In re Delaine

• Decision Date: 20 December 1985
• Docket Number: Adv. No. 85-038,85-0494.,85-03214,Bankruptcy No. 85-2602
• Citation: 56 BR 460
• Parties: In re Gerard DELAINE, Debtor. Dorothy DELAINE, Plaintiff, v. Gerard DELAINE, Defendant. In re Larry L. THOMPSON, Debtor. Clara M. Thompson MULDREW, Plaintiff, v. Larry L. THOMPSON, Defendant.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

56 B.R. 460 (1985)

In re Gerard DELAINE, Debtor.

Dorothy DELAINE, Plaintiff, v. Gerard DELAINE, Defendant.

In re Larry L. THOMPSON, Debtor.

Clara M. Thompson MULDREW, Plaintiff, v. Larry L. THOMPSON, Defendant.

Bankruptcy Nos. 85-2602, 85-03214, Adv. Nos. 85-038, 85-0494.

United States Bankruptcy Court, N.D. Alabama, Western and Southern Divisions.

December 20, 1985.

Harry Asman, Birmingham, Ala., for debtor Larry L. Thompson.

James G. Henderson, Birmingham, Ala., Interim Trustee for Larry L. Thompson.

James A. Holliman, Birmingham, Ala., for Clara M. Thompson Muldrew.

David Reid, Livingston, Ala., for debtor Gerard Delaine.

C. Michael Stilson, Tuscaloosa, Ala., Interim Trustee for Gerard Delaine.

Booker T. Forte, Jr., Eutaw, Ala., for Dorothy Delaine.

MEMORANDUM OF DECISION

GEORGE S. WRIGHT, Bankruptcy Judge.

The above styled adversary proceedings have been consolidated for the purposes of this opinion because they involve common questions of law regarding the dischargeability of marital obligations pursuant to 11 U.S.C. Section 523(a)(5) (1984). After a TRIAL on the merits of each case, the Court makes the following findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.

FINDINGS OF FACT

I. Delaine Case

Gerard and Dorothy Delaine were married on June 19, 1970 in Livingston, Sumter County, Alabama. Two children were born of the marriage — Gerard D. Delaine and Rasjus Delaine who were born July 19, 1971 and September 30, 1972, respectively. Gerard Delaine primarily worked in trucking but also worked as a pulpwooder from time to time. Mr. Delaine's combined income from trucking, pulpwooding and unemployment benefits in 1983 and 1984 was approximately $19,000.00 annually. During the marriage, Dorothy Delaine held several jobs for short periods of time but relied upon Gerard Delaine to support her and her two children.

Mr. Delaine filed for divorce in the Circuit Court of Sumter County, Alabama on September 5, 1984. The FINAL JUDGMENT OF DIVORCE contained the following pertinent provisions:

FOURTH: The custody of the minor children, Gerard Delaine and Rasjus Delaine, is awarded to the mother, subject to the right of reasonable visitation by the father. The father is ordered to pay $150.00 per month child support; the payment to be made to the Circuit Clerk on or before the 15th day of each month.

. . . .

SIXTH: Possession of the marital home is awarded to the wife, and husband is ordered to make all mortgage payments due on the home. Wife shall have the right to live there as long as she remains unmarried. When the youngest child attains the age of nineteen years, or the wife remarries, the house is ordered to be sold and the proceeds evenly divided after payment of all debts. Title to the property shall remain in both parties.

SEVENTH: Husband is awarded title to the other real property, and the wife is ordered to execute a deed to husband conveying her title to the real estate. Husband shall be responsible for payment of all liens.¹

On January 8, 1985 the Circuit Court of Sumter County, Alabama entered an order directing Mr. Delaine's employer, Roadway Express, Inc. to withhold $150.00 per month from the debtor's paychecks to satisfy his current support obligation. The deductions were, in fact, made; but due to certain administrative charges, Mrs. Delaine received only $138.40 per month pursuant to the order.

Mr. Delaine fell behind on the monthly mortgage payments of $440.00 and $316.00 per month to AmSouth Mortgage Co. and Credithrift of America, Inc. respectively. On or about April 20, 1985, Mrs. Delaine filed a PETITION FOR DEFENDANT TO SHOW CAUSE WHY HE SHOULD NOT BE HELD IN CONTEMPT for, among other things, failing to make the current payments on the mortgages and on the child support obligation. Mr. Delaine filed his Chapter 7 petition in this Court on April 25, 1985.

On July 2, 1985, the Honorable Claude D. Nielson, Circuit Judge for the Circuit Court of Sumter County, Alabama ruled that Mr. Delaine owed Mrs. Delaine the sum of $33.00 for child support. This arrearage was apparently caused by the administrative charges mentioned above. Judge Nielson ruled that Mr. Delaine was not in contempt of court. In his ORDER, Judge Nielson further stated:

The Court is of the opinion that the plaintiff should file a Petition to Modify the amount of child support based on the change of circumstances in this cause; however, she has elected not to do so at this time.

