits of Gary Purser. had no formal medical training, but his lay opinion was that Gary Purser was mentally competent and was overdosed Finally, the so-called “Million Dollar Recording” was on prescription drugs by his family in an effort to gain provided to the Purser Family along with the Secret control of Gary Purser's money. The allegations of abuse Recordings, and was admitted in evidence in state court were investigated by Adult Protective Services but found and in this Court. In that recording, Debtor discussed with to be invalid. Physicians who treated Gary Purser at that his wife how each of the Pursers should have to pay one time agreed that he had Frontotemporal Dementia 8 and million dollars to him in settlement of Ms. Deaton's *910 prescription medication was administered per the doctors' claims in the lawsuit. Debtor also stated that Gary Purser orders to treat the symptoms. had dementia, although Debtor testified at trial that he made the statement sarcastically. Debtor apparently recorded Gary Purser passed away from pneumonia on July 28, 2011, his own conversation by accident, but the authenticity and in the hospital in Temple. Almost immediately, Debtor tried genuineness of the recording were not seriously disputed. to have an autopsy performed to prove his theory that Gary Purser was not suffering from dementia or other mental defect. In a callous attempt to obtain an autopsy, Debtor V. Nondischargeability of the State Court Judgment under reported to the funeral home, two local justices of the 11 U.S.C. § 523(a)(6). peace, the Temple Police Department, the Killeen Police The Bell County jury unanimously found Debtor liable to Department, and the Texas Rangers that the Purser Family Helen Purser and the Purser Family. 10 On October 12, had “murdered” or “killed” Gary Purser by overdosing 2012, the state court rendered judgment on the verdict. The him on prescription drugs because they wanted his money. judgment awarded damages to Helen Purser against Debtor, © 2015 Thomson Reuters. No claim to original U.S. Government Works. 10 In re Scarbrough, 516 B.R. 897 (2014) Ms. Deaton, and Ms. Steele, jointly and severally, in the [4] The Court first considers the nondischargeability of the amount of $3,060,000.00 for “(i) damages referable to willful, defamation judgments against Debtor because defamation malicious and deliberate defamation while acting in concert, damages are common to all of the Plaintiffs. The Purser and (ii) damages referable to willful, malicious and deliberate Family's Second Amended Complaint describes some of fraud while acting in a conspiracy....” The judgment also Debtor's defamatory conduct as follows: awarded Helen Purser $2,000,000.00 exemplary damages against Debtor. [F]alse statements and reports that JoAnn Purser was threatening to kill Regarding the rest of the Purser Family, Elizabeth Deaton; false statements and reports Tipton recovered $750,000.00 plus $750,000.00 exemplary that the Purser Family had been damages; Bubba Purser recovered $825,000.00 plus abusing the elderly Gary Purser; $750,000 exemplary damages; JoAnn Purser recovered false statements and reports that $825,000.00 plus $750,000.00 exemplary damages; and Sue the Purser Family had murdered Purser recovered $455,000.00 plus $455,000.00 exemplary Gary Purser; false statements and damages. All of these damage awards were based on reports that Bubba Purser and JoAnn defamation while acting in concert. Purser consumed illegal drugs; and the posting of slanderous videos about All totaled, the Purser Family recovered a judgment against JoAnn Purser on YouTube and the Debtor for $10,620,000.00, plus five percent interest from misrepresentations related thereto. the date of judgment. 11 This Court has previously held that (Pls.' Second Am. Compl., ¶ 29, ECF No. 31). collateral estoppel applies to the damages awarded in the Bell County lawsuit and the damage amounts will not be [5] [6] [7] [8] Notably, the Bell County jury verdict 12 found Debtor liable for both defamation and defamation per disturbed. Grogan v. Garner, 498 U.S. 279, 284 n. 11, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). The only remaining issue se. “Defamation is a false statement about a person, published is whether Debtor's conduct made the debts nondischargeable to a third-party, without legal excuse, which damages the in bankruptcy. person's reputation.” Fiber Sys. Int'l, Inc. v. Roehrs, 470 F.3d 1150, 1161 (5th Cir.2006) (citation omitted). In the case [1] [2] [3] Section 523(a)(6) makes debts of defamation per se, the harm caused by the words is so nondischargeable where a debtor causes “willful and obviously hurtful that they require no proof of injury to be malicious injury ... to another entity or to the property of actionable. Id. Falsely imputing a crime to another person is another entity.” 11 U.S.C. § 523(a)(6). A nondischargeable grounds for defamation per se. Id. False imputation of a crime debt under § 523(a)(6) must arise from “a deliberate or requires “a statement that unambiguously and falsely imputes intentional injury, not merely a deliberate or intentional act criminal conduct to a party.” Id. (quotations omitted). that leads to injury.” Kawaauhau v. Geiger, 523 U.S. 57, 61, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998). Further, “an injury Debtor committed a willful and malicious act when he is ‘willful and malicious' where there is either an objective disseminated the false and outrageous allegations that the substantial certainty of harm or a subjective motive to cause Purser Family abused and murdered their father. While a harm.” Miller v. J.D. Abrams Inc. (In re Miller), 156 F.3d finding of either subjective or objective intent to cause harm 598, 606 (5th Cir.1998). Accordingly, § 523(a)(6) actions would make the defamation debts nondischargeable under apply more to categories of intentional torts “as distinguished section 523(a)(6), see Miller, 156 F.3d at 606, the Court finds from negligent or reckless torts.” Geiger, 523 U.S. at 61, Debtor liable under either test. 118 S.Ct. 974. The creditor seeking to establish a § 523(a)(6) violation bears the burden to prove such a *911 claim by a [9] [10] [11] The objective test analyzes whether preponderance of the evidence. Grogan, 498 U.S. at 291, 111 a reasonable person would determine that a defendant's S.Ct. 654. actions were substantially certain to cause harm. See Mann Beacken, LLP v. Powers (In re Powers), 421 B.R. 326, 335 (Bankr.W.D.Tex.2009). False accusations of criminal A. Willful and Malicious Defamation. conduct can create an objective substantial certainty of harm against the accused. See McClendon v. Springfield, 505 B.R. