Norberg v. Norberg (In re Norberg), Bankruptcy No. 17-30559
| Decision Date | 20 August 2019 |
| Docket Number | Bankruptcy No. 17-30559,Adversary No. 17-7029 |
| Citation | 606 B.R. 833 |
| Parties | IN RE: Alonna Knorr NORBERG, Debtor. Jon David Norberg, in His Individual Capacity and on Behalf of His Minor Children M.E.N., I.R.N., and G.J.N, Plaintiff, v. Alonna Knorr Norberg, Defendant. |
| Court | U.S. Bankruptcy Court — District of North Dakota |
Michael Gust, Anderson, Bottrell, Sanden & Thompson, Fargo, ND, for Plaintiff.
Charles A. Stock, Fischer, Rust & Stock, PLLC, Crookston, MN, for Defendant.
Plaintiff Jon Norberg filed an Adversary Complaint alleging Debtor/Defendant Alonna Knorr Norberg's debt to him arising from damages he allegedly suffered as a result of her abuse of process, malicious prosecution and defamation should be excepted from discharge under 11 U.S.C. § 523(a)(6). Doc. 1 at 4-7. He also seeks a determination that Alonna Knorr Norberg's debt to him arising from domestic support obligations is nondischargeable under 11 U.S.C. § 523(a)(5). Id. at 6-7. Additionally, he seeks a determination that Alonna Knorr Norberg's debt payment requirements under the order entered in the parties' divorce proceedings are nondischargeable under 11 U.S.C. § 523(a)(15). Id. at 6. To the extent Jon Norberg has already paid debts which were Alonna Knorr Norberg's responsibility under the divorce decree, he seeks reimbursement of that sum and a determination that the debt is nondischargeable under 11 U.S.C. § 523(a)(15). Id. at 7.
Alonna Knorr Norberg filed an Answer, maintaining that any alleged debt related to Jon Norberg's defamation, malicious prosecution and abuse of process claims is dischargeable. Doc. 4 at 2. She further asserts that, although she does not seek to discharge her support obligations, part of the debt assigned to her in the divorce is dischargeable because it is no longer owed to Jon Norberg and Jon Norberg does not have standing to assert nondischargeability. Doc. 4 at 3-4.
In March 2019, Jon Norberg filed a Motion for Partial Summary Judgment, seeking a determination that any debt arising from the defamation, malicious prosecution and abuse of process claims he filed in state court should be excepted from discharge. Doc. 10. Alonna Knorr Norberg disputed that Jon Norberg met the elements of collateral estoppel and the section 523(a)(6) cause of action. Doc. 13 at 3. On September 20, 2018, the Court granted Jon Norberg's Motion for Partial Summary Judgment and ruled that any debt owed by Debtor Alonna Knorr Norberg to Jon Norberg arising from Jon Norberg's causes of action for abuse of process, malicious prosecution and defamation or slander is excepted from discharge under 11 U.S.C. § 523(a)(6). Based on the request of the parties and the Court's analysis of the permissive abstention factors, the Court abstained from exercising jurisdiction over Jon Norberg's request to determine liability or damages arising from his state law defamation or slander, abuse of process and malicious prosecution causes of action. 11 U.S.C. § 1334(c); Stabler v. Beyers (In re Stabler ), 418 B.R. 764, 769 (8th Cir. BAP 2009).
Jon Norberg's claims that domestic support obligations or other debt arising from the parties' divorce is excepted from discharge under 11 U.S.C. § 523(a)(5) and (15) remain pending. His request for reimbursement or indemnification for debts he has already paid that were the responsibility of Alonna Knorr Norberg remains pending as well.
On May 17, 2019, Jon Norberg filed a second Motion for Partial Summary Judgment. Doc. 32. In his brief filed in support of his motion, Jon Norberg asserts that Alonna Knorr Norberg "acknowledges in her Answer to the Complaint that any 523(a)(5) debts are not dischargeable." Doc. 32 at 3. Presumably, he is suggesting that the Court may enter an order ruling that Alonna Knorr Norberg's debt to Jon Norberg arising from domestic support obligations is not dischargeable under 11 U.S.C. § 523(a)(5). In her response to the partial motion for summary judgment, Alonna Knorr Norberg "concedes that any child support debt due [and] owing to Plaintiff is not dischargeable pursuant to 11 U.S.C. § 523(a)(5)." Doc. 33 at 1. Likewise, in her Answer, Alonna Knorr Norberg represents that she is not seeking to discharge her support obligations. Doc. 4 at ¶6.
Jon Norberg testified by affidavit that Alonna Knorr Norberg owed him $3,557.90 in unpaid child support as of May 17, 2019. Doc. 32 at ¶7. For purposes of entry of judgment on a claim under section 523, the sum at issue is the debt the debtor owes on the date of petition. Jon Norberg offered no evidence in support of this sum.
During oral argument, the parties agreed that the Court may enter an order and judgment finding that unpaid child support due and owing on the petition date is excepted from discharge under 11 U.S.C. § 523(a)(5). The Court will enter judgment accordingly.