In lieu of foreclosure, Mr. and Mrs. Delaine executed a deed to the homeplace in August, 1985 to John and Bessie Larkin. Mrs. Delaine was released from the mortgage indebtedness at that time.

II. Thompson Case²

Plaintiff, Clara M. Thompson Muldrew³, and defendant, Larry L. Thompson, had been married for twenty-two years when they were divorced on December 13, 1982. The couple had one child, Paula Thompson, who was a minor at the time of the divorce. The former Clara Thompson has since remarried to Mr. Hugh B. Muldrew.

Mr. Thompson was the owner of Thompson Transport and Refrigeration, Inc. which had been in the business of selling and repairing refrigeration units for transfer trucks. After an initial period of success, Mr. Thompson decided to relocate and to expand the business. The company borrowed the necessary capital from the National Bank of Commerce (hereinafter called "N.B.C.") which required the personal guarantees of Mr. and Mrs. Thompson and took mortgages and security interests on all of the couple's assets which included a 1981 Buick, the marital home, and a lake house on Lake Mitchell.

Mrs. Thompson had been employed by Thompson Transport & Refrigeration, Inc. as its Secretary Treasurer. Prior to the divorce, however, Mrs. Thompson quit her job and moved to the couple's house on Lake Mitchell. She drew unemployment compensation for a short time, and later worked at a grocery store for minimum wage.

Mrs. Thompson filed for divorce in the Circuit Court of Jefferson County, Alabama, Bessemer Division (DR-82-411). The DECREE OF DIVORCE was entered in that case on December 13, 1982. Paragraph 4 of the decree awarded custody of Paula Thompson to her mother. Mr. Thompson was directed in paragraphs 5 and 6 respectively to pay Mrs. Thompson $100.00 per month "as periodic alimony for support and maintenance" and $300.00 per month for child support. Paragraphs 7, 8 and 9 provided:

7. That the Defendant is divested of all of his right, title and interest in and to the lake property in Chilton County, Alabama and the Defendant shall execute all necessary documents to transfer his interest therein to the Plaintiff. That the parties shall cooperate in the transfer of the existing lease on said property to the Plaintiff and the Defendant shall further cooperate in the transfer of all utilities and deposits on said property to the Plaintiff and the Plaintiff shall be responsible for the lease and utility payments thereto and shall indemnify and hold Defendant harmless in the event of her nonpayment of same. That all lease and utility payments are current as of the date of the execution of this decree.

That the Defendant shall indemnify and hold harmless the plaintiff on the outstanding indebtedness owed to National Bank of Commerce on said lake property and shall indemnify and hold harmless the Plaintiff from any claim, action, cause of action or other liabilities or damages in the event of his nonpayment of same and all reasonable efforts will be made by the Defendant to release said lake property from all existing security agreements. That the plaintiff shall execute any and all documents necessary to transfer all of her rights, title and interest to the Defendant in and to any other real property acquired by the parties during the marriage. That the defendant shall make no efforts to secure the release of any such property from any security agreement without first having secured the release of the lake property.

8. As further alimony, the Plaintiff is hereby awarded the 1981 Buick automobile, serial number 1J4AM47N7BG156298 and the Defendant shall pay and be liable for any outstanding indebtedness owing thereon, and shall indemnify and hold harmless the Plaintiff from any claim, action, cause of action or other liabilities or damages in the event of his nonpayment of same. The Defendant shall execute all reasonable and necessary documents to effectively transfer title and ownership of this automobile to the Plaintiff.

9. As alimony, the Defendant shall pay any and all outstanding joint indebtedness incurred by the parties prior to their separation and shall indemnify and hold harmless the Plaintiff from any action, claim, cause of action or other damages or liabilities arising out of the non payment of same.

Lastly, Mr. Thompson was ordered to pay the wife's attorney's fees of $500.00 in paragraph 12.

Mr. Thompson began to experience severe financial problems apparently due to the downturn in business after the move and expansion, and he was unable to make the payments required of him under the original divorce decree. N.B.C. foreclosed on the debtor's home, on the lake house, and on the 1981 Buick automobile.

On October 13, 1983, the Circuit Court for Jefferson County, Alabama, Bessemer Division entered an ORDER modifying the original decree. The court ordered that the periodic alimony provided for by paragraph 5 of the original decree be terminated. The court refused, however, to modify Mr. Thompson's obligations under paragraphs 7 and 8 since those obligations were "in the nature of a property settlement and alimony in gross."⁴ Mr. Thompson, therefore, continued to be obligated to hold his ex-wife harmless on the deficiency owed to the bank on the lake house and on the 1981 Buick pursuant to paragraphs 7 and 8 respectively.

Mrs. Muldrew's testimony established that $4,400 was owed on the 1981 Buick after the divorce, but she could not assign a fair market value to...