Lowry v. Nicodemus (In re Nicodemus)

• Citation: 497 B.R. 852
• Decision Date: 07 October 2013
• Docket Number: BAP No. 12–8050.
• Parties: In re Sherri J. NICODEMUS, Debtor. Laverne K. Lowry, Plaintiff–Appellee, v. Sherri J. Nicodemus, Defendant–Appellant.
• Court: Bankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Sixth Circuit

497 B.R. 852

In re Sherri J. NICODEMUS, Debtor.Laverne K. Lowry, Plaintiff–Appellee,

v.Sherri J. Nicodemus, Defendant–Appellant.

BAP No. 12–8050.

United States Bankruptcy Appellate Panel of the Sixth Circuit.

Submitted: Aug. 20, 2013.

Decided: Oct. 7, 2013.

ON BRIEF: Michael J. Moran, Gibson & Lowry, Cuyahoga Falls, OH, for Appellant. Walter R. Lawrence, Tallmadge, OH, for Appellee.

Before: HUMPHREY, LLOYD, and PRESTON, Bankruptcy Appellate Panel Judges.

OPINION

C. KATHRYN PRESTON, Bankruptcy Judge.

Sherri J. Nicodemus (“Debtor” or “Defendant”) appeals the order of the bankruptcy court determining that the entire debt owed to Laverne K. Lowry (“Plaintiff”) in the amount of $32,186.90 plus interest pursuant to a state court judgment, is nondischargeable under § 523(a)(2)(A). The total sum consists of $9,386.90 in damages for failure to comply with a settlement agreement and $22,800.00 in sanctions for contemptuous failure to comply with a court order. Debtor argues that only the portion resulting from breach of the settlement agreement, or $9,386.90, should be held nondischargeable. For the reasons set forth below, the Panel AFFIRMS the decision of the bankruptcy court holding that the entire debt, in the amount of $32,186.90 plus interest, is nondischargeable under § 523(a)(2)(A).

STATEMENT OF ISSUES

There are two issues presented in this appeal. The primary issue is whether the bankruptcy court erred in determining that the $22,800.00 awarded as a sanction for contemptuous failure to comply with a court order is nondischargeable under § 523(a)(2)(A). The second issue is whether the bankruptcy court erred in denying Debtor's motion to amend or make additional findings of fact pursuant to Fed. R. Bankr.P. 7052.

JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel of the Sixth Circuit (“BAP”) has jurisdiction to decide this appeal. The United States District Court for the Northern District of Ohio has authorized appeals to the BAP, and no party has timely elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A “final” order of a bankruptcy court may be appealed by right under 28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United States, 489 U.S. 794, 797, 109 S.Ct. 1494, 1497, 103 L.Ed.2d 879 (1989) (internal quotations and citations omitted). Determinations of dischargeability are final orders for purposes of appeal. Cash Am. Fin. Servs., Inc. v. Fox (In re Fox), 370 B.R. 104, 109 (6th Cir. BAP 2007) (quoting Hertzel v. Educ. Credit Mgmt. Corp. (In re Hertzel), 329 B.R. 221, 224–25 (6th Cir. BAP 2005)).

Dischargeability determinations are conclusions of law reviewed de novo. Hogan v. George (In re George), 485 B.R. 478 (6th Cir. BAP 2013) (table). Under a de novo standard of review, the appellate court determines the law at issue “independently of, and without deference to, the trial court's determination.” Palmer v. Washington Mut. Bank (In re Ritchie), 416 B.R. 638, 641 (6th Cir. BAP 2009) (citing Gen. Elec. Credit Equities, Inc. v. Brice Rd. Devs., L.L.C. (In re Brice Rd. Devs., L.L.C.), 392 B.R. 274, 278 (6th Cir. BAP 2008)). However, “[t]he Panel must affirm the underlying factual determinations unless they are clearly erroneous.” Hart v. Molino (In re Molino), 225 B.R. 904, 906 (6th Cir. BAP 1998). “[A] finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (citation omitted) (internal quotation marks omitted).

The bankruptcy court's denial of Debtor's motion to amend or make additional findings of fact pursuant to Fed. R. Bankr.P. 7052 is reviewed for abuse of discretion. Besser v. Sepanak, 478 Fed.Appx. 1001 (6th Cir.2012). Abuse of discretion exists when the court “ ‘relies upon clearly erroneous findings of fact or when it improperly applies the law or uses an erroneous legal standard.’ ” Corzin v. Fordu (In re Fordu), 209 B.R. 854, 858 (6th Cir. BAP 1997) (citation omitted). If a trial court's decision determining dischargeability is based on the correct law and facts, the court has not abused its discretion in denying a party's motion to amend or make additional findings of fact.

