In re Beasley

• Decision Date: 03 July 2019
• Docket Number: Case No. 18-04268-DSC13
• Parties: In the Matter of: Brian C. Beasley, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

In the Matter of: Brian C. Beasley, Debtor.

Case No. 18-04268-DSC13

UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

July 3, 2019

Chapter 13

MEMORANDUM OPINION

This matter is before the Court on Katherine Leigh Beasley's Objection to Confirmation of Plan and Motion to Dismiss, or Alternatively, Convert Case to Chapter 7 (the "Objection to Confirmation") and Brian C. Beasley's Objection to Claim (the "Claim Objection"). (Docs. 19, 23.) This Court held an evidentiary hearing on the Objection to Confirmation and Claim Objection on May 23, 2019. Appearing at the hearing were the Debtor and his counsel, Ted Stuckenschneider; the Creditor and her counsel, Chris Glenos and Andrew Shaver; and a non-party witness, Heather Thomas. An additional non-party witness, Dr. Brad Beasley, testified on May 31, 2019, when the hearing was concluded.¹

The Court has jurisdiction to hear these matters pursuant to 28 U.S.C. §§ 157 and 1334, and the General Order of Reference, as amended, entered by the United States District Court for the Northern District of Alabama. This is a core proceeding under 28 U.S.C. § 157(b)(2).

Based upon the filings, the evidence and testimony, representations and arguments of the parties, and for the reasons set forth herein, the Court FINDS and CONCLUDES as follows:²

INTRODUCTION

This Court is the latest stop on the parties' litigation journey, a saga which began in North Carolina and continues to unfold in Alabama. Brimming with protracted domestic relations proceedings and allegations of egregious conduct by the Debtor, the legal disputes between Brian and Leigh have endured for more than three years. This is the third court and the undersigned is at least the fourth jurist to adjudicate claims spawning from the Beasley's irreconcilable differences. Notwithstanding, the parties have now landed in bankruptcy court, with no end in sight for their divorce disputes. Indeed, this Court has previously entered a consent Order allowing them to proceed in the Circuit Court of Madison County, Alabama, as to "certain domestic issues." (See Doc. 55.) Even though this Court is not the end of the litigation road for Brian and Leigh, it is nevertheless a critical juncture where equity prevails.

FINDINGS OF FACT

1. The Debtor's Prepetition Conduct and Relevant Background

The factual background to this case is well-documented. Brian and Leigh Beasley were married on July 17, 1999. (Doc. 19, Ex. G at ¶ 1.) In 2010, Leigh gave birth to their son, who is their only child. (Id. at ¶ 2, the "Minor Child".) After more than sixteen years of marriage, the couple separated on September 2, 2015. (Id. at ¶ 1.) Prior to their separation, Brian engaged inextramarital relations including marital misconduct with his now fiancée, Heather Thomas. (Id. at ¶ 24.)

Brian filed a complaint for divorce from Leigh in North Carolina on September 25, 2015. (Doc. 19, Ex. G at ¶ 3.) The North Carolina state court adjudicated many of the domestic relations matters pertinent to their separation, including post-separation support, child custody, child support, equitable distribution, and alimony. In 2016, Brian moved to Alabama and he currently resides in Birmingham at a house owned by Ms. Thomas. Brian filed for divorce from Leigh a second time, before the Circuit Court of Madison County, Alabama, on or about January 26, 2017. (See Doc. 19, Ex. H.) Leigh also moved to Alabama, and she is a student in graduate school at the University of Alabama in Huntsville (UAH). Brian and Leigh's divorce became final when the Alabama state court entered a Final Judgment of Divorce on July 27, 2018. (Id.)

Over the course of litigating domestic disputes between Brian ("Debtor") and Leigh ("Creditor"), both North Carolina and Alabama courts have found facts in their respective orders that painted an unflattering picture of the Debtor. One judgment, in particular, assimilated facts from various proceedings and orders that framed a compelling narrative of misconduct by the Debtor. And that judgment - the equitable distribution judgment - stated that "[t]his matter has been heavily litigated" due to the Debtor's "utter lack of regard for the judicial process, repeated failure to abide by the Orders of this Court and blatant disregard of the Orders of this Court." (Doc. 19, Ex. C at ¶13, the "Equitable Distribution Judgment".)³

This judgment was entered in a North Carolina state court by Judge Gordon A. Miller on June 15, 2017. (See Doc. 19, Ex. C.) It included a procedural history that did not reflect favorably upon the Debtor. For example, the Debtor did not pay child support or post-separation support as ordered, which led to a motion for contempt and attorney fees. (Id. at ¶13(c).) Because the Debtor failed to appear for the contempt hearing, the North Carolina state court entered a commitment order for civil contempt and directed that he be taken into custody until the contempt was purged. (Id.) The Debtor did not purge his contempt, nor did he appear in court for a hearing on attorney fees. (Id. at ¶ 13(d).) That resulted in an order awarding attorney fees in the amount of $48,188.15 against Debtor with a payment deadline of December 31, 2016. (Id.) As chronicled by the North Carolina state court, that deadline came and went without any payment from the Debtor. (Id.)

