Fox v. Kelly (In re Kelly)

• Citation: 549 B.R. 275
• Decision Date: 01 April 2016
• Docket Number: Adversary No. 15–1048 J,No. 7–15–10164 JA,7–15–10164 JA
• Parties: In re: Darla J. Kelly, Debtor. Carl Fox, Plaintiff, v. Darla J. Kelly, Defendant.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of New Mexico

549 B.R. 275

In re: Darla J. Kelly, Debtor.

Carl Fox, Plaintiff,

v.Darla J. Kelly, Defendant.

No. 7–15–10164 JA

Adversary No. 15–1048 J

United States Bankruptcy Court, D. New Mexico.

Signed April 1, 2016

Katharine C. Downey, Sutin Thayer & Browne, A.P.C., Albuquerque, NM, for Plaintiff.

Darla J. Kelly, Los Lunas, NM, pro se.

MEMORANDUM OPINION

ROBERT H. JACOBVITZ, United States Bankruptcy Judge

Plaintiff Carl Fox and Defendant Darla J. Kelly are former spouses. Plaintiff seeks summary judgment on his claim that certain debts he asserts arose from the parties' dissolution of marriage proceedings in state court are non-dischargeable under 11 U.S.C. § 523(a)(5)and 11 U.S.C. § 523(a)(15)¹ . See Plaintiff's Motion for Summary Judgment ("Motion")—Docket No. 13, and Memorandum in Support of Plaintiff's Motion for Summary Judgment ("Brief)—Docket No. 14. Defendant opposes the Motion. See Response to Request to Judgment ("Response")—Docket No. 19. After consideration of the parties' submissions, and being otherwise sufficiently informed, the Court finds that the facts not subject to genuine dispute establish that the debts at issue in this adversary proceeding are non-dischargeable as a matter of law. The Court will, therefore, grant the Motion.

SUMMARY JUDGMENT STANDARDS

The Court will grant summary judgment when the requesting party demonstrates that there is no genuine dispute as to a material fact and that the movant is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a), made applicable to adversary proceedings by Fed.R.Bankr.P. 7056. "[A] party seeking summary judgment always bears the initial responsibility of informing the ... court of the basis for its motion, and ... [must] 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).

In considering a motion for summary judgment, the Court must "examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment." Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796 (10th Cir.1995)(quoting Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990)). "[A] party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial" through affidavits or other supporting evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

New Mexico Local Bankruptcy Rule 7056–1 requires the movant to number all material facts movant contends are not subject to genuine dispute, with references to the portions in the record upon which the movant relies to establish each material fact. See NM–LBR 7056–1 ("The facts shall be numbered and shall refer with particularity to the portions of the record relied upon."). Similarly, the party opposing a motion for summary judgment must number each material fact the party contends is in genuine dispute, with references to particular portions of the record upon which the party relies, and must identify which of the moving party's numbered facts the opposing party contends are disputed. See NM–LBR 7056–1(b). Unless the party opposing summary judgment specifically controverts a material fact, all properly supported material facts identified in the motion for summary judgment are deemed admitted. See NM–LBR 7056–1(b) ("All facts in movant's statement of facts that are properly supported shall be deemed admitted unless respondent specifically controverts them."). Defendant is not represented by counsel. Her Response does not comply with the requirements of NM–LBR 7056–1(b) because it does not include a statement of numbered facts Defendant alleges are disputed, nor does the Response identify by number which of the Plaintiff's facts she contends are subject to genuine dispute. Instead, the Response attempts to respond to the Motion and Brief in narrative form. See Docket No. 19. The Response also attaches copies of various documents in support of Defendant's position. Despite Defendant's failure to comply with the requirements of NM–LBR 7056–1(b), the Court will consider the substance of Defendant's Response together with the documents attached to the Response to determine whether any material facts are subject to genuine dispute.

FACTS NOT SUBJECT TO GENUINE DISPUTE²

1. Defendant filed a voluntary petition under Chapter 7 of the Bankruptcy Code on January 28, 2015. Brief, ¶ 2; Response, p.1.

2. Plaintiff and Defendant were divorced on November 22, 2004. Brief, ¶ 4; Response, p.1.

3. The parties' divorce decree, which dissolved the marriage between them, was entered in the Thirteenth Judicial District Court, County of Valencia, State of New Mexico (the "State Court") in Case No. D–1314–DM2003–394 (the "State Court Action"). Brief, ¶ 4; Response p.1.

