in re Pino, Bankruptcy No. 00-31547-LK. Adversary No. 00-3044-LK.
| Decision Date | 15 August 2001 |
| Docket Number | Bankruptcy No. 00-31547-LK. Adversary No. 00-3044-LK. |
| Citation | 268 BR 483 |
| Parties | In re Jorge H. PINO, Debtor. Jorge H. Pino, Plaintiff, v. Elena Pino, Defendant. |
| Court | U.S. Bankruptcy Court — Western District of Texas |
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E.P. Bud Kirk, El Paso, TX, for plaintiff.
Don W. Minton, El Paso, TX, for defendant.
Before the Court is Debtor's Complaint to Determine Dischargeability of Debt. The Complaint describes six debts, each of which is recognized to arise out of a divorce, and asks the Court to determine whether they are non-dischargeable under § 523(a)(5) or § 523(a)(15), and if under § 523(a)(15), whether the Debtor is entitled to a discharge under the exceptions to non-dischargeability of marital debts under § 523(a)(15)(A) or (B). A timely Response and Counterclaim was filed by the Defendant (non-debtor spouse) also asking the court to determine the issues under 11 U.S.C. § 523(a)(5) and (a)(15). The matter was tried before the court on May 31, 2001. After considering argument of the counsel, the evidence presented, observing the candor and demeanor of the witnesses and otherwise being duly advised in the premises, the court enters the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a) as adopted by Fed.R.Bankr.P. 7052. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I), and this court has exclusive jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b), and 28 U.S.C. § 157(a) & (b)(1).
The Debtor Jorge Pino was married one time prior to his marriage to Elena. That marriage dissolved in divorce in or about 1993. He then married Elena. He and Elena had been involved in an ongoing relationship for several years before their marriage. They had two children and adopted a third. These children and their years of birth are Jorge (Coco) — 1986, Julian — 1991; and Briana — 1993. The couple divorced in June 1999.
Mr. Pino is a pilot for Federal Express and earns approximately $180,000 per year. He is currently 52 years old and faces mandatory retirement at age 60, 7½ years from this date. He earned a B.S. degree in aeronautical engineering and served in the Marines for about 10 years. He is not eligible for any military retirement pay. Ms. Pino is 42 years old. She is a registered nurse with a Masters of Science degree, and is currently employed by Columbia Healthcare System earning approximately $58,000 per year and participates in the company's 401k plan. Both parties now live in the El Paso area in the State of Texas.
During the marriage Jorge and Elena became involved with two orphans, nephews of a girl who worked for them. The two boys, Eusebio and Jesus, were Mexican Nationals. While married, the couple initiated actions to adopt the two children. With the divorce pending, Elena withdrew from the adoption process. Mr. Pino advises the court that he continued with adoption proceedings. Since the divorce he has remarried and has completed the adoption process with Jesus. However, at the time of trial, Jesus was still living in Juarez, Mexico in a house rented by the Debtor and with a housekeeper paid for by the Debtor. Eusebio is now living in Durango, Mexico in a boarding school and is being supported by the Debtor. The information about the current status of these two children and the status of adoption proceedings was all provided through oral testimony. No documents, court papers, or written evidence was introduced to establish the accuracy of this information.
While married, Jorge and Elena Pino enjoyed a "high standard" of living. They built a luxurious and expensive home in New Mexico, referred to as the Appaloosa house, owned another home in which Elena operated a child care business in El Paso, and owned yet a third a home in Memphis, Tennessee. They had a Lincoln Navigator automobile and a new Motor Home. According to the divorce papers they owned quite a bit of furniture, a collection of art work and various items described as "collectibles." With this standard of living came a lot of debt. The divorce itself was worked out in two major stages. A Bifurcated Judgment of Divorce (Px-3) was entered on or about June 28, 1999 which actually granted the divorce. A Final Judgment on Reserved Issues was entered on June 12, 2000 which essentially divided the property, debts and established the child support and custody arrangements.
