Kelly Groves v. Jeffery Paul Crowder

Summary

In this adversary proceeding, Kelly Groves sought a monetary judgment against Jeffery Paul Crowder and a determination that the debt was nondischargeable under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4), and 523(a)(6), as well as denial of Crowder’s discharge under § 727(a)(4). The Bankruptcy Court concluded that Groves failed to establish an underlying debt owed by Crowder, including because the relevant construction contracts were between Groves and Crowder’s LLC and veil-piercing theories were waived. The court therefore denied the nondischargeability claims and the request to deny Crowder’s discharge.

Holdings

1. Groves failed to prove a valid contract between herself and Crowder individually because the land and construction contracts were between Groves and CCMC. The breach-of-contract claim against Crowder therefore failed as a matter of law.
2. Groves waived any veil-piercing or alter-ego theory as a basis for imposing liability on Crowder because she did not plead those theories and they were not tried by consent.
3. Groves was not barred from asserting a direct fraud claim against Crowder merely because veil-piercing theories were waived. A corporate agent may be personally liable for his own tortious conduct, including fraud, even when acting for the corporation or LLC.
4. Groves failed to prove that Crowder knowingly or recklessly made a material misrepresentation with intent to induce her action. Her fraud claim therefore failed.
5. Groves's claims under 11 U.S.C. §§ 523(a)(2)(A), (a)(4), and (a)(6) were denied because she failed to establish the threshold existence of an underlying debt owed by Crowder.
6. Groves lacked standing to pursue denial of Crowder's discharge under § 727(a)(4) because she failed to establish that Crowder owed her an enforceable debt.

Questions Presented

1. Whether Groves proved an enforceable underlying debt owed by Crowder individually based on breach of contract.
2. Whether Groves could impose individual liability on Crowder through veil piercing or alter-ego theories that were not pleaded.
3. Whether Groves proved a direct Texas fraud claim against Crowder based on alleged misrepresentations made while acting for CCMC.
4. Whether Groves's alleged debt was nondischargeable under 11 U.S.C. §§ 523(a)(2)(A), (a)(4), or (a)(6).
5. Whether Groves had standing to seek denial of Crowder's discharge under 11 U.S.C. § 727(a)(4) after failing to establish that Crowder owed her a debt.

Disposition

other