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 11 In re Scarbrough, 516 B.R. 897 (2014) 786, 792–93 (E.D.Tex.2013). Applying the objective test, it Second, Debtor previously served as a Justice of the Peace. is not difficult to see that making spurious murder accusations He was familiar with the powers of that office and knew that a to authorities, the funeral home, and relatives of the deceased Justice of the Peace had the authority to order an inquest into a would be substantially certain to cause harm. That is why death. Debtor maintained that Gary Purser did not suffer from Texas law treats false accusations of illegal and immoral dementia or another mental impairment. Frustrated that he conduct as defamatory per se. had not been able to depose Gary Purser, Debtor viewed Gary Purser's death as the final opportunity to prove his case. He A reasonable person would recognize that false reports to alleged intentional prescription drug overdoses killed Gary authorities of murder and elder abuse are substantially certain Purser because all he needed was one of the law enforcement to cause harm to the alleged offender. The object of making authorities to accept his story and an autopsy would follow. the reports is to trigger an investigation into the alleged Had any of the authorities suspected foul play in the death offender's conduct. If an investigation was not likely to follow of Gary Purser, they would have notified the Justice of the the accusation, there would be no incentive to make the report. Peace, who would have initiated an inquest. Subjectively, it is even more obvious that Debtor willfully and A final critical piece of evidence demonstrates Debtor's maliciously intended to injure Helen Purser and her *912 malicious motives. On July 29, 2011, mere hours after he family. Debtor sought to delay the burial of Gary Purser—not learned of Gary Purser's death, Debtor wrote a letter to Jack for altruistic reasons—but as a strategic maneuver to obtain Crews requesting an autopsy—not because he believed foul an autopsy. Three critical facts compel this conclusion. play was afoot—but because he wanted to prove Gary Purser did not have dementia. The letter reads: [12] First, the judgment has collateral estoppel effect. Applying Texas preclusion rules, “collateral estoppel bars Dear Jack: relitigation of any ultimate issues of fact actually litigated We were saddened by the news that Mr. Purser died and essential to the judgment in a prior suit....” Schwager v. yesterday in Temple. I had a great deal of respect for him. Fallas (In re Schwager), 121 F.3d 177, 181 (5th Cir.1997) As you know the main issue in this case is whether or not (quotations omitted). The jury found that Debtor's statements he was suffering from a mental illness due to dementia or were defamatory per se. Included in the defamation per se another brain disorder. We believe that an autopsy would jury question was the characterization that the Debtor made clear up this issue. I suggest we ask an independent medical statements “he knew were false or which he made with a examiner to perform an autopsy here at the funeral home high degree of awareness that were probably false, to an prior to his interment. extent that he in fact had serious doubts as to the truth of the statement(s).” Therefore, the Bell County jury made a *913 We are not intending to ask the court to order one, finding on the issue of the Debtor's subjective belief in the but without definitive evidence of a medical nature we will veracity of his own statements. The finding that Debtor knew point out that an autopsy would have solved the question, the statements were false or had serious doubts as to their but the family refused to have one performed. truth is inconsistent with an assertion of good faith reporting on his part. Moreover, Debtor freely admitted that he did This letter is not intended to be disrespectful to the family not have any evidence to support his accusations other than in their time of sorrow, but because they have put this issue limited medical information he gleaned from the medical before the court we think this would be the best way to records he obtained a few days before July 28, 2011. The resolve it. medical records showed that Gary Purser's treating physicians Sincerely, agreed that he had dementia prior to his death and that he had not been mistreated by his family. Debtor presented no Jerry Scarbrough expert medical testimony at trial in the Bell County lawsuit or in this adversary proceeding to support his murder and (Pls.' Ex. 85) (emphasis added). Of course, while requesting abuse theories, but characterized the Purser Family's medical an autopsy directly from the Purser Family to resolve the expert's opinions as “stupid.” “main issue” concerning dementia in Debtor's lawsuit, he was simultaneously contacting authorities to pitch his murder theory. Jack Crews learned that Debtor contacted the funeral © 2015 Thomson Reuters. No claim to original U.S. Government Works. 12 In re Scarbrough, 516 B.R. 897 (2014) home to influence a halt to Gary Purser's burial based on caption, it is true that JoAnn Purser once held a seat on murder allegations. At 6:32 p.m. on July 29, 2011, Mr. Crews the Killeen City Council and no longer held that position. sent Debtor the following email with the subject line “Your The *914 fact that Debtor posted it to a fictitious account conduct”: called “PurserJoann” illustrates the malicious intent behind the posting. The pictures and corresponding commentary Mr. Scarbrough: were presented in a way that made it appear JoAnn Purser took $10,000.00 from Gary Purser and would not give it back I just saw the letter you faxed earlier this date. I write this to him. While such an event did occur, the presentation in email in response. the video provided no context. JoAnn Purser was portrayed First, stop patronizing me. You never had any respect for as a thief without explaining why Gary Purser had brought Mr. Purser and you do not care about the feelings of his $10,000.00 in cash to Ms. Deaton's home. family now. What you did in calling the funeral home today and sending that letter is beyond the pale of any Debtor defended the video by describing it as an exercise of person capable of reasonable behavior. Your actions reveal his rights as an eligible voter for the Killeen school board your true intentions with perfect clarity—your words not elections. He testified that he did not believe JoAnn Purser meaningful. was a good candidate and that he would not vote for her. He posted the videos to inform the public of what kind of I will not be surprised at anything you do or say if you think person he thought she was. It is clear that Debtor's subjective it will help squeeze nuisance money from Mr. Purser or his motive in posting the videos was to damage JoAnn Purser's family. Your words and actions are reckless and you will reputation and candidacy for the school board elections, and be held legally accountable. Put aside whatever it is that to needlessly harass her in connection with the Bell County drives you to sacrifice your reason and honor and just be lawsuit. The right to free speech does not insulate Debtor from quiet for a while. civil liability for willful and malicious defamation. See New York Times Co. v. Sullivan, 376 U.S. 254, 301–02, 84 S.Ct. A reckoning already awaits you at the courthouse. Do not 710, 11 L.Ed.2d 686 (Goldberg, J., concurring). make it worse. Jack Crews B. Willful and Malicious Fraud. (Pls.' Ex. 86). Debtor viewed a time of grieving for the Purser [13] Helen Purser alleged Debtor committed fraud by: Family as an opportunity to gain leverage in his lawsuit. [M]aking false and embarrassing demands and allegations related to the Apart from the unfounded murder accusations, Debtor acted state court action; making groundless, in other ways that reinforce the conclusion that he intended to fraudulent, and harassing claims harm the Purser Family. Another example is the videos that in the state court action in an he posted on YouTube.com of JoAnn Purser's video of the attempt to coerce a multimillion-dollar Backyard Incident and her 911 call following the Driveway settlement from the Purser Family Incident. Debtor admittedly created a bogus account name —and then lying about the secret for “PurserJoann” and uploaded one video to that account. 