Roettger v. Rakay (In re Rakay), Case No. 17-32760-dof

• Decision Date: 14 September 2018
• Docket Number: Case No. 17-32760-dof,Adversary Proceeding Case No. 18-03018-dof
• Parties: IN RE: TRINA KAY RAKAY, Debtor. JEFFREY K. ROETTGER, Plaintiff, v. TRINA KAY RAKAY, Defendant.
• Court: U.S. Bankruptcy Court — Eastern District of Michigan

IN RE: TRINA KAY RAKAY, Debtor.JEFFREY K. ROETTGER, Plaintiff, v. TRINA KAY RAKAY, Defendant.

Case No. 17-32760-dof

Adversary Proceeding Case No. 18-03018-dof

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION - FLINT

September 14, 2018

Chapter 13 Proceeding

Hon. Daniel S. Opperman

OPINION REGARDING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

Plaintiff Jeffrey K. Roettger filed a Motion for Summary Judgment arguing that this Court should give a state court order preclusive effect and make a determination that the debt owed to him by Defendant Trina Kay Rakay is excepted from discharge pursuant to 11 U.S.C. § 523(a)(2) due to fraud and under 11 U.S.C. § 523(a)(5) for a domestic support obligation. Defendant disagrees that the state court order should be given such an effect and argues that Plaintiff is not entitled to summary judgment. Because collateral estoppel applies to part of the judgment, the Court grants Plaintiff's Motion for Summary Judgment in part and denies it in part for the reasons discussed in this Opinion.

Facts

Plaintiff and Defendant Trina Kay Rakay were married on September 23, 2011. Defendant filed a complaint for divorce in the Oakland County Circuit Court on February 2, 2015. The divorce was contentious and the dispute between the parties centered on the use of certain property during the incarceration of Plaintiff. Plaintiff's arbitration summary stated that "Alimony is not at issue. However, due to the extreme nature of [Defendant's] wanton theft and destruction of [Plaintiff's] house and belongings, the equitable division of property is at issue." The parties agreed to arbitration on October 13, 2015. The "Matrimonial Arbitration Acknowledgment and Agreement" entered into between the parties set forth the following issues "to be arbitrated:" "division of real and personal property, including ancillary issues related thereto;" "costs, expenses and attorney fees;" and "allocation of the parties' responsibility for marital debts." Other issues were identified in the agreement as "not applicable," including "spousal support."

A lengthy Arbitration Ruling was issued on August 25, 2016. Some of the relevant portions of that ruling are as follows:

This matter was referred for binding arbitration by stipulation of the parties' and order of the Court.

Issues placed in arbitration are division of real and personal property, costs, expenses and attorney fees, and allocation of the parties' responsibility for marital debt.

An arbitration hearing was conducted on January 25, 2016. [Defendant] Trina Roetteger chose to represent herself, and [Plaintiff] Jeff Roetteger was represented by counsel.

Trina had been previously presented by an attorney, was aware of her right to be represented by an attorney, but preferred to proceed on her own behalf.

. . . .

Jeff owned a Denali 5th wheel camper, and Silverado pick-up truck. He testified these were gifted to him by his father. . . .

Jeff testified that, after he was incarcerated, Trina sold these assets without his knowledge or permission, or without legal authority to do so. . . .

. . . .

Trina testified that she believed these items to be joint property because Jeff's dad gifted the pick-up truck and the 5^th wheel camper to both of them during the marriage and, even though her name was not on the titles, she believed the donor's intent was that she own them.

Trina testified that while Jeff was in jail she sold the pick-up truck to her son . . . . Since she was not on the title, she had to sign Jeff's name to the title, which is, arguably forgery. However, she claims she had Jeff's permission to do so, a point on which Jeff vigorously denies.

. . . .

Jeff introduced his father's de bene esse deposition. His father testified he only met Trina on a few occasions, did not know her well, and had no intent to give her any kind of a gift or property. It was his intent to do exactly what he did, which was gift something to his son, and it was titled in his son's name.

The arbitrator's finding is Trina had no legal right to sign Jeff's name to titles and sell property. Her testimony that Jeff somehow wanted her to do this on his behalf is inherently incredible. Further, there is no evidence Jeff received any money from the proceeds of sale.

. . . .

. . . Jeff would have Judgment against Trina in the amount of $14,000.00, for the wrongful loss of the Denali caused by her deliberate and arguably illegal actions.

. . . .

Accordingly, the combined total for the Denali and the Silverado, Jeff is entitled to Judgment in the amount of $24,000.00.

