       United States Bankruptcy Appellate Panel
                         For the Eighth Circuit
                     ___________________________

                             No. 14-6032
                     ___________________________

      In re: Michael Aubrey Walker, also known as Mike Aubrey Walker

                                   llllllDebtor

                           ------------------------------

                               Joseph R. Wilson

                     lllllllllllllllllllll Plaintiff - Appellant

                                         v.

  Michael Aubrey Walker; Tamar Walker; Precious Princess Productions, LLC

                   lllllllllllllllllllll Defendants - Appellees
                                    ____________

                Appeal from United States Bankruptcy Court
              for the Western District of Missouri - Springfield
                               ____________

                        Submitted: February 25, 2015
                            Filed: April 7, 2015
                              ____________

Before KRESSEL, SCHERMER and NAIL, Bankruptcy Judges.
                          ____________

SCHERMER, Bankruptcy Judge


                                         1
       Joseph R. Wilson (Wilson) appeals the bankruptcy court’s1 rulings denying his:
(1) requests for: (a) a judgment of nondischargeability under 11 U.S.C. § 523 against
Michael Aubrey Walker (Debtor), together with a money judgment, and (b)
enforcement of a money judgment against Debtor’s non-filing spouse or her
company; (2) request for denial of the Debtor’s discharge under 11 U.S.C. § 727; and
(3) motions to alter or amend the judgment and for a new trial and making additional
findings of fact. We have jurisdiction over this appeal. See 28 U.S.C. § 158(b). For
the reasons that follow, we affirm.

                                      ISSUES
       This appeal concerns Wilson’s assertions that debt owed to him by the Debtor
should be excepted from the Debtor’s discharge under § 523 of Title 11 of the United
States Code (Bankruptcy Code) or the Debtor’s discharge should be denied under
Bankruptcy Code § 727. Therefore, we consider whether the Debtor owes a debt to
Wilson. To determine whether a debt exists, we must decide whether: (1) two
contracts between the Debtor and Wilson were void as unconscionable; (2) Wilson
lost an investment he made in the Debtor or his career; and (3) Wilson has asserted
any other basis for a debt. We consider Wilson’s arguments that: (1) the Debtor
waived an unconscionability argument for failure to raise it as an affirmative defense;
and (2) assertion of unconscionability is barred by the Virginia statute of limitations.
In addition, we consider the propriety of the bankruptcy court’s ruling that the
Debtor’s discharge should not be denied under §§ 727(a)(2), (a)(3) and (a)(4). We
hold that there is no basis upon which to rule that the Debtor owed a debt to Wilson.
The bankruptcy court properly decided that Wilson had no cause of action under
§523. Likewise, there was no basis upon which to deny the Debtor’s discharge under
§ 727.




      1
           The Honorable Arthur B. Federman, Chief Judge, United States
Bankruptcy Court for the Western District of Missouri.
                                           2
                                BACKGROUND
      The bankruptcy court made extensive factual findings in its written decisions.
Those findings were supported by the record, and we see no error with them.
Therefore, where practical, we set forth the findings relevant to our decision in a
summary fashion.

       The Debtor and Wilson first met in 2002 while the Debtor was performing in
Nashville, Tennessee. The Debtor was only twenty-six years-old, while Wilson was
approximately forty-five years-old. When the two men met, the Debtor had been
working as a karaoke singer and an impressionist. It is undisputed that the Debtor is
a talented singer.

     In late 2003 or early 2004, Wilson agreed (verbally) to help manage the
Debtor’s career. Wilson agreed to provide advice, counsel and funds to help with the
Debtor’s career.

The written Artist Management Agreements

        The parties continued to work together, but they did not enter into their first of
three written agreement until 2005. The bankruptcy court found that the Debtor and
Wilson acted through a sole proprietorship arrangement, not as a partnership as the
Debtor believed was intended. Wilson had registered “W&W Enterprises” (W&W)
as a fictitious name with the Missouri Secretary of State. The bankruptcy court found
that Wilson acted as the Debtor’s manager in the name of W&W, a sole
proprietorship of Wilson who was effectively the employer and the Debtor was the
employee.

      In April 2005, Wilson retained an attorney to draft the first Artist Management
Agreement (2005 AMA). The 2005 AMA obligated Wilson to advise and counsel
the Debtor in all matters concerning development of his act, publicizing himself,


                                            3
selection of venues, and terms of contracts. Notwithstanding the obligations taken
on by Wilson, Wilson was inexperienced in the area. Previously he had worked in
the wallpaper business and then in construction where he was a business owner and
operator. Before Wilson met the Debtor, he had only managed a couple of music
acts.

       The 2005 AMA had a three-year term, with an option for Wilson to renew the
agreement for four one-year terms. Therefore, the total term of the agreement could
reach seven years at Wilson’s option. The 2005 AMA obligated the Debtor to pay
Wilson fees of 15% of the Debtor’s gross compensation and publishing revenue, and
25% of voice impression work performed by the Debtor. An individual or
corporation could buy out the right to manage the Debtor’s affairs for $2 million.
Under the 2005 AMA, the Debtor had the option to terminate the agreement upon
thirty days written notice if Wilson was not able to personally render services.

      The parties entered into two subsequent Artist Management Agreements
(AMAs). Like the 2005 AMA, these agreements obligated Wilson to advise and
counsel the Debtor in all matters concerning development of his act, publicizing
himself, selection of venues, and terms of contracts. Each of these subsequent AMAs
was drafted by Wilson without the advice of counsel. According to Wilson, he used
the 2005 AMA as a template for the later AMAs. The changes from the 2005 AMA
were drastic.

