Michelena v. Michelena (In re Michelena)

Decision Date02 June 2022
Docket NumberCASE NO: 19-70068,ADVERSARY NO. 19-7009
Citation641 B.R. 325
Parties IN RE: Robert Marcus MICHELENA, Debtor. Monica Michelena, Plaintiff, v. Robert Marcus Michelena, Defendant.
CourtU.S. Bankruptcy Court — Southern District of Texas

Gilberto Hinojosa, Brownsville, TX, Antonio Martinez, Jr., Attorney at Law, McAllen, TX, for Plaintiff.

Antonio Martinez, Jr., Attorney at Law, McAllen, TX, for Defendant.


Eduardo Rodriguez, United States Bankruptcy Judge

Monica Michelena, the former spouse of Robert Marcus Michelena, seeks a nondischargeable judgment under §§ 523(a)(2)(A), (a)(2)(B), (a)(4), and (a)(6). The Court conducted a five-day trial commencing on February 15, 2022, and concluding on March 16, 2022. For the reasons set forth herein, the Court finds that Monica Michelena's request that this Court find certain sums, including those contained in Claim No. 7-7, discharged pursuant to §§ 523(a)(2)(A), (a)(2)(B), (a)(4), and (a)(6) is denied. Nevertheless, Monica Michelena's Claim No. 7-7 is nondischargeable pursuant to § 523(a)(15). Monica Michelena's other claims, Claim Nos. 8-2, 9-2, and 11-2, are nondischargeable pursuant to § 523(a)(5).

A. Procedural History

On March 4, 2019, Robert Marcus Michelena ("Defendant " or "Debtor ") filed his initial petition and schedules under chapter 11 of the Bankruptcy Code, initiating the instant bankruptcy case.1 Debtor's case was later converted to a chapter 7 case.2 In the underlying bankruptcy case Monica Michelena ("Plaintiff ") filed the following general unsecured proofs of claim: (1) Claim No. 8-2 in the amount of $21,293.09 for "Child Support, Cause No. F-2230-05-2"; (2) Claim No. 9-2 in the amount $9,827.58 for "Order on Amended Motion for Enforcement of Child Support, Cash, Medical Support and Medical Educational Expenses"; (3) Claim No. 11-2 in the amount of $13,650.31 for "Order on Amended Motion for Enforcement of Child Support, Cash, Medical Support and Medical Educational Expenses"; and (4) Claim No. 7-7 in the amount of $1,165,786.34 for "Number 13-16-00349-CV 13th Court of Appeals Memorandum Opinion, signed 3/19/2020 Number 2012-DCL-4282-E Judgment on New Trial for Property Division, signed 6/1/2016" ("Claim 7-7 ").

On July 5, 2019, Plaintiff filed the instant complaint seeking a nondischargeable judgment of certain obligations of Defendant under §§ 523(a)(2)(A), (a)(2)(B), (a)(4) and (a)(6) ("Complaint ").3 Claim 7-7 forms the basis of Plaintiff's Complaint.4 Plaintiff amended her Complaint on July 13, 2020.5 In response, Defendant filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).6 This Court denied Defendant's motion,7 and struck the amended complaint.8 Plaintiff amended her Complaint again on December 15, 2020.9 On December 1, 2021, Debtor received a general discharge in his chapter 7 bankruptcy case.10

On January 11, 2021, Defendant filed his answer.11 Plaintiff and Defendant filed their "First Amended Joint Pretrial Order" on December 30, 2021.12 On January 4, 2022, Plaintiff amended her Complaint for a final time raising the same claims raised in the original Complaint ("Second Amended Complaint ").13 Defendant did not amend his answer but did file a trial brief on February 9, 2022.14

After a five-day trial, this Court ordered the parties to file post-trial briefing.15 On April 13, 2022, Defendant filed "Defendant's Post-Trial Brief" ("Defendant's Post-Trial Brief ").16 On May 13, 2022, Plaintiff filed "Complainant's Trial Brief" ("Plaintiff's Post-Trial Brief ").17 All briefing has been submitted and the matter is now ripe for determination.

B. Stipulated Facts18
1. Plaintiff and Defendant's divorce

On May 18, 2005, Plaintiff filed a petition for divorce.19 On May 24, 2005, Defendant filed his counter-petition for divorce.20 In the divorce proceeding, Defendant filed his "Inventory and Appraisement of Robert M. Michelena."21 On July 23, 2009, the Final Decree of Divorce ("Divorce Decree ") was entered.22 On appeal, the Thirteenth Court of Appeals of Texas affirmed in part and reversed in part the property division and remanded the case to the trial court for a new trial ("Court of Appeals Decision ").23

