In re Schweitzer

• Decision Date: 04 June 2007
• Docket Number: Adversary No. 06-2600.,Bankruptcy No. 06-53946.
• Citation: 370 B.R. 145
• Parties: In re Deborah Lynn SCHWEITZER, Debtor. Vincent L. Schweitzer, Plaintiff, v. Deborah Lynn Schweitzer, Defendant.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

370 B.R. 145

In re Deborah Lynn SCHWEITZER, Debtor Vincent L. Schweitzer, Plaintiff, v. Deborah Lynn Schweitzer, Defendant.

Bankruptcy No. 06-53946.

Adversary No. 06-2600.

United States Bankruptcy Court, S.D. Ohio, Eastern Division at Columbus.

June 4, 2007.

COPYRIGHT MATERIAL OMITTED

Nannette J.B. Dean, Columbus, OH, Attorney for Plaintiff.

Vincent Schweitzer, Grove City, OH, pro se.

Michael T. Gunner, Columbus, OH, Attorney for Defendant/Debtor.

Deborah Lynn Schweitzer, Marysville, OH, pro se.

Larry J. McClatchey, Chapter 7 Trustee, Columbus, OH.

Office of the U.S. Trustee, Columbus, OH.

MEMORANDUM OPINION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

JOHN E. HOFFMAN, Jr., Bankruptcy Judge.

Vincent Schweitzer ("Vincent") initiated this adversary proceeding against Deborah Schweitzer, his former spouse and the debtor in this Chapter 7 case ("Deborah" or "Debtor"), seeking a judgment declaring that (1) Deborah's obligation under the parties' separation agreement to hold him harmless on their joint mortgage indebtedness is nondischargeable under 11 U.S.C. § 523(a)(15),¹ and (2) Deborah's hold harmless obligation with respect to the parties' joint Chase Bank ("Chase") credit card account is nondischargeable under both 11 U.S.C. § 523(a)(2)(A) and (a)(15). Before the Court are Vincent's Motion for Summary Judgment ("Motion") (Doc. 13), filed on February 22, 2007; Deborah's response ("Response") (Doc. 18), filed on March 13, 2007; and Vincent's reply ("Reply") (Doc. 19), filed on March 22, 2007. The Motion was filed for the limited purpose of obtaining summary judgment on the second and third claims for relief asserted in Vincent's complaint — the nondischargeability claims brought under § 523(a)(15). Because Deborah's hold harmless obligations are debts incurred in connection with a separation agreement within the meaning of § 523(a)(15), they are excepted from discharge. Vincent accordingly is entitled to summary judgment on his claims for relief based on § 523(a)(15).

I. Jurisdiction

The Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. 28 U.S.C. § 157(b)(2)(I).

II. Factual and Procedural Background

The material facts in this case are not in dispute and are drawn from the Motion, Response and Reply, the supporting exhibits, and the schedules and other filings made in the Debtor's underlying Chapter 7 case.

Deborah and Vincent were married in October 1991 and separated in October 2004. At the time of their separation they jointly owned a home located at 211 Sorensen Drive, Marysville, Ohio. Wells Fargo Home Mortgage ("Wells Fargo") and Homecomings Financial ("Homecomings") held first and second mortgages, respectively, on the property. Under the Petition for Dissolution of Marriage and a Separation Agreement ("Separation Agreement"), signed by Vincent and Deborah on "October 14, 2004, Deborah was awarded the marital residence and agreed to hold Vincent harmless on the parties' joint mortgage indebtedness.² In addition, each party agreed to be responsible for the debts incurred in his/her own name and to hold the other party harmless from liability on these individual obligations. The Separation Agreement also prohibited each party from incurring debts or obligations upon the credit of the other and provided that in the event any such debt was incurred, the party incurring the debt would indemnify and hold the other party harmless.³ The marriage was dissolved in November 2004.

In July 2005, Deborah obtained cash advances in the aggregate amount of $21,000 by drawing three checks on the joint Chase credit card account. In addition to the cash advances, she used the credit card to charge nearly $1,000 in additional purchases during August 2005. Deborah made monthly payments to Chase on this credit card debt in September, October and November of 2005, but made no payments thereafter. Vincent, although he had never used the Chase account, made payments on the account in an effort to protect his credit standing.

