In re Payne

• Decision Date: 20 October 2022
• Docket Number: 21-31735-SGJ-7,Adversary 22-03030-sgj,22-03058-sgj
• Parties: In re: MARCUS JARROD PAYNE Debtor. v. MARCUS JARROD PAYNE, Defendant. STACY PAYNE, Plaintiff,
• Court: U.S. Bankruptcy Court — Northern District of Texas

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In re: MARCUS JARROD PAYNE Debtor.

STACY PAYNE, Plaintiff, v. MARCUS JARROD PAYNE, Defendant.

No. 21-31735-SGJ-7

Adversary Nos. 22-03030-sgj, 22-03058-sgj

United States Bankruptcy Court, N.D. Texas, Dallas Division

October 20, 2022

MEMORANDUM OPINION AND ORDER REGARDING COMPETING MOTIONS FOR SUMMARY JUDGMENT: DECLARING SOME, BUT NOT ALL, OF DEBTOR'S DEBTS NONDISCHARGEABLE PURSUANT TO 11 U.S.C § 523(A)(15)

This is a nondischargeability action between a chapter 7 debtor and his former spouse. Before the Court are competing motions for summary judgment of the Plaintiff Stacy Payne (the former spouse), and Defendant Marcus Jarrod Payne, the chapter 7 debtor. The present issue is whether six state court judgments/orders obtained by Plaintiff, awarding her attorney's fees, costs, and sanctions in certain post-divorce proceedings--should be excepted from the Defendant Debtor's discharge under 11 U.S.C. § 523(a)(5) or, alternatively, 11 U.S.C. § 523(a)(15). Having considered the summary evidence (all of which was documentary, and none of which was disputed), the Court hereby grants Plaintiff's motion for summary judgment in part and denies it in part-specifically determining that four of the six debts are nondischargeable under Bankruptcy Code section 523(a)(15), but none of the debts are nondischargeable under section 523(a)(5). Likewise the Court grants Defendant's motion for summary judgment in part and denies it in part-specifically determining that two of the six debts are not nondischargeable under Bankruptcy Code section 523(a)(15) and none of the six debts are nondischargeable under section 523(a)(5).

I. Undisputed Facts

Plaintiff Stacy Payne ("Plaintiff" or sometimes "SP") and Defendant Marcus Jarrod Payne ("Defendant" or sometimes "MJP") are former spouses who each sought a divorce from one another in May 2019 in the 303^rd Judicial District Court in Dallas County, Texas ("Family Court"). After mediation, they entered into an Agreed Final Decree of Divorce that was signed by the Family Court on December 2, 2019 (the "Divorce Decree") [See Dkt. No. 92 at Ex. A].^[1] The Divorce Decree dissolved their marriage; ordered a division of property and debts; and contained a "release," releasing each other "from every claim, demand, right and obligation whatsoever, both in law and in equity, that either of them ever had or now has against the other or their property upon the reason of any matter, cause (including but not limited to Cause No. JS 19 00127G), including tort claims of any kind, or thing up to entry of this Agreed Final Divorce Decree . . . . (the "Release")" Id. at p. 22. Both parties signed it. There were no children of the marriage.

A. The Post-Divorce Defamation Suit

In March of 2020 (just three months after the Divorce Decree), MJP sued SP for defamation and related torts ("Defamation Suit"), based on statements allegedly made by SP in connection with a pre-divorce domestic dispute and 911-call and other statements/actions thereafter-all of which occurred before the entry of the Divorce Decree. The Defamation Suit was filed in the 134^thJudicial District Court of Dallas County, Texas. SP answered and moved to dismiss based on the Release in the Divorce Decree. The Defamation Suit was subsequently transferred to the Family Court. Defendant appealed the transfer order (an interlocutory order), and the Texas Court of Appeals for the Fifth Appellate District at Dallas dismissed the appeal for want of jurisdiction and ordered that SP recover her costs from MJP relating to that appeal [Dkt. No. 92 at Ex. B]. The Family Court later granted SP's motion to dismiss the Defamation Suit and awarded her $20,000 in attorney's fees and expenses [Dkt. No. 92 at Ex. D]. Defendant then appealed this dismissal, and the Texas Court of Appeals for Sixth Appellate District at Texarkana affirmed the Family Court's ruling [Dkt. No. 92 at Ex. C].^[2] See also Payne v. Payne, No. 06-20-00051-CV (Ct. App- Texarkana Apr. 1, 2021).^[3] The Court of Appeals Memorandum Opinion makes it very clear that the reason for the dismissal of the Defamation Suit and attorney's fee award was the Release in the Divorce Decree-i.e., any of the claims asserted in the Defamation Suit had been released.^[4]

