Lawrence v. Combs (In re Combs)

• Decision Date: 21 January 2016
• Docket Number: Case No. 14–51339–SCS,APN 15–05009–SCS
• Citation: 543 B.R. 780
• Court: U.S. Bankruptcy Court — Eastern District of Virginia
• Parties: In re: David Michael Combs, Debtor. Stacy L. Lawrence, Plaintiff, v. David Michael Combs, Defendant.

543 B.R. 780

In re: David Michael Combs, Debtor.

Stacy L. Lawrence, Plaintiff,

v.David Michael Combs, Defendant.

Case No. 14–51339–SCS

APN 15–05009–SCS

United States Bankruptcy Court, E.D. Virginia, Newport News Division .

Signed January 21, 2016

Jeffrey L. Marks, Kaufman & Canoles, Virginia Beach, VA, for Plaintiff.

Barry W. Spear, Boleman Law Firm, P.C., Convergence Center III, Virginia Beach, VA, for Defendant.

MEMORANDUM OPINION

STEPHEN C. ST. JOHN, Chief United States Bankruptcy Judge

This matter came on for trial on November 13, 2015, on the Complaint to Determine Dischargeability of Debt (the "Complaint") filed by Stacy L. Lawrence ("Lawrence") on April 13, 2015, pursuant to 11 U.S.C. § 523 regarding claims against the debtor, David Michael Combs (the "Debtor"). The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(b) and 1334(b). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409(a). After the conclusion of the presentation of evidence¹ and argument of the parties, the Court took the matter under advisement. The Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.

I. The Complaint

This Complaint arises from an apparently highly acrimonious divorce proceeding in the Circuit Court of the City of Williamsburg–James City County, Virginia (the "Divorce Proceeding") between Lawrence and the Debtor. Complaint to Determine Dischargeability of Debt, ¶ 6, filed April 13, 2015, Adv. Proc. No. 15–05009 –SCS, ECF No. 1 (hereinafter, "Compl."). The goal of the Complaint is simple: "Lawrence has initiated this adversary proceeding seeking an order from the Bankruptcy Court declaring that the obligations owed by the Debtor to Lawrence as part of their divorce are of the nature of alimony, maintenance, and/or support and are therefore domestic support obligations ('DSO') pursuant to 11 U.S.C. § 101(14) [sic ] and thus, nondischargeable under 11 U.S.C. § 523(a)(5)." Id. ¶ 1.² The state court entered a Final Decree of Divorce (the "Divorce Decree") on July 31, 2012, thereby terminating the parties' marriage. Id. ¶ 7. The state court thereafter entered an Equitable Distribution Order on May 30, 2014 (the "Order"), which Lawrence asserts includes awards in the nature of alimony, maintenance, or support. Id. ¶¶ 8, 15. Lawrence alleges the Divorce Decree and the Order establish a number of domestic support obligations, as that term is defined by the Bankruptcy Code, owed by the Debtor to her and that the sums are "essential to enable Lawrence to maintain basic necessities and/or to provide shelter" for her and the parties' minor child, as follows:

1. Support arrearage arising from a February 23, 2012 prepetition judgment entered against the Debtor in the amount of $1,452.27 ("February 23 Support").

2. Spousal support arrearage resulting from a judgment entered by the state court pursuant to an order entered April 6, 2011, in the amount of $3,812.00 with interest at 6% per annum from July 16, 2013, through September 26, 2014, which equals $273.84, for a total of $4,085.84 ("April 6 Support").

3. Spousal and child support arrearage from November 8, 2010, through February 17, 2011, totaling $6,293.13. Lawrence asserts, "During the period of time the child support was $777.00 per month and spousal support was $1,130.00 per month for a total support obligation each month of $1,907.00. The arrearage covers a period of 3 months and 9 days, with a per diem of $63.57, for a total of $6,293.13, and Lawrence was awarded a judgment in the amount of $6,293.13, plus the legal rate of interest from July 16, 2013." (Hereinafter, the "February 17 Support").³

4 Division of 2010 tax refunds in the amount of $2,330.00, which Lawrence alleges represents spousal support. (Hereinafter, the "Tax Division").⁴

5. Division of retirement accounts and pension plans. Lawrence was awarded $56,500.00 of the Debtor's retirement account with Anheuser–Busch and his Individual Retirement Accounts, which she alleges represents support ("Retirement Account Division").

6. Reimbursement of L.E.C.'s⁵ education fund ("Education Fund") in the amount of $12,750.00, which the Debtor was ordered to reimburse at a rate of $1,000.00 every six (6) months commencing January 1, 2015, and continuing on June 1 and January 1 of each year thereafter until L.E.C. turns eighteen (18) in 2019, when the remaining unpaid balance is due and payable in full ("Education Fund Reimbursement").

7. Reimbursement of Lawrence for foreclosure avoidance costs she paid to Glasser & Glasser on property located at 3986 Bournemouth, Williamsburg, Virginia. Lawrence was awarded a judgment in the amount of $12,923.76 ("Foreclosure Avoidance").

