Newman v. Johnson (In re Johnson), Bankruptcy No. 11–20679.

• Decision Date: 29 May 2012
• Docket Number: Adversary No. 11–02393.,Bankruptcy No. 11–20679.
• Citation: 473 B.R. 447
• Parties: In re Neldon P. JOHNSON, Debtor. Ina Marie Newman f/k/a Ina Marie Johnson, Plaintiff, v. Neldon P. Johnson, Defendant.
• Court: U.S. Bankruptcy Court — District of Utah

473 B.R. 447

In re Neldon P. JOHNSON, Debtor.

Ina Marie Newman f/k/a Ina Marie Johnson, Plaintiff,

v.Neldon P. Johnson, Defendant.

Bankruptcy No. 11–20679.

Adversary No. 11–02393.

United States Bankruptcy Court,

D. Utah,

Central Division.

May 29, 2012.

Shane L. Keppner, Jared L. Inouye, Bennett Tueller Johnson & Deere, Salt Lake City, UT, for Plaintiff.

David E. Leta, Engels Tejeda, Snell & Wilmer LLP, Salt Lake City, UT, for Debtor/Defendant.

U.S. Trustee's Office, Salt Lake City, UT, Philip G. Jones, Orem, UT, for Chapter 7 Trustee.

MEMORANDUM DECISION REGARDING MOTIONS FOR SUMMARY JUDGMENT

WILLIAM T. THURMAN, Chief Judge.

This matter came before the Court on cross motions for summary judgment to determine the dischargeability of a debt pursuant to §§ 523(a)(5) and 523(a)(15) of the Bankruptcy Code.¹ The Court conducted a hearing on this matter on April 9, 2012, in which Shane Keppner appeared on behalf of plaintiff Ina Marie Newman (“Newman”) and David Leta appeared on behalf of the debtor/defendant Neldon P. Johnson (“Johnson” or the “Debtor”). At the conclusion of the hearing, the Court took this matter under advisement to determine whether either party should prevail as a matter of law in this dischargeability proceeding.

After careful review of the statutory authority, the case law, and the parties' briefs and arguments, the Court issues the following Memorandum Decision.²

I. JURISDICTION AND VENUE

This Court has jurisdiction over the subject matter pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). Venue is appropriate under 28 U.S.C. § 1408. Notice of the hearing on these cross motions is found to be appropriate and adequate.

II. PROCEDURAL BACKGROUND AND FINDINGS OF FACT

Johnson filed for chapter 7 bankruptcy relief on January 20, 2011. On April 25, 2011, the Debtor initiated an adversary proceeding, 11–02395, and sought declaratory relief requesting the Court find any debt owed to Newman to be dischargeable. Also on April 25, 2011, Newman initiated this adversary proceeding, 11–02393. Newman's complaint alleged nondischargeability under §§ 523(a)(5) and (15) and denial of discharge under § 727(a)(2) and (5). On June 2, 2011, Newman filed a motion to consolidate the adversary proceedings. After a hearing, the Court granted that motion, and entered a consolidation order on September 8, 2011. On May 25, 2011, Johnson filed a motion to dismiss Newman's complaint. On July 28, 2011, the Court entered an order: (i) denying Johnson's motion to dismiss as to the §§ 523(a)(5) and (15) causes of action; (ii) granting the motion to dismiss as to the § 727(a)(2) cause of action; and (iii) finding that the complaint failed to adequately plead a cause of action under § 727(a)(5) but granting Newman leave to file an amended complaint on the § 727(a)(5) claim. On August 8, 2011, as allowed by the Court's order of July 28, 2011, Newman filed an amended complaint, alleging three causes of action, including: (i) nondischargeability under § 523(a)(5); (ii) nondischargeability under § 523(a)(15); and (iii) denial of discharge under § 727(a)(5)(the “Amended Complaint”). On January 31, 2012, Newman filed her motion for summary judgment to determine the debt nondischargeable pursuant to § 523(a)(15). On February 24, 2012, Johnson filed his motion for summary judgment on the first two causes of action alleged in Newman's Amended Complaint, the dischargeability of the debt under §§ 523(a)(5) and 523(a)(15). Neither party requested summary judgment on the § 727(a)(5) claim, and that claim remains to be tried.

The Court finds there is no genuine issue as to the following material facts. Newman and Johnson took a trip together on May 3, 1964, in which it appears their intentions were to get married. However, car troubles prevented them from making it to their destination, and the parties returned home. In 1965, the parties participated in a religious wedding ceremony. However, at no time did the parties obtain a marriage license. On July 20, 2000, Newman filed a divorce action in the Utah Fourth District Court (the “State Court”) against Johnson. Newman's complaint alleged that “[t]he parties are wife and husband, having been married on May 3, 1964 in Arizona.” Johnson's answer to the divorce complaint admitted this fact. The parties entered into a stipulation regarding the division of marital property. On June 6, 2001, the State Court entered Findings of Fact and Conclusions of Law granting the parties a divorce, stating that “[t]he petitioner and respondent were married on May 3, 1964.”