13 recordings; falsely reporting that the The YouTube video played the audio of JoAnn Purser's call Purser Family had been abusing Gary to the police following the Driveway Incident. The visual Purser, Sr.; and falsely reporting that aspect of the video began with a picture of JoAnn Purser the Purser Family had murdered Gary with large red lettering partially covering her face that reads Purser, Sr. “VOTED OUT.” The picture was superimposed on a plain black backdrop that filled the frame. Underneath the stamped (Pls.' Second Am. Compl., ¶ 28, ECF No. 31). The Bell picture were large white words that read “JoAnn Purser, County jury found Debtor committed fraud by failure to running for Killeen school board.” disclose and fraud by misrepresentation as those species of fraud were defined in the 24 jury charge. The judgment The video played the actual 911 call while displaying pictures ordered that “Helen Purser have judgment and recover from of Gary and JoAnn Purser. Regarding the “VOTED OUT” [Debtor], Melissa Deaton, and Denise Steele, jointly and © 2015 Thomson Reuters. No claim to original U.S. Government Works. 13 In re Scarbrough, 516 B.R. 897 (2014) severally, in the amount of $3,060,000.00, in connection with 781 So.2d 607, 612 (La.Ct.App.2001)). After a remand the ... damages referable to willful, malicious and deliberate for an evidentiary hearing and a subsequent appeal, Keaty fraud while acting in a conspiracy....” The judgment also was sanctioned in the amount of $107,605.95. Id. (citing awarded an additional $2,000,000.00 in exemplary damages. Keaty v. Raspanti, 866 So.2d 1045 (La.Ct.App.2004)). Keaty eventually filed a Chapter 7 bankruptcy petition and Raspanti [14] Although § 523(a)(2)(A) is the usual vehicle for initiated an adversary proceeding to declare the sanctions seeking nondischargeability of a debt based on fraud, it award nondischargeable under § 523(a)(6) for willfully and is possible to assert a claim for willful and malicious maliciously causing injury by bringing the frivolous lawsuit. fraud under § 523(a)(6). See, e.g., Schubert Osterrieder & Id. Raspanti lost his collateral estoppel argument at the Nickelson PLLC v. Bain (In re Bain), 436 B.R. 918, 924 bankruptcy court and district court, and appealed to the Fifth (Bankr.S.D.Tex.2010) (finding that “[a]llowing Plaintiffs' Circuit. state-law fraud claim to be asserted under § 523(a)(6) would not render § 523(a)(2)(A) superfluous”); see also Grogan v. The panel framed the issue as whether “under principles Garner, 498 U.S. 279, 282 n. 2, 111 S.Ct. 654, 112 L.Ed.2d of collateral estoppel, the sanctions issue was ‘actually 755 (1991) (stating “[a]rguably, fraud judgments in cases litigated’ ... such that the Louisiana appellate court's findings in which the defendant did not obtain money, property, or barred the relitigation of the willful and malicious injury services from the plaintiffs and those judgments that include requirement of § 523(a)(6).” Id. at 269. In reversing the lower punitive damages awards are more appropriately governed by courts, the panel clarified the standards for evaluating the § 523(a)(6)”). This is especially true where “the facts alleged“actually litigated” component of collateral estoppel and held in the fraud claim are the same underlying facts as those “[t]here is no question that the sanctions issue was actually alleged in the [willful and malicious defamation] claim.” litigated in the state court.” Id. at 272. The court did not end its Bain, 436 B.R. at 924. inquiry there, however, and went on to evaluate “whether the state ... court ‘has made specific, subordinate, factual findings [15] [16] An injury that is recognizable for purposes of on the identical dischargeability issue in question—that is, an willful and malicious fraud *915 is forcing another person to issue which encompasses the same prima facie elements as expend unnecessary money and time. See id. (forcing a person the bankruptcy issue....’ ” Id. at 272 (quoting Dennis v. Dennis to spend time and money to cancel hundreds of unwanted (In re Dennis), 25 F.3d 274, 278 (5th Cir.1994)). In deciding magazine subscriptions satisfied the injury requirement for that the state court's findings were on an issue identical to a § 523(a)(6) fraud claim). The Fifth Circuit has indicated the dischargeability issue, the court observed “[b]oth § 523(a) that presenting frivolous claims and engaging in deliberate (6) and the Louisiana [sanctions] statute require an inquiry and needlessly prolonged litigation is sufficient injury for into whether Keaty acted either with an objective substantial purposes of § 523(a)(6). See Raspanti v. Keaty (In re Keaty), certainty of injury (to cause unnecessary delay) or a subjective 397 F.3d 264, 274 (5th Cir.2005). Abusing the judicial motive to cause injury (to harass or to increase the cost of process to cause unnecessary delay or harassment can serve litigation needlessly).” Id. at 273. After quoting a critical as the basis for finding willful and malicious behavior. Id. portion of the Louisiana appellate court's findings, the panel decided: While neither case dealt specifically with nondischargeability of a fraudulent debt under § 523(a)(6), two Fifth Circuit These are clear and specific findings cases shed light on this issue. In In re Keaty, 397 F.3d as to Keaty's state of mind. They 264 (5th Cir.2005), a Louisiana appellate court found that demonstrate that Keaty's motive in Keaty and his law partner committed sanctionable conduct by filing the frivolous claim for attorney's filing a frivolous claim for attorneys' fees against Raspanti. fees was to injure Raspanti (by The Louisiana appellate court made findings “that the harassing him). *916 They also Keatys knew their claims had prescribed, that their answers demonstrate that Keaty's actions to Raspanti's request for admissions were disingenuous, were substantially certain to injure and that the proceedings by the Keatys were knowingly Raspanti, since deliberately and without foundation, crafted for the purposes of harassment, needlessly prolonging the proceedings and designed to prolong the proceedings deliberately and would necessarily cause Raspanti needlessly.” Keaty, 397 F.3d at 268 (citing Keaty v. Raspanti, financial injury. Thus, we conclude © 2015 Thomson Reuters. No claim to original U.S. Government Works. 