8. Reimbursement for a payment made by Lawrence to Lytle Title, for which Lawrence was awarded a judgment in the amount of $7,500.00 ("Lytle Title Reimbursement").⁶

9. The Debtor was ordered to pay Lawrence $58,000.00 representing the difference in the equity between properties located at 3986 Bournemouth and 3483 Fenwick Drive, both in Williamsburg, Virginia. (Hereinafter, the "Equity Difference Payment").

10. Rental income payment of $1,600.00 representing imputed rental income ("Rental Income Payment").

11. Reimbursement of L.E.C.'s medical expenses in the amount of $3,949.12, representing ninety-three (93) percent of the uninsured medical and dental expenses incurred in the total amount of $4,496.37 ("Medical Expense Reimbursement").

12. The balance due on an original garnishment of spousal support in the amount of $344.48 ("Garnishment Payment").

See Compl. ¶¶ 9, 13–14, 16, 19 (items 1–12 above are collectively referred to as the "Lawrence Claim"). Lawrence asserts the total amount of the domestic support obligation owed to her by the Debtor and not subject to discharge pursuant to 11 U.S.C. § 523(a)(5) is $167,728.60. Compl. ¶¶ 9, 11, 20.⁷ The Complaint also prays for an award of attorney fees but fails to specify an amount certain, the circumstances supporting an award, or the basis for such an award. Id. at 5 (prayer for relief). In sum, Lawrence prays this Court declare that she holds a nondischargeable claim against the Debtor in an amount of not less than $167,728.60, along with interest, costs, and attorney fees. Id. ; see also id. at ¶ 20. The Debtor answered the Complaint, denying that the entirety of the Lawrence Claim constitutes a nondischargeable domestic support obligation. Answer to Complaint ¶¶ 1, 8–9, 11, 13, 16, 18–19, filed May 15, 2015, Adv. Proc. No. 15–05009 –SCS, ECF No. 6 (hereinafter, "Answer"). Accordingly, the Debtor asserts that the Lawrence Claim is dischargeable. Id. ¶ 20.

II. The Bankruptcy Filing

The Debtor filed his voluntary Chapter 13 petition on September 26, 2014 ("Bankruptcy Case"). Pet. filed September 26, 2014, Case No. 14–51339–SCS, ECF No. 1. The Debtor scheduled various claims held by Lawrence as unsecured nonpriority debts, labeled as property settlements, and subject to discharge.⁸ On October 8, 2014, the Debtor filed his Chapter 13 Plan ("Plan") and related motions in the Bankruptcy Case. The Plan provided for the payment of certain amounts, characterized as domestic support obligations, to Lawrence. Specifically, Section 2.B. provided for payment of two amounts to Lawrence with priority status pursuant to 11 U.S.C. § 507, one in the amount of $3,949.00 and the other in the amount of $6,293.13.⁹ The Plan proposed to pay both amounts pro rata over 38 months. Plan ¶ 2.B., filed October 8, 2014, Case No. 14–51339–SCS, ECF No. 11. After resolution of an objection to the Plan filed by the Chapter 13 Trustee unrelated to the issues of the Complaint, an order was entered confirming the Plan on March 13, 2015. Order Confirming Plan, entered March 13, 2015, Case No. 14–51339–SCS, ECF No. 43; see also Order Settling Trustee's Objection to Confirmation of Plan, entered February 19, 2015, Case No. 14–51339–SCS, ECF No. 40.¹⁰

III. Findings of Fact

A. Conceded Domestic Support Obligations

Perhaps consistent with the apparent level of animosity in the Divorce Proceeding, Lawrence and the Debtor were unable to reach a factual stipulation. However, the Debtor concedes the following four obligations are in the nature of support and are not subject to discharge: (1) February 23 Support in the amount of $1,452.27; (2) April 6 Support in the amount of $4,085.84; (3) February 17 Support in the amount of $6,293.13; and (4) the Medical Expense Reimbursement in the amount of $3,949.12. (These items are collectively referred to as the "Conceded Support Payments."). Transcript of November 13, 2015 Trial at 5–7, ECF No. 19 (hereinafter, "Tr."). The Conceded Support Payments total $15,780.36. Accordingly, the Court determine these obligations to be nondischargeable.

B. Trial Testimony

The exhibits tendered by Lawrence were admitted without objection. Tr. at 43.¹¹

The testimony at trial was largely unhelpful in resolving the question of whether all, or some portion, of the Lawrence Claim (other than the Conceded Support Payments) is in the nature of alimony, maintenance, or support. Instead, the witnesses were directed by counsel to rehash much of the sordid history of the Divorce Proceeding, which is not relevant to the issues raised in the Complaint.

Upon examination by Lawrence's counsel,¹² the Debtor testified that he and Lawrence were married in 1998, and their divorce was final in 2012. Tr. at 8, 34–35. The Debtor presently resides at 3483 Frederick Drive, Toano, Virginia. Id. at 9. The remainder of the Debtor's testimony largely involved the review of his bankruptcy schedules. The Debtor has been employed by Anheuser–Busch since 2000 and has been a full-time employee since 2006. Id. at 25; see also Lawrence Exh. 1, Pet., Schedule I, filed September 26, 2014, Case No. 14–51339–SCS, ECF No. 1. The Debtor confirmed his income from Anheuser–Busch was $87,793.22 in 2012; $102,001.32 in 2013; and, as of September 18, 2014, the Debtor had gross income of $88,110.70 for 2...