In re Merena

• Decision Date: 10 March 2009
• Docket Number: Adversary No. 08-00046.,Bankruptcy No. 08-60066-7.
• Citation: 413 B.R. 792
• Parties: In re Alice Michelle MERENA, Debtor. Kenneth Merena and Yu Zhao, Plaintiffs. v. Alice Michelle Merena, Defendant.
• Court: U.S. Bankruptcy Court — District of Montana

413 B.R. 792

In re Alice Michelle MERENA, Debtor Kenneth Merena and Yu Zhao, Plaintiffs. v. Alice Michelle Merena, Defendant.

Bankruptcy No. 08-60066-7.

Adversary No. 08-00046.

United States Bankruptcy Court, D. Montana.

March 10, 2009.

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Kenneth Merena, pro se.

Yu Zhao, pro se.

Toby Alback, Billings, MT, for Defendant.

MEMORANDUM of DECISION

RALPH B. KIRSCHER, Bankruptcy Judge.

In this Adversary Proceeding, Plaintiffs Kenneth Merena ("Merena") and Yu Zhao ("Zhao") seek the denial of the Defendant/Debtor Alice Michelle Merena's ("Alice") discharge under 11 U.S.C. §§ 523(a)(2)(A), 523(a)(6), 727(a)(3), 727(a)(4) and 727(a)(6)(C). Alice opposes the Plaintiffs' allegations. After trial of this cause and review of applicable law, this matter is ready for decision. For the reasons set forth below, a separate judgment shall be entered in favor of Alice and against the Plaintiffs, dismissing all Counts of the Plaintiffs' Complaint with prejudice.

The agreed Final Pretrial Order submitted by the parties on December 9, 2008, was approved by the Court, with legal clarification, on December 11, 2008. It provides that this Court has jurisdiction of this cause under 28 U.S.C. § 1334, and that this is a core proceeding under 28 U.S.C. § 157. This Memorandum of Decision sets forth the Court's findings of fact and conclusions of law pursuant to F.R.B.P. 7052.

Trial of this Adversary Proceeding was held at Billings on December 16, 2008, and at Butte on February 10, 2009. The Plaintiffs Merena and Zhao appeared and testified, represented by attorney Craig D. Martinson of Billings, Montana. Alice appeared and testified, represented by attorney Toby Alback of Billings, Montana. The only other witness that testified at trial was the Chapter 7 Trustee, Joseph V. Womack of Billings, Montana. The Plaintiffs' Exhibits 1, 2, 3, 4, 5, 6, 9, 10, 11, 12, 13, 14, 17, 19, 20, 21, 22, 23, 25, 26, 27, 28, 29 and 30 were admitted into evidence without objection as were Alice's Exhibits A, F, G, H, I, J, K, L and M. The Plaintiffs' Exhibits 8, 15 and 16 were admitted into evidence over Alice's objection.

As previously noted, trial in this matter commenced on December 16, 2008, and at that time, the Court allowed Merena to appear for the trial via video from Utah for the convenience of Merena and because of an outstanding arrest warrant against Merena in Montana. Merena stated at the trial on December 16, 2008, that he had made his own arrangements for a video conference site and also stated early on that "knowing the intense depth of evidence," he anticipated that the trial in this matter could not be concluded in a single day. On December 16, 2008, the Plaintiffs concluded their case-in-chief. However, when it became apparent that the trial was indeed not going to conclude on December 16, 2008, since Defendant wished to proceed with her case-in-chief, the Court stated that it would reconvene the trial on December 17, 2008, at 09:00 a.m. Merena then informed the Court that he could not secure his video connection for December 17, 2008, and further indicated that he would not be available to attend any continued trial until after Christmas. Merena argued that it was imperative that he attend the entire trial in this case. Because the Court was not able to find another trial date that was conducive to both the Court's and Merena's schedule, in an Order entered December 17, 2008, the Court set a scheduling conference for January 14, 2009, to determine when trial in this matter would conclude.

Following the scheduling conference held January 14, 2009, the Court entered an Order setting February 10, 2009, as the date for the continuation of the trial. The Court specifically picked February 10th in order to allow Merena to appear from Butte and avoid any future video conference issues. The Court directed Alice to appear from Billings on February 10th because the Court did not want to cause any restraining order violation by Merena.

Given Merena's apparent desire to financially strangle Alice through legal proceedings, the Court was not surprised when Merena filed a request for continuance of the trial on February 4, 2009, stating that he had some other conflict on February 10, 2009. Merena did not disclose the nature of the conflict and did not disclose why he waited three weeks to notify the Court of his conflict. Consequently, the Court denied Merena's request for continuance. Despite the alleged conflict, both Merena and Zhao were at the reconvened trial on February 10, 2009.

