Court Opinion

ID: 4073930
Source: CourtListenerOpinion
Date Created: 2016-09-30 04:28:55.21593+00
Date Added: 2024-06-11T14:32:56.429249
License: Public Domain

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