IN RE EMMONS

• Decision Date: 23 June 2006
• Docket Number: Bankruptcy No. 04-23118-DRD-7,Adversary No. 05-2056-DRD.
• Citation: 349 B.R. 780
• Parties: In re the Matter of Kyle David EMMONS, Debtor. Kyle David Emmons, Plaintiff, v. Kim Melinda Emmons (n/k/a Kim Melinda Webb), Defendant.
• Court: U.S. Bankruptcy Court — Western District of Missouri

349 B.R. 780

In re the Matter of Kyle David EMMONS, Debtor Kyle David Emmons, Plaintiff, v. Kim Melinda Emmons (n/k/a Kim Melinda Webb), Defendant.

Bankruptcy No. 04-23118-DRD-7, Adversary No. 05-2056-DRD.

United States Bankruptcy Court, W.D. Missouri.

June 23, 2006.

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J. Brian Baehr, Baehr Law Firm, P.C. Columbia, MO, for Debtor.

MEMORANDUM OPINION

DENNIS R. DOW, Bankruptcy Judge.

Before the Court is a Motion for Civil Contempt and Sanctions filed by Kyle David Emmons ("Debtor") and a Motion to Set Aside Default Judgment filed by Kim Melinda Emmons n/k/a Kim Melinda Webb ("Webb"). The Court heard evidence and arguments on the above referenced matters on March 16, 2006, solicited post-hearing briefs and took the matters under advisement. These are core proceedings under 28 U.S.C. § 157(b)(2)(A) over which the Court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b), 157(a) and (b)(1). The following constitutes my Findings of Fact and Conclusions of Law in accordance with Rule 52 of the Federal Rules of Civil Procedure as made applicable to these proceedings by Rules 7052 and 9014(c) of the Federal Rules of Bankruptcy Procedure. For the reasons set forth below, the Court denies Debtor's Motion for Civil Contempt and Sanctions and grants Webb's Motion to Set Aside Default Judgment.

I. FACTUAL AND PROCEDURAL HISTORY

Debtor and Webb obtained a Judgment and Decree of Dissolution of Marriage from the Circuit Court of Boone County, Missouri on or about May 19, 1999 ("Dissolution Judgment"). Pursuant to the Dissolution Judgment, Debtor was ordered to pay certain costs associated with their children's college education. On December 22, 2004, Debtor filed a Chapter 13 bankruptcy, which was subsequently converted to a Chapter 7. Webb is listed as a creditor on Schedule E. On June 30, 2005, Webb filed, in the Circuit Court of Boone County, Missouri, in Case No. 99DR081106, a Motion for Contempt and Application for Suspension of License ("State Court Contempt Motion") for alleged non-payment of child support. In response to this, Debtor filed, on July 21, 2005, adversarial complaint no. 05-2052 ("Adversary 05-2052"), seeking damages for an alleged violation of the automatic stay. Five days later, on July 26, 2005, Debtor filed a second complaint, adversary no. C5-2056 ("Adversary 05-2056"), seeking a determination of dischargeability of their son's spring 2005 college tuition and both their children's future college expenses.

On July 29, 2005, Webb filed a Motion for Relief from Stay to proceed with the State Court Contempt Motion, which was partially granted by the Court on September 8, 2005 ("Partial Relief Order"). The Partial Relief Order contains the following language:

Upon hearing had, and information received, the Court hereby lifts the stay to allow State Court proceedings in case number 99DR081106, filed in Boone County Circuit Court, during the pendency of the above-captioned bankruptcy with regard to post-petition child support. Prepetition child support in the amount of $2,346.00 is being paid through the plan and the stay is not lifted with regard to that amount. To date $340.73 has been paid on that claim through the plan.

On September 26, 2005, the Court entered an order converting Debtor's case to a Chapter 7. At Debtor's request, because Webb had not responded, on September 30, 2005, the Court entered an Order of Default Judgment in Adversary 05-2056 ("Default Judgment"). The Default Judgment states in relevant part:

. . . judgment should be entered against the Defendant because (1) there is no debt owed by the Plaintiff arising from Plaintiff's son's attendance at Harding University for the Spring semester, 2005; and (2) the Plaintiffs obligation for future college costs pursuant to a Judgment of Dissolution between Plaintiff and Defendant Kim Melinda Emmons . . . is not in the nature of support under 11 U.S.C. § 523(a)(5).