      On April 30, 2007, the Debtor and Wilson entered into a new Artist
Management Agreement (2007 AMA). The 2007 AMA was for a twenty-year term
with four two-year extension options exercisable only by Wilson. At Wilson’s
option, the total term of the agreement could now reach twenty-eight years. Wilson
had the Debtor initial the paragraph extending the agreements term. Under this new
agreement, the Debtor was now obligated to pay Wilson a fee of 25% on all receipts.
The buyout cost for another organization or individual was increased to $10 million.

                                         4
And, Paragraph 10 of the 2007 AMA states that “[i]t is understood by ARTIST that
MANAGER cannot be replaced or fired for any reasons or circumstances during this
. . . Agreement, exception [sic] specified in paragraph (12).” The Debtor was allowed
to purchase the remainder of the twenty-year term for $8 million. In turn, Paragraph
12 provided a cure period for any claimed breach. If there was no cure, Paragraph 12
also stated that “[i]n the event of any dispute under or relating to the terms of this
Agreement, or breach thereof, it is agreed that the same shall be submitted for
arbitration to the American Arbitration Association (“AAA”) in the State of
Virginia.” The provision from the 2005 AMA allowing the Debtor to terminate on
thirty days written notice if Wilson was unable to perform was removed. Now, the
2007 AMA stated:

      If MANAGER is not personally available to render the services of
      MANAGER as described herein (except for limited periods not to
      exceed one hundred eighty (180) days because of illness), MANAGER
      will have the right to secure temporary replacement management for the
      remaining period of this Agreement.

       A year later, the parties also signed a new Artist Management Agreement on
April 28, 2008 (2008 AMA). Wilson contends that changes he made to the 2008
AMA were made at the Debtor’s request. The bankruptcy court found this to be
lacking in credibility. The 2008 AMA stated that the term was “for a period of time
twenty (25) [sic] years.” Wilson exclusively had the option to extend the term for
four periods of two years (eight years total).2 Under this new agreement, Wilson’s
compensation was increased to 50% of Walker’s gross revenues. Paragraph 10 of the
2007 AMA stating that Wilson could not be replaced or fired for any reason stayed
as part of the 2008 AMA. However, the provision in the 2007 AMA that allowed the
Debtor to buy out the remaining term of Wilson’s contract was removed. The

      2
             Discussing the internal inconsistency in the document, the bankruptcy
court appropriately held that whether the term was twenty-five years with eight years
of options, or twenty years with eight years of options, it was unreasonable.
                                          5
provisions in Paragraph 12 of the 2007 AMA concerning a cure for any claimed
breach and the submission of disputes to arbitration in Virginia remained in the 2008
AMA. Wilson retained the right to secure a replacement manager for the balance of
the agreement’s term if Walker should become unavailable to perform. In addition,
the 2008 AMA added a new term stating:

      In the event MANAGER pass’s [sic] away, ARTIST will allow
      MANAGER’S benefactor the right to hire at benefactor[’s] cost, a
      replacement MANAGER (ACCEPTABLE TO ARTIST) for the
      remainder period of contract with no options. Payments will be paid at
      same existing rate to benefactor and will be paid monthly by ARTIST
      or new MANAGER less MANAGERS[’s] prior arranged fee from
      benefactor with a detailed account of monthly receipts.

The bankruptcy court found that this: (1) appears to require the Debtor to pay the
benefactor the same payment the Debtor would have paid to Wilson, even if the
benefactor did not obtain an acceptable replacement, and that, (2) if the benefactor
obtained a replacement who was compensated at a lesser rate, the benefactor would
receive the difference.

      Under all three AMAs, the Debtor was solely responsible for his expenses. The
AMAs expressly stated that Wilson had no liability for such expenses. In addition,
under all three AMAs, the Debtor was only to work at such times and places as were
approved in writing by Wilson.

The Mickey Gilley Theater deal and Al Embry agreement

      In July 2006, Wilson signed, on behalf of the Debtor, a two-year Exclusive
Booking Agreement with Al Embry International, LLC. The agreement included a
provision to extend its term for two years at Al Embry International, LLC’s option.

      On April 1, 2007, approximately one month before the parties entered into the

                                         6
2007 AMA, Wilson signed a five-year Performance Agreement for the Debtor to
perform at the Mickey Gilley Theater in Branson, Missouri. Under the arrangement
with the Mickey Gilley Theater, the Debtor was given a time slot for his performance.
From the ticket sales, the theater received a specified amount and the performer
received the remaining balance. The Mickey Gilley Theater required a performer to
pay his own expenses. Wilson testified that, notwithstanding a requirement in the
2007 AMA for the Debtor to pay his own expenses, Wilson paid the Debtor’s
expenses for performances at the Mickey Gilley Theater using borrowed funds. In
addition, Wilson testified that the Debtor was paid a salary by W&W and was issued
Form 1099's by W&W. Due to the success of the Debtor’s show, in 2007 W&W paid
all of its expenses and repaid all of its loans. The bankruptcy court observed that this
meant that Wilson had no unrecovered investment for 2007.

The Pigeon Forge deal

      Notwithstanding the five-year arrangement with the Mickey Gilley Theater, on
March 21, 2008, Wilson signed a Letter of Intent with an entity called Smoky
Mountain Entertainment, LLC (SMEC), to move the Debtor’s act to Pigeon Forge,
Tennessee. The Debtor testified that Wilson told him they needed to get out of
Branson because no one liked Wilson there. The terms proposed under the Pigeon
Forge opportunity were significantly more lucrative than those offered under the
Mickey Gilley Theater deal. However, the Pigeon Forge agreement was contingent
upon SMEC’s closing on the purchase of property it intended to use as a performance
venue. The move to Tennessee required the Debtor to breach his Mickey Gilley
Theater contract. Although Wilson has argued that the Debtor and Wilson jointly
made the decision to breach the Mickey Gilley Theater contract and move to Pigeon
Forge, the bankruptcy court appropriately found that Wilson was responsible for this
determination. The record also supports the court’s finding that under the 2007
AMA, the Debtor could not perform anywhere without Wilson’s approval.



