Romano v. Romano (In re Romano)

• Decision Date: 08 April 2016
• Docket Number: Adv. No. 15–09028 (CGM),Case No. 10–36381 (CGM)
• Citation: 548 B.R. 39
• Parties: In re James M. Romano, Debtor. Linda S. Romano, Plaintiff, v. James M. Romano, Defendant.
• Court: U.S. Bankruptcy Court — Southern District of New York

548 B.R. 39

In re James M. Romano, Debtor.

Linda S. Romano, Plaintiff,

v.James M. Romano, Defendant.

Case No. 10–36381 (CGM)

Adv. No. 15–09028 (CGM)

United States Bankruptcy Court, S.D. New York.

Signed April 8, 2016

Silver & Lesser, P.C., 3250 Route 9W, New Windsor, New York 12553, Counsel for Plaintiff, By: Sol Lesser

Genova & Malin, Attorneys, The Hampton Center, 1136 Route 9, Wappingers Falls, N.Y. 12590–4332, Counsel for Defendant, By: Andrea B. Malin

MEMORANDUM DECISION AND ORDER GRANTING AND DENYING IN PART PLAINTIFF'S AND DEFENDANT'S CROSS–MOTIONS FOR SUMMARY JUDGMENT

CECELIA G. MORRIS

, CHIEF UNITED STATES BANKRUPTCY JUDGE

Before the Court is Plaintiff Linda Romano's motion for summary judgment, seeking a determination that certain debts of Defendant James Romano are non-dischargeable domestic support obligations under 11 U.S.C. § 523(a)(5)

, and non-dischargeable debts incurred for willful and malicious injury under 11 U.S.C. § 523(a)(6). See Mem. Law Supp. Pl.'s Mot. Summ. J. 6, Mar. 1, 2016, ECF No. 14 ("Pl.'s Mot.").¹ Also before the Court is Defendant's motion for summary judgment, seeking a determination that these contested debts were in fact discharged by Defendant's chapter 13 bankruptcy case. Mem. Law Supp. Def.'s Mot. Summ. J. 1–2, Mar. 2, 2016, ECF No. 15–3 ("Def.'s Mot."). For the reasons stated below, the Court grants Plaintiff's motion for summary judgment for the relief sought under § 523(a)(5), and denies Plaintiff's motion insofar as it seeks relief under § 523(a)(6). The Court correspondingly denies Defendant's motion for a determination of dischargeability under § 523(a)(15), and grants Defendant's motion for summary judgment on Plaintiff's cause of action based on § 523(a)(6) grounds.

Jurisdiction

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(a)

, 28 U.S.C. § 157(a) and the Standing Order of Reference signed by Chief Judge Loretta A. Preska dated January 31, 2012. This is a "core proceeding" under 28 U.S.C. § 157(b)(2)(I).

Background

James Romano ("Debtor" or "Defendant") filed his chapter 13 bankruptcy petition on May 11, 2010 and has completed his chapter 13 plan. See Petition, In re Romano, No. 10–36381 (Bankr.S.D.N.Y. May 11, 2010), ECF No. 1. Defendant's wife, Linda Romano ("Plaintiff"), brings this adversary proceeding for a declaration that the debts owed to her and to Federal National Mortgage Association ("Fannie Mae") are non-dischargeable domestic support obligations. See Compl. ¶ 1, Oct. 29, 2015, ECF No. 1. Defendant and Plaintiff do not currently reside together. See Pl.'s Resp. to Def.'s Statement of Material Facts ¶ 4, Mar. 16, 2016, ECF No. 17 ("Pl.'s Resp. SMF"). The complaint, filed on October 29, 2015, alleges that although still legally married, Defendant and his wife entered into a Separation and Property Settlement Agreement ("Settlement Agreement") on May 18, 2009. Compl. ¶ 9.

Plaintiff's complaint alleges the Settlement Agreement requires the Defendant to continue to pay the monthly mortgage payments, real property taxes, insurance, and a substantial amount of the utilities. Id. Plaintiff asserts Defendant was to pay her $100 a week in spousal maintenance payments. Id. at ