TEENA COLEBROOK V. JOHN PRESTON THOMPSON

Summarized by Bradley Pearce , Pearce Law PLLC
10 months 1 week ago

Case Type:

Consumer

Case Status:

Affirmed

Citation:

24-9011 (6th Circuit, Apr 17,2025) Published

Tag(s):

Ruling:

A party that litigates using the in forma pauperis provisions of 28 U.S.C. § 1915 is subject to heightened pleading standards by 28 U.S.C. § 1915(e)(2), so the trial court, sua sponte, should dismiss complaints that are subject to a statute of limitations affirmative defense under Fed. R. Bankr. P. 7012(b).

Procedural context:

The appellant filed a pro se nondischargeability complaint against the debtor and others, alleging actual fraud in the inducement. The actual fraud (if any) was perpetrated by a corporation. The appellant failed to allege what, specifically, any fraudulent statement of any of the defendants that induced the defendant to make her investments. Further, the appellant failed to allege any theory supporting corporate veil piercing. The bankruptcy court, sua sponte and under the direction of 28 U.S.C. § 1915(e)(2)(B)(ii), dismissed the appellant's case because her claims, as pled, were subject to a statute of limitations defense.

Facts:

In 2012, appellant Teena Colebrook entered into two separate contracts (“IFAs”) with John Forbes, Inc. dba SevenX Investments Corporation, a Tennessee corporation (“Corporation”). In the IFAs, Colebrook agreed to invest $35,000 in two real estate projects. The debtor, John Preston Thompson, was not a party to the IFAs. His name, however, appeared on the signature block of emails from the Corporation. Colebrook also attached, as exhibits to her complaint, emails that apparently were sent by other persons in the Corporation's email signature block, but not from Thompson. Despite assurances from the Corporation's principals, but not Thompson, Colebrook never received any payment in respect of her investments. Colebrook filed her nondischargeability adversary proceeding under 28 U.S.C. § 1930(f). Observing that this provision is available only to qualifying chapter 7 debtors, the bankruptcy court granted the in forma pauperis request under 28 U.S.C. § 1915. However, in granting that request, the bankruptcy court applied the remaining provisions of section 1915, which require courts to dismiss cases if the court, on its own review, determines that the complaint fails to state a claim on which relief may be granted. Notwithstanding that statutes of limitations are affirmative defenses, the bankruptcy court followed precedent that held that an in forma pauperis complaint that revealed a statute of limitations defense must be dismissed under 28 U.S.C. § 1915(e)(2)(B)(ii). The bankruptcy court thus dismissed Colebrook's adversary proceeding.

Judge(s):

BAUKNIGHT, CROOM, and GREGG, Bankruptcy Appellate Panel Judges

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