                                           7
      Wilson did an inconsequential amount of meaningful research before
proceeding with the Pigeon Forge deal. That proved to be a mistake.

     Under the SMEC deal, SMEC was to pay the costs of lodging and provide the
Debtor with a backup band and singers. With only the Letter of Intent in hand,
Wilson and the Debtor moved to Pigeon Forge in May 2008 (just after the Debtor and
Wilson had entered into the 2008 AMA), and started to incur those costs.

       The same month, SMEC, W&W and the Debtor entered into an Artist
Performance Agreement. That agreement refers to W&W and the Debtor collectively
as the “Artist.” The Artist Performance Agreement provided for the Debtor’s
performances to take place in the property that SMEC was to acquire and renovate.
 The agreement stated that, upon acquisition of the property, SMEC was to put the
amount of $245,000 in an escrow account, for use in making payments to W&W
during the first year of the contract. The bankruptcy court pointed out that the escrow
account was of no real security because the account was controlled by SMEC. The
sale of the property where the Debtor’s performances were to take place never closed.
Worse, SMEC never deposited the required funds into the escrow account.

      Thereafter, Wilson signed an amendment to the SMEC agreement. The
amendment allowed the Debtor’s performances to be either in the property that was
supposed to be acquired by SMEC (which was a 1,200-seat venue) or in another
leased property. The Debtor’s show ended up in a 200-seat venue, rather than in the
previously contemplated 1,200-seat venue. SMEC failed to honor its obligations to
make bi-weekly payments to Wilson and to pay Wilson’s and the Debtor’s living
expenses, and it also did not reimburse the parties for band and lodging expenses.

      The bankruptcy court pointed out that entering into the Pigeon Forge deal
(based upon Wilson’s decision to do so) was a poor decision not only due to the lack
of Wilson’s due diligence regarding the financial viability of the project and its

                                          8
backer, but also because the consequence of doing so was not wise for him personally
or for the Debtor’s career. In fact, the bankruptcy court appropriately found that these
poor management decisions by Wilson “had devastating effects on the Debtor’s
career.”

        The Pigeon Forge deal was short-lived. SMEC terminated the agreement
effective July 18, 2008, which was soon after the Debtor started his Pigeon Forge
performances. The bankruptcy court noted the disagreement of the parties regarding
why SMEC terminated the contract. It also noted that SMEC’s attorney stated in a
newspaper comment (a comment that was later retracted as part of a settlement of
litigation) that SMEC terminated the contract due to difficulty working with Wilson.

The Don King deal

       After the SMEC agreement was terminated, the booking agent who had
originally approached Wilson about moving the Debtor’s act to Pigeon Forge
arranged for the Debtor and Wilson to meet with the well-known producer Don King.
This led to the Debtor’s and Wilson’s signing of an Entertainment Personal
Management Agreement with Don King Productions (King). Under the
Entertainment Personal Management Agreement, the Debtor hired King as his
“Career Business Manager.” The agreement defined King’s role as “to supervise,
guide, and direct [the Debtor’s] professional career as an entertainer, individually, and
to attend to and assist in all business arrangements in connection with [the Debtor’s]
career in entertainment.” Wilson was a party to the contract as the Debtor’s “Personal
Business Manager.” The term of the agreement was three years with one three-year
extension period, unless either party notified the other that they did not want to
extend the term. The compensation to King under the agreement was 50% of
revenues. Wilson maintained that he was still entitled to 50% of whatever revenue
was left for the Debtor.



                                           9
       No work (and, therefore, no revenues) came from the King deal. The parties
disagree about the reason for this. The bankruptcy court noted Wilson’s stated
reason, pointing out an inconsistency in his testimony. The court relied on the
Debtor’s testimony, stating that a more plausible reason was because of actions taken
by Wilson. The bankruptcy court acknowledges that the original contact with King
resulted from one of Wilson’s other contacts, but it found that Wilson’s management
style was the reason why the Debtor was unable to use the contact to benefit his
career. The court also stated that opportunities such as this one existed in the first
place because of the Debtor’s talent.

Debtor’s return to Branson

       When it became clear the Debtor would not secure an engagement through the
King deal, he returned to Branson seeking work. Wilson then threatened Mickey
Gilley with a lawsuit if he engaged the Debtor directly and did not pay Wilson what
he believed to be his share of the Debtor’s earnings.

      The Debtor then sent a September 15, 2008 email stating that he was
terminating Wilson as his manager. Eleven days later, an attorney hired by the
Debtor sent a letter notifying Wilson that the Debtor was terminating the 2008 AMA.
Wilson responded (through his attorney) that the 2008 AMA could not be terminated
and that any claim for breach had to be brought in a Virginia arbitration.

       Thereafter, the Debtor worked mostly for tips, singing at a local mall. Since
August 2009, the Debtor performed off and on at the God & Country Theatre. In
addition, the Debtor sang at church and engaged in a small number of single
performances. Wilson has contacted a number of the places where the Debtor has
performed since 2009 threatening litigation if any of them did business with the
Debtor without including Wilson. Wilson maintains that he is entitled to his 50%
share under the 2008 AMA. In one instance, a booking for the Debtor to do a series

                                         10
of performances in Cancun, Mexico was terminated after Wilson threatened a lawsuit.

Tamar Walker and her companies

      In August 2009, the Debtor’s wife, Tamar Walker, set up a company called
Precious Princess Productions, to manage the Debtor’s performances and receive the
funds from such performances. Tamar also set up performances for her own musical
group through Precious Princess Productions. In 2012, Tamar created Unchained
Productions LLC, a successor company to Precious Princess Productions. Income
from the Debtor’s performances and Tamar’s own performances is funneled through
Unchained Productions. Unchained Productions pays the Debtor $50 per show, the
expenses from the Debtor’s and Tamar’s performances and the household living
expenses for the Debtor and Tamar.