14 In re Scarbrough, 516 B.R. 897 (2014) that the state appellate court's findings (1998)). In a split opinion, the Fifth Circuit panel reversed the satisfy the elements of § 523(a)(6). district court. Id. at 274. The companies argued on appeal that the attorneys' fees award should be held nondischargeable as a willful and In Shcolnik v. Rapid Settlements Ltd. (In re Shcolnik), 670 malicious injury under § 523(a)(6) because “Shcolnik used F.3d 624 (5th Cir.2012), the willful and malicious conduct the stolen documents, threats of criminal reports, and claims at issue was committed by a former company officer who of ownership in the company in tandem as a scheme to “attempted to obtain one million dollars by falsely claiming extract $1,000,000 from them in the guise of a ‘buyout’ an ownership interest in the company and threatening public of his pretended ‘ownership interests.’ ” Id. at 628. The exposure of alleged illegal activity.” Id. at 626. More panel noted that the companies “have neither alleged nor specifically, the court described a series of events that began offered evidence that Shcolnik intended to inflict litigation when Shcolnik, the eventual bankruptcy debtor, was fired costs on them, which is the debt for which they urge from his position as an officer of two companies. Allegations nondischargeability.” Id. at 629. Authoring the panel opinion, arose thereafter that: Judge Edith Jones provided *917 a brief overview of the Fifth Circuit's interpretation of section 523(a)(6) following [Shcolnik] absconded with various documents from [the Geiger, and reiterated the standard that “an injury is willful companies'] offices. Shcolnik then began threatening to and malicious where there is either an objective substantial disclose alleged criminal and regulatory violations by certainty of harm or a subjective motive to cause harm.” Id. [the companies] if they did not “buy-out” his “ownership interests.” In emails, he referred to a “doomsday plan” The opinion also made comparisons to Keaty. The majority which would be launched if Stewart Feldman, the primary summarized the facts of Keaty as, “[t]he debtors' intended owner of [the companies], did not “properly compensate” injury was ‘harassment’ through baseless litigation, but their him for his “ownership interests ... which appear to be actions were ‘substantially certain to ... cause ... financial worth in excess of $1,000,000.” He threatened a “massive injury.’ ” Id. (quoting Keaty, 397 F.3d at 274). Considering series of legal attacks ... which will likely leave you that both cases evaluated the relationship between the debtor's disbarred, broke, professionally disgraced, and rotting in a motive and a resulting injury, the Shcolnik panel observed that prison cell,” and expressed his hope that Feldman would “this case is slightly different from that in Keaty: Shcolnik be the victim of prison rape. allegedly engaged in a course of contumacious conduct Id. at 626–27. In response, the companies initiated that required the [companies] to file meritorious litigation an arbitration proceeding against Shcolnik that sought against him, resulting in the instant fee award; whereas in declaratory judgment that he did not hold an ownership Keaty, the debtors pursued the burdensome suit that provoked interest in the companies or related entities. The arbitrator a sanctions award against them.” Id. After making this held in the companies' favor and awarded them $50,000.00 in distinction, the panel opined that “[i]t would make no sense attorneys' fees, and a state court later confirmed the award. for the infliction of expense in litigating a meritless legal claim to constitute willful and malicious injury to the creditor, Shcolnik filed bankruptcy and the companies sought as in Keaty, while denying the same treatment here to the to have the arbitration attorneys' fees award declared infliction of expense by a debtor's attempt to leverage an nondischargeable under § 523(a)(6). Id. at 627. After equally baseless claim through a campaign of coercion.” Id. considering cross motions for summary judgment, the The panel found a genuine fact issue existed for trial because bankruptcy court granted Shcolnik's motion and the district “Shcolnik's behavior resulted in willful and malicious injury court affirmed. The district court held that the companies if his claims of ownership were made in bad faith as a “could not establish a genuine issue of material fact as to pretense to extract money from the [creditor companies].” willfulness, because they did not actually pay Shcolnik the Id. at 630. Finally, Judge Jones made a critical observation million dollars he demanded.” Id. at 629. The district court about the relationship between the debtor's conduct and the “interpreted the Supreme Court to require that a debtor intend resulting injuries he caused: “[t]he litigation costs he forced ‘the alleged injury itself’ in order to fulfill the willfulness upon [the creditors] are different from the million dollar component of 11 U.S.C. § 523(a)(6).” Id. (citing Kawaauhau claim he made against them, but they were neither attenuated v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 © 2015 Thomson Reuters. No claim to original U.S. Government Works. 15 In re Scarbrough, 516 B.R. 897 (2014) nor unforeseeable from his alleged intentionally injurious made in bad faith. That the payday never came did not conduct.” Id. matter in Shcolnik, as the majority did not ignore the certain financial harm that resulted. Here, Helen Purser and her Judge Catharina Haynes wrote a partial concurrence and family spent over a million dollars pursuing and litigating dissent. She stated that “[t]he effect of the majority opinion is the Bell County lawsuit. 14 Meanwhile, Debtor participated to transform all litigation precipitated by aggressive demand in a “parade of horribles” while defending Ms. Deaton (and letters into potential ‘malicious' acts for purposes of non- later himself) by pursuing baseless counterclaims on her dischargeability.” Id. (Haynes, J., concurring and dissenting). behalf, violating court orders, failing to produce the Secret Further, Judge Haynes lamented that “the majority opinion Recordings, and attempting to initiate multiple meritless glosses over the lack of connection between the allegedly criminal investigations. malicious acts and the arbitration award of attorneys' fees now sought to be rendered non-dischargeable.” Id. The dissent The jury found that Debtor, along with Ms. Deaton and Steele, went on to explain: committed fraud by misrepresentation and fraud by failure to disclose against Helen Purser. The jury also determined that We do not have a case setting out they acted in concert and in a conspiracy in committing fraud a test for where the quintessential against Helen Purser. The jury's exemplary damage award demand letter ends and the parade found that Debtor, Ms. Deaton, and Ms. Steele acted with of horribles suggested by the majority opinion begins. Wherever either malice or gross negligence. 