569 B.R. 814
Bankr. D. Utah2017Background
- Bringhurst was hired by Utah Behavior Services (UTBS) in November 2013, later became chief clinical officer, and was involved in opening UTBS’s St. George operations; UTBS paid him $20,000 and gave him a company American Express card.
- Bringhurst left UTBS in February 2015, immediately joined/started a competing company (Summit) with a former UTBS employee, and allegedly removed confidential information.
- A Utah state court granted injunctive relief against Bringhurst, finding breaches of loyalty and misuse of UTBS confidential information; the injunction later expired.
- Bringhurst and his spouse filed Chapter 7 in September 2016; UTBS filed an adversary complaint (Oct. 2016) seeking nondischargeability under 11 U.S.C. §§ 523(a)(4) and (a)(6), and injunctive relief, claiming about $55,374.08 in damages.
- Bringhurst moved for summary judgment on all claims; the bankruptcy court determined some issues were appropriate for summary judgment and others were not, and declined jurisdiction over the injunctive-relief counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bringhurst was a "fiduciary" for § 523(a)(4) (express or technical trust) | UTBS contends Bringhurst held fiduciary duties and breached them, making debt nondischargeable | Bringhurst argues no express/technical trust existed under § 523(a)(4) despite state-court fiduciary findings | Court: No express or technical trust; summary judgment for Bringhurst on § 523(a)(4) fiduciary/defalcation claims (dismissed) |
| Whether Bringhurst embezzled UTBS funds via American Express card (§ 523(a)(4)) | UTBS says AmEx charges included personal uses and were misappropriated | Bringhurst says he had authorization or a reasonable belief of authorization; intent unclear | Court: Genuine factual dispute about intent/authorization; summary judgment denied as to embezzlement (issue for trial) |
| Whether Bringhurst committed larceny by taking UTBS property (§ 523(a)(4)) | UTBS alleges wrongful taking of company property (AmEx, info) | Bringhurst notes company provided the card and disputed conduct | Court: No disputed fact that AmEx card was lawfully given; larceny claim fails; summary judgment for Bringhurst on larceny claim |
| Whether Bringhurst’s conduct was "willful and malicious" injury (§ 523(a)(6)) | UTBS argues leaving, starting a competitor, and reporting billing caused harm and was intentional | Bringhurst contends actions were not intended to cause harm or were justified | Court: Material facts exist on intent; summary judgment denied on § 523(a)(6) claim |
| Whether this bankruptcy court has jurisdiction to grant injunctive relief (claims 4 & 5) | UTBS seeks permanent injunction protecting confidential/trade-secret information in bankruptcy court | Bringhurst contends state-court injunction and its expiration moot or that bankruptcy lacks jurisdiction | Court: Claims for injunction raise non-core/related issues; better resolved by state court; bankruptcy court lacks jurisdiction—summary judgment for Bringhurst on counts 4 and 5 |
Key Cases Cited
- Becker v. Bateman, 709 F.3d 1019 (10th Cir. 2013) (summary judgment standard)
- Fowler Bros. v. Young (In re Young), 91 F.3d 1367 (10th Cir. 1996) (elements for fiduciary/defalcation under § 523(a)(4))
- In re Bratt, 489 B.R. 414 (Bankr. D. Kan. 2013) (distinguishing express/technical trusts for § 523(a)(4))
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (willful and malicious standard under § 523(a)(6))
- Grogan v. Garner, 498 U.S. 279 (1991) (burden of proof for nondischargeability)
- Panalis v. Moore (In re Moore), 357 F.3d 1125 (10th Cir. 2004) ("willful and malicious" requires both elements)