Extension of funds to develop Debtor’s career

      Wilson maintains that, over the years, he spent significant funds toward
developing the Debtor’s career. In fact, Wilson claimed that one form of
consideration for the 2008 AMA was that he gave up more than $100,000 that he had
invested in the Debtor’s career.

Wilson’s bankruptcy

       On March 6, 2008, during the time when Wilson was managing the Debtor and
decided to breach the Mickey Gilley Theater contract and move to Pigeon Forge, and
less than two months before the parties executed the 2008 AMA, Wilson filed his
own Chapter 7 bankruptcy petition in Tennessee. Contrary to his testimony regarding
investing in the Debtor’s career, Wilson listed on his schedules no amounts due to
W&W, or claims against the Debtor. He did not list on his schedules any amounts
owed to him under the AMAs or any other debt owed to him by the Debtor. The

                                        11
docket from Wilson’s bankruptcy case shows he obtained a Chapter 7 discharge.

Debtor’s bankruptcy case

      The Debtor filed his Chapter 7 bankruptcy petition on July 30, 2012. In the
Debtor’s case, Wilson filed the adversary proceeding that is the subject of this appeal.
Through the adversary proceeding, Wilson claimed that the debt owed to him under
the 2008 AMA is excepted from the Debtor’s discharge under § 523 of the
Bankruptcy Code, together with the request for a money judgment, and that the
Debtor’s discharge should be denied under Bankruptcy Code § 727. Wilson also
added Tamar Walker and Precious Princess Productions, LLC as defendants, seeking
enforcement of any judgment against them jointly and severally. He sought recovery
of the income funneled through Precious Princess Productions and Unchained
Productions. The Debtor asserted a counterclaim.

       The bankruptcy court ruled in favor of the Defendants as to the Complaint. It
ruled against the Debtor on his Counterclaim.3    The Debtor did not appeal the ruling
on his Counterclaim.4

      Thereafter, in response to Wilson’s request that the bankruptcy court amend or


      3
              The bankruptcy court determined that it had jurisdiction to enter a final
judgment on the Complaint and the Counterclaim. Neither party raised the court’s
authority to enter a final judgment as an issue on appeal. At oral argument, counsel
for the parties stated affirmatively that they conceded the court’s jurisdiction.
      4
             The Debtor sought to reject the 2007 and 2008 AMAs. The court held
that those AMAs were rejected. The parties make no arguments on appeal regarding
the rejection of the AMAs, and we consider any appeal of that portion of the
bankruptcy court’s decision to be abandoned. Nevertheless, we would affirm the
rejection decision for the same reasons we affirm the bankruptcy court’s ruling on
Wilson’s § 523 claims.
                                          12
make additional findings of fact, amend the court’s Judgment, and grant a new trial
on the Debtor’s adversary proceeding, the court entered an order, making additional
findings as to termination by Debtor of any effective contract between the Debtor and
Wilson, and denying the requests for a new trial and to amend his Judgment (Post-
Judgment Order).

                            STANDARD OF REVIEW
       We review the bankruptcy court’s findings of facts for clear error and its
conclusions of law de novo. Heide v. Juve (In re Juve), 761 F.3d 847, 851 (8 th Cir.
2014). The court’s interpretation of state law is reviewed de novo. County of Ramsey
v. MERSCORP Holdings, Inc., 776 F.3d 947 (8th Cir. 2014). “[W]hether a contract
is unconscionable is a question of law for the court to decide.” Fransmart, LLC v.
Freshii Dev., LLC (In re Fransmart), 768 F. Supp.2d 851, 871 (E.D. Va. 2011) (citing
Art’s Flower Shop v. C&P Tel. Co., 413 S.E.2d 670 (W. Va.1991)) and Jones v. Dere,
No. LW-2612-4, 1995 WL 1055959, at *4 (Va. Cir. Ct. Aug. 16, 1995)); Snydor v.
Conseco Fin. Servicing Corp., 252 F.3d 302, 305 (4th Cir. 2001) (“We first decide
whether the district court properly concluded that the arbitration agreement was
unconscionable.”). Where the court is required to make factual findings to determine
whether the unconscionability standard was met, the case presents a mixed question
of law and fact. Besta v. Beneficial Loan Co. of Iowa, 855 F.2d 532, 533 (8th Cir.
1988); U.S. Dep’t of Health & Human Servs., v. Smitley, 347 F.3d 109, 115-116 (4th
Cir. 2003) (when considering dischargeability of in context of HEAL student loan,
application of unconscionability standard to facts of case presented mixed question
law and fact).

                                  DISCUSSION

A.    Dischargeability under 11 U.S.C. § 523

     The bankruptcy court properly determined that Wilson had no action under
Bankruptcy Code §523 because the Debtor owes no debt to Wilson. Section 523 sets


                                         13
forth categories for which a discharge under § 727 “does not discharge an individual
debtor from any debt.” 11 U.S.C. § 523(a) (emphasis added). For § 523(a) to apply
in the first instance, there must be a debt.

       The bankruptcy court appropriately stated that Wilson set forth no cause of
action under § 523 because the 2007 and 2008 AMAs were void as unconscionable
and, as a result, there was no debt owed to Wilson.5 Contrary to arguments by Wilson
otherwise, the Debtor did not waive the unconscionability argument. In addition, we
agree with the bankruptcy court’s decision to refrain from hearing Wilson’s argument
that the unconscionability defense was barred by the Virginia statute of limitations.
We also agree that Wilson has no claim for a lost investment in the Debtor or his
career, or any other basis for asserting a debt.