On November 20, 2013, Defendant filed his "Inventory and Appraisement of Robert Michelena" (together with Defendant's Inventory and Appraisement of Robert M. Michelena, "Sworn Inventories ") in the 357th District Court in Cameron County, Texas.24 On June 1, 2016, the 357th District Court entered it's "Judgment on New Trial for Property Division" ("357th District Court Judgment ").25 The 357th District Court Judgment awarded Plaintiff the entire value of an A.G. Edwards Account x-5675 ("A.G. Edwards Account ") and a Compass CD 322200 ("Compass CD ") because Defendant failed to include those accounts in his Sworn Inventories.26 In his Post-Trial Brief, Defendant stipulated that he did not disclose the A.G. Edwards Account or the Compass CD in his Sworn Inventories.27 The 357th District Court Judgment also awarded Plaintiff $40,000 for a settlement with Texas State Bank received by Defendant ("Settlement ") because Defendant likewise failed to disclose that Settlement.28 The remainder of the community property was divided in such manner that each party received 50%.29 The 357th District Court did not find that Defendant acted fraudulently, willfully and maliciously, or intentionally or that Defendant was a fiduciary for Plaintiff.30

On June 29, 2016, Defendant appealed the 357th District Court Judgment to the Court of Appeals.31 On March 19, 2020, the Court of Appeals entered its Memorandum Opinion, affirming and reforming the 357th District Court Judgment ("Court of Appeals Order ").32 The new judgment entered against Defendant was for $938,041.17, plus post judgment interest.33 On June 16, 2020, Defendant appealed to the Texas Supreme Court.34 The Texas Supreme Court denied Defendant's Petition for Review.35

2. Passing of Defendant's mother

On April 8, 2013, Defendant's mother, Loretta Michelena ("Loretta ") passed away.36 Loretta's Last Will and Testament provided, inter alia, that: (1) all her furniture was to be equally divided between her sons, Defendant and Ronald M. Michelena; (2) her lady's Rolex watch was to go to Defendant; (3) her pear cut diamond ring was to go to Defendant; and (4) the remainder of her estate and property was to be divided equally among Defendant and Ronald M. Michelena.37

3. Plaintiff's pre-petition collection efforts

On February 22, 2017, Plaintiff filed an Application for Writ of Garnishment After Judgment, seeking to garnish the accounts under Defendant's name with BBVA Compass Bank and Wells Fargo's Advisors.38 BBVA Compass Bank held $12,987.95 in an account belonging to Defendant.39

On May 9, 2018, Plaintiff filed a writ of execution with the Cameron County Sheriff to execute on property, known as the Marshall Hutts property, which is partially owned by Defendant, in satisfaction of the 357th District Court Judgment.40 The sale of the Marshall Hutts property was set to occur on August 7, 2018.41 However, due to a previous bankruptcy filing by Defendant in case number 18-70282 on August 2, 2018, the sale was stayed.42 On January 31, 2019, Plaintiff filed a second writ of execution with the Cameron County Sheriff to execute on the Marshall Hutts property.43 The sale of Defendant's interest in the Marshall Hutts property was set to occur on March 5, 2019.44

4. Certain of Defendant's assets

On August 2, 2018, Defendant received $61,669 from Golden Eagle Resources II, LLC for a 5-year leasehold interest in Defendant's property in Belmont County, Texas.45 The interest payment by Golden Eagle Resources, LLC was wire transferred to Defendant's state court attorney Joseph Preston's IOLTA.46 In 2016 and 2017, Defendant withdrew $11,000 and $84,597, respectively, from his New York Life Trust Company account.47 Defendant also deposited $26,000 from his New York Life Trust Company account into Joseph Preston's IOLTA.48


A. Jurisdiction, Venue, and Constitutional Authority to Enter a Final Order

This Court holds jurisdiction pursuant to 28 U.S.C. § 1334 and now exercises its jurisdiction in accordance with In re: Order of Reference to Bankruptcy Judges, Gen. Order 2012-6 (S.D. Tex. May 24, 2012). Furthermore, a determination as to the dischargeability of a particular debt is a core matter under 28 U.S.C. § 157(b)(2)(I). Because this is a core matter expressly brought under the Code— 11 U.S.C. § 523 —the Supreme Court's holding in Stern v. Marshall is not applicable and this Court holds constitutional authority to enter a final order and judgment with respect to the core matter at bar.49 Additionally, both Plaintiff and Defendant have consented to the entry of final orders by this Court.50

Finally, venue is governed by 28 U.S.C. §§ 1408 and 1409. Here, venue is proper because the Court presided over the underlying bankruptcy case.

A. Forfeiture of Federal Rule of Bankruptcy Procedure 4007(c) limitation defense

As a preliminary matter, the Court, sua sponte, must consider the application of Federal Rule of Bankruptcy Procedure 4007(c). Rule 4007(c) states that "a complaint to determine the dischargeability of a debt under § 523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a) ...."51 In the instant case, Debtor filed a petition under chapter 11 of the Bankruptcy Code on March 4, 2019.52 The first date set for the meeting of creditors was April 11, 2019, and the deadline to file a dischargeability complaint was June 10, 2019.53 Plaintiff filed her Complaint on July 5, 2019, well outside the June 10, 2019 deadline.54

In Kontrick v. Ryan , the Supreme Court held that the deadline for objecting to a debtor's discharge under Rule 4004(a) was not jurisdictional.55 The Kontrick Court reasoned that "essentially the same time prescriptions apply" under Rule 4004(a) and 4007(c).56 Sin...

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