Opinion
Case No. 07–59297
03-31-2015
IN RE: Frank M. BYERS, III, Debtor.
John F. Cannizzaro, Amy Elizabeth Gullifer, Cannizzaro, Bridges, Jillisky & Streng, Marysville, OH, for Debtor.
John F. Cannizzaro, Amy Elizabeth Gullifer, Cannizzaro, Bridges, Jillisky & Streng, Marysville, OH, for Debtor.
MEMORANDUM OPINION AND ORDER GRANTING DEBTOR'S MOTION FOR SUMMARY JUDGMENT RELATIVE TO CREDITOR PATRICIA BYERS' MOTION TO DISMISS OR CONVERT
C. Kathryn Preston, United States Bankruptcy Judge
This cause came on for consideration of Debtor's Motion for Summary Judgment Relative to Creditor Patricia Byers' Motion to Dismiss or Convert (Doc. 374) ("Motion for Summary Judgment"), filed November 14, 2014. Creditor Patricia Byers ("Creditor") has not filed any response to Debtor's Motion for Summary Judgment. For the reasons stated below, the Court concludes that the Motion for Summary Judgment should be granted.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and General Order 05–02, entered by the United States District Court for the Southern District of Ohio, referring all bankruptcy matters to this Court. Venue in this Court is proper pursuant to 28 U.S.C. §§ 1408 and 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A).
I. Factual and Procedural Background
Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code on November 15, 2007. Creditor is the former spouse of Debtor. Although Creditor was active in the early stages of the bankruptcy case, her issues (some of which related to confirmation of Debtor's Plan and some not) were ultimately addressed, and Debtor's Chapter 13 Plan proceeded to confirmation. Debtor consummated the Plan and received a Chapter 13 discharge on December 30, 2013.
Shortly thereafter, Creditor began filing a barrage of motions intended to procure payment of her prepetition claim. Among these, on March 27, 2014, Creditor filed a document titled "Creditor Patricia A. Byers' Request for Debtor to Produce his Filed Federal Income Tax Returns or, in the Alternative, to Convert the Plan from Chapter 13 to Chapter 7, or Dismissal, Pursuant to 11 USC 1037(c)(11)(E), 18 U.S.C. § 1328(b)(2) & Civ. R. 60(b)(1)(2)(3)" (Doc. 262) (hereinafter, the "Motion to Dismiss"). The Motion to Dismiss made numerous requests for relief in addition to those indicated by the document's title. On May 1, 2014, the Court entered an order denying all requests for relief articulated in Creditor's Motion to Dismiss, except Creditor's request that this case be dismissed, or in the alternative, converted to a case under Chapter 7 of the Bankruptcy Code. See Order Den. Creditor Patricia A. Byers' Req. for Debtor to Produce Income Tax Returns, Setting a Hr'g on Req. to Convert or Dismiss this Case and Den. Other Relief Requested (Doc. 278). Creditor's request for dismissal or conversion of this case is brought pursuant to 11 U.S.C. § 1307(c)(11), for Debtor's failure to pay a domestic support obligation that first became payable after the petition was filed.
The facts pertinent to resolution of this matter are without dispute and may be summarized as follows:
The obligations to which this action relates arose from a divorce proceeding in the Delaware County Court of Common Pleas, Division of Domestic Relations. An agreed judgment was entered in Debtor's divorce case on October 10, 2006 (hereinafter, the "Agreed Judgment") . The Agreed Judgment required Debtor to pay a sum labeled "lump-sum property settlement" to Creditor in the amount of $60,000.00 (hereinafter, the "Lump–Sum Obligation") by February 1, 2007. Additionally, the Agreed Judgment required Debtor to pay Creditor $2,500.00 per month, "as additional property settlement" (hereinafter, the "Monthly Obligation"), commencing on October 1, 2006, and terminating when Debtor paid the Lump–Sum Obligation. The Agreed Judgment stated that "[b]oth parties agree that no spousal support shall be paid by either party, and the [Domestic Relations] Court shall not retain jurisdiction over the issue of spousal support." It was signed by Creditor, Creditor's divorce attorney, Debtor, Debtor's divorce attorney, a state court magistrate, and the presiding judge.
The Agreed Judgment and certain other documents considered by the Court in deciding this matter were not certified or otherwise authenticated as copies of the original. However, Creditor has made no objection to the authenticity of the documents, and therefore, any objection Creditor may have is deemed waived. See Wiley v. United States , 20 F.3d 222, 226 (6th Cir. 1994) ("If a party fails to object before the [trial] court to the affidavits or evidentiary materials submitted by the other party in support of its position on summary judgment, any objections to the [trial] court's consideration of such materials are deemed to have been waived.").