Since the divorce Mr. Pino has remarried. He acquired a smaller home in El Paso and drives a 1989 van with over 175,000 miles on it. Ms. Pino has not remarried, now resides in the house that was once used for her child care business, and has a 1995 Pontiac, a 1993 Ford pickup and a the 1997 Motor Home. The two younger children reside full time with Ms. Pino while Jorge (Coco) has moved back with Mr. Pino. Child support is being paid by Mr. Pino in the amount of $3,851/month. Mr. Pino also maintains a $600,000 policy of life insurance with the children listed as beneficiaries, pays approximately 75% of any extracurricular activity expense they are involved with and maintains health insurance coverage for them. Mr. Pino also had part of his retirement account with Federal Express allocated to Elena Pino; she would be entitled to $1,000/month upon his retirement.
The two parties agreed at trial that of all the issues involved in their divorce, there were only 6 debts which Mr. Pino was ordered to pay in the divorce that are in dispute.. They are described as follows:
What the parties disagree on is whether the specified obligations fall within the "support or maintenance" provisions of 11 U.S.C. 523(a)(5) or the "property settlement" provisions of 11 U.S.C. 523(a)(15) and if under this latter section, whether the Debtor is entitled to discharge all or any of them.
Section 523(a) of the Bankruptcy Code excepts certain categories of debts from a debtor's discharge granted under section 727, 1141, 1228(a), 1228(b) or 1328(b). Among the debts rendered non dischargeable by this provision are marital obligations owed to a spouse, former spouse, or child of the Debtor incurred by the Debtor in the course of a divorce or separation. Specifically, § 523(a)(5) of the Code excepts from discharge any debt:
11 U.S.C. § 523(a)(5).
Thus, under § 523(a)(5), a debt that is "actually in the nature of alimony, maintenance or support of a spouse, former spouse, or child of the Debtor" is nondischargeable in bankruptcy. The burden of proof is on the person who asserts nondischargeability of a debt to prove its exemption from discharge. In re Benich, 811 F.2d 943, 944 (5th Cir.1987); In re Harrell, 754 F.2d 902, 904 (11th Cir.1985). The standard of proof is by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 659-60, 112 L.Ed.2d 755 (1991).
The question of whether a particular debt constitutes "alimony, maintenance or support" is a question of federal bankruptcy law, and not of state law. In re Strickland, 90 F.3d 444, 446 (11th Cir. 1996); In re Tatge, 212 B.R. 604, 608 (8th Cir.BAP1997); H.R. REP. NO. 95-959, 95th Cong. & Ad. News at p. 6319 (1977). The crucial issue in making this determination is the intent of the parties (or the divorce court) and the function the award was intended to serve at the time of the divorce. Cummings v. Cummings, 244 F.3d 1263, 1265-66 (11th Cir.2001); In re Kline, 65 F.3d 749, 751 (8th Cir.1995). To make this determination, a bankruptcy court should undertake "a simple inquiry as to whether the obligation can legitimately be characterized as support, that is, whether it is in the nature of support". In re Harrell, 754 F.2d 902, 906 (11th Cir. 1985) If the debt is in the nature of "alimony, maintenance or support," the debt is not dischargeable.
The Fifth Circuit has set forth a list of factors to consider in determining this issue, including intent of the parties. See Dennis v. Dennis, 25 F.3d 274, 279 (5th Cir.1994); In re Davidson, 947 F.2d 1294, 1296 (5th Cir.1991); In re Benich, 811 F.2d 943, 945 (5th Cir.1987). In Dennis, the Fifth Circuit stated:
This Court set forth a nonexclusive list of factors which bankruptcy courts should review in deciding whether a divorce obligation constitutes alimony, maintenance, or support. The considerations include the parties\' disparity in earning capacity, their relative business opportunities, their physical condition, their educational background, their probable future financial needs, and the benefits each party would have received had the marriage continued.
In the context of § 523(a)(5), "substance prevails over form." In re Warren, 160 B.R. 395, 398 (Ban...
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