15 that line is, it is not crossed here, and I disagree with transforming The Bell County judgment also awarded Helen Purser the regrettable unpleasantness and sanctions for Debtor's discovery abuses in the amount of aggressiveness that often attend the $54,261.50. The Court previously granted partial summary prelude to litigation into “coercive” judgment in Helen Purser's favor on the sanctions issue under or “contumacious” conduct so easily. § 523(a)(6). Debtor contends that this prevents the Court from Shcolnik's e-mail letters, however considering whether his discovery abuses factor into Helen reprehensible they undeniably are, do Purser's § 523(a)(6) claim for willful and malicious fraud. The not constitute either. Court disagrees with Debtor's position. Id. at 631. Debtor's discovery abuses do not make up the entirety of Helen Purser's § 523(a)(6) willful and malicious fraud claim, This Court shares Judge Haynes's concerns in Shcolnik. but they do factor into Debtor's larger scheme to harm It is true that “transform[ing] all litigation precipitated her. Throughout the Bell County litigation, Debtor filed by aggressive [behavior] into potential ‘malicious' acts for frivolous motions and pleadings, and attempted to use extra- purposes of nondischargeability” would be inappropriate. judicial tactics to gain advantage. Deposition transcripts, See Shcolnik, 670 F.3d at 631 (emphasis added). Likewise, such as Debtor's deposition of Helen Purser, reveal immense the Court disapproves of “transforming the regrettable hostility by Debtor against her. Other transcripts, such as Ms. unpleasantness and aggressiveness that often attend *918 Deaton's deposition, reveal Debtor's spirit of gamesmanship the prelude to litigation into ‘coercive’ or ‘contumacious' over discovery matters. 16 To be sure, Debtor's failure to conduct so easily.” See id. Litigants and lawyers should not *919 produce the Secret Recordings and his violation of the face punishment merely for attempting to enforce legal rights. medical records confidentiality order were met with monetary But the Bell County jury found that Debtor intentionally sanctions and contempt orders. But those instances were utilized the litigation process to perpetrate fraud against Helen simply part and parcel of Debtor's overall scheme to harm and Purser. Debtor's actions clearly crossed the line between harass Helen Purser while seeking “to leverage a [ ] ... baseless zealous advocacy and contumacious conduct. claim through a campaign of coercion.” Shcolnik, 670 F.3d at 629. Applied here, Keaty and Shcolnik recognize the sort of injury that Debtor caused to Helen Purser. As in Shcolnik, Debtor For example, Debtor sent inflammatory written used harassing and contumacious methods in an attempt to interrogatories to Gary Purser on September 19, 2011, recover damages or coerce a nuisance settlement of claims approximately fifty-three days after his death. Debtor © 2015 Thomson Reuters. No claim to original U.S. Government Works. 16 In re Scarbrough, 516 B.R. 897 (2014) obviously knew that Gary Purser was deceased because he strategy led to a debt that bankruptcy cannot discharge. had already besieged various law enforcement officials with Therefore, the Court finds Helen Purser's entire judgment murder allegations surrounding Gary Purser's death. Yet he against Debtor for fraud is nondischargeable under § 523(a) served offensive discovery on Gary Purser's attorney anyway. (6). The reality is that Debtor knew that Helen Purser would receive the discovery. The questions were not innocuous, VI. Nondischargeability of the State Court Judgment but instead pried into Gary Purser's sexual history as if he under 11 U.S.C. § 523(a)(2)(A). were still alive. Debtor continued this line of questioning at [17] In addition, Helen Purser seeks nondischargeability of Helen Purser's deposition. During deposition breaks, Helen her state court judgment for fraud by failure to disclose *920 Purser was upset by Debtor's questioning to the point where and fraud by misrepresentation under § 523(a)(2)(A). She she was crying and shaking. In the Bell County trial, an contends that the Bell County judgment fits within the false expert testifying about ethics, Alice Oliver–Parrott, had the pretenses, false representation, or actual fraud provisions of § opportunity to watch the deposition video. She testified “the 523(a)(2)(A). The Amended Complaint set out the basis for questions that Mr. Scarbrough asked Mrs. Purser were in no the § 523(a)(2)(A) theory as follows: way in furtherance of this litigation and did not pertain in any As set forth in the state court verdict way to any issue that is in dispute here. He literally asked this and final judgment, Defendant, acting woman about her mastectomy and whether or not her husband individually and as a co-conspirator had ever fondled her breasts. I find that unforgivable.” (Pls.' with third parties, perpetrated fraud Ex. 1, vol. 7, at 60:5–11). upon the Purser Family. In short, Defendant lied to and about the Jeff Ray, Helen Purser's attorney in the Bell County lawsuit, Purser Family by making false testified that on several occasions Debtor conveyed his and embarrassing allegations in the intention to be “a thorn in [the Pursers'] side” and said his community and in connection with end goal was to “get millions out of them.” Debtor made the state court action. All this multiple oral demands to Jeff Ray to settle the case for in an effort to coerce and extort one million dollars for himself and two million dollars for money from the Purser Family. Ms. Deaton. The Million Dollar Recording between Debtor And, when the Purser Family and his spouse also evidenced his malicious intention to discovered the existence of certain somehow get millions from the Purser Family. Most critical, evidence—i.e. secret recordings—that despite basing the bulk of Ms. Deaton's counterclaims on the would expose Defendant's claims as Backyard and Driveway Incidents, Debtor freely admitted groundless, fraudulent, and harassing he knew Helen Purser was not present for either event. Yet and confirm their claims against he pursued baseless claims against her because he “had no Defendant, Defendant intentionally reason not to.” When a person wields the judicial process like failed to produce and preserve a sword, he cannot expect that same process to shield him such evidence. To their detriment, from liability for his actions. the Purser Family relied on the fraudulent misrepresentations about Other actions Debtor took that rounded out his campaign of these potential claims-expending coercion were: encouraging Ms. Deaton to make an assault significant resources to investigate report of the Driveway Incident almost two years after such claims. Also to their detriment, the event occurred; initiating a baseless guardian ad litem the Purser Family relied on proceeding without consent from his client to do so; filing the fraudulent misrepresentations a motion for summary judgment on behalf of Ms. Steele regarding the existence (or without her authorization; filing frivolous counterclaims for nonexistence) of evidence— Ms. Deaton, which were nonsuited at trial; violating the expending significant resources to confidentiality order with respect to medical records; and confirm or dispel the existence (or repeatedly denying the existence of recordings of which he non-existence) of such evidence. had possession. Debtor's pursuit of a scorched earth litigation Defendant's misrepresentations caused © 2015 Thomson Reuters. No claim to original U.S. Government Works. 