      (I)    Unconscionability

             (i)   Consideration of unconscionability

       According to Wilson, an unconscionability defense was prohibited because it
was not set forth as an affirmative defenses in the Debtor’s pleadings. We disagree.
As was recognized by the bankruptcy court in the Post-Judgment Order,
unconscionability was an issue known from the beginning of the adversary
proceeding (and before). Moreover, the issue of unconscionability was raised at a
pre-trial conference and then at trial, with much of the evidence at trial centering on
unconscionability. And, Wilson filed a supplemental trial brief on the discreet issue
of unconscionability. Federal Rule of Civil Procedure 15(b)(2), made applicable by
Federal Rule of Bankruptcy Procedure 7015, states that “[w]hen an issue not raised


      5
            Consistent with affirming the bankruptcy court’s ruling that the Debtor
owes no debt to Wilson, we also affirm the court’s decision to enter judgment in favor
of Tamar and Precious Princess Productions on the Complaint.
                                          14
by the pleadings is tried by the parties’ express or implied consent, it must be treated
in all respects as if raised in the pleadings.” FED. R. CIV. P. 15(b)(2). There can be
no questions that, given the circumstances, the issue of unconscionability was tried
by (at the very least) the implied consent of Wilson. We also note that Wilson never
argued before the bankruptcy court (prior to trial, at trial or otherwise) that a
consideration of unconscionability was disallowed because it had not been plead.

          (ii)   Statute of limitations

       We also agree with the bankruptcy court’s decision to deny Wilson’s request
to apply a Virginia statute of limitations defense. According to Wilson,
unconscionability was not raised until a pre-trial conference in October 2013, which
was after the expiration of the statute of limitations for such a claim under either the
2007 AMA or the 2008 AMA. However, the bankruptcy court aptly stated in the
Post-Judgment Order (and we agree) that the statute of limitations issue was raised
by Wilson for the first time in a post-judgment motion. And, that court properly
denied Wilson’s request that it consider the issue. See U.S. v. Gurley, 434 F.3d 1064,
1069 (8th Cir. 2006) (affirming refusal to consider an issue presented for the first
time in a motion to alter or amend judgment).

          (iii) The 2007 and 2008 AMAs were void as unconscionable

       The AMAs provide, and the parties do not contest, that Virginia law applies.
In Virginia, unconscionability is “a narrow doctrine.” Snydor, 252 F.3d at 305
(citation omitted). An “unconscionable bargain has been defined to be ‘one that no
man in his senses and not under a delusion would make, on the one hand, and as no
fair man would accept, on the other.’ The inequality must be so gross as to shock the
conscience.” Managment Enters., Inc. v. Thorncroft Co., Inc., 416 S.E.2d 229, 231
(Va. 1992) (quoting Smyth Bros.-McLeary-McLellan Co. v. Beresford, 104 S.E. 371,
382 (Va. 1920)). “A plaintiff alleging that a contract is unconscionable must prove
that claim by clear and convincing evidence.” March v. Tysinger Motor Co., Inc.,


                                          15
No. 3:07-CV-508, 2007 WL 4358339, at *4 (E.D. Va. Dec. 12, 2007). “A court may
void a contract on the grounds that it is unconscionable.” Reel v. Anderson Fin.
Servs., LLC, No. 5:07CV00080, 2008 WL 53222, at * 6 n. 7 (W.D. Va. Jan. 2, 2008)
(citing Smyth Bros.-McLeary-McLellan Co., 104 S.E. at 382).

      However, “ ‘[c]ourts cannot relieve one of the consequences of a contract
merely because it was unwise’ ... [or] ‘rewrite a contract simply because the contract
may appear to reach an unfair result.’ ” Pelfrey v. Pelfrey, 487 S.E.2d 281, 284 (Va.
Ct. App. 1997) (citations omitted) (quoting Rogers v. Yourshaw, 448 S.E.2d 884, 888
(Va. Ct. App. 1994); Owens v. Owens, 86 S.E. 2d 181, 186 (Va. 1955) (same).

       The bankruptcy court set forth four aspects of the 2007 and 2008 AMAs by
which the Debtor proved by clear and convincing evidence that those agreements
were unconscionable as a matter of law: (1) term; (2) Wilson’s compensation; (3)
inability to terminate; and (4) Wilson’s replacement. The court correctly applied
Virginia unconscionability law, and the evidence supports its conclusion of
unconscionabilty.

               1. Term

       The conclusion that the Debtor met the standard for proving unconscionability
is supported by the bankruptcy court’s determination that neither the evidence nor the
law supported the long term of the 2007 and 2008 AMAs (recall that the 2007 AMA
was for a twenty-year term with four two-year extensions options exercisable by
Wilson, and the 2008 AMA was for twenty or twenty-five years with Wilson’s option
to extend for four two-year terms).

       The court credited the testimony of Mickey Gilley that a typical management
agreement would be for three to five years with renewal options the same length as
the original term. The court set forth Gilley’s extensive experience in the
entertainment industry (he had been in the industry since 1957, had experience as a

                                         16
country music performer and as a country music nightclub owner, and he owned a
country music theater in Branson, Missouri for twenty-four years), and reviewed his
testimony about what he had seen and experienced in that industry. The court used
the seven-year maximum duration for a personal services contract under California
statute as a guide (acknowledging that Virginia does not have such a statute). See
CAL. LAB. CODE § 2855(a). And, it used the 2005 AMA (drafted by an attorney, not
Wilson) as a benchmark. The court showed that the California statute and the 2005
AMA were consistent with Gilley’s testimony.

