In re Soforenko
| Decision Date | 07 January 1997 |
| Docket Number | Bankruptcy No. 95-40380-HJB,Adversary No. 95-4204. |
| Parties | In re Joel F. SOFORENKO, Debtor. Rhonda SOFORENKO, Plaintiff, v. Joel F. SOFORENKO, Defendant. |
| Court | United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of Massachusetts |
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Peter M. Stern, Springfield, for Defendant.
James M. Smith, Lexington, Gary M. Weiner, Springfield, for Plaintiff.
Edward V. Sabella, Springfield, for Bruce D. Clarkin.
Before the Court for determination is the complaint of Rhonda Soforenko (the "Plaintiff") against Joel F. Soforenko (the "Debtor"), her former husband. Through her complaint, the Plaintiff seeks to establish that certain obligations of the Debtor imposed under the terms of a state court divorce judgment are nondischargeable pursuant to 11 U.S.C. § 523(a)(5), 11 U.S.C. § 523(a)(15), or 11 U.S.C. § 523(a)(6).
The following constitute findings of fact and conclusions of law, pursuant to Fed. R.Bankr.P. 7052.
The Judgment of Divorce Nisi (the "Decree") entered by the Commonwealth of Massachusetts Trial Court, Probate and Family Court Department, Hampden Division (the "Probate Court") on July 12, 1994 ordered the Debtor to pay to the Plaintiff the weekly sum of $300 for her support and $600 for the support of the minor children. The Decree also ordered various other payments and conveyances between the Debtor and the Plaintiff. However, to date, the following obligations of the Debtor to the Plaintiff decreed by the Probate Court have not been met:
On January 31, 1995, the Debtor filed with this Court a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. The Plaintiff timely filed the instant complaint maintaining that the above obligations were nondischargeable under either § 523(a)(5), § 523(a)(15), or § 523(a)(6). After the completion of approximately four days of testimony, the Court took the matter under advisement.
The Debtor and the Plaintiff were divorced on July 12, 1994 after approximately 15 years of marriage. They have three minor children who reside with the Plaintiff. The Debtor is a sole practitioner whose law firm, Soforenko & Associates, P.C., primarily handles personal injury and bankruptcy cases.
The Plaintiff has attained Bachelor of Science and Master's degrees in speech pathology. In fact, she was employed as a speech therapist until 1985, after which time she stopped working outside of the home in order to attend to the needs of the minor children. Shortly after the divorce, the Plaintiff began working full-time as a speech therapist with the Ludlow School Department.
After examining the evidence presented as to the financial circumstances of the parties, the Court makes the following findings as to the income and expenses of the Debtor and the Plaintiff, both at the time of the divorce and at the time of trial.
The Debtor testified that the financial statement, dated April 28, 1993, submitted to the Probate Court, (Ex. J), represented a fair and accurate description of his economic condition at the time of the divorce. (Mar. 1, 1996 Tr. at 116.) That financial statement reflected that the Debtor received a gross salary of $1,435 per week from Soforenko and Associates, P.C.2 In addition, the Debtor testified that he received fringe benefits from the law firm not reflected in the financial statement. For example, the law firm paid for an automobile for the Debtor's use and all expenses associated with the vehicle, including insurance and maintenance. (Mar. 1, 1996 Tr. at 51.) Additionally, the law firm also paid for the Debtor's legal expenses incurred in both his divorce and bankruptcy cases. (Mar. 1, 1996 Tr. at 75-77.) The firm also provided a "cafeteria" health insurance plan for the Debtor and the law firm employees. (Mar. 1, 1996 Tr. at 99.)
From his salary, the Debtor paid $900 per week in alimony and child support. (Ex. A ¶ 14.) In addition, the April 28, 1993 financial statement listed weekly tax deductions of $458.61 and weekly living expenses of $209.00. Thus, the Debtor's expenses exceeded his net income by $132.61 per week.
With respect to the Debtor's assets, the April 28, 1993 financial statement described only $1,300 in savings. However, the Decree also awarded the Debtor the School Street Property. The Probate Court Master's Draft Report, dated April 15, 1994 and followed, as amended, by the Probate Court (the "Master's Report"), estimated that the School Street Property had equity of $125,000. (Def.'s Ex. 3 at 8.)