17 In re Scarbrough, 516 B.R. 897 (2014) the Purser Family both economic and fraud.” RecoverEdge, 44 F.3d at 1292; see also Bank of noneconomic injuries, as awarded in La. v. Bercier (In re Bercier), 934 F.2d 689, 692 (5th the state court verdict. Based on Cir.1991). For a debtor's representation to qualify as a “false the foregoing, the debt owed to the representation or false pretense” under § 523(a)(2)(A), it Purser Family is nondischargeable must have been: (1) a knowing and fraudulent falsehood, (2) under section 523(a)(2)(A) of the describing past or current facts, (3) upon which the other Bankruptcy Code. party relied. RecoverEdge, 44 F.3d at 1293 (citing Allison v. Roberts (In re Allison), 960 F.2d 481, 483 (5th Cir.1992)). (Second Am. Compl., ¶ 24, ECF No. 31). The false representations must be made knowingly and fraudulently, but a debtor's silence regarding a material fact At the summary judgment stage, Helen Purser urged that can also constitute a false representation under the Code. collateral estoppel mandated nondischargeability of the Caspers v. Van Horne (In re Van Horne), 823 F.2d 1285, fraudulent debt because the elements for fraud presented to 1288 (8th Cir.1987) (stating the bankruptcy courts have the jury matched the elements required for § 523(a)(2)(A). overwhelmingly held that a debtor's silence regarding a While the jury found reliance, the Court agreed with Debtor's material fact can constitute a false representation actionable position that the justifiable reliance standard stated in Field v. under § 523(a)(2)(A) when the omission touches upon the Mans, 516 U.S. 59, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995), essence of the transaction). Finally, the creditor's reliance created a fact issue. on a debtor's false representation must be justifiable under the circumstances. Field v. Mans, 516 U.S. 59, 74–75, 116 Debtor advanced several positions in his defense at trial. S.Ct. 437, 133 L.Ed.2d 351 (1995). The Court must determine First, Helen Purser could not have justifiably relied on any whether the falsity of Debtor's representation was or should of his actions because he interacted only with her attorneys. have been readily apparent to Helen Purser. Second, he never obtained, or sought to obtain, “money, property, or services.” Debtor argued that the money Ms. Debtor challenges whether false representations were made Deaton wrongfully obtained in the past could not be imputed and whether there is evidence that Helen Purser justifiably to him merely because he agreed to represent her. Finally, relied on any representations. At the heart of Helen Purser's he contended that although he never knew about the Secret fraud claim is the fact that Debtor intentionally failed to Recordings, the fact that Helen Purser's attorneys were aware disclose and lied about the existence of the Secret Recordings. of them negates the theory that Debtor caused her to waste money on prolonged litigation expenses. The Secret Recordings demonstrate Ms. Deaton's and Ms. Steele's understanding of Gary Purser's financial affairs [18] [19] In an individual case, § 523(a)(2)(A) of the and their willingness to assist him in depleting the Bankruptcy Code excepts from discharge any debt for money, community estate. Based on references to the pending divorce property, or services obtained by false pretenses, a false proceedings, the recordings took place in the spring or early representation, or actual fraud. 11 U.S.C. § 523(a)(2)(A). summer of 2010. Yet Helen Purser and her attorneys did not Although one purpose of the Code is to give debtors a fresh learn of the recordings' contents or existence until April 22, start, § 523(a)(2)(A) is designed to protect victims of fraud. 2011. In the meantime, as an officer of the court, Debtor Tummel & Carroll v. Quinlivan (In re Quinlivan), 434 F.3d had a duty of candor and honesty to the court to truthfully 314, 319 (5th Cir.2005); see also Deodati v. M.M. Winkler answer discovery requests. See TEX.R. CIV. P. 13. Debtor & Assocs. (In re M.M. Winkler & Assocs.), 239 F.3d 746, staunchly denied the existence of any recordings to Helen 749 (5th Cir.2001). The creditor who is the victim of fraud Purser's attorneys after he had them in his possession. In must prove by a preponderance of the evidence that the debt turn, Helen Purser justifiably relied on her attorneys' informed is nondischargeable. RecoverEdge L.P. v. Pentecost, 44 F.3d advice based on false representations made by Debtor. See 1284, 1292 (5th Cir.1995) (citing *921 Grogan v. Garner, Mans, 516 U.S. at 74–75, 116 S.Ct. 437. 498 U.S. 279, 286, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)); see also Gen. Electric Capital Corp. v. Acosta (In re Acosta), Knowledge of the recordings and their contents at the time 406 F.3d 367, 372 (5th Cir.2005). Debtor's duty to produce them arose would have been extremely beneficial to Helen Purser in the Bell County [20] [21] [22] [23] The Fifth Circuit differentiateslawsuit. The recordings put Debtor's then-client, Ms. Deaton, between “false pretenses and representations” and “actual © 2015 Thomson Reuters. No claim to original U.S. Government Works. 18 In re Scarbrough, 516 B.R. 897 (2014) in a nearly indefensible position with respect to Helen Purser's obtained money, property, services, or credit as a result of the claims against her. The pressure for Debtor's client to settle fraud, someone must have obtained something.” Id. the lawsuit would have been immense in the face of recorded evidence of a scheme to defraud Helen Purser's marital estate. Assuming that Bain correctly states the requirements of Armed with the recordings, Helen Purser's lawyers could section 523(a)(2)(A), Debtor ignores the fact that the Bell have prepared a strong case for trial in little time. Knowledge County jury found he both conspired and acted in concert of the Secret Recordings would have reduced litigation costs with Ms. Deaton and Ms. Steele. 