The State Court also entered an Amended Decree of Divorce (the “Divorce Decree”), memorializing the parties' stipulation on June 27, 2001. The stipulation and subsequent Divorce Decree granted to Newman two pieces of real property, a Smith Barney account, and an obligation to pay from Johnson $2,800,000 as a property settlement. The property settlement required Johnson to pay Newman $8,333.33 per month, commencing July 1, 2001, with a balloon payment for the balance due on July 1, 2006, secured by a note and trust deed on the real and personal property and inventory of the U–Check Company, which had previously been owned by both parties. The Divorce Decree also granted to Johnson an interest in the U–Check Company, stock in International Automated Systems (IAS), and all patents, patents pending, and ideas that he had created. The parties dispute the exact amount paid by Johnson to Newman following the divorce decree, but it was no more than $100,000.

Approximately six years later, in October of 2007, Johnson filed a Motion to Vacate the Divorce Decree alleging a lack of subject matter jurisdiction of the State Court due to the fact that the parties were never legally married (the “Motion to Vacate”). The State Court found that while the parties “had never actually been married” in the thirty-seven years prior to the divorce, Johnson had taken the position that they were married in the divorce proceedings, and thus the Utah Supreme Court case Caffall v. Caffall, 5 Utah 2d 407, 303 P.2d 286 (1956)³ was controlling. The State Court found that Johnson's Motion to Vacate was an attempt to avoid his obligations to Newman, that Johnson's actions when taken altogether constituted bad faith, and that Johnson was “estopped from attacking the Amended Decree, despite any lack of subject matter jurisdiction.” Johnson appealed the decision to the Utah Supreme Court. The Utah Supreme Court issued a decision on May 7, 2010, stating that while the parties “never took steps to have their marriage legally recognized” before the divorce proceedings, the State Court had subject matter jurisdiction to issue the divorce decree. Johnson v. Johnson, 234 P.3d 1100, 1101 (Utah 2010). In doing so, the Utah Supreme Court also stated, “[w]e therefore overrule our holding in Caffall and hold that because courts of general jurisdiction have the authority to adjudicate divorces, we will not invalidate a divorce decree on the grounds that the right involved in the suit did not embrace the relief granted.” Id. at 1103–04 (quotations omitted). The Court found that because the State Court had subject matter jurisdiction to enter the divorce decree, Johnson “cannot collaterally attack it.” Id. at 1104.

III. DISCUSSIONA. Summary Judgment Standard

A motion for summary judgment will be granted if the pleadings, admissions on file, and affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Pleadings must be liberally construed in favor of the party opposing summary judgment. Harman v. Diversified Med. Invs. Corp., 488 F.2d 111, 113 (10th Cir.1973). When a moving party's motion for summary judgment is made and supported as provided in this rule, the nonmoving party's response must set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e). A fact is material if it may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Disputes as to non-material facts are not important and do not bar the entry of summary judgment. Kaiser–Francis Oil Co. v. Producer's Gas Co., 870 F.2d 563 (10th Cir.1989). If the nonmoving party's evidence is “merely colorable, or is not significantly probative, there is insufficient evidence and summary judgment may be granted.” Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505. On a motion for summary judgment the court cannot evaluate credibility nor can it weigh evidence. National American Ins. Co. v. American Re–Insurance Co., 358 F.3d 736, 742–43 (10th Cir.2004).

It is under this standard that the Court considers the cross motions for summary judgment in this case. The one modification to the foregoing is that because these are cross motions for summary judgment, the principle of some deference to the “opposing party” is somewhat diluted as both parties are the “opposing party.” As noted above, the Court's ruling is limited to whether summary judgment is appropriate in favor of Newman on the second cause of action in her Amended Complaint, nondischargeability under § 523(a)(15), and whether summary judgment is appropriate in favor of Johnson on the first and second causes of action in Newman's Amended Complaint, nondischargeability under § 523(a)(5) and (15).

B. Positions of the Parties

Newman argues that summary judgment should be granted in her favor under § 523(a)(15) for a number of reasons. She argues that the Rooker–Feldman doctrine and the doctrine of collateral estoppel prevent this Court from retrying the issue of whether the parties were legally married because Johnson admitted in his State Court answer that the parties were married on May 3, 1964, and because the Divorce Decree under...