In Re John Daniel Jacobson, Bankruptcy No. 09-34988-H4-13.

• Citation: 433 B.R. 183
• Decision Date: 06 July 2010
• Docket Number: Bankruptcy No. 09-34988-H4-13.,Adversary No. 09-03423.
• Parties: In re John Daniel JACOBSON and Marlene Kay Jacobson, Debtors.Rebecca Berger, Plaintiff,v.John Daniel Jacobson, Defendant.
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Texas

433 B.R. 183

In re John Daniel JACOBSON and Marlene Kay Jacobson, Debtors.

Rebecca Berger, Plaintiff,

v.John Daniel Jacobson, Defendant.

Bankruptcy No. 09-34988-H4-13.

Adversary No. 09-03423.

United States Bankruptcy Court,

S.D. Texas,

Houston Division.

July 6, 2010.

COPYRIGHT MATERIAL OMITTED

Craig E. Power, Lisa Marie Norman, Cokinos Bosien & Young, Houston, TX, for Plaintiff.

Janet S. Casciato-Northrup, Law Office of Janet S. Northrup, PC, Houston, TX, for Defendant.

MEMORANDUM OPINION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

JEFF BOHM, Bankruptcy Judge.

I. Introduction

A debtor's ex-wife spent fifteen years seeking to clarify and obtain the exact property interests awarded to her in a final decree of divorce. Shortly after a ruling in her favor by the Fourteenth Court of Appeals of Texas, John D. Jacobson (the Debtor) filed a petition for relief in this Court. The Debtor's ex-wife, Rebecca Berger, asserts that the debt-which she estimates is approximately $1.2 million-should not be discharged, because he committed defalcation by breaching a fiduciary duty owed to her; specifically, she asserts that the Debtor failed to segregate and protect funds that might have been-and ultimately were-adjudicated to belong to her. The Debtor argues that Ms. Berger's reading of the Bankruptcy Code is too broad, and that his actions do not rise to the level statutorily required to be excepted from discharge. After considering the Debtor's motion for summary judgment, Ms. Berger's response in opposition thereto, the evidence associated with these pleadings, and the applicable law, the Court concludes that the Debtor's conduct does not constitute defalcation; and therefore, the debt owed by the Debtor to Ms. Berger should not be excepted from discharge under a theory of defalcation. Thus, the Court will grant summary judgment to the Debtor on this particular issue. However, because Ms. Berger's complaint has also pleaded that the Debtor's debt to her is nondischargeable because he allegedly committed larceny or embezzlement, and because the Debtor's summary judgment motion fails to address these two issues, the Court will schedule a status conference to discuss a schedule for adjudicating these remaining points.

The Court makes the following Findings of Fact and Conclusions of Law under Federal Rule of Bankruptcy Procedure 7052.¹ To the extent that any Finding of Fact is construed to be a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law is construed to be a Finding of Fact, it is adopted as such. The Court reserves the right to make any additional Findings and Conclusions as may be necessary or as requested by any party.

II. Findings of Fact

A. The divorce and ensuing litigation.

1. On November 12, 1993, the 308th Judicial District Court of Harris County Texas (the Family Court) signed a Final Decree of Divorce (the Divorce Decree) in cause number 1993-06210, granting a divorce to Ms. Berger and the Debtor (the Parties). [Docket No. 17, Stip. No. 3].²

2. Under the heading “Division of Marital Estate,” the Divorce Decree awarded Ms. Berger “[o]ne-half of all oil and gas interests of the parties as described in Exhibit A.” [Docket No. 13, Jnt. Ex. 1, p. 27]. Exhibit A of the Divorce Decree lists certain oil and gas wells (the Original Wells). [Docket No. 17, Stip. No. 4].

3. A protracted and bitter dispute arose over the exact property interests awarded in the Divorce Decree, as detailed below. The Parties have now been in court for no less than seventeen years.

4. Before the entry of the Divorce Decree, the Debtor instructed his employer, Texas Independent Exploration (TIE), the operator, to place fifty percent (50%) of the joint interest billing and the revenue in the Original Wells in Ms. Berger's name and account. [Docket No. 17, Stip. No. 5].

5. At the time of entry of the Divorce Decree, the Debtor owned certain leasehold interests associated with the Original Wells, and Ms. Berger was aware of this fact. [Docket No. 17, Stip. No. 6].

6. After entry of the Divorce Decree, the Debtor acquired ownership interest in several additional wells (the Additional Wells) which arose from his leasehold interests in the Original Wells identified in the Divorce Decree. [Docket No. 17, Stips. No. 7-8] (emphasis added).³ It is unclear from the evidence exactly when the Debtor acquired ownership interest in the Additional Wells.

7. From the date of entry of the Divorce Decree through the Debtor's petition date, the Debtor earned revenues as a result of his ownership interests in the Additional Wells. [Docket No. 17, Stip No. 10]. The Debtor exercised dominion and control over the revenues he earned as a result of his ownership interests in the Additional Wells. [Docket No. 17, Stip. No. 11]. The Debtor has not transferred any portion of the ownership interests in the Additional Wells to Ms. Berger [Docket No. 17, Stip. No. 12], nor has the Debtor paid Ms. Berger any portion of the revenues he earned as a result of his ownership interests in the Additional Wells [Docket No. 17, Stip. No. 13].