17 It is indisputable because, without them, it took longer to build a case based that Ms. Deaton and Ms. Steele obtained something from on circumstantial evidence. The lawyers spent significant the conspiracy to defraud Helen Purser of funds from time and resources to discover the *922 existence of the her community estate. Admitted in both this adversary Secret Recordings, and had to litigate further to establish theirproceeding and the Bell County lawsuit was a handwritten authenticity because of Shawn Richeson's involvement. note by Gary Purser that memorialized cash gifts to the two women. (Pls.' Ex. 7). Next to the notation “Cash to Parties” Moreover, knowledge of the Secret Recordings would have Ms. Steele's name appears with the amount of $70,000.00 alerted Helen Purser to the potentially massive outflow of beneath it, and Ms. Deaton's name appears with the amount community funds much earlier in the proceedings. Because $6,000.00 beneath it. (Id.). Further, Clayton Olvera testified of Clayton Olvera's allegations, events such as the Driveway at his state court deposition *923 that Gary Purser helped Incident, and the disappearance of large amounts of cash, purchase a Toyota Camry for Ms. Steele by giving her Helen Purser knew that Gary Purser made gifts to the two $5,000.00 every other week, provided her weekly payments women. Without the Secret Recordings, however, she had of approximately $500.00 for a time, helped pay for real estate no way of knowing the magnitude of what the women were classes she attended, purchased jewelry for her, and provided planning. The women seriously suggested Gary Purser keep somewhere between $2,000.00 to $5,000.00 for Ms. Steele all his money at Ms. Deaton's house in a safe to prevent the and Mr. Olvera to rent a trailer. (Pls.' Ex. 38). Ms. Steele Purser Family's access to it. Instead, Helen Purser remained testified at her deposition that Gary Purser gave her sister misinformed, the women were able to keep the gifts and had $1,000.00, that he gave her multiple unspecified amounts for the opportunity to receive more, and Debtor attempted to purposes of starting a sports bar business, that he gave her leverage frivolous counterclaims for nuisance money. $4,000.00 to purchase the Toyota Camry, and that he paid for her real estate classes. (Pls.' Ex. 152–E). During the Driveway [24] [25] [26] “This circuit imputes fraud to debtors Incident on April 29, 2010, Gary Purser drove to Ms. Deaton's only if the fraudulent representations were made by a formal house with approximately $10,000.00 in hand. 18 Other partner or agent.” Quinlivan, 434 F.3d at 319. When an testimony from the Purser Family likewise recounted how agent is utilized to accomplish fraud, the “debt ... cannot be significant amounts of Helen Purser's community estate was discharged even if the debtor did not know or had no reason to given to Ms. Deaton and Ms. Steele. know that his agent was acting fraudulently.” Id. at 320. State law is used to analyze the relationship between the parties. Id. In a videotaped interview admitted in evidence in this Court, at 319. Gary Purser spoke with Jack Crews about the money he gave the two women. (Def.'s Exs. 17 & 18). Regarding Ms. Since Helen Purser never gave him anything, Debtor believes Deaton, Gary Purser stated he gave her $1,600.00 for a fence § 523(a)(2)(A) is inapplicable to his situation. Section 523(a) repair; $4,200.00 for a roof repair; $600.00 for medicine; (2)(A) does not include a “receipt of benefit” requirement. approximately $500.00 for her sister's car and house payment; Winkler, 239 F.3d at 749. Instead, “[t]he statute focuses and approximately $1,000.00 in small increments to pay on the character of the debt, not the culpability of the for miscellaneous bills. Regarding Ms. Steele, Gary Purser debtor or whether the debtor benefitted from the fraud.” Id. acknowledged that he gave her $3,500.00 for medical bills; Nonetheless, Debtor emphasizes that the statutory language $12,000.00 to pay for a medical operation; between $3,000.00 does include an “obtained” requirement. Although he did not and $6,000.00 to help her purchase the Toyota Camry; cite any cases in support of this position in his post-trial $300.00 for replacement car tires; and approximately $500.00 brief, at the summary judgment stage he relied on In re Bain, in weekly cash payments. He also stated that he bought her 436 B.R. 918, 922 (Bankr.S.D.Tex.2010), for the proposition a necklace worth $1,400.00 and a watch worth $400.00. The that “[e]ven though the debtor need not be the person who main reason he hired Clayton Olvera was because he believed © 2015 Thomson Reuters. No claim to original U.S. Government Works. 19 In re Scarbrough, 516 B.R. 897 (2014) court either rejected these defenses or Debtor did not assert Ms. Steele would benefit from Freytag Irrigation if it was them in the Bell County lawsuit, which was the appropriate successful. Realizing that Ms. Steele lived with Olvera, Gary forum. Either way, the Court finds that Debtor's defenses are Purser also cut their monthly rent by $250.00 for her benefit precluded by collateral estoppel or without merit. when they moved into a duplex that he owned. Gary Purser stated that he paid her $500.00 to $1,000.00 on ten to fifteen [28] Under Texas preclusion rules, “collateral estoppel bars occasions when she met with him at a Red Roof Inn hotel and relitigation of any ultimate issue of fact actually litigated had sexual contact. He believed this arrangement lasted until and essential to the judgment in a prior suit....” Schwager v. some point in 2010. In total, Gary Purser provided a rough Fallas (In re Schwager), 121 F.3d 177, 181 (5th Cir.1997) estimation that he gave Ms. Steele between $40,000.00 and (quotations omitted). “The requirement that an issue be $50,000.00. ‘actually litigated’ for collateral estoppel purposes simply requires that the issue is raised, contested by the parties, In light of this evidence, Debtor cannot contend that no one submitted for determination by the court, and determined.” obtained anything from the scheme to defraud Helen Purser. Keaty, 397 F.3d at 272. Debtor's client, Ms. Deaton, along with Ms. Steele, obviously obtained money and gifts from Helen Purser's marital estate In the Bell County lawsuit, Debtor's First Amended Motion and Debtor sought to ensure that they not only kept what for Judgment Notwithstanding the Verdict contended that they had, but that they all would receive more in the form of attorneys are entitled to a qualified immunity privilege; damages or nuisance money. defamation must refer to specific individuals instead of a group; and the First Amendment protected Debtor's Debtor's alternative position is that Helen Purser could not statements. (Pls.' Ex. 48, vol. 14, at 9867–84). The have justifiably relied on his actions and misrepresentations motion also challenged the sanctions judgments and asserted because he interacted with her attorneys rather than with defenses of a legal duty to report criminal activity, statutory her. Debtor fails to provide any legal authority in support of immunity in reporting elder abuse, and state and federal this position. Helen Purser justifiably relied on information constitutional rights to speak freely about matters of that she learned from her *924 attorneys, who obtained the public record. (Id.). Therefore, these defenses were “raised, information directly from Debtor. contested by the parties, submitted for determination by the court, and determined” when the Bell County court denied the In sum, the Court finds that Helen Purser justifiably relied motion and rendered judgment on the verdict. (Id. at 9999– upon Debtor's repeated knowing and fraudulent falsehoods in the Bell County lawsuit about the existence of the Secret 1000); Keaty, 397 F.3d at 272. 