At the time of trial in the instant matter, the Debtor testified that his gross weekly salary from the law firm was $1,495. (April 12, 1996 Tr. at 125.) The Debtor also testified that his current expenses were substantially similar to those shown in a September 7, 1995 financial statement also furnished to the Probate Court. (April 12, 1996 Tr. at 128; Def.'s Ex. 6.) That financial statement listed, in addition to the Debtor's $850 weekly payment in alimony and child support3, weekly tax deductions in the amount of $361.31, and weekly expenses of $209.00. Thus, the Debtor had only $74.69 in excess income at the end of each week.
The Debtor testified that, at the time of trial, his only assets (other than the proprietary interest in his law firm) were approximately $300 in checking accounts and $400 in an IRA. (April 12, 1996 Tr. at 128-29.) The School Street Property awarded to the Debtor by the Probate Court had been foreclosed upon and there is deficiency owed in the approximate amount of $90,000.
The Plaintiff testified that her financial statement dated May 24, 1993, furnished to the Probate Court, (Ex. H), represented a fair and accurate description of her economic condition at the time of the divorce. (Feb. 29, 1996 Tr. at 120.) The Probate Court awarded the Plaintiff $300 in alimony per week and $600 in child support per week. (Ex. A ¶ 14.) This was the Plaintiff's only source of income at the time of the divorce. The May 24, 1993 financial statement listed weekly expenses of $1,157.28. Therefore, the Plaintiff's expenses exceeded her income by $257.28 on a weekly basis. The Plaintiff's assets consisted of $68,630 in equity in the marital home, $25,011.17 in an IRA, and $1,448.87 in a savings account. (Ex. H).
At the time of trial, the Plaintiff was earning a gross yearly salary of $36,237 as a speech therapist, (Feb. 29, 1996 Tr. at 118), resulting in a weekly salary of $696.86. In addition the Plaintiff received $250 per week in alimony and $600 per week in child support from the Debtor. (Ex. E). Thus, the Plaintiff's total weekly income amounted, at the time of trial, to the sum of $1,546.86.
The Plaintiff testified that a financial statement, dated May 31, 1995, furnished to the Probate Court, (Ex. G), was a fair and accurate description of her economic condition at the time of trial in the instant matter. (Feb. 29, 1996 Tr. at 126.) Based on that statement and the Plaintiff's testimony4, it appears that her total weekly expenses equaled $1,702.35. Therefore, the Plaintiff's expenses exceeded her income by $155.49 on a weekly basis.
Despite operating her household at a deficit from the time of the divorce until the time of trial, the Plaintiff has somehow managed to accumulate significant savings. The Plaintiff testified that at the time of trial her assets consisted of a $5,000 certificate of deposit, (Feb. 29, 1996 Tr. at 159); a combined balance of $11,590 in her checking and savings accounts as of February 21, 1996, (Feb. 29, 1996 Tr. at 166); an IRA of $27,000, (Feb. 29, 1996 Tr. at 129); and equity of $73,000 in the marital home. (Feb. 29, 1996 Tr. at 160.) In addition, from January of 1995 until the time of trial, the Plaintiff paid James M. Smith, one of her attorneys, from $500 to $1,000 every month. (Feb. 29, 1996 Tr. at 161-64.)5
The Plaintiff argues that each of the Debtor's above referenced unmet obligations is in the nature of support and thus is nondischargeable pursuant to § 523(a)(5). The Plaintiff further argues that to the extent that this Court should find that any of the obligations are in the nature of a property distribution, rather than support for the purposes of § 523(a)(5), the obligation is nondischargeable pursuant to § 523(a)(15) since the Debtor has the ability to pay the obligation, and the detriment to the Plaintiff of nonpayment far outweighs the benefit of the discharge to the Debtor. The Plaintiff also argues that the obligations are nondischargeable under § 523(a)(6) in that the Debtor willfully and maliciously caused injury to her by allowing property to be either spent, converted, foreclosed, or abandoned.
The Debtor...
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