A telephone conference was held on the State Court Contempt Motion on November 17, 2005 and the Family Court Commissioner determined that the parties could proceed on the issue of college tuition, pursuant to the language contained in the Partial Relief Order. Neither at this hearing nor at any other time until approximately two weeks after the entry of an order of discharge did Debtor make the state court aware of the entry of the Default Judgment. On November 18, 2005, Webb amended the State Court Contempt Motion ("Amended State Court Contempt Motion"), abandoning a request for payment of the prepetition child support arrearage and the 2005 Spring tuition¹, but seeking payment for 2005 Fall college tuition. A hearing was held on the Amended State Court Contempt Motion on November 22, 2005 and the Family Court Commissioner found that Debtor had not paid the college tuition and was therefore in contempt of the Dissolution Judgment. On November 30, 2005, because the 2006 Spring tuition had come due, Webb filed another Motion for Contempt ("Third Motion for Contempt") in the state court seeking to hold Debtor in contempt for non-payment of post-petition child support and Spring 2006 tuition. On January 9, 2006, the state court scheduled a show cause hearing for the Third Motion for Contempt for January 24, 2006. This Court entered an Order of Discharge in Debtor's bankruptcy on January 10, 2006 ("Order of Discharge"). On January 17, 2006, Debtor filed, in state court, a Motion to Dismiss or Vacate, Motion to Dismiss for Bankruptcy Discharge, Motion for Rehearing with the State Court and Notice of Hearing scheduled for January 24, 2006. A hearing was held in state court on January 24, 2006, where Debtor prayed for a dismissal because of the bankruptcy discharge and Webb argued it was proper to proceed on the Third Motion for Contempt. The Family Court Commissioner made no findings at the January 24th hearing and continued both matters for clarification from this Court. There have been no hearings on the Third Motion for Contempt since the Order of Discharge was entered and there have been no further hearings on this matter in the state court since January 24, 2006.

II. DISCUSSION AND ANALYSIS

A. Motion to Set Aside Default Judgment

The entry of default judgment is not favored by the law and "should be a rare judicial act." Iowa Oil Co. v. T Mart Inc., 299 B.R. 555, 562 (Bankr. N.D.Iowa2003) citing Jones Truck Lines, Inc. v. Foster's Truck & Equip. Sales (In re Jones Truck Lines, Inc.), 63 F.3d 685, 688 (8th Cir.1995). The courts have a preference for the adjudication of cases on their merits. T Mart Inc., 299 B.R. at 562, citing Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 784 (8th Cir.1998). Decisions to grant or deny a motion to set aside default judgment are within the sound discretion of the bankruptcy court. Jones Truck Lines, Inc., 63 F.3d at 687, citing United States ex rel. Time Equip. Rental & Sales, Inc. v. Harre, 983 F.2d 128, 130 (8th Cir.1993). Bankruptcy Rule 7055 incorporates Rule 55 of the Federal Rules of Civil Procedure. Rule 55 sets out the procedures for entry of default and judgment of default and states: "For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)." Reasons listed in Rule 60(b)(1) for relief from judgment, and made applicable to default judgments through Rule 55( c), include "mistake, inadvertence, surprise, or excusable neglect."²T Mart Inc., 299 B.R. at 560, citing Harre, 983 F.2d at 130; Fed.R.Civ.P. 60(b)(1). Alternatively, Rule 60(b)(4) permits the court to set aside a judgment that is "void." T Mart Inc., 299 B.R. at 560. If a defendant is improperly served, a federal court lacks jurisdiction over the defendant rendering a default judgment void under Rule 60(b)(4). T. Mart Inc., 299 B.R. at 560, citing Printed Media Servs., Inc. v. Solna Web, Inc., 11 F.3d 838, 843 (8th Cir.1993). Webb, as the defaulting party, has the burden to show the applicability of Rule 60(b)(1) or (b)(4). See T Mart Inc., 299 B.R. at 560.

1. Service of Summons End Complaint, Rule 63(b)(4)

Debtor asserts that he served the Summons and Complaint for Adversary 05-2056 on Webb by first class mail to her address of 3307 Shoemaker Drive, Columbia, MO 65202 on July 28, 2005. Webb argued that she "either did not receive a copy of the Adversarial Complaint No. 05-2056 or did not realize that debtor had filed another Adversary Complaint against her within a week of the prior complaint."³ It is well settled that the law presumes that correspondence properly addressed, stamped and mailed was received by the individual to whom it was addressed. Arkansas Motor Coaches Ltd. Inc. v. Comm'r. of Internal Revenue, 198 F.2d 189, 191 (8th Cir.1952); T Mart Inc., 299 B.R. at 560. Although the presumption of delivery is rebuttable, it is a strong presumption that may only be overcome by specific facts. Arkansas, 198 F.2d at 191.

Here, because Debtor invoked the presumption of proper delivery of service, the law requires that Webb present something more than mere testimony on non-receipt. T Mart Inc., 299 B.R. at 560. Webb testified that she still lives at the address that Debtor used, that she has lived there for approximately three years and that she has not had problems receiving mail in the past. Webb testified that she read all court documents mailed to her residence and, because she did not always understand what they stated, that she gave a copy of everything she received to her attorney. Her argument is that because she did not give a copy of the complaint in Adversary 05-2056 to her counsel, she must not have received one in the mail. She also stated that she did not initially receive notice of Debtor's bankruptcy, implying that Debtor may have also forgotten to send her a copy of Adversary 05-2056. That fact, however, is irrelevant to the question of whether she received a...