In re Owsley
| Decision Date | 17 July 2021 |
| Docket Number | Civil Action 2:20-cv-00171 |
| Parties | IN RE JIMIE DIANNE OWSLEY, Appellant. |
| Court | U.S. District Court — Southern District of Texas |
Appellant Jimie Dianne Owsley appeals from the Bankruptcy Court's disbursement of proceeds that were obtained through the sale of a property co-owned by Jimie Owsley and her ex-husband Appellee Brian Owsley. (Dkt. No. 15). Alternatively, Jimie Owsley moves for certification of a direct appeal to the Fifth Circuit pursuant to 28 U.S.C. § 158. (Dkt. No. 11).
This case is the culmination of the Parties' lengthy state divorce proceedings. There, Jimie Owsley was ordered to carry the mortgage and refinance the co-owned property. If she failed to refinance, the property was to be sold and the net sales proceeds were to be split equally between the Parties. Jimie Owsley failed to refinance and Brian Owsley obtained a state court enforcement order requiring the sale of the property. Jimie Owsley appealed that enforcement order stopped making payments on the mortgage, and filed for bankruptcy in federal court. Following the sale of the property, the Bankruptcy Court relied on the state court enforcement order and disbursed the proceeds equally between the Parties with no offset for Jimie Owsley's pre-sale mortgage payments. Jimie Owsley contends the Bankruptcy Court erred because it should have turned to Texas common law or the Parties' original divorce decree-not the state court enforcement order. In Jimie Owsley's Motion for Certification of a Direct Appeal, she argues that the Bankruptcy Court's alleged error warrants the Fifth Circuit's immediate attention. Based on the following this Court finds that certification is unwarranted and further, that the Bankruptcy Court correctly construed and relied upon the enforcement order in disbursing funds equally. Jimie Owsley's Motion is therefore DENIED and the Bankruptcy Court's Order is AFFIRMED.
On February 19, 2016, Jimie and Brian Owsley obtained a Final Decree of Divorce (the “Final Decree”) in Texas state court in Nueces County. (Dkt. No. 7-1 at 99-132). Three specific orders within the Final Decree are relevant to this case. First, Jimie Owsley was awarded a property co-owned by the Parties at 7590 Rancho Destino Road in Las Vegas, Nevada (the “Vegas Property”), but the Court expressly conditioned this award on the requirement that Jimie Owsley refinance the property in her name alone, thus absolving Brian Owsley from financial responsibility for the remainder of the note. (Dkt. No. 12-1 at 43-44). Second, the Final Decree ordered Jimie Owsley to carry the mortgage on the Vegas Property:
IT IS ORDERED AND DECREED that the wife, JIMIE DIANNE OWSLEY, shall pay, as a part of the division of the estate of the parties, and shall indemnify and hold the husband and his property harmless from any failure to so discharge . . . [t]he balance due, including principal, interest, tax, and insurance escrow, on the promissory note executed by JIMIE DIANNE OWSLEY and BRIAN LEON OWSLEY, in the original principal sum of $413, 000.00, dated March 27, 2013, payable to Guild Mortgage Company and secured by deed of trust on the real property awarded in this decree to the wife.
(Dkt. No. 12-1 at 46) (emphases added). Thus, the requirement that Jimie Owsley should continue making mortgage payments was not explicitly subject to any condition-she was to assume responsibility for the mortgage payments no matter what. Further, she was ordered to pay only the ongoing balance “due, ” and was not necessarily responsible for any total deficiency owing on the promissory note.
Third, in a separate section, the Final Decree ordered Jimie Owsley to refinance the Vegas Property in her sole name within 60 days or, failing that, the Vegas Property was to be sold:
IT IS ORDERED AND DECREED that JIMIE DIANNE OWSLEY shall do everything within her ability to attempt to refinance the mortgage on said real property in her sole name within 60 days from the date of this decree. If the mortgage on the real property cannot be refinanced . . . then the [Vegas Property] shall be sold. IT IS ORDERED AND DECREED that if the real property is sold any net sales proceeds shall be split equally between the JIMIE DIANNE OWSLEY and BRIAN LEON OWSLEY and likewise, JIMIE DIANNE OWSLEY and BRIAN LEON OWSLEY shall each pay 50 percent of any deficiency owing on the mortgage after the sale of the real property.
(Id. at 46-47) (emphases added). Note that, unlike the order requiring Jimie Owsley to assume the ongoing mortgage payments, the sale of the Vegas Property was expressly conditioned upon Jimie Owsley's failure to refinance. Note also that the contours of the “net sales proceeds” to be “split equally” were not explicitly defined. But however vague the term “net sales proceeds” might have been, the Final Decree made clear that the Parties were to share equal responsibility for any “deficiency owing . . . after” the sale-as contrasted with Jimie Owsley's unconditional responsibility for any periodic “balance due” during the life of the mortgage.