The Agreed Judgment was based upon a partially handwritten proposed settlement agreement (hereinafter, the "Proposed Settlement Agreement"), which was attached to a document titled "Memorandum of Agreement," filed in Debtor's divorce case on October 3, 2006. The Proposed Settlement Agreement outlined the parties' agreement that was finalized by the Agreed Judgment. In the Proposed Settlement Agreement, the Monthly Obligation was originally labeled as spousal support; however, the term "spousal support" was stricken, and the Monthly Obligation was relabeled, in handwriting, as "additional property settlement." The Proposed Settlement Agreement was signed by Debtor, Creditor, and their respective attorneys, and all parties initialed the handwritten revision relabeling the Monthly Obligation as a property settlement.
On February 13, 2008, Creditor filed proof of claim 4–1 (the "Claim") in this Chapter 13 case, to evidence the debt owed by Debtor pursuant to the Agreed Judgment. On the face of the Claim, the basis for the Claim is identified as a "property settlement," and Creditor attached to the Claim a copy of the Agreed Judgment and the Proposed Settlement Agreement. The Claim was filed as a general unsecured claim: Creditor did not check the box indicating that the Claim was for a domestic support obligation or otherwise entitled to priority treatment under 11 U.S.C. § 507(a)(1). According to the Claim, as of the commencement of the case, Debtor owed Creditor the sum of $72,500.00 pursuant to the Agreed Judgment. It is unclear to what extent, if any, Debtor paid the Monthly Obligation to Creditor for the months subsequent to the petition date.
The copy of the Agreed Judgment attached to Creditor's Claim was a copy of the document prior to it being filed with the domestic relations court: the only signatures on the document are Creditor and her divorce attorney, and the document is not stamped as "filed" by the court. Nevertheless, it appears to be an accurate copy of the Agreed Judgment filed with the domestic relations court, a copy of which is attached to the Motion for Summary Judgment.
On July 24, 2014, and July 25, 2014, respectively, Creditor filed an amended proof of claim, designated claim 4–2 by the clerk of court (the "Amended Claim"), in the amount of $330,000.00, and an additional claim, claim 8 by the clerk, in the amount of $6,000,000.00. According to the proofs of claim, the basis for each claim is a "Domestic Support Obligation Divorce Debt," each claim is entitled to priority pursuant to 11 U.S.C. § 507, and each is secured by the "Third Amended Trust of Mildred Byers[,] 100 shares of Byers Holdings [and] 11.1% [of] DBB Investments, Ltd." No documentation was attached to either proof of claim to support the indebtedness or the security interest.
Debtor's motion seeks summary judgment on Creditor's Motion to Dismiss, on the basis that Creditor has failed to establish that any debt owed to Creditor is a domestic support obligation, and that, even if a debt is a domestic support obligation, such debt did not first become payable after Debtor filed the petition.
II. Standard of Review
Rule 56 of the Federal Rules of Civil Procedure, made applicable to contested matters by Federal Rule of Bankruptcy Procedure 9014, provides that a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial burden of "informing the ... court of the basis for its motion, and identifying those portions of the [record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
If the movant satisfies this burden, the nonmoving party must then assert that a fact is genuinely disputed and must support the assertion by citing to particular parts of the record. Fed. R. Civ. P. 56(c)(1). The mere allegation of a factual dispute is not sufficient to defeat a motion for summary judgment; to prevail, the non-moving party must show that there exists some genuine issue of material fact. See Anderson v. Liberty Lobby, Inc ., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When deciding a motion for summary judgment, all justifiable inferences must be viewed in a light most favorable to the non-moving party. Matsushita Elec Indus. Co. v. Zenith Radio Corp ., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Anderson , 477 U.S. at 255, 106 S.Ct. 2505.
The Sixth Circuit Court of Appeals has articulated the following standard to apply when evaluating a motion for summary judgment:
[T]he moving [party] may discharge its burden by "pointing out to the ... court ... that there is an absence of evidence to support the nonmoving party's case." The nonmoving party cannot rest on its pleadings, but must identify specific facts supported by affidavits, or by depositions, answers to interrogatories, and admissions on file that show there is a genuine issue for trial. Although we must draw all inferences in favor of the nonmoving party, it must present significant and probative evidence in support of its [position]. "The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]."
Hall v. Tollett, 128 F.3d 418, 422 (6th Cir. 1997) (internal citations omitted). A material fact is one whose resolution will affect the determination of the underlying action. Tenn. Dep't of Mental Health & Mental Retardation v. Paul B., 88 F.3d 1466, 1472 (6th Cir. 1996). An issue is genuine if a rational trier of fact could find in favor of either party on the issue. Schaffer v. A.O. Smith Harvestore Prods., Inc., 74 F.3d 722, 727 (6th Cir. 1996) (citation omitted). "The substantive law determines which facts are ‘material’ for summary judgment purposes." Hanover Ins. Co. v. American Eng'g Co., 33 F.3d 727, 730 (6th Cir. 1994) (citations omitted). However, determinations of credibility, weight to be given the evidence, and inferences to be drawn from the facts remain the province of the jury. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. In determining whether each party has met its burden, the court must keep in mind that "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses ...." Celotex, 477 U.S. at 323–24, 106 S.Ct. 2548.