In his May 2019 motion, Jon Norberg seeks a determination that Alonna Knorr Norberg's debt obligations imposed in the Divorce Decree1 are nondischargeable under 11 U.S.C. § 523(a)(15). Doc. 32 at 1, 4-7. More specifically, he maintains that "[t]he debt at issue is identified in Claim No. 5 in Knorr's underlying bankruptcy case, No. 17-30559." Doc. 32. Jon Norberg did not attach Claim 5 to his motion or supporting affidavit, but he testified by affidavit that the North Dakota District Court ordered Alonna Knorr Norberg to pay $252,955.00 to Bell State Bank & Trust in the Divorce Decree and that she failed to make payment on this debt. Doc. 32 at 8-9. He also attested that North Mountain Capital, LLC, an entity in which Jon Norberg holds an ownership interest, purchased the loan from Bell State Bank & Trust and Bell State Bank & Trust assigned its interest to North Mountain Capital. Doc. 32 at 9.
Alonna Knorr Norberg filed a response, conceding that her debt to North Mountain Capital "to the extent of Plaintiff's ownership of it and or to the actual extent of the debt" is not dischargeable pursuant to section 523(a)(15). Doc. 33 at 1. She asserted that the "only question remaining is what the amount of the debt owed by Debtor-Defendant to Plaintiff is." Id. She argued that the sum of her debt to North Mountain Capital should be reduced to $200,000 because that is the sum North Mountain Capital paid to Bell State Bank & Trust to acquire an assignment of the promissory note and the right to enforce it. She asserted that this debt should then be reduced to reflect only Jon Norberg's interest in North Mountain Capital totaling 49%. Id. at 2
During oral argument on Jon Norberg's May 2019 motion, Alonna Knorr Norberg sought leave to supplement the record on summary judgment, which the Court granted. Doc. 37. The parties filed a Stipulation to Supplement the Record with documents attached on July 12, 2019. Doc. 39. The Court also granted the parties an opportunity to file briefs outlining the significance of this evidence. Both parties filed briefs. See Docs. 40, 41, 42.
Jon Norberg and Alonna Knorr Norberg married in May 1996. Doc. 11 at 4. They divorced on June 16, 2014. Id. at 39. In the Divorce Decree, the North Dakota District Court awarded assets and assigned debts to Jon Norberg and Alonna Knorr Norberg. Id. at 30-38. The debts assigned to Alonna Knorr Norberg included a $252,955.00 debt to "Bell State Bank & Trust Home Equity *2017." Doc. 11 at 31. Although Jon Norberg and Alonna Knorr Norberg were jointly liable to Bell State Bank & Trust at the time of their divorce, the state court assigned Alonna Knorr Norberg responsibility for paying this debt in the Divorce Decree. Doc. 11 at 31; Doc. 33-1 at 4; Doc. 39-1; Doc. 39-2. Jon Norberg testified that Alonna Knorr Norberg failed to make payment to Bell State Bank & Trust. Doc. 32 at 8.
In July 2015, Bell State Bank & Trust initiated a lawsuit in North Dakota District Court alleging that Jon Norberg and Alonna Knorr Norberg were jointly liable to it on a May 2009 promissory note, claiming both parties were in default on the note and seeking judgment against both parties. Doc. 39-1. Jon Norberg filed an Answer admitting he signed the promissory note but denying liability for the debt. Doc. 39-2. Alonna Knorr Norberg did not answer the complaint. See Doc. 39-5; Doc. 39-8. As of October 12, 2015, Jon Norberg and Alonna Knorr Norberg were indebted to Bell State Bank & Trust pursuant to the terms and conditions of the May 2009 promissory note in the sum of $292,422.32. Doc. 33-1 at ¶2.2e.
On November 13, 2015, Bell State Bank & Trust assigned its "right, title and interest" in the debt and underlying promissory note to North Mountain Capital in exchange for $200,000. Doc. 33-1 at 1-5. The assignment also provided that Bell State Bank & Trust agreed to execute a substitution of parties and legal counsel in the lawsuit it filed against Jon Norberg and Alonna Knorr Norberg. Doc. 33-1 at 3. Bell State Bank & Trust and North Mountain Capital signed a Substitution of Parties and Legal Counsel, which was filed with the North Dakota District Court in February 2016. Doc. 39-3. The substitution also provided that "Jon Norberg is no longer a Defendant in this matter since he has been dismissed as a Defendant in this litigation." Doc. 39-3. Jon Norberg owns a 49% interest in North Mountain Capital. Id. at 10.
On February 23, 2016, the North Dakota District Court entered an Order substituting North Mountain Capital as Plaintiff and removing Bell State Bank & Trust as Plaintiff. The court also found that "Defendant Jon Norberg is no longer a defendant in this matter as he has been dismissed." Doc. 39-4. North Mountain Capital sought default judgment against Alonna Knorr Norberg. Docs. 39-5; 39-6; 39-7. The North Dakota District Court entered judgment against Alonna Norberg in the sum of $298,077.22 on May 6, 2016.
In his Complaint, Jon Norberg sought reimbursement or indemnification for debts he has already paid that were the responsibility of Alonna...
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