The Final Decree's contingency provision concerning the sale of the Vegas Property is relevant because Jimie Owsley failed to accomplish the refinance of the Vegas Property by the 60-day deadline.[1] (Dkt. No. 12-1 at 4); (Dkt. No. 11 at 2); (Dkt. No. 12 at 2).
After Jimie Owsley failed to refinance, Brian Owsley sought to enforce the Final Decree in Texas state court on multiple occasions. The first such occasion was on September 30, 2016, when the state court granted Brian Owsley's motion to enforce the Final Decree by ordering that he sell the Vegas Property himself and divide the proceeds equally with Jimie Owsley (“First Enforcement Order”). (Dkt. No. 12-1 at 5). On November 30, 2017, however, the First Enforcement Order was reversed by the Thirteenth Court of Appeals for defective service. Owsley v. Owsley, No. 13-17-00025-CV, 2017 WL 5953097, at *3 (Tex. App.-Corpus Christi Nov. 30, 2017, no pet.) (mem. op.).
After the Texas appellate court reversed the First Enforcement Order, Brian Owsley filed another motion to enforce the Final Decree. On August 20, 2018, the Texas state court granted Brian Owsley's second motion to enforce the Final Decree by ordering Brian Owsley to sell the Vegas Property (“Second Enforcement Order”). (Dkt. No. 12-1 at 11). In doing so, the state court noted that, pursuant to Section 9.006 of the Texas Family Code, it needed to “specif[y] more precisely the manner of effecting the prior order for the sale of real estate and improvements.”[2](Id. at 9-10). In relevant part, the Second Enforcement Order echoed the Final Decree's command to split equally the Vegas Property's “net sales proceeds, ” but it further defined that term as “gross sales price less customary closing costs (e.g. outstanding mortgage balance, outstanding taxes, realtor fees, title company fees, etc.).” (Id. at 11) (emphasis added). Notably, the Second Enforcement Order's definition of “net sales proceeds” did not explicitly include any offset for the payments being made by Jimie Owsley on the mortgage's “balance due” pursuant to the Final Decree. (Id.). The Second Enforcement Order did, however, explicitly provide an offset for the “outstanding mortgage balance, ” which flows directly from the Final Decree's mandate that the Parties split equally any “deficiency owing . . . after” the sale of the Vegas Property. (Id. at 11, 47). The state court further ordered Jimie Owsley to sign all documents required to effect the sale within 72 hours of presentment. (Id. at 11). According to Brian Owsley, he retained a realtor to sell the Vegas Property but Jimie Owsley refused to sign the necessary paperwork. (Dkt. No. 12 at 3).
Jimie Owsley appealed the Second Enforcement Order on November 16, 2018 to the Texas Thirteenth Court of Appeals. See Notice of Appeal, Owsley v. Owsley, No. 13-18-00636-CV (Tex. App.-Corpus Christi Nov. 16, 2018). On November 29, 2018, the Thirteenth Court of Appeals ordered mediation. See Order Issued, id. (Tex. App.-Corpus Christi Nov. 29, 2018). After mediation proved unsuccessful, the appellate court reinstated the case on February 8, 2019. See Case Reinstated, id. (Tex. App.-Corpus Christi Feb. 8, 2019). But before any brief was filed, Jimie Owsley filed a Suggestion of Bankruptcy[3] and was granted a stay in the Texas appellate proceedings on March 7, 2019. See Order Issued, id. (Tex. App.-Corpus Christi Mar. 7, 2019). That case remains pending before the Thirteenth Court of Appeals.[4]
On February 7, 2019, Jimie Owsley filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.[5] (Dkt. No. 7 at 30-37). Jimie Owsley stopped making mortgage payments on the Vegas Property after March 2019. (Id. at 256). On June 7, 2019, the mortgage company holding the note for the Vegas Property-Guild Mortgage Company-moved for relief from the automatic stay on that property due to Jimie Owsley's default. (Id. at 249-51). A week later, the Bankruptcy Court held a hearing on the motion and issued a continuance to afford the parties time to reach an agreement regarding the sale of the Vegas Property. (Dkt. No. 12 at 3). After six months of jostling over the sale price, the Vegas Property was finally sold in January 2020 for $700, 000. (Dkt. No. 7 at 430); (Dkt. No. 12 at 5). After the debt to Guild Mortgage and other transaction costs were deducted from the sale price, the proceeds amounted to $265, 620.72. (Dkt. No. 15-3 at 189). That amount was subsequently deposited into the Bankruptcy Court's...
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