4. On February 26, 2014, the State Court entered an Order Regarding January 31, 2014 Hearing in the State Court Action (the "February 2014 Order"). See Brief, Exhibit 1 attached to Exhibit 1; Response, Exhibit A.

5. The February 2014 Order awarded a judgment against Plaintiff for "child support arrears." See February 2014 Order, ¶ 19.

6. On August 14, 2014, the State Court entered a Default Order in the State Court Action (the "August 2014 Order"). See Brief, Exhibit 2 attached to Exhibit 1; Response, Exhibit B–1.

7. The August 2014 Order entered a "consolidated judgment" in favor of Plaintiff and against Defendant for the following expenses: a) guardian ad litem fees; b) orthodontic work for the parties' child; c) expenses relating to a trip the parties' child took with the Travel Club; and d) Plaintiff's attorneys' fees and costs. Id.

DISCUSSION

At issue is whether the debts arising from the February 2014 Order and the August 2014 Order are non-dischargeable under § 523(a)(5)or § 523(a)(15). In a Chapter 7 case, debts for "domestic support obligations" as well as debts owed to a former spouse that do not constitute domestic support obligations but that are otherwise "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" are non-dischargeable. See 11 U.S.C. § 523(a)(5)(domestic support obligations); 11 U.S.C. § 523(a)(15)(other debts arising from a divorce proceeding that are not domestic support obligations under subsection (5)). By enacting these sections, Congress has made a policy choice that favors the enforcement of obligations to former spouses arising from a dissolution of marriage over the debtor's fresh start. SeeTaylor v. Taylor (In re Taylor), 737 F.3d 670, 675 (10th Cir.2013)(Sections 523(a)(5)and 523(a)(15)" 'reflect the congressional preference for the rights of spouses to alimony, maintenance or support over the rights of debtors to a 'fresh start' free of debts.' ") (quoting Gianakas v. Gianakas (In re Gianakas), 917 F.2d 759, 761 (3d Cir.1990)(remaining citations omitted)); Sampson v. Sampson (In re Sampson), 997 F.2d 717, 721 (10th Cir.1993)(observing that § 523(a)(5)"departs from the general policy of absolution, or 'fresh start' in order to enforce an overriding public policy favoring the enforcement of familial obligations.") (citation and internal quotation marks omitted).³ These two non-dischargeability subsections work in tandem to render nearly all debts owing to a former spouse arising out of a dissolution of marriage proceeding non-dischargeable in a Chapter 7 bankruptcy case.⁴ Generally, either the debt constitutes a domestic support obligation and is, therefore, non-dischargeable under § 523(a)(5); or, the debt does not qualify as a domestic support obligation, but arises from a separation agreement or divorce decree, or arises as a result of a court order entered in connection with a divorce proceeding, and is consequently non-dischargeable under § 523(a)(15).⁵ Plaintiff alleges that the debt arising from the February 2014 Order is non-dischargeable under 11 U.S.C. § 523(a)(5)and the debt arising from the August 2014 Order is non-dischargeable under § 523(a)(15). The Plaintiff bears the burden of proving that a debt is non-dischargeable, whether under § 523(a)(5)or § 523(a)(15), by a preponderance of the evidence.⁶ The Court will address each debt in turn.

The February 2014 Order

Section § 523(a)(5)makes debts for domestic support obligations non-dischargeable. 11 U.S.C. § 523(a)(5). The Bankruptcy Code defines "domestic support obligation" as a debt "owed to a spouse, former spouse, or child of the debtor ... in the nature of alimony, maintenance or support ... of such spouse, former spouse or child of the debtor ... without regard to whether such debt is expressly so designated .... by reason of applicable provisions of ... an order of a court of record." 11 U.S.C. § 101(14A).⁷ Whether a debt constitutes a "domestic support obligation" and is, consequently, "non-dischargeable under § 523(a)(5)is a dual inquiry into both the parties'[ ] intent and the substance of the obligation." Sampson, 997 F.2d at 723.⁸ The label the parties used to describe the obligation is not determinative. See Taylor, 737 F.3d at 676–77("The nature of the obligation is not restricted to the parties' label ...") (citations omitted).

The facts not subject to genuine dispute establish that the debt created by the February 2014 Order is non-dischargeable under § 523(a)(5)as a domestic support obligation. The February 2014 Order was entered in the State Court Action and created a debt owed to Plaintiff by his former spouse. It awarded Plaintiff judgment for "child support arrears." See February 2014 Order. Defendant acknowledges that the debt represented by the February 2014 Order is "back child support owed to minor child Carleigh Mary–Jett Fox," but argues that such debt "will be caught up with the court[']s direction to mediate a...