AGREED FACTS

The approved Final Pretrial Order sets forth the following agreed facts:

1. Merena and Yu are creditors in the above entitled bankruptcy case.

2. This action is being brought in connection with the bankruptcy case of Alice Merena, initially filed as a Chapter 13 case and then converted to a Chapter 7 proceeding.

3. Kenneth and Yu reside in Salt Lake County, State of Utah.

4. Merena and Alice are husband and wife with separate places of residence.

ADDITIONAL FACTS

Additional facts are taken from the testimony and exhibits admitted at trial, and the case dockets of this Adversary Proceeding and Alice's main bankruptcy case. Prior to meeting Merena, Alice had two children from a prior marriage to Ryan S. Graveley. The evidence suggests that Merena and Alice met sometime in 2005, while Alice was finishing college, and were living together by the beginning of 2006. Merena and Alice were married in Utah on June 11, 2006. Alice subsequently filed for divorce from Merena on August 21, 2007. Exhibit 16.

The testimony and exhibits show that Merena's and Alice's relationship was tumultuous. For example, Alice testified that she got in a fight with Merena while on a family vacation to Montana during the summer of 2007 and Merena ended up returning to Utah alone, leaving Alice and her children stranded in Montana. Merena and Alice also had a dispute in January of 2006 that resulted in Alice being charged on January 13, 2006, with domestic violence in the presence of a child and criminal mischief. Exhibit 15. However, Exhibit 15 also shows that the aforesaid domestic violence charge was dismissed not long thereafter on January 24, 2006. Alice pled guilty to the criminal mischief charge and after completing an anger management class, the criminal mischief charge was dismissed on January 2, 2007. Finally, Exhibit 17 shows that Alice filed a Request for Protective Order against Merena on August 1, 2007. Alice asserts on page 3 of the Request for Protective Order that "she is ending the relationship [with Merena] and seeking a Divorce and fears [Merena's] reaction." Exhibit 17.

Zhao is a self-employed computer analyst who first met Merena when Merena needed computer service at his dance club. Zhao and Merena are now close friends who see each other often. Zhao and Merena are also business partners who own a partnership or other similar business entity that owned and still owns the home at 14135 Senior Band Road, Draper, Utah in which Merena and Alice lived with their respective children. Merena, who also goes by Dr. Merena, owns a dance club and is engaged in real estate investment and other consulting activities.

Zhao met Alice when she first began dating Merena. Zhao attended Alice's and Merena's wedding and considers himself Alice's friend.

Zhao testified that Alice called him during the late afternoon of August 20, 2007, claiming she needed financial assistance. Zhao testified that he agreed to meet with Alice on August 20th "as a friend" to "find out what was happening." Zhao remembered the exact date of the meeting because he had accompanied Merena to a hearing on Alice's Request for Protective Order earlier that same date. Merena testified that Zhao's telephone numbers are 801-375-3100 and 801-358-9099. Alice's telephone records at Exhibit 30 reflect that Alice called Zhao at 5:25 p.m. on August 20th.

Alice's version of the August 20, 2007, meeting is slightly different from Zhao's. Alice asserts that Zhao called her on August 20, 2007, while she was in the middle of a telephone conversation with her parents. Alice claims she called Zhao back after she finished the conversation with her parents, and told Zhao that she was between a rock and a hard place because she didn't have enough money to cover her motel room. Zhao offered to meet Alice at her motel and help in any way that he could. Alice's telephone records do not show an incoming call from either of Zhao's two telephone numbers recited by Merena. However, Alice testified that Zhao had more than two telephone numbers.

Zhao testified that he left his job, drove to Salt Lake and met Alice sometime between 5:30 and 6:00 p.m. in the lobby of the motel where Alice was staying. Zhao stated that he and Alice talked for about 2 or 3 hours, and recalls leaving his visit sometime around 9:00 p.m.¹ When Zhao asked Alice to explain what was going on, Alice told Zhao that when she returned home from a visit to Montana, she entered her home and heard noises that lead her to believe that Merena was home having sex with another person. Notwithstanding the allegations of infidelity, Zhao pled with Alice to reconcile with Merena. Zhao concedes that Alice did not promise to reconcile with Merena. However, Zhao was nevertheless hopeful because Alice was "crying and sobbing" during their meeting, which led Zhao to believe that Alice genuinely cared for Merena. Alice also wanted Zhao to keep an eye on Merena because Alice thought Merena was severely depressed and might be suicidal.

During their August 20, 2007, visit, Alice told Zhao that she had no money to pay her motel bill. Alice's father had apparently been in Utah prior to August 20, 2007, and had paid for Alice's motel bill with his credit card. However, when Alice's father left Utah and returned to Montana, the motel would not allow Alice to use her father's credit card...