19 Recordings and the legitimacy of the positions he asserted for Ms. Deaton. See RecoverEdge, 44 F.3d at 1293. The VIII. Conclusion. Bell County judgment for fraud is nondischargeable under § For the reasons stated in this Opinion, the Bell County 523(a)(2)(A). This includes the damage awards for past and lawsuit judgment against Debtor is nondischargeable under future mental anguish and exemplary damages because “once section 523(a)(2)(A) and (a)(6) of the Bankruptcy Code. This it is established that specific money or property has been Opinion shall serve as the Findings of Fact and Conclusions obtained by fraud ... ‘any debt’ arising therefrom is excepted of Law of the Court pursuant to FED. R. BANKR. P. 7052 and from discharge.” Cohen v. de la Cruz, 523 U.S. 213, 218, 118 FED. R. CIV. P. 52(a)(1). Pursuant to Rule 7058, a separate S.Ct. 1212, 140 L.Ed.2d 341 (1998). judgment will be rendered contemporaneously herewith. VII. Affirmative Defenses and Privilege. All Citations [27] Finally, Debtor asserts a variety of privileges and the First Amendment as affirmative defenses. The state 516 B.R. 897 Footnotes 1 Sue Purser is the maiden name of Sue Van Zanten. She will be referred to as Sue Purser because that is consistent with the name on the case caption. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 20 In re Scarbrough, 516 B.R. 897 (2014) 2 For purposes of clarity, the Court will refer to Gary Purser, Sr., as “Gary Purser,” and his son Gary Purser, Jr., as “Bubba Purser.” 3 Despite the sworn denials of Ms. Deaton and Ms. Steele, Gary Purser stated on April 19, 2011, in a videotaped interview that he gave them thousands of dollars during their relationship. When asked if he and Ms. Steele engaged in some sort of sex act together, Mr. Purser admitted he had kissed and fondled her, but added, “Well, it's according to what you call a sex act ... I damn sure didn't never have sex with her.” (Def.'s Ex. 18 at 32–33). 4 As shown to the Court at trial, Debtor uploaded the video to YouTube.com. As of the date of this Opinion, the video is still available at www.youtube.com/watch?v=i_t7DMeJF-g. 5 JoAnn Purser also called 911 to report the incident. As shown at trial, Debtor created a video that included the audio of the telephone call and several pictures Ms. Deaton took of the incident. He uploaded it to YouTube.com under the account name “PurserJoann.” As of the date of this Opinion, it is still available at www.youtube.com/watch?v=bHCN7svus90. 6 These recordings were referred to as the “Redington” recording and the “Sister” recording. 7 In granting contempt sanctions in the Bell County lawsuit, Judge Alan Mayfield stated: Your actions, Mr. Scarbrough, strike at the fabric of the freedoms that people just a few miles from here fight for. Just a total disregard to the rule of law and the rules of evidence and the rules of discovery and the inherent powers of the Court. Not once, not twice, three times now and still I'm not locking you up. I can tell you this much ... if you're going to try and represent yourself and your clients by violating the Court's appropriate orders, by hiding evidence, and by seeking to prejudice witnesses by disclosing documentation in matters that the Court has ordered protected, you deserve to be locked up. You do it again I'm going to lock you up and 30 days will barely be long enough. (Pls.' Ex. 120, at 134–36) (emphasis added). 8 According to a neuropsychological evaluation by his doctors, Gary Purser suffered from Frontotemporal Dementia with Klüver–Bucy Syndrome. The doctors found a global lack of capacity including financial and medical decision-making impairment, and lack of capacity to live independently. 9 The Bell County lawsuit contempt order stated: “Mr. Scarbrough's actions in telephoning Carolyn Bolling and discussing ... portions of Gary W. Purser Sr.'s medical records or information contained therein are a total disregard for the rule of law, the rules of evidence, the rules of discovery, the Confidentiality Order, and the inherent powers of this Court.” (Pls.' Ex. 124). 10 The counterclaims of Ms. Deaton were nonsuited at trial. 11 This figure does not include the trial court's award of sanctions against Debtor because this Court already granted partial summary judgment that the sanctions debt is nondischargeable under § 523(a)(6). 12 The Court may apply collateral estoppel to these amounts even though the case is on appeal. See Wash v. Moebius (In re Wood), 167 B.R. 83, 85 (Bankr.W.D.Tex.1994) (stating “[c]ollateral estoppel may be applied to a trial court finding even while the judgment is pending on appeal”) (quotation omitted). 13 He uploaded the other video to his own account of “Jerry Scarbrough.” 14 Jack Crews testified that his law firm billed $482,613.38 in connection with the Bell County lawsuit. He did not represent Helen Purser the entire time, but he did represent her initially. Jeff Ray, Helen Purser's other attorney, testified that his law firm had billed over $600,000.00 to represent her and her family during the Bell County lawsuit. 15 Gross negligence would not meet the standard for causing a willful and malicious injury set forth in Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998). 16 In one exchange where the Pursers' attorney asked why a photograph of Gary Purser that Ms. Deaton took during the Driveway Incident had not been produced, Debtor replied, “Well, hell, I'm not supposed to tell you about things you don't know about. I'm just supposed to tell you about things you ask about.” (Pls.' Ex. 52). 17 The jury charge did not define the phrase “act in concert” but it did define conspiracy: To be part of a conspiracy, more than one person must have had knowledge of, agreed to, and intended a common objective or course of action that resulted in the damages to Helen Purser. One or more persons involved in the conspiracy must have performed some act or acts to further the conspiracy. Each co-conspirator is responsible for all acts done by any of the conspirators in furtherance of the unlawful combination. Pls.' Ex. 152–A. 18 Ms. Deaton testified during this adversary proceeding that she never accepted any money or benefits from Gary Purser. The Court finds that Ms. Deaton's testimony was not credible because of extensive evidence to the contrary. In addition, on multiple occasions she mentioned that her alcohol use, combined with her extensive reliance on prescription drugs, caused her to be in a “blurred” or “blacked out” state during many of the events in question. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 21 In re Scarbrough, 516 B.R. 897 (2014) 19 Because Debtor is precluded from contending his statements were protected by the First Amendment, the Court will not address his unsupported argument that the First Amendment preempts section 523(a)(6). End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works. © 2015 Thomson Reuters. No claim to original U.S. Government Works. 22 Case 6:14-cv-00419-WSS Document 24 Filed 09/30/15 Page 1 of 2 Case 6:14-cv-00419-WSS Document 24 Filed 09/30/15 Page 2 of 2