III. Analysis
Pursuant to 11 U.S.C. § 1307(c)(11), the Court may dismiss a Chapter 13 case, or convert a Chapter 13 case to a case under Chapter 7 for cause, including "failure of the debtor to pay any domestic support obligation that first becomes payable after the date of filing of the petition." 11 U.S.C. § 1307(c)(11). The Bankruptcy Code defines a "domestic support obligation," in pertinent part, as follows:
a debt that accrues before, on, or after the date of the order for relief in a case under this title ... that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support ... of such
A case is commenced by the filing of a petition for relief. 11 U.S.C. § 301(a). The commencement of a case constitutes an order for relief. 11 U.S.C. § 301(b).
spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit ....
11 U.S.C. § 101(14A) (emphasis added).
In determining whether a certain obligation is in the nature of alimony, maintenance, or support, it is well settled that "[t]he language of the parties' (or state courts') characterization of the [obligation] does not control." Long v. Calhoun (In re Calhoun) , 715 F.2d 1103, 1111 (6th Cir. 1983). "Instead, the bankruptcy court should look to the nature of the obligation to determine if it was actually meant for support." In re Thomas , 591 Fed.Appx. 443, 445-46 (6th Cir. 2015) (citing Calhoun , 715 F.2d at 1107 ). An obligation not otherwise designated as alimony, maintenance, or support, is nonetheless in the nature of support if (1) the state court or parties intended to create a support obligation, (2) the obligation has the actual effect of providing necessary support , and (3) if the obligation is not so excessive as to be unreasonable under traditional concepts of support. Fitzgerald v. Fitzgerald (In re Fitzgerald) , 9 F.3d 517, 520 (6th Cir. 1993) (citing Calhoun , 715 F.2d at 1109–10 ). Importantly, "[t]he burden of demonstrating that an obligation is in the nature of support is on the non-debtor." Id. (citing Calhoun, 715 F.2d at 1111 ).
In Fitzgerald , 9 F.3d at 521, and Sorah v. Sorah (In re Sorah), 163 F.3d 397, 402 (6th Cir. 1998), the Sixth Circuit Court of Appeals clarified that, if the obligation is specifically labeled as alimony, maintenance, or support by the domestic relations court, it is immaterial whether the obligation has the actual effect of providing necessary support. However, when the obligation is not labeled as such, as in the instant case, this prong of the test is to be applied. See Norbut v. Norbut (In re Norbut) , 387 B.R. 199, 206 (Bankr. S.D. Ohio 2008).
In the instant case, the Monthly Obligation and the Lump–Sum Obligation were not designated by the parties or the state court as alimony, maintenance, or support; instead, the Agreed Judgment specifically designated both obligations as property settlements. Therefore, the burden is on Creditor to demonstrate that the obligations are in the nature of support. Creditor, however, has not identified any facts which suggest that the Monthly Obligation or the Lump–Sum Obligation are in the nature of support under the test set forth above.
Moreover, the revisions to the Proposed Settlement Agreement suggest that all parties intended the Monthly Obligation to be a property settlement. By striking the term "spousal support" and relabeling the Monthly Obligation as an "additional property settlement," it appears that the parties were meticulous with the terminology used to describe the Monthly Obligation, and the parties' initials by the change indicates that Debtor, Creditor, and their respective counsel intended Monthly Obligation to be a property settlement. Further, Creditor's preparation of her Claim, articulating on the form that the basis for the debt was a "property settlement," and Creditor's failure to describe the debt on the Claim form as being a priority claim for a domestic support obligation, likewise indicates that Creditor understood the nature of the Lump–Sum Obligation to be a property settlement.
