In re Greenhouse
| Decision Date | 29 June 2022 |
| Docket Number | CASE NO. 21-12844-RAM |
| Citation | 641 B.R. 711 |
| Parties | IN RE: Harry Beck GREENHOUSE, Debtor. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
Jacqueline Calderin, Esq., Agentis PLLC, Miami, FL, Robert P. Charbonneau, Esq., Agentis PLLC, Coral Gables, FL, John D. Emmanuel, Esq., Tampa, FL, Nicole Grimal Helmstetter, Buchanan Ingersoll & Rooney PC, Miami, FL, for Debtor.
Linda M. Leali, Coral Gables, FL, Trustee, Pro Se.
Steven D. Schneiderman, Office of the US Trustee, Miami, FL, for U.S. Trustee.
ORDER GRANTING, IN PART, AND DENYING, IN PART, MOTION TO ENFORCE FINAL JUDGMENT OF DISSOLUTION OF MARRIAGE
The Court conducted a hearing on June 2, 2022, on the Expedited Motion to Enforce Final Judgment of Dissolution of Marriage (the "Motion to Enforce") [DE# 346], filed by the Debtor's former wife, Olivia Sampaio Greenhouse (the "Former Wife"). The Court has considered the record, including the Motion to Enforce, Polychain's Preliminary Objection to Expedited Motion to Enforce Final Judgment of Dissolution of Marriage (the "Polychain Objection") [DE# 352], and the Former Wife's Reply to [the Polychain Objection] [DE# 353]. The Court has also considered the arguments of counsel presented at the June 2nd hearing, and most importantly, carefully reviewed the Final Judgment of Dissolution of Marriage (the "Final Judgment") entered by the state court on May 24, 2022 in Case No. 2021-005073-FC-04 (the "Dissolution Case") [DE# 345-1]. Finally, the Court has considered applicable state and federal law.
For the reasons that follow, the Motion to Enforce will be granted in part and denied in part. The Court will enforce those portions of the Final Judgment ordering the transfer of any property that is exempt from administration in this bankruptcy case. However, the provision in the Final Judgment awarding the Former Wife the Debtor's interest in MetaStable Capital, L.P. ("MetaStable"), cannot be enforced. The MetaStable investment is non-exempt property of the estate that is subject to the jurisdiction of this Court and the disposition of this asset should be addressed in the Debtor's chapter 11 plan. Moreover, the state court awarded the MetaStable investment to the Former Wife primarily as her share of the equitable distribution plan value, and the equitable distribution award entered after the filing of the bankruptcy petition is an unsecured non-priority claim in this case.
The material facts are not in dispute.
The Debtor filed a petition commencing this Subchapter V chapter 11 case on March 26, 2022. Just 11 days before filing his chapter 11 petition, on March 15, 2022, the Debtor filed a Petition for Dissolution of Marriage initiating the Dissolution Case. On May 17, 2021, the Former Wife filed a motion seeking clarification on how the automatic stay affected the family court's authority to proceed in the Dissolution Case [DE# 91].
On June 9, 2021, Judge Cristol, the initial judge assigned to this bankruptcy case, entered his Order Granting Creditor Olivia Sampaio Greenhouse's Motion for an Order: (A) Confirming the Automatic Stay is Inapplicable to: (1) Pending Dissolution Proceeding Involving a Determination of Domestic Support Obligations; and (2) the Determination of Equitable Distribution of Non-Estate, Exempt Property, But Subject to Bankruptcy Court's Final Determination of Objection to Exemptions, if any, and (B) Modifying the Automatic Stay to Determine Equitable Distribution of Estate Property, Subject to Final Bankruptcy Court Approval (the "Stay Clarification Order") [DE# 136]. The Stay Clarification Order confirmed that the automatic stay exception in 11 U.S.C. § 362(b)(2) allowed the family court to establish or modify support obligations and child custody and visitation issues "except to the extent that such proceeding seeks to determine the division of property that is [property] of the estate" [DE# 136, p. 2, ¶ 2] (typographical error corrected in bracketed insertion).
[DE# 136, p. 3, ¶ 4].
To summarize, the Stay Clarification Order first confirmed exactly what the Bankruptcy Code provides in § 362(b)(2). The automatic stay does not stay proceedings to determine domestic support obligations ("DSOs") or to determine child support and custody issues. The stay also does not apply to the collection of a DSO from property, including exempt property, that is not property of the estate. Second, the Stay Clarification Order granted limited stay relief to allow the family court to determine the Former Wife's interest in exempt or non-exempt property. This meant that the state court could determine the amount of the Former Wife's equitable distribution. Notably, the Stay Clarification Order did not grant stay relief to allow the family court to order the Debtor to transfer to the Former Wife non-exempt property of the bankruptcy estate.
On May 24, 2022, the family court entered the Final Judgment subject of the Motion to Enforce. Judge Young attempted to comply with the Stay Clarification Order by addressing support and child custody issues and the equitable distribution of marital assets, while recognizing that the Final Judgment may not be ratified in its entirety by this Court. Final Judgment, p. 5 ().
In material part, the Final Judgment directs the Debtor to do the following:
Final Judgment, pp. 6, 7, 10, 20, 22 [DE# 345].
The Motion to Enforce seeks expedited relief because the Final Judgment directed the Debtor to transfer the Health Saving Account and divide up the Vanguard SEP IRA within 10 days and directed the immediate transfer of the MetaStable investment. Although the Court conducted the June 2nd hearing on the Motion to Enforce on short notice, the Court finds that the issues have been adequately briefed and argued.
Finalizing a marital dissolution while a bankruptcy case is pending can be tricky. Some things are expressly allowed by the automatic stay exception in § 362(b)(2). As applied here, unless the exempt status of the Health Savings Account and IRA remain subject to challenge, the family court had the authority to direct the Debtor to transfer one-half of his interest in the Vanguard IRA and to transfer his Health Savings Account. And, without question, Judge Young had the authority to determine child custody issues, to fix the amount of durational and rehabilitative alimony, and to award the Former Wife attorney's fees as part of her support.
The family court also had authority under the Stay Clarification Order to determine the amount that the Former Wife is entitled to as equitable distribution. However, the family court did not have the authority to order the Debtor to transfer the MetaStable investment.
First, whether intended as support or equitable distribution, or both, the family court did not have jurisdiction to order the Debtor to transfer the MetaStable investment. All agree that this asset is not exempt and is property of the bankruptcy estate. Therefore, only this Court has jurisdiction to determine the disposition of the MetaStable investment,1 and presumably will make that determination when it considers confirmation of an amended chapter 11 plan.
Second, this Court...
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