In re Ciccimaro, Bankruptcy No. 03-35430bif.

• Decision Date: 12 March 2007
• Docket Number: Bankruptcy No. 03-35430bif.,Adversary No. 06-0295.
• Parties: In re Eugene CICCIMARO, Debtor. Eugene Ciccimaro, Plaintiff, v. Jacqueline F. Emore and Maria Emore Ciccimaro, Defendants.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania

Page 184

364 B.R. 184

In re Eugene CICCIMARO, Debtor Eugene Ciccimaro, Plaintiff, v. Jacqueline F. Emore and Maria Emore Ciccimaro, Defendants.

Bankruptcy No. 03-35430bif.

Adversary No. 06-0295.

United States Bankruptcy Court, E.D. Pennsylvania.

March 12, 2007.

David A. Scholl, Law Office of David A. Scholl, Newtown Square, PA, Scott L. Hozakowski-Rubin, Fox & Fox, Norristown, PA, for Debtor.

Carole L. Hendrick, Attorney at Law, Collegeville, PA, Christina M. Rogomentick, Willig, Williams & Davidson, Philadelphia, PA, for Defendants.

MEMORANDUM

BRUCE FOX, Bankruptcy Judge.

Defendant Jacqueline F. Emore has filed a motion to dismiss the above-captioned adversary proceeding, contending either that the plaintiff seeks an advisory opinion or that the issues posed can and should be decided by the state court. Defendant Maria Ciccimaro seeks summary judgment for the same reasons. The plaintiff opposes dismissal or summary judgment, initially contending that there are material facts in dispute, that no advisory opinion is sought, and that his complaint states a cause of action which must be first resolved in this court before any further adjudication is undertaken by the parties in state court. As will be discussed below, he now maintains that this proceeding has effectively been settled and only the issue of counsel fees remains.

After hearing oral argument on these two motions, it became apparent that both defendants were relying upon documents and representations beyond those found in the plaintiffs complaint. For the reasons stated in a memorandum dated January 16, 2007, I instructed the parties that I Would consider defendant Emore's motion to dismiss as one for summary judgment, and that copies of state court pleadings and orders entered of record in an earlier contested matter (to reopen this bankruptcy case) would be considered in determining defendants' two motions for summary judgment. I also set deadlines for the parties to submit affidavits and other documents in conformity with Fed. R. Bankr.P. 7056 (incorporating Fed.R.Civ.P. 56). All three parties have submitted affidavits in support of their respective positions. Thus, properly before me are the defendants' two motions for summary judgment.¹

I.

The following facts are undisputed.

On October 20, 2003, the debtor filed a voluntary petition in bankruptcy under chapter 7. He received a chapter 7 discharge under 11 U.S.C. § 727 on March 4, 2004. Thereupon, his bankruptcy case was closed on March 8, 2004, pursuant to 11 U.S.C. § 350(a).

On June 5, 2006 — more than two years after his case was closed — the debtor sought to reopen the bankruptcy case, see 11 U.S.C. § 350(b), alleging that defendants Emore and Ciccimaro were violating the statutory discharge injunction found in section 524(a) by positions taken in connection with the Ciccimaros' pending state court divorce action.

During the pendency of his 2003 bankruptcy case, the debtor and Mrs. Ciccimaro were opposing parties in a divorce action in the Montgomery County Court of Common Pleas, docketed in the state court at No. 03-00043. In Mr. Ciccimaro's bankruptcy schedules, he listed his wife as a co-debtor (but not a creditor) and Ms. Emore as an unsecured creditor.²

In July 2004, Ms. Emore brought suit against Ms. Ciccimaro (who is her daughter) in state court. This civil action was based upon a loan made by Ms. Emore to the Ciccimaros prior to Mr. Ciccimaro's bankruptcy filing. Ms. Emore obtained a judgment against Ms. Ciccimaro by default in the amount of $71,414.88 on March 16, 2005.

On May 12, 2005, the state court entered a decree in divorce. That order further provided that issues of equitable distribution of marital property, alimony, and counsel fees would later be determined. Prior to any such resolution, and after learning of Ms. Emore's judgment against Ms. Ciccimaro, on January 11, 2006, Mr. Ciccimaro filed an emergency petition in state court seeking to join Ms. Emore as a party in the divorce litigation and seeking to enjoin Ms. Emore from executing on her judgment against the proceeds of the impending sale of the marital home.

Thereafter, Ms. Emore filed her own petition to intervene in the divorce litigation. Her intervention petition alleged that she had lent to the Ciccimaros $65,000 to aid them in the purchase of their family residence, and mortgaged her home to obtain those funds. When the loan payments ceased, she brought suit against her daughter and obtained a judgment. She further asserted that intervention was appropriate as her daughter has no assets that are not marital assets. Upon the filing of Ms. Emore's petition to intervene, Mr. Ciccimaro withdrew his own petition to join Ms. Emore as a party.

