United States District Court, E.D. California
L. Nunley United States District Judge.
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.
issue started with a joint bank account. (Appellees'
App., ECF No. 15-1 at 4.)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.)
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.)
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.)
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.)
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
. . . .
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 ...