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Brune v. Parrott

United States District Court, E.D. California

June 12, 2017

KARL BRUNE, Appellant,
v.
BLANE LELAND PARROTT and JENETTE LAVAUN PARROTT, Appellees.

          ORDER

          Troy L. Nunley United States District Judge.

         This is a bankruptcy appeal. Appellant Karl Brune (“Brune”) was a creditor of Appellees Blane Leland Parrott (“Blane”) and Jenette Lavaun Parrott (“Jenette”) (collectively “the Parrotts”). Brune filed an adversary action in the bankruptcy court, claiming the Parrotts' debt to him was not dischargeable in bankruptcy. He was unsuccessful before the bankruptcy court and he now appeals. For the reasons below, the judgment of the bankruptcy court is AFFIRMED.

         I. Background

         The issue started with a joint bank account. (Appellees' App., ECF No. 15-1 at 4.)[1]Brune is a contractor whom the Parrotts hired to work on their home in Paradise, California. (ECF No. 15-1 at 4.) According to Brune, the Parrotts obtained a construction loan for the work using Brune's state-issued contractor's license. (ECF No. 15-1 at 4.) Brune and the Parrotts opened a joint checking account together and directed nearly $300, 000 of the loan funds to be deposited into the joint account incrementally. (ECF No. 15-1 at 4.) However, the Parrotts eventually withdrew or transferred roughly $250, 000 from the joint account into their personal account. (ECF No. 15-1 at 4.) Brune completed the initial work for which the Parrotts hired him, and they asked him to stay on to update older portions of their home. (ECF No. 15-1 at 5.) According to Brune, he was underpaid for the first phase of work and not paid for the second. (ECF No. 15-1 at 5.) In the end, Brune claims, the Parrotts owed him $100, 960. (ECF No. 15-1 at 5.) Brune claims the Parrotts enticed him into helping them obtain the construction loan by opening a joint account with Brune and guaranteeing he would be paid. (ECF No. 15-1 at 6.) Brune contends that the Parrotts' pattern of immediately transferring joint loan funds into their personal account shows that they never intended to pay him. (ECF No. 15-1 at 6.)

         The Brune-Parrott relationship soured further when the Parrotts complained about Brune to the Contractors State License Board (“CSLB”). (ECF No. 15-1 at 7.) Those complaints ultimately led to Brune's contractor's license being suspended. (ECF No. 15-1 at 7.) Brune contends the Parrotts' complaints were false. (ECF No. 15-1 at 7.) The parties evidently arbitrated their dispute before the CSLB. (See ECF No. 15-1 at 61.)

         The Parrotts filed for chapter 7 bankruptcy on May 7, 2014. (See ECF No. 15-1 at 45.) Shortly thereafter, Brune filed an adversary action in propria persona, contending the Parrotts' debt to him was not dischargeable in bankruptcy. (ECF No. 15-1 at 45.) Brune filed an amended complaint on September 29, 2014, asserting two causes of action. (ECF No. 15-1 at 3, 45.) First, Brune alleged the Parrotts' debt was not dischargeable pursuant to 11 U.S.C. § 523(a)(2), (4), and (6) because it was the product of “Intentional Fraud, Defalcation, Embezzlement, Larceny and Misrepresentation.” (ECF No. 15-1 at 4-7.) Second, Brune alleged the Parrott's debt was not dischargeable pursuant to 11 U.S.C. § 727, although he did not specify which subdivision of § 727 he was invoking. (ECF No. 15-1 at 8-11.)

         The Parrots filed a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (See ECF No. 15-1 at 44.) They argued the portion of Brune's first claim arising under § 523(a)(6) lacked supporting factual allegations. (See ECF No. 15-1 at 44.) They also argued Brune's second claim failed to state a claim because Brune did not specify which subsection of § 727 he was invoking. (See ECF No. 15-1 at 44-46.) The bankruptcy court denied the Parrotts' motion with respect to Brune's § 523(a)(6) claim but granted it with respect to his § 727 claim. (ECF No. 15-1 at 46-47.)

         The case went to trial. (See ECF No. 15-1 at 57.) Brune gave an opening statement that was largely a recitation of the allegations in his complaint. (ECF No. 15-1 at 64.) The bankruptcy judge advised Brune the court was familiar with the complaint and that the allegations in the complaint were not actually proof. (ECF No. 15-1 at 65.) After a short back-and-forth with the bankruptcy judge, Brune called Blane as a witness. (ECF No. 15-1 at 66.) Brune questioned Blane about their dealings, including the construction loan, the deposits and withdrawals to and from the joint bank account, and the status of the work Brune performed for the Parrotts. (ECF No. 15-1 at 70-81.) The Parrotts' attorney did not cross-examine Blane. (ECF No. 15-1 at 82.) Brune then rested his case. (ECF No. 15-1 at 82.) He never called himself as a witness. (See ECF No. 15-1 at 82.) The Parrotts moved for judgment pursuant to Rule 52(c) of the Federal Rules of Civil Procedure because Brune made “no showing of any fraud” or any other basis for non-discharge under § 523. (ECF No. 15-1 at 82.) The bankruptcy judge agreed, and granted the Parrotts' motion:

THE COURT: I'm afraid I'm going to have to agree with [the Parrotts], Mr. Brune. I don't know what in the world you were trying to prove here, but you didn't prove anything.
. . . .
Perhaps you should have consulted an attorney before you came in on this matter, but even though you are not represented by an attorney and you have chosen to appear in what we call pro se or pro per, you are still required to show me, as the judge, the basis for your complaint.
And there are ways of presenting evidence that, you know, should be able to show that, but you haven't done it. You haven't shown me a thing that shows there was improper conduct on the part of Mr. Parrott or anything that he did that would require me to rule in your favor.
. . . .
I can't award you a judgment where you haven't shown me anything or that you ...

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