Crowder v. Wilbur (In re Wilbur)

• Decision Date: 27 July 2017
• Docket Number: ADVERSARY PROCEEDING NO. 17–5044–BEM,CASE NO. 16–67262–BEM
• Citation: 574 B.R. 782
• Parties: IN RE: Phillip Russell WILBUR, Jr., Debtor. Landa Crowder, Stanley Crowder, and Amy Riley, Plaintiffs, v. Phillip Russell Wilbur, Jr., Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

574 B.R. 782

IN RE: Phillip Russell WILBUR, Jr., Debtor.Landa Crowder, Stanley Crowder, and Amy Riley, Plaintiffs,

v.Phillip Russell Wilbur, Jr., Defendant.

CASE NO. 16–67262–BEM

ADVERSARY PROCEEDING NO. 17–5044–BEM

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

Signed July 27, 2017

Ian M. Falcone, The Falcone Law Firm, P.C., Marietta, GA, for Plaintiffs.

Karen King, King & King Law LLC, Atlanta, GA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

Barbara Ellis–Monro, U.S. Bankruptcy Court Judge

This matter comes before the Court on Defendant's Answer and Motion to Dismiss, styled as "Motion for Default Judgment Defendant's [sic] Answer to Complaint Objecting to Discharge and Motion for Summary Judgment," (the "Motion to Dismiss" or "Motion") [Doc. 8] and Plaintiffs' Response in Opposition to Defendant's Motion to Dismiss (the "Response"). [Doc. 12]. The Motion to Dismiss seeks to dismiss Counts I, II, III, and VI of Plaintiffs' complaint (the "Complaint") for failure to state a claim upon which relief may be granted. Counts I, II, and III allege the attorney fees in the amount of $28,639.98 awarded to Plaintiffs in a state court lawsuit are nondischargeable under 11 U.S.C. § 523(a)(5), (a)(15), and (a)(6), respectively.¹ Count VI objects to Defendant's discharge. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I), (J). Having considered the pleadings and legal authorities, the Court will grant the Motion to Dismiss as to Counts I, II, and partially as to Count VI, and will deny the Motion to Dismiss as to Count III and partially as to Count VI.

I. MOTION TO DISMISS STANDARD

Fed. R. Civ. P. 8(a)(2), made applicable in adversary proceedings by Fed. R. Bankr. P. 7008, sets forth a liberal pleading standard that requires the complaint contain only a "short and plain statement of the claim showing that the pleader is entitled to relief[.]" To survive a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6), made applicable in adversary proceedings by Fed. R. Bankr. P. 7012(b), the complaint "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ... A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citations omitted). Although the complaint "does not need detailed factual allegations" to survive a motion to dismiss, it "requires more than labels and conclusions[;] a formulaic recitation of the elements of a cause of action will not do[.]" Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 1964–65, 167 L.Ed.2d 929 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level[.]" Id. , 127 S.Ct. at 1965. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal , 556 U.S. at 678, 129 S.Ct. at 1949.

II. FACTUAL ALLEGATIONS APPLICABLE TO COUNTS I, II, III, AND VI OF THE COMPLAINT

Phillip Russell Wilbur, Jr. ("Defendant") is the former husband of Plaintiff Amy Riley ("Ms. Riley"). [Complaint ¶ 4]. Plaintiffs Stanley and Landa Crowder ("Mr. Crowder" and "Ms. Crowder" and with Ms. Riley "Plaintiffs") are the parents of Ms. Riley and are Defendant's former in-laws. [Id. ¶¶ 5, 6]. Defendant and Ms. Riley were divorced by final judgment and decree entered on May 17, 2013 in the Superior Court of Paulding County, Georgia. [Id. ¶ 7].

A. Defendant's Legal Actions Against Plaintiffs

On August 30, 2013, Defendant filed a complaint for damages, attorney fees, and a preliminary injunction against Plaintiffs in the Superior Court of Paulding County, alleging libel per se; slander per se; tortious interference with contractual relations, business relations, or potential business relations; RICO violations; intentional infliction of emotional distress; and false light (the "Defamation Complaint" or the "Defamation Litigation"). [Id. ¶ 8 and Ex. A]. The Defamation Complaint alleged that Plaintiffs damaged Defendant's reputation by contacting his employer and stating that he was using drugs. [Id. ¶ 9]. The Defamation Complaint also alleged Plaintiffs used Defendant's name to create a false profile on an internet sex site. [Id. ]

On November 12, 2013, Defendant filed a motion for contempt citation in the Superior Court of Paulding County alleging Ms. Riley failed to allow Defendant visitation and communication with his minor children (the "Contempt Motion"). [Id. ¶ 10 and Ex. B]. On December 12, 2013, Defendant filed petitions for stalking temporary protective orders against each Plaintiff in the Superior Court of Paulding County (the "TPO Petitions"). [Id. ¶¶ 11, 14, 17 and Ex. C, D, E]. The allegations in the TPO Petitions specifically refer to allegations in the Defamation Complaint. [Id. ¶¶ 12, 15, 18]. During a Rule 2004 examination, Defendant admitted the allegations in the TPO Petitions are intertwined with the allegations in the Contempt Motion and in the Defamation Complaint. [Id. ¶¶ 13, 16, 19].

