Cammarota v. Haddad (In re Haddad), Bankruptcy Case No. 20-14365 EEB

CourtUnited States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of Colorado
Writing for the CourtElizabeth E. Brown, Bankruptcy Judge
Citation639 B.R. 605
Parties IN RE: Louis Deeb HADDAD, Debtor. Maria Cammarota and CCR, LLP, d/b/a Coombe Curry Rich & Jarvis, Plaintiffs, v. Louis Deeb Haddad, Defendant.
Docket NumberBankruptcy Case No. 20-14365 EEB,Adversary Proceeding No. 20-1295 EEB
Decision Date14 March 2022

639 B.R. 605

IN RE: Louis Deeb HADDAD, Debtor.

Maria Cammarota and CCR, LLP, d/b/a Coombe Curry Rich & Jarvis, Plaintiffs,
Louis Deeb Haddad, Defendant.

Bankruptcy Case No. 20-14365 EEB
Adversary Proceeding No. 20-1295 EEB

United States Bankruptcy Court, D. Colorado.

Signed March 14, 2022

639 B.R. 608

J. Aaron Atkinson, Bailey C. Pompea, Hackstaff Snow Atkinson & Griess, LLC, Greenwood Village, CO, for Plaintiff CCR, LLP, d/b/a Coombe Curry Rich & Jarvis, Maria Cammarota.

Erica Nicole Vargas, Lakewood, CO, for Defendant.


Elizabeth E. Brown, Bankruptcy Judge

639 B.R. 609

THIS MATTER is before the Court following a trial on Plaintiff Maria Cammarota's complaint to determine dischargeability.1 She seeks a determination that the Debtor's divorce court obligation to pay her one-half of the equity in the parties’ former marital residence was actually in the nature of a domestic support obligation. Subsequent to trial, she has also filed a request for fees and expenses, to which Debtor has objected.


At the time they separated, these parties had been married for approximately eight years and had three young children. Theirs was a traditional marriage, where Plaintiff worked at home, caring for their children and their home, and the Debtor was the sole breadwinner. While they did not have savings or much else in the way of assets, they had a comfortable 3,600 square-foot home, with five bedrooms and five bathrooms. But for reasons unstated, Plaintiff fled the marital home in September 2013.

For a time, she was homeless, as Debtor refused to provide her with any means of support. She survived through the kindness of others who lent her a couch to sleep on. Initially, she would return to the marital home to see and care for the children. But eventually, the Debtor refused her entry. She then rented a 300 square-foot basement storage room, in another single mother's home for $680 per month, so that she had a place to live where she could bring her children.

Despite this meagre housing arrangement, Plaintiff did not make enough in wages to pay for this rent or any other necessities. Her immediate prospects were limited as she had no college degree and very little work experience from before her marriage. Her only source of work was a seasonal job at a photography studio, where she earned $9 per hour, but the business offered her very few hours. Essentially destitute, she had to apply for governmental assistance and rely on personal loans from friends. In contrast, the Debtor has enjoyed a steady work history, employed at a number of car dealerships, in both sales and management.

The documents admitted at trial show the relative income of these parties as:

639 B.R. 610
Year Relevant Events Her Income His Income
2008 -- 65,656
2009 -- 100,410
2010 -- 105,084
2011 -- 161,809
2012 (Plaintiff started her own photography business, but expenses exceeded income) (-$4,040) 144,836
2013 Parties separated September 2013 1,667 73,648
2014 Parties divorced May 2014 8,932 88,609
2015 Marital Home Sold March 2015 11,534 103,260
2016 No information admitted No information admitted
2017 13,380 119,400
2018 No information admitted 87,403
2019 No information admitted 94,891

The Debtor testified that his income dropped and then steadily climbed back up every time he switched dealerships. But even though his income dropped around the time of the separation and divorce, it still exceeded her income by a factor greater than ten times.

In their separation agreement, the Debtor had three main financial obligations: past and present spousal support, child support, and division of marital property, which primarily centered on the sale or refinancing of the home to distribute one-half of its equity to the Plaintiff. To establish the amount of Plaintiff's spousal support, the parties employed a formula that attributed income to both spouses. However, this formula did not reflect their then current reality. For example, the formula imputed income to Plaintiff of $9 per hour for a full forty-hour week, even though in reality Plaintiff was only able to obtain minimal hours from the photography studio at which she worked part-time. It also included her receipt of governmental assistance as "income."

On the other hand, the formula attributed gross wages of only $4,248 to the Debtor, or an annualized figure of $50,976. Yet Debtor's 2014 tax return (the year of the divorce) showed he earned over $88,000. In contrast, she earned only $8,932 in 2014. But based on the applicable

639 B.R. 611

formula, the parties set her spousal support payment at $920 per month, for a period of four years. Also based on these distorted income figures, the agreement set Debtor's child support obligation at $15 per month, or $5 for each of the three minor children.

In the property section of the separation agreement, the parties agreed that the marital home would become Debtor's sole and separate property, but he had an obligation to pay her the sum of $48,222, representing her share of its equity at the time of the divorce. It further obligated him to refinance the property within thirty months and, failing that, he would have to sell the home. In addition, the parties acknowledged that, at the time of the divorce, the mortgage payments were in arrears by over $15,000, as the Debtor had stopped making these payments following the separation. Under the separation agreement, Debtor had the duty to cure the arrears within six months or immediately list the home for sale. Debtor was also responsible for making the future mortgage payments and homeowner association dues.

Debtor did not cure the mortgage, did not make current payments, and did not sell the home until March 2015. By that time, most of the equity in the home had disappeared in mounting interest charges. At closing, Plaintiff received only $10,000 from the sales proceeds. And while he was not making the mortgage payments, Debtor was also pulling out large cash withdrawals from his account and traveling to the mountains, staying in hotels, and eating at nice restaurants. Thus, at a time when Plaintiff desperately needed the funds from the home equity for her subsistence, the Debtor's actions made sure she would never see those funds.

In February 2017, Plaintiff filed a motion in the divorce court to order the Debtor to pay her the remaining amount due for the home equity. At that time, Debtor owed a balance of $36,945. But when the court ruled on the motion almost two years later, it entered a judgment in the amount of $63,499.23, which represented the unpaid equity, plus interest and attorney fees.


A. Whether the Payment of Home Equity in this Case Constitutes a Domestic Support Obligation

In general, bankruptcy offers a debtor a fresh start, free from the encumbrance of past debts. But Congress has made exceptions to this general policy in favor of other countervailing policies. Some of the exceptions are based on a debtor's moral turpitude. If a particular debt is the result of the debtor's fraud, for example, Congress has denied the discharge of such a debt once the creditor has established the fraudulent nature of the debt. 11 U.S.C. § §...

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