Admittedly, Creditor's Amended Claim indicates that the basis for the debt due her is a domestic support obligation. Creditor, however, failed to attach any documentation to support the Amended Claim. The Amended Claim was filed more than six (6) years after Creditor filed the initial Claim, and more than seven (7) months after completion of Debtor's Chapter 13 Plan and issuance of Debtor's discharge. Earlier in the case, Creditor was twice provided notice by Trustee of the classification and treatment of her Claim: first, the Notice of Intention to Pay Claims (Doc. 99) (the "Notice"), filed September 15, 2008, denoted Creditor's Claim as "unsecured" and indicated that the Claim would be paid the general unsecured dividend rate of seventy percent (70%). Second, Trustee's Certification of Final Payment and Case History (Doc. 200) (the "Certification"), filed December 6, 2013, also denoted Creditor's Claim as "unsecured" and indicated that Creditor had been paid a total of $19,575.00 on her Claim. Yet Creditor did not object to the Notice or the Certification; nor did she otherwise contest the treatment of her Claim as a general unsecured claim at any time prior to consummation of Debtor's Chapter 13 Plan and issuance of Debtor's discharge. Thus, it appears that Creditor filed the Amended Claim solely in an attempt to give credence to the Motion to Dismiss and her efforts to secure full payment of the Claim. Under such circumstances, the Court may and does disregard the Amended Claim. See, e.g., Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986) ("[C]ourts will disregard a contrary affidavit when they conclude that it constitutes an attempt to create a sham fact issue.")(citing, among others, Foster v. Arcata Assocs., Inc., 772 F.2d 1453, 1462 (9th Cir. 1985) ; Biechele v. Cedar Point, Inc., 747 F.2d 209, 215 (6th Cir. 1984) ); Poitevint v. United Recovery Sys. , LP , 899 F.Supp.2d 1230, 1235 (N.D. Fla. 2012). The Amended Claim does not avail Creditor.
On the Trustee's Notice and Certification, only general unsecured claims were labeled "unsecured"; any unsecured priority claims were designated as "priority."
Debtor's Chapter 13 Plan originally was a defined dividend plan that provided for a dividend to general unsecured creditors of seventy percent (70%). On May 23, 2013, Debtor's plan was converted to a "pot" plan, which provided that Debtor would pay a total of $93,000.00 into the Plan. See Order Granting Debtor's Am. Mot. to Modify Confirmed Chapter 13 Plan Filed April 23, 2013 (Doc. 197). Creditor did not respond or otherwise object to Debtor's Motion to Modify (Doc. 189). According to Trustee's Certification, unsecured creditors were paid twenty-seven percent (27%) of their claims.
Courts may disregard an affidavit filed in support of the affiant's position on summary judgment when there is a conflict between previous sworn testimony (i.e., a deposition, previous trial testimony, or admissions) and the affidavit. This is sometimes referred to as the "sham affidavit rule." Courts have stated that an "affidavit should be disregarded as a sham only ‘when a party has given clear answers to unambiguous questions which negate the existence of any genuine issue of material fact ... [and that party attempts] thereafter [to] create such an issue with an affidavit that merely contradicts, without explanation, previously given clear testimony.’ " Poitevint v. United Recovery Sys. , LP, 899 F.Supp.2d 1230, 1235 (N.D. Fla. 2012) (alterations in original) (quoting, Tippens v. Celotex Corp. , 805 F.2d 949, 954 (11th Cir. 1986) ).
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Debtor's Motion for Summary Judgment illustrates that the only debt Debtor owed Creditor was grounded in the Agreed Judgment. Inasmuch as the record indicates that that debt was a property settlement, and Creditor has failed to bring forward facts demonstrating to the contrary (or demonstrating a genuine issue of fact regarding the nature of the debt), the Court can only conclude that the debt was indeed a property settlement.
Creditor likewise failed to provide evidence that the alleged debt evidenced by claim 8 is a domestic support obligation. Again, Creditor did not attach any documents to the proof of claim. Although the basis for claim 8 is stated as a "Domestic Support Obligation Divorce Debt," Creditor has not provided any evidence demonstrating that this alleged debt arose from Debtor's divorce, or that claim 8 is otherwise a debt "established or subject to establishment ... by ... (i) a separation agreement, divorce decree, or property settlement agreement; (ii) an order of a court of record; or (iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit[.]" 11 U.S.C. § 101(14A)(C). Thus, the obligation, if it exists, fails to meet the criteria for dismissal of this case set forth in 11 U.S.C. § 1307(c)(11).
Inasmuch as Creditor has failed to illustrate that any debt owed by Debtor is a domestic support obligation, as defined by 11 U.S.C. § 101(14A), the Court need not address whether the alleged domestic support obligations first became payable after the date of the filing of the petition.
IV. Conclusion
Inasmuch as Creditor has failed to present "significant and probative evidence" indicating that any debt owed by Debtor is a domestic support obligation, see Hall, 128 F.3d at 422, Creditor's request for conversion or dismissal based on Debtor's failure to pay a domestic support obligation cannot survive Debtor's Motion for Summary Judgment. For the foregoing reasons, the Court finds that there is no genuine dispute as to any material fact, and that Debtor is entitled to judgment as a matter of law.
Accordingly, it is
ORDERED AND ADJUDGED that Debtor's Motion for Summary Judgment (Doc. 374) is GRANTED. It is further
ORDERED AND ADJUDGED that Creditor's request for dismissal or conversion of this case under 11 U.S.C. § 1307 set forth in her Motion to Dismiss (Doc. 262) is DENIED.