On February 5, 2015, in the Defamation Litigation, the Superior Court of Paulding County entered an Order on Motion for Attorney's Fees & Expenses of Litigation in the amount of $28,639.98 in favor of Plaintiffs (the "Defamation Order").² [Id. ¶ 20 and Ex. F]. The Defamation Order initially awarded the fees to Plaintiffs' state court counsel but was later amended to award the fees to Plaintiffs, and fi fa's were filed accordingly. [Id. ¶¶ 20–24 and Ex. G, H, I, J]. The Defamation Order found that the allegations in Defendant's Defamation Complaint "lacked substantial justification" and that Defendant "asserted various claims which [he] knew to be false, solely for the purpose of harassing [Plaintiffs] and increasing litigation costs." [Id. ¶¶ 20, 55]. Defendant's actions were willful and caused malicious injury to Plaintiffs. [Id. ¶¶ 56, 57].

The attorney fees and expenses awarded in the Defamation Order arise out of actions directly related to the family relationship between the parties, the various complaints, motions, and petitions mentioned above, and the issues of custody and visitation addressed in the final decree of divorce. [Id. ¶¶ 44, 50]. The Defamation Order is owed to a former spouse or is recoverable on her behalf. [Id. ¶¶ 45, 51]. The Defamation Order is in the nature of alimony, maintenance, and support. [Id. ¶ 46]. The Defamation Order was established by the reasonable application of a divorce decree, property settlement, or an order of a count of record. [Id. ¶ 47]. The fees and expenses were incurred by Defendant in the course of a divorce or separation or in connection with a separation agreement, divorce decree, or other order of a court of record. [Id. ¶ 52].

B. The Bankruptcy Case

On September 30, 2016, Defendant filed a Chapter 7 bankruptcy petition and numerous schedules and sworn attestations. [Id. ¶ 27, 28]. On October 31, 2016, Plaintiffs filed a Motion for 2004 Examination that included a request for certain documents. [Id. ¶ 29; Case No. 16–67262 Doc. 19, Ex. A]. On November 3, 2016, the Court entered an order authorizing the examination. [Id. ¶ 30, Case No. 16–67262 Doc. 22]. The documents requested by Plaintiffs included: (1) copies of bank statements, canceled checks, and other financial records or documents of Defendant from any bank or financial institution for the four years prior to filing bankruptcy; (2) copies of all documentation reflecting or evidencing any income received from any source in the past four years; and (3) copies of all documentation reflecting or evidencing any loans made to Defendant by any person or entity, or any loan applications submitted by Defendant to any person or entity, for the four years prior to filing bankruptcy. [Id. ¶ 31].

As part of the 2004 examination, Defendant produced his 2013 income tax return, showing a total wage income of $19,112. [Id. ¶ 32 and Ex. L]. During the 2004 examination, Defendant acknowledged having received an additional $18,593.20 from his employer, but he claimed those funds were loan proceeds rather than income. [Id. ¶ 33]. At the time of the 2004 examination, on January 11, 2017, Defendant agreed to produce proof of the loans but has failed to do so. [Id. ¶ 34]. On November 11, 2016, Defendant amended his Schedule F to list his employer as a creditor with a debt of $47,000. [Id. ¶ 35].

According to his statement of financial affairs, Defendant earned $19,648 in 2016, $14,000 in 2015, and $30,000 in 2014. [Id. ¶ 36; Case No. 16–67262 Doc. 4]. Defendant failed to produce complete bank records for the following time periods: January 2014 to November 2014; May 2015 to December 2015; and January 2016 to May 2016. [Id. ¶¶ 37–39]. Defendant failed to comply with a court order. [Id. ¶ 41]. Plaintiffs believe Defendant is hiding his true income. [Id. ¶ 40].

III. LEGAL ANALYSIS

A. Determination of Dischargeability Under 11 U.S.C. § 523(a)

Section 523(a) of the Bankruptcy Code provides that certain debts are excepted from a Chapter 7 discharge, including debts:

(5) for a domestic support obligation;

(6) for willful and malicious injury by the debtor to another entity or to the property of another entity; [and]...

(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit[.]

11 U.S.C. § 523(a)(5), (6), (15). Count I of Plaintiffs' Complaint alleges that the $28,639.98 awarded in the Defamation Order is nondischargeable as a domestic support obligation ("DSO"). Count II of the Complaint...