The North Carolina state court also documented the Debtor's failure to comply with discovery requests and a second contempt motion for failure to pay post-separation support. (Doc. 19, Ex. C at ¶ 13(e), (h), (i).) When the Debtor failed to appear for the second contempt hearing, another civil commitment order was entered against him for post-separation support arrears ($24,153.71), attorney fees for the first and second contempt motions ($3,000), as well as attorney fees pursuant to the attorney fee order ($48,188.15). (Id. at ¶ 13(j).) The Order for Attorney Fees ($48,188.15) remains outstanding and comprises a portion of the Creditor's claim in this bankruptcy case. (Claim No. 7.) The North Carolina state court also noted the Debtor's absence and non-participation at the specially set equitable distribution trial, "as was his history throughout the case." (Id. at ¶ 14.)

The Debtor's failure to appear in court, failure to comply with court orders, failure to meaningfully respond to discovery, and failure to meet his post-separation support obligations was not lost on the North Carolina state court. Indeed, it described the Debtor's conduct as "egregiousand without excuse" and "not like anything this Court has ever seen or experienced before." (Doc. 19, Ex. C at ¶ 77(g), (h).) And when this case made its way to an Alabama state court, the Debtor was found in contempt of court on a "total of ninety-four (94) separate incidences." (Doc. 19, Ex. H. at ¶ 10.)⁴ In holding the Debtor in contempt, the Alabama state court determined that he "willfully and contemptuously failed to pay toward the judgments he was so Ordered to do." (Id. at ¶ 6.) This determination was based, in part, on the fact that the Debtor "continued to travel and take vacations, has continued to purchase sports memorabilia, continues to attend sporting events, and continues to pay his own expenses, including non-essential items" yet he failed to make any payments toward the outstanding judgments of $133,445.06 against him.⁵ (Id.) The Alabama state court also found that the Debtor had been "continuously employed and receives substantial compensation from his employer." (Doc. 19, Ex. H at 105.) And that, "[a]dditionally, the Husband [Debtor] admitted that he derives additional income from his sales of sports memorabilia." (Id.) He was sentenced to "incarceration within the Madison County Jail for five days for each incident, for a total of four hundred seventy (470) days." (Id. at ¶ 10.) The sentence was to remain suspended provided the Debtor complied "with all previous orders and specific orders contained herein." (Id.)

This Final Judgment of Divorce was entered on July 27, 2018. (Id.) Almost three months later, on October 16, 2018, a Motion for Implementation of Jail Sentence was filed; citing, in part, the Debtor's failure to comply with the July 2018 Final Judgment of Divorce despite receiving anincome tax refund and employment bonus. (Creditor's Ex. 13.)⁶ Perhaps fearing incarceration, the Debtor complied with one aspect of the July 2018 Final Judgment of Divorce insofar as he paid for the uncovered medical expenses ($6,507.35) for the Minor Child. (See Creditor's Ex. 11.) In his verified response to the Motion for Implementation of Jail Sentence, the Debtor averred that his March 2018 bonus "was utilized to accommodate expenses related to his move to Birmingham, AL to be closer to his son and for his new job." (Creditor's Ex. 14.) The verified response made no mention of the Debtor's income tax refund. (Id.) On October 19, 2018, a day after responding to the motion for implementation of jail sentence and three days after the same was filed, the Debtor filed a voluntary petition for chapter 13 bankruptcy. (Doc. 1.)

At the evidentiary hearing before this Court, the Debtor admitted to making mistakes and acknowledged that he did not handle the divorce appropriately. He testified that he views the instant chapter 13 bankruptcy as the only avenue to "make this as right as possible" and that if he goes to jail, he will "be no good to anyone" without any income.

2. The Sports Memorabilia

During the Beasleys' marriage, the Debtor bought and sold sports memorabilia. And at one time, four or five years ago, he made significant money doing so. The Debtor's sports memorabilia became the subject of the Equitable Distribution Judgment. On August 25, 2015, as recounted by the North Carolina state court, the Creditor served the Debtor and Ms. Thomas with spoliation letters. (Doc. 19, Ex. C at ¶ 3.) The North Carolina state court found that "[w]ithin hours after receiving the spoliation letter, Husband [Debtor]...