8. On August 27, 1996, Ms. Berger filed a Motion for Enforcement and Clarification of Decree of Divorce in the Family Court. [Docket No. 17, Stip. No. 15]; [Docket No. 13, Jnt. Ex. 3]. Ms. Berger sought a clarifying order regarding the transfer of her interest in the Original Wells identified in the Divorce Decree. [Docket No. 13, Jnt. Ex. 3]. On October 23, 1996, the Family Court entered an Order on Motion for Clarification of Decree of Divorce. [Docket No. 17, Stip. No. 16]; [Docket No. 13, Jnt. Ex. 4]. The Family Court ordered the Debtor to deliver to Ms. Berger “any and all duly and properly executed assignments necessary to transfer into the name of [Ms. Berger], her interest in and to the oil and gas working interests and revenue interests in the specific wells described in Exhibit ‘A’ to the [Divorce Decree].” [Docket No. 13, Jnt. Ex. 4].

9. On October 8, 1997, Ms. Berger filed a First Supplemental Motion for Enforcement in the Family Court. [Docket No. 17, Stip. No. 17]; [Docket No. 13, Jnt. Ex. 5]. Ms. Berger requested the Family Court inter alia, to appoint an auditor to oversee her interest in the Original Wells, place TIE in receivership, and enter clarifying orders regarding TIE and the Debtor's duties. [Docket No. 13, Jnt. Ex. 5].

B. The Family Court's Final Decree on Issues of Post-Divorce Enforcement, Clarification and Partition.

10. On April 24, 1998, Ms. Berger filed a First Supplemental Petition for Enforcement and for Damages Against TIE. [Docket No. 17, Stip. No. 18], [Docket No. 13, Jnt. Ex. 6], which she amended on November 17, 1998 (the First Amended Petition) [Docket No. 17, Stip. No. 19], [Docket No. 13, Jnt. Ex. 7]. Ms. Berger brought multiple claims against TIE and the Debtor, alleging inter alia, that they fraudulently deprived her of her “interest and income from the mineral interests.” [Docket No. 13, Jnt. Ex. 7, p. 4]. She additionally asserted that she is “entitled to a pro-rata share in all subsequent wells developed from those interests which were not properly partitioned at the time of the divorce” (a reference to revenue from the Additional Wells). [Docket No. 13, Jnt. Ex. 7, p. 5].

11. Importantly, in her fraud allegations, Ms. Berger's filing alleged “[the Debtor] and TIE were constructive trustees of [Ms. Berger's] income from the mineral interests and as such had a fiduciary relationship with [Ms. Berger].” [Docket No. 13, Jnt. Ex. 7, p. 4].

12. On June 23, 2000, the Family Court signed a Final Decree on Issues of Post-Divorce Enforcement, Clarification and Partition (the Final Decree). [Docket No. 17, Stip. No. 20]; [Docket No. 13, Jnt. Ex. 8]. The Final Decree reflects that a jury found that the Debtor did not “fail to deliver to [Ms. Berger] ... any and all duly and properly executed assignments necessary to transfer into the name of [Ms. Berger] her interest in and to the oil and gas working interests and revenue interests ... in [the Original Wells].” [Docket No. 13, Jnt. Ex. 8, Question No. 2]. The jury also found that the Debtor did not “fail to comply with the terms of the [Divorce Decree] that awards to [Ms. Berger] one-half of all oil and gas interests of the parties as described in Exhibit A.” [Docket No. 13, Jnt. Ex. 8, Question No. 3]. However, the jury found that the Debtor had committed fraud against Ms. Berger and awarded her $157,234.48 in damages and fees. [Docket No. 13, Jnt. Ex. 8, Questions Nos. 5-7, 9a].

13. Importantly, the jury's finding of fraud related only to the Original Wells, as opposed to the Additional Wells. The Parties stipulate that the dispute at issue in this adversary proceeding does not involve revenues either party may have received from the Original Wells-this adversary proceeding is solely related to revenues from the Additional Wells. [Docket No. 17, Stip. No. 14]. Finally, the jury finding was set aside by the Family Court as noted infra.

C. The Family Court's Final Judgment.

13. On September 6, 2000, the Family Court signed an Order on John D. Jacobson's Motion for New Trial and Motion to Modify Judgment and Rebecca L. Broesche's ⁴ Motion for Partial New Trial. [Docket No. 17, Stip. No. 21]; [Docket No. 13, Jnt. Ex. 9]. The order granted a new trial and set aside the findings of the June 23, 2000 Final Decree. [Docket No. 13, Jnt. Ex. 9].

14. After the Family Court's decision to grant a new trial, Ms. Berger amended her petition for enforcement and damages at least three times. On December 6, 2002, Ms. Berger filed a Third ⁵ Amended Supplemental Petition for Enforcement and for Damages Against Texas Independent Exploration, Inc. [Docket No. 17, Stip. No. 22]; [Docket No. 13, Jnt. Ex. 10]. A fourth supplement was filed on December 30, 2002 [Docket No. 17, Stip. No. 23]; [Docket No. 13, Jnt. Ex. 11] and a fifth on February 3, 2003 [Docket No. 17, Stip. No. 24]; [Docket No. 13, Jnt. Ex. 12]. In her filings, Ms. Berger asserted...