        According to Wilson, one method of consideration for the extended term of the
2008 AMA, rendering it appropriate, was that Wilson waived his right to collect
investments in the Debtor’s career totaling over $100,000. The bankruptcy court
properly pointed out the deficiencies with that argument, as we discuss in our
discussion of Wilson’s claim of a lost investment below. In addition, the court
acknowledged other arguments made by Wilson (such as that it takes longer to
develop the career of an impressionist than it does to develop the career of other
artists, and that once developed, the career of an impressionist tends to last longer),
and discredited them and him in light of his limited experience managing performers
and his lack of experience managing an impressionist. We see no error with this.
And, as the bankruptcy court pointed out, Wilson had the Debtor initial the paragraph
of the 2007 AMA extending the term, but no other paragraph of that AMA. As the
bankruptcy court stated, Wilson’s testimony regarding why he had the Debtor initial
the twenty-year term in the 2007 AMA (that the twenty-year term looked awkward
and that he wanted to be clear this was not a short-term project) showed that Wilson
knew that term for the agreement was at least unusual.

             2. Inability to terminate

       Unconscionability was properly grounded on the Debtor’s practical inability
to terminate the 2007 or 2008 AMA. The evidence supports the bankruptcy court’s
determination regarding the interminable nature of the agreements.

                                          17
       As stated by the bankruptcy court, Paragraph 10 of the 2007 and 2008 AMAs
stated that Wilson “cannot be replaced or fired for any reasons or circumstances”
except those specified in Paragraph 12. However, Paragraph 12 (set forth above)
does not set forth “reasons or circumstances” upon which the Debtor could fire
Wilson. Instead, it set forth a cure period for any alleged breach and, if a breach was
not cured, required Virginia arbitration. The record shows that Wilson’s response to
the Debtor’s notice that he considered Wilson to be in breach of his obligations and
the Debtor’s attempt to terminate the agreement was to insist that the Debtor could
not terminate the AMAs and must take the matter to arbitration. However, Wilson
would not agree to pay his share of the costs for the arbitration. The bankruptcy court
correctly decided that the effect of this was that there was no practical way for the
Debtor to terminate the 2007 and 2008 AMAs. Importantly, the bankruptcy court
stressed the fact that, according to the contractual terms, the Debtor could be bound
by the 2008 AMA until the Debtor was sixty-five years-old and Wilson was eighty-
four years-old (regardless of whether Wilson competently performed his duties).

                3. Wilson’s Compensation

      The conclusion of unconscionability was also properly grounded upon the
bankruptcy court’s decision that Wilson’s level of compensation under the 2008
AMA was excessive.

       The bankruptcy court looked to the language of the three AMAs setting forth
Wilson’s duties as a “personal manager, advisor and counselor.” It also looked at the
terms of the AMAs stating what Wilson was not (“an employment agent, theatrical
agent, or licensed manager”), and what Wilson was not promising to do (“procure or
produce or attempt to produce, and employment or engagements for the Debtor”).
We see no error with the bankruptcy court’s assessment, when it compared Wilson’s
role under the AMAs to the role of a personal manager as stated in an entertainment
law treatise and the testimony of Mickey Gilley, that the duties listed for Wilson in

                                          18
the AMAs were consistent with the definition of a personal manager. See Thomas D.
Seltz, Melvin Simensky, Patricia Acton & Robert Lind, 1 Entertainment Law 3d:
Legal Concepts and Business Practices § 8:7 at 1.

       And, the court properly pointed out the practical difficulty with the fee
arrangement. After payment of Wilson’s 50% cut of gross proceeds and payment of
all expenses from his own 50% share, the Debtor could end up with nothing. In
addition, Wilson maintained that he operated as a sole proprietor, but his effective
employee (the Debtor) was required to pay the sole proprietor’s expenses under both
the 2007 and 2008 AMAs.

      The unconscionability decision is also supported by, as the bankruptcy court
noted, the evidence that the traditional amount of compensation for a personal
manager set forth in the employment law treatise and by Gilley (15% -20% or 10% -
25%, respectively) was consistent with the level of compensation in the 2005 AMA
that was drafted by an attorney. See 1 Entertainment Law 3d § 8:7 at 1. The court
took care to distinguish exceptions to the norm, giving a few examples including the
King agreement and King himself, on valid and significant grounds.6 The record
supports the decision that the King deal and the other exceptions referenced by the
court were truly exceptions to the rule on compensation. We also agree with the
bankruptcy court’s assessment that Wilson’s record and experience did not merit
compensation at an exceptional level.

       And, the bankruptcy court appropriately discredited Wilson’s stated reason
(that he was moving to representing the Debtor exclusively which carried additional
risk for him) for the increase in the amount of his compensation (to 50%) from the
2007 AMA to the 2008 AMA. Lastly, we agree with the bankruptcy court that the


      6
           The court also distinguished Gilley’s 50/50 deal with his own manager
and the compensation of the manager for Elvis Presley.
                                        19
Debtor’s arrangement with Precious Princess Productions and Unchained Productions
is distinguishable and irrelevant to the determination of unconscionability of the
AMAs.

               4. Wilson’s Replacement

          Likewise, the evidence supports the decision of unconscionability based on
the fact that the 2007 and 2008 AMAs allowed Wilson to hire a replacement for
himself for the remaining term of the contracts in the event he was unable to perform.
And, under the 2008 AMA, Wilson’s “benefactor” received notable benefits such as
compensation for the remainder of the term and the ability to choose a replacement
for Wilson (with the Debtor’s approval, but at the same rate of compensation) for the
remainder of the term. The 2005 AMA, which was drafted by an attorney, allowed
the Debtor to terminate Wilson upon thirty days written notice if Wilson was unable
to perform under the agreement. The court contrasted with that provision the sections
of the 2007 and 2008 AMAs dictating what would happen if Wilson was unable to
perform. The very language of the 2007 and 2008 AMAs supported the bankruptcy
court’s recognition that Wilson’s changes to the AMAs rendered it unconscionable.

       In addition to the problems with the term, inability to terminate, Wilson’s
compensation and Wilson’s replacement, the bankruptcy court appropriately stated
that Wilson was more sophisticated than the Debtor and the Debtor testified that
Wilson often asked him to sign documents that he had not read. The court then stated
that any procedural imbalance was overshadowed by the exceptionally harsh and
oppressive substantive terms of the AMAs.