. . . .

The need to litigate these points relative to the Denali and Silverado were created by Trina's fraudulent actions, and her false testimony regarding these items. . . .

There was an above ground pool at the house . . . . While Jeff was in jail, Trina had the pool removed. She testified she feared "they" would lose the house in foreclosure because the payments were not being made and she wanted to preserve the asset, the pool.

. . . .

In February of 2016 . . . the pool was, apparently returned to Jeff in adequate condition. . . .

. . . Jeff is entitled to Judgment in the amount of $1,200.00 to reimburse the cost of returning the pool to its prior location.

Trina was without any legal justification or right to remove the pool from the property. There is no evidence that was sound judgment on any level.

Jeff claims a great deal of his personal property, tools, furniture and similar, were disposed of or destroyed by Trina during Jeff's incarceration . . . .

. . . .

Testimony about the personal property is convoluted, unclear, and unpersuasive by both parties as to many items. It is more probable than not than Trina moved more property from the house than she should have. Arguably, she should not have taken anything until there was some agreed upon disposition.

. . . .

As to personal property, the arbitrator is persuaded that Trina removed some of Jeff's personal property, or allowed it to be taken perhaps by the impropertenants (see discussion elsewhere), but one way or the other, there is no doubt Jeff lost some personal property. . . .

. . . .

It is the arbitrator's conclusion that the best evidence supports the property removed had a probable Fair Market Value of $6,302.00. It is admittedly an estimate based on knowledge of used property. It does appear Trina sold things, probably in a garage sale, but possibly just to neighbors. It further appears that most of Jeff's property was separate property, not marital property.

On this issue, Judgment to Jeff against Trina in the amount of $6,302.00.

Jeff has a somewhat confused theory for recovery with respect to money he claims Trina removed from the marital estate or cost him by reason of what he calls "extortion" or failure to pay his bills on his behalf.

. . . .

Jeff's theory is he owns the home as his separate property, and no value accumulated during the marriage. Apparently, the rest of his theory is Trina is responsible to make his house payments and his property tax payments, on his separate property, while he sits in jail. Jeff's theory as to damages for unpaid mortgage payments and/or property tax payments, and similar fails. It is his own fault he was sitting in jail not taking care of business. Since Trina has no ownership responsibility for the properties, she has no other obligations pertaining to the properties.

The exception is as set forth below.

. . . .

. . . the mortgage and other expenses on the house were not being paid, and Trina was deriving income from use of the house. So, to the extent Trina derived income off of the house, while letting payments go delinquent, equity demands some kind of compensation or pay-back.

It appears the value derived from the house for the approximate 7 months over while the above occurred . . . would be at least $1,500.00 per month. The actual cost to Jeff for owning the property may have been greater.

However, it is well established it really was not Trina's obligation to pay the bills on Jeff's house, just because Jeff was sitting in jail. If he had not been married to Trina, he would still have the problem of paying his bills while incarcerated. However, the idea that Trina would not live in the house as his wife, but rather park others in the house and derive profit from the house is an entirely different matter.

. . . .

The rental Fair Market Value of the house for all of these people to live there, which should really go to Jeff, for the 7 months in question, is $10,500.00.

Therefore, Jeff should be entitled to $10,500.00 on this issue.

Under "Summary of Conclusions," the arbitrator stated, in part:

Trina fraudulently disposed of marital property by forging Jeff's name on at least one title, by her own admission, and selling property in which no interest—and keeping the money.

The arbitrator finds Trina engaged in the fraudulent conveyance and fraudulent concealment of certain personal property during the marriage. The arbitration award is based upon that finding.

Under "Award," the ruling stated, in relevant part:

Jeff shall have Judgment against Trina in the amount of $41,502.00 . . . .

The Judgment should include this language:

The purpose and intent of the provision contained in this Judgment . . . is to provide for and ensure the suitable maintenance or support of the beneficiary of such provision. Accordingly, any duty, obligation, or liability, and/or property settlement arising under or pursuant to this or any other such provision contained in this Judgment is not dischargeable in bankruptcy or otherwise under any federal or state law.

The purpose and intent of the above provisions . . . is to provide for and ensure the suitable maintenance or support of the other party and is a 'domestic support obligation' (DSO) as defined in the Bankruptcy Abuse Preventions and Consumer Protections Act (BAPCPA), 11 USC Sec. 523(a)(5). Accordingly, any duty, obligation or liability arising under or pursuant to this or any other such provision in this

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