FACTS

On July 29, 2011, Debtor filed a voluntary petition for relief under Chapter 13 (Case No. 11–52963). In Debtor's schedules, she listed Plaintiff as the holder of an unsecured non-priority claim in the amount of $32,736.79 based on a civil judgment. On December 1, 2011, Plaintiff filed a proof of claim in the amount of $32,186.90.

Prior to the petition date, Debtor was married to Plaintiff's son, John Lowry. Plaintiff and John Lowry had an extensive collection of model trains. On April 27, 2007, John Lowry died. Following John Lowry's death, a dispute arose between Plaintiff and Debtor over the train collection. On July 18, 2007, Plaintiff filed suit against Defendant in the Portage County, Ohio, Court of Common Pleas (“Court of Common Pleas”) seeking more than $25,000 in damages resulting from the Debtor's alleged conversion of the train collection, which he asserted belonged to him (“state court litigation”).

On July 31, 2007, the Court of Common Pleas entered an agreed order tendered by Plaintiff and Defendant, restraining and enjoining certain actions with respect to the train collection. The order provided that Debtor was “restrained and enjoined from selling, transferring, removing, moving, encumbering, or otherwise disposing of any trains, accessories, train memorabilia, displays or other personal property associated with the train collection located at the [Defendant's] premises.” Stipulations, Exh. B, Docket No. 10.¹

In September 2007, Debtor was appointed administratrix of John Lowry's probate estate by the Portage County, Ohio, Probate Court. On November 5, 2007, a magistrate judge of the Court of Common Pleas entered another agreed order in the state court litigation directing that one Amy Richards conduct an inventory of the train collection. On July 13, 2009, following the completion of the inventory, Plaintiff and Defendant, individually and as administratrix of John Lowry's estate, entered into a settlement agreement resolving the state court litigation and matters in Probate Court (the “Settlement Agreement”). The Settlement Agreement identified certain parts of the train collection as belonging to Plaintiff and required Defendant to deliver possession of those parts to Plaintiff. The remainder of the train collection was to be sold at auction and the proceeds were to be split among the parties to the Settlement Agreement. On August 5, 2009, the Court of Common Pleas entered an order dismissing the state court litigation “pursuant to separate settlement agreement entered by the parties” with prejudice. Stipulations, Exh. E, Docket No. 10. On September 23, 2009, Plaintiff filed a motion to enforce the Settlement Agreement in the Court of Common Pleas.

After Plaintiff filed his motion to enforce the Settlement Agreement, the Court of Common Pleas held hearings and entered two orders, on January 29, 2010 and February 24, 2010, both directing Defendant to comply with the terms of the Settlement Agreement to turn over certain trains and accessories to Plaintiff. The court also scheduled a consolidated hearing for April 19, 2010, on Plaintiff's Motion to Enforce the Settlement Agreement and Motion for Contempt and Attorney Fees.

On April 21, 2010, after an evidentiary hearing, the magistrate judge entered a decision, finding that:

Defendant advanced no reasonable excuse why she had not complied with the Court's Order. Further the Defendant has not turned over all the trains and/or accessories promised to the children. For some reason Defendant has given the appearance and attitude to the Court that she feels that if complying with the Court's prior Orders is inconvenient to her, she need not comply. Defendant admitted that she did not seek to comply with the Court's Order by giving the remaining trains and/or the accessories to the Plaintiff. No items were returned from March 2, 2010 to the days of hearing, even though the Defendant could have returned those items. In fact Defendant shipped those items to the auctioneer. Her actions have been dilatory at the best and malicious at the worst.

Stipulations, Exh. I, Docket No. 10. The Court of Common Pleas ordered Defendant to comply with its prior orders and deliver to Plaintiff the trains. The magistrate's decision also stated that Defendant's failure to return the trains would result in the imposition of a penalty on Defendant of $100.00 per day, until the items were delivered to Plaintiff, and Defendant was charged with all court costs incurred by Plaintiff. Id.

Evidently, Defendant failed to fully comply with the multitude of orders and finally, Plaintiff moved the Court of Common Pleas for entry of a final judgment. The Court of Common Pleas entered judgment for Plaintiff and against Defendant in the amount of $32,186.90 plus interest (the “Judgment”). The Judgment provides as follows:

IT IS THEREFORE ORDERED that Plaintiff is granted a judgment against the Defendant Sherri J. Lowry Nicodemus nka Miller, for a deficiency in the amount of funds paid to Plaintiff from the proceeds of the train collection auction, in the amount of $9,386.90, plus interest at the statutory rate of 4% per annum from the date hereof.

IT IS THEREFORE ORDERED that Plaintiff is granted a judgment against the Defendant Sherri J. Lowry Nicodemus nka Miller, for her willful contempt of this Court's Order filed herein on October 12, 2010, by failing to return the trains and/or accessories to Plaintiff, in an amount of $22,800.00....