At oral argument, it was undisputed that the marital residence had been sold after the original closure of Mr. Ciccimaro's bankruptcy case, and the net proceeds of sale, $111,000, were placed in escrow. The parties' present dispute concerns these funds, which are acknowledged by all to be marital property subject to equitable distribution under Pennsylvania law. See 23 Pa.C.S.A. § 3501(a) (defining marital property, with certain exceptions, as "all property acquired by either party during the marriage and the increase in value of any nonmarital property [during the marriage]").

In seeking to reopen this bankruptcy case and proceed with litigation to enforce the discharge injunction, Mr. Ciccimaro was concerned that if Ms. Emore's petition to intervene were granted, she would request of the state court that her judgment against Ms. Ciccimaro be satisfied prior to the equitable division of funds from the parties' marital assets: viz., the realty sale proceeds held in escrow. Such a distribution method, the debtor believed, would obligate his equitable distribution portion of the realty sale proceeds to be used to repay a portion of Ms. Emore's discharged debt, in violation of 11 U.S.C. § 524(a).

For reasons previously detailed in a memorandum dated September 7, 2006, I felt that the state court judicial system was capable of addressing this issue — see, e.g., Cohen v. Goldberg, 554 Pa. 201, 720 A.2d 1028 (1998); Hogg v. Hogg (In re Hogg), 816 A.2d 314 (Pa.Super.2003) — and thus could provide Mr. Ciccimaro any relief under section 524(a) to which he might be entitled. Therefore, I was disinclined to reopen his closed bankruptcy case solely for an adjudication regarding the scope of the bankruptcy, discharge injunction as it applied to equitable distribution. See generally In re Apex Oil Co., Inc., 406 F.3d 538, 543 (8th Cir.2005).

However, in his bankruptcy case, Mr. Ciccimaro had disclosed that there was only $5,000 in equity in the marital residence. Yet, after the case was closed, the realty Was sold yielding $111,000 in net proceeds. In order to allow a bankruptcy trustee to investigate whether the bankruptcy estate had any claim to those escrowed sale proceeds, coupled with the issue of the scope of the discharge injunction, I granted the debtor's motion to reopen the case.

After the opportunity to investigate, the chapter 7 trustee disclaimed any interest or claim in the realty sale proceeds.

Mr. Ciccimaro commenced this adversary proceeding in his reopened case by filing a complaint, asserting that the lawsuit by Ms. Emore against Ms. Ciccimaro and the subsequent entry of default judgment was "collusive," Complaint, ¶¶ 10-11, and that Ms. Emore's petition to intervene in the divorce action was designed "to obtain the collection of her judgment [against Ms. Ciccimaro] in full from the proceeds of the marital estate," which would "eviscerate the effect of the [bankruptcy] discharge...." Id., ¶¶ 13-14. Furthermore, the complaint asserts that Ms. Ciccimaro "seek[s] to eviscerate the effect of the [bankruptcy] discharge ... by requesting [in state court] that the elimination of his obligation to pay ... [joint] debts be considered in the equitable distribution aspects of the Divorce Action." Id., ¶ 16. Based upon these allegations, Mr. Ciccimaro sought a ruling that the defendants were in civil contempt and that he, as plaintiff, was entitled to an injunction, damages, costs and attorney's fees from the defendants. Complaint, ¶ 19.

Ms. Ciccimaro then filed an answer to the complaint, denying that she collusively participated in any state court lawsuits and that any actions taken in state court by her violated section 524 of the Bankruptcy Code. Ms. Emore filed a similar response denying any collusion or improper conduct in state court. She also filed a counterclaim asserting that the plaintiffs complaint was filed in bad faith (to which the plaintiff filed an answer denying any bad faith). Her counterclaim sought attorney's fees and costs.

In support of their summary judgment motions that this adversary proceeding be dismissed, the defendants have now submitted affidavits. Ms. Emore affirms that her motion to intervene in the state court litigation was filed as "a direct result of [the debtor's] Motion to Add me as a Party Defendant," and was intended to afford her notice of any distributions to Ms. Ciccimaro. Emore Affidavit, ¶¶ 10, 12. She further avers that if she were granted leave to intervene, she would seek repayment of her outstanding judgment only from Ms. Ciccimaro's award of marital property under equitable division. Id., ¶ 13. Furthermore, Ms. Emore is agreeable to the dismissal of her counterclaim "provided a motion for summary judgment is granted" resulting in the dismissal of Mr. Ciccimaro's complaint. Id., at 16.

Ms. Ciccimaro has filed an affidavit averring that she is "precluded from requesting that the State Court obligate my husband ... to pay for or be responsible for the debts that were discharged in his Bankruptcy case as to do so would be in violation of his Bankruptcy discharge[.]" Ciccimaro Affidavit, ¶ 3. She does "intend" to request that the state court consider all of her outstanding debts when adjudicating her claims for...