B. The Post-Divorce QDRO Suit

The Family Court also oversaw a post-divorce enforcement action centering around the qualified domestic relation order (QDRO) completion and approval process. Specifically, the Divorce Decree had awarded MJP a portion of certain of SP's retirement benefits and stated that the details would be defined in a subsequent QDRO that would be signed by the Family Court after the Divorce Decree. The Family Court went on to state that "Husband [MJP] shall pay 100% for cost of QDRO drafting and submission and any all [sic] applicable Federal Income Taxes and State Taxes associate with the husband's receipt of these funds." [Dkt. No. 92 at Ex. A, p. 4.] Thus, MJP was required to prepare, submit, and pay the cost of obtaining the post-divorce QDROs. MJP failed to do so properly, and SP hired a professional who was an expert in the field of QDRO preparation to review and prepare acceptable division orders that were suitable for submission to the retirement plan administrators. When SP thereafter moved for entry of a judgment from the Family Court on these issues, MJP filed repeated objections, afterwards initiating an action against SP in relation to the QDROs. After finding MJP's actions groundless and for the purpose of harassment, the Family Court awarded several judgments in SP's favor, for both sanctions and attorney's fees [Dkt. No. 92 at Ex. E-H].

C. The Bankruptcy Filing

On September 28, 2021, Defendant commenced a voluntary petition for relief pursuant to Chapter 7 of Title 11 of the United States Code in the Bankruptcy Court for the Northern District of Texas [See Case No. 21-31735]. Thereafter, Plaintiff filed her complaint pursuant to 11 U.S.C § 523(a)(5) and (a)(15), objecting to the dischargeability of the debts stemming from a total of six judgments or orders rendered against Defendant in connection with each the post-divorce Defamation Suit and the post-divorce QDRO Suit:

1. With respect to the Defamation Suit, a "Mandate" (entered on May 11, 2020) from the Texas Court of Appeals for the Fifth Appellate District, issued after its dismissal of MJP's unsuccessful appeal of the transfer of the Defamation Suit to the Family Court, awarding SP's cost of appeal [Dkt. No. 92 at Ex. B].

2. With respect to the Defamation Suit, an "Order on Respondent's Motion to Dismiss Baseless Causes of Action" (entered July 2, 2020), dismissing the Defamation Suit and assessing $20,000.00 in attorney's fees and expenses against MJP and in favor of SP [Dkt. No. 92 at Ex. D].

3. With respect to the QDRO Suit, a "Judgment" (entered May 7, 2021) awarding SP $13,456.00 in attorney's fees and expenses, plus 5% accruing interest, related to the preparation of the QDROs. [Dkt. No. 92 at Ex. E].

4. With respect to the QDRO Suit, an additional "Order Awarding Attorney Fees and Expenses" (entered May 7, 2021) for $4,853.36 in attorney's fees, plus 5% accruing interest, after the Family Court found Defendant's objections to entry of judgment in the QDRO Suit to be "groundless and brought in bad faith or for purpose of harassment." [Dkt. No. 92 at Ex. F].

5. With respect to the QDRO Suit, yet another "Order Awarding Attorney Fees and Expenses" (entered May 7, 2021) for another $1,100.00 attorney's fees, plus 5% accruing interest, in connection with Plaintiff's amended motion for a final written judgment [Dkt. No. 92 at Ex. G].

6. With respect to the QDRO Suit, yet another "Judgment" (entered May 14, 2021) for $5,000.00 in sanctions, after the court found Defendant's actions in the QDRO Suit groundless and for the purpose of harassment [Dkt. No. 92 at Ex. H].

Defendant promptly filed a motion to dismiss this nondischargeablity adversary proceeding under Federal Rule of Civil Procedure 12(b). This Court denied the motion, stating that Plaintiff had established a plausible claim.

Defendant then filed a motion for summary judgment, arguing that none of the debts owed to Plaintiff fall under the purview of either 11 U.S.C § 523(a)(5) or (a)(15). Plaintiff countered with her own motion for summary judgment, stating that Defendant cannot receive a discharge of any of the six debts created by the court judgments/orders set forth above, which she claims are all debts arising from "a domestic support obligation" (§ 523(a)(5)) or, in the alternative, were "incurred by the debtor…in connection with . . . a divorce decree" (§ 523(a)(15)).

II. Standard for Summary Judgment

Summary judgment is proper where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. Civ. P. 56, as made applicable by Fed.R.Bankr.P. 7056. In concluding whether a question of fact has been raised, the evidence must be viewed in the light most favorable to the non-moving party. Berquist v. Washington Mut. Bank, 500 F.3d 344, 349 (5th Cir. 2007). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Pylant v. Hartford Life and Acc. Ins. Co., 497 F.3d 536, 538 (5th Cir. 2007).

A court's role at the summary judgment stage is not to weigh the evidence or decide the truth of the matter at hand but rather to determine solely whether a genuine issue of material fact exists. Peel & Co., Inc. v. The Rug Market, 238 F.3d 391, 394 (5th Cir. 2001).^[5] After the movant has presented a properly supported motion for summary judgment, the burden then shifts to the nonmoving party to show with "significant probative evidence" that a genuine issue of...