       Wilson attacks the bankruptcy court’s use of Mickey Gilley’s testimony, the
entertainment law treatise, and California Labor Code § 2855(a) in its decision
regarding the term and Wilson’s compensation under the AMAs. According to
Wilson, the bankruptcy court supplemented the record with these materials because
it recognized that the Debtor could not meet his burden of proving unconscionability.

                                         20
We disagree. The Debtor provided an ample basis upon which the court held the
AMAs were unconscionable, and the bankruptcy court’s use of these materials as part
of its analysis was proper. Moreover, any error by the bankruptcy court was harmless
error. And, in addition to term and compensation of the AMAs, the court also relied
on the Debtor’s inability to terminate the AMAs and the provision for them regarding
a replacement for Wilson.

       The entertainment law treatise, the California statute and Gilley’s testimony
were properly considered by the court. We see no error with the bankruptcy court’s
use of its research from reputable legal authorities to support its decision. In addition,
the court acted within its bounds when it allowed, credited and cited to Gilley’s
testimony. The court recognized Gilley’s extensive experience in the entertainment
industry and in various country music roles in particular. Gilley testified from that
experience. Likewise, we disagree with Wilson’s argument that the bankruptcy court
misinterpreted Gilley’s testimony

          (II) No loss of an investment by Wilson

       Wilson maintains that he is entitled to reimbursement for the funds he invested
in the Debtor and that, but virtue of that investment, he is a creditor and the holder of
a debt. We disagree.

       The bankruptcy court recognized that any right of Wilson to collect funds from
the Debtor would have been property of Wilson’s own bankruptcy estate. Wilson
failed to disclose in his bankruptcy case any debt owed by the Debtor. Therefore,
Wilson is judicially estopped from claiming that he is owed funds from any
investment in the Debtor prior to his own March 6, 2008 bankruptcy filing.7 Judicial
estoppel “protects the integrity of the judicial process.” Stallings v. Hussmann Corp.,


      7
            Wilson contends that in the 2008 AMA the Debtor acknowledged a debt
of more than $100,000. However, the 2008 AMA is void.
                                           21
447 F.3d 1041, 1048 (8th Cir. 2006). Although, the circumstances for invocation of
judicial estoppel cannot be reduced to a formula, certain factors guide a court in its
exercise of its discretion to apply judicial estoppel. See New Hampshire v. Maine,
532 U.S. 742, 749, 751 (2001). The factors are whether: (1) “a party's later position
[is] clearly inconsistent with its earlier position;” (2) “the party has succeeded in
persuading a court to accept that party's earlier position, so that judicial acceptance
of an inconsistent position in a later proceeding would create the perception that
either the first or the second court was misled;” and (3) “the party seeking to assert
an inconsistent position would derive an unfair advantage or impose an unfair
detriment on the opposing party if not estopped.” Id. at 750-751 (internal citations
and quotation marks omitted).

       Wilson’s failure to list debt owed to him by the Debtor in Wilson’s bankruptcy
case is inconsistent with his assertion in this case that the Debtor owes a debt to him.
The bankruptcy court in Wilson’s case adopted Wilson’s position when it issued a
Chapter 7 discharge. Stallings, 447 F.3d at 1048 (citing Superior Crewboats, Inc. v.
Primary P&I Underwriters (In re Superior Crewboats, Inc.), 374 F.3d 330, 335 (5th
Cir. 2004) (“For example, where the bankruptcy court issues a ‘no asset’ discharge,
the bankruptcy court has effectively adopted the debtor’s position.”). Wilson would
gain an unfair advantage if he were able to hide his alleged cause of action from his
own creditors and then later reap the benefits of it. Wilson filed his bankruptcy case
at the time when he was advising the Debtor to move to Pigeon Forge, and a couple
of months before the 2008 AMA. He can hardly claim that his failure to schedule the
debt he believed was owed to him from the Debtor was inadvertent or a good-faith
mistake. Moreover, the record supports the bankruptcy court’s statement that all
expenses and loans to the Debtor from 2007 were repaid.

       In addition, for Wilson’s alleged investments of $100,000, the bankruptcy
court correctly stated that the documentation did not support such expenses.
Moreover, as stated by the bankruptcy court, the evidence did not show a loss by

                                          22
Wilson of an investment in the SMEC deal in 2008. The record supports the
bankruptcy court’s statement that Wilson did not have significant unpaid expenses
after filing his bankruptcy petition and before termination of the SMEC agreement
months later. The 2008 AMA allowed Wilson to recover his expenses prior to the
Debtor receiving his share of funds, but Wilson testified the parties would have
received the same amount on July 15, 2008. In addition, there is evidence that, as the
court stated, the Debtor and Wilson had both received approximately the same
amount of the funds paid out by W&W in 2007 and 2008.

      And, importantly, the court recognized that Wilson’s arguments presume that
the Debtor borrowed money from Wilson. This was contrary to Wilson’s position
that W&W was a sole proprietorship. We agree with the bankruptcy court’s
statement that any funds Wilson advanced would not have been a loan to the Debtor.
Rather, they would have been an investment in his sole proprietorship.

       We similarly reject Wilson’s contentions that he is entitled to compensation for
his efforts developing the Debtor’s career. As the bankruptcy court recognized, the
Debtor has talent, and Wilson did not help or advance his career.

          (III) Additional arguments

       Wilson maintains that even if the 2007 and 2008 AMAs are void, he is entitled
to a judgment under the 2005 AMA. That argument lacks merit. The 2005 AMA was
superseded when the terms of the 2005 AMA were subsequently incorporated into the
2007 and 2008 AMAs (although some terms suffered drastic modifications). Neither
the record nor the subsequent AMAs reflect an expression of intent that the 2005
AMA should survive or spring back. In addition, the briefs on appeal include
arguments about whether the offending terms should have been severed from the
AMAs and whether the AMAs were breached and terminated (including related
arguments of whether the Debtor waived any claim of breach or ratified the AMAs).


                                          23
We affirm the bankruptcy court’s decision that the AMAs were void in their entirety.
Therefore, we do not consider these issues. We have considered additional arguments
by Wilson, such as that the Debtor is estopped from claiming unconscionability, and
hold that any such arguments lack merit.

       In summary, the 2007 and 2008 AMAs were unconscionable. In addition,
Wilson has shown no loss of an investment in the Debtor or his career that would
qualify Wilson as the holder of a debt. Moreover, none of the additional arguments
asserted by Wilson show he is owed a debt. Without a debt, Wilson has no cause of
action under Bankruptcy Code § 523.

B.    11 U.S.C. § 727

       We also affirm the bankruptcy court’s decision that Wilson did not prevail in
his action for denial of the debtor’s discharge under Bankruptcy Code § 727(a).

        Section 727(c) specifies who may object to the granting of a debtor’s discharge.
It states that “[t]he trustee, a creditor, or the United States Trustee may object to the
granting of a discharge under subsection (a) of this section.” 11 U.S.C. § 727(c).
However, Wilson is not a creditor of the Debtor. As stated, the 2007 and 2008 AMAs
were void as unconscionable. In addition, as stated, Wilson was judicially estopped
from claiming he was a creditor for any amount prior to his own bankruptcy filing.
Lastly, the record did not support an unpaid investment by Wilson to the Debtor for
the period after his bankruptcy filing.

      Assuming arguendo that Wilson was entitled under § 727(c) to object to the
grant of the Debtor’s discharge, Wilson failed to prove grounds for denial of the
Debtor’s discharge under § 727(a).




                                           24
      (I)    § 727(a)(2)

      Bankruptcy Code § 727(a)(2) states:
      (a) The court shall grant the debtor a discharge, unless--
      ...
      (2) the debtor, with intent to hinder, delay, or defraud a creditor or an
      officer of the estate charged with custody of property under this title, has
      transferred, removed, destroyed, mutilated, or concealed, or has
      permitted to be transferred, removed, destroyed, mutilated, or
      concealed--
             (A) property of the debtor, within one year before the date of the
      filing of the petition; or
             (B) property of the estate, after the date of the filing of the
      petition;

11 U.S.C. § 727(a)(2)(A) and (B).

       The record supports the bankruptcy court’s decision that, since Wilson was not
a creditor of the Debtor, and Wilson did not prove the Debtor or Tamar transferred
the Debtor’s income to Precious Princess Productions or Unchained Productions with
the intent of defrauding anyone else, Wilson failed to prove a cause of action under
§ 727(a)(2). See Georgen-Running v. Grimlie (In re Grimlie), 439 B.R. 710, 716
(B.A.P. 8th Cir. 2010) (A § 727(a)(2) action requires proof that “the debtor took the
actions with the intent to hinder, delay or defraud creditors. . . .”) (internal quotation
marks omitted) (quoting Sullivant v. Bieniek (In re Nieniek), 417 B.R. 133, 137
(Bankr. D. Minn. 2009)). And, we see nothing in the record to contradict this.

      (II)   § 727(a)(3)

      Section 727(a)(3) states:

      (a) The court shall grant the debtor a discharge, unless--
      ...
      (3) the debtor has concealed, destroyed, mutilated, falsified, or failed to

                                           25
      keep or preserve any recorded information, including books, documents,
      records, and papers, from which the debtor's financial condition or
      business transactions might be ascertained, unless such act or failure to
      act was justified under all of the circumstances of the case;

11 U.S.C. § 727(a)(3).

       The bankruptcy stated that Wilson had met his burden of proving the records
were inadequate. However, that court also recognized the unusual situation in this
case regarding the keeping of the Debtor’s records. And, there exists a substantial
basis in the record to support the bankruptcy court’s decision that, in this type of
business, with Tamar in charge of the records, and in light of her record keeping
abilities and the circumstances during the relevant period (including Tamar’s
surgeries, pregnancies and complications in connection therewith, and issues with
children), the failure to keep detailed records was understandable and justifiable. See
McDermott v. Swanson (In re Swanson), 476 B.R. 236, 240 (B.A.P. 8th Cir. 2012)
(citations omitted) (Once the party seeking denial of the discharge “has shown that
the debtor’s records are inadequate, the burden of production shifts to the debtor to
offer a justification for his record keeping (or lack thereof); however, the objecting
party bears the ultimate burden of proof with respect to all elements of this claim.”).

      (III) § 727(a)(4)

       Bankruptcy Code § 727(a)(4) states that “[t]he court shall grant the debtor a
discharge, unless . . . the debtor knowingly and fraudulently, in or in connection with
the case . . . made a false oath or account . . ..” 11 U.S.C. § 727(a)(4)(A).

      The bankruptcy court examined the Debtor’s schedules and stated that the
Debtor disclosed the arrangement by which he and his wife structured their finances
to avoid Wilson. We agree with this assessment. The court also recognized that to
have a cause of action for a false oath under § 727(a)(4), the statement needs to be
material and made with intent. See Korte v. Internal Revenue Serv. (In re Korte), 262

                                          26
B.R. 464, 474 (B.A.P. 8th Cir.2001) (citing Mertz v. Rott, 955 F.2d 596, 597–98 (8th
Cir.1992)). We see support in the record for the bankruptcy court’s statement that,
to the extent the Debtor’s schedules are inaccurate in any other respect, the Debtor
did not intend to deceive anyone and the statements are not material.

                                 CONCLUSION
      For the reasons stated, we affirm the rulings of the bankruptcy court.




                                        27