In violation of the provision in the Separation Agreement requiring her to "remove [Vincent's] name from the mortgage[s]," and to take over all other financial responsibilities for the marital residence, Separation Agreement ¶ 4, Deborah failed to refinance the mortgages. Vincent therefore remained liable on the mortgage debt. In January 2006, Deborah defaulted on her mortgage payments. On March 24, 2006, Vincent initiated a contempt proceeding in the Franklin County Court of Common Pleas, Domestic Relations Division, alleging that Deborah had violated the terms of the Separation Agreement. On June 9, 2006, Wells Fargo initiated foreclosure proceedings, naming both Deborah and Vincent as defendants.

On July 31, 2006, Deborah filed a petition for relief under Chapter 7 of the Bankruptcy Code. Vincent commenced this adversary proceeding on September 28, 2006. As set forth above, Vincent's complaint alleges that Deborah's marital debts are nondischargeable under 11 U.S.C. § 523(a)(2)(A) and (a)(15). He also seeks a money judgment in the amount of $24,128.22, plus interest on the Chase debt, any deficiency balance resulting from the mortgage foreclosure, and "$1,000 for each incidence of derogatory information reported on [Vincent's] credit report." Compl. at 3-4.

As previously stated, the Motion seeks summary judgment only as to the second and third claims for relief stated in Vincent's complaint — his nondischargeability claims based on § 523(a)(15).

III. Legal Analysis

A. Summary Judgment Standard

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) (made applicable in this adversary proceeding by Fed. R. Bankr.P. 7056). On motion for summary judgment, the inferences drawn from the underlying facts must be viewed in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anthony v. BTR Auto. Sealing Sys., Inc., 339 F.3d 506, 511 (6th Cir.2003); McKenzie v. Bell-South Telecomms., Inc., 219 F.3d 508, 512 (6th Cir.2000). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Leary v. Daeschner, 349 F.3d 888, 897 (6th Cir.2003); Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989). Once the moving party satisfies its burden, the non-moving party must then "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. 1348 (quoting Fed.R.Civ.P. 56(e)); Lanier v. Bryant, 332 F.3d 999, 1003 (6th Cir.2003); McKenzie, 219 F.3d at 512. The nonmoving party may not meet this burden by resting on mere allegations in the pleadings. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324, 106 S.Ct. 2548; Mounts v. Grand Trunk W.R.R., 198 F.3d 578, 580 (6th Cir.2000). "Merely alleging the existence of a factual dispute is insufficient to defeat a summary judgment motion; rather, there must exist `in the record a genuine issue of material fact." McKenzie, 219 F.3d at 512 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A material fact is one that has the "potential to affect the outcome of the suit under applicable law." FDIC v. Anchor Props., 13 F.3d 27, 30 (1st Cir.1994) (citations and internal quotation marks omitted). "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. See also Niecko v. Emro Mktg. Co., 973 F.2d 1296, 1304 (6th Cir.1992).

B. Hold Harmless Agreement — Chase Credit Card Debt

Under the terms of the Separation Agreement, neither spouse was permitted to use the credit of the other to incur any indebtedness. If either spouse violated this arrangement, the. Separation Agreement provided that the spouse incurring the debt would "save the other absolutely harmless from any debt or obligation so charged or otherwise incurred." Separation Agreement ¶ 15. After the divorce was final, Deborah used the joint Chase credit card to take the cash advances and incur additional charges described above. At issue here is whether Deborah's obligation to hold Vincent harmless on the Chase debt is nondischargeable under § 523(a)(15).

Section 523 of the Bankruptcy Code provides, in pertinent part, as follows:

(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt —

. . .

(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit[.]

11 U.S.C. § 523(a)(15). To be excepted from discharge under this provision, the debt must: (1) be to a spouse, former spouse, or child of the debtor; (2) not be of the type described in § 523(a)(5), i.e., not a domestic support obligation; and (3) have been incurred in the course of a divorce or separation or in connection with a separation agreement, divorce decree, or other order of a court. Id. The party contesting the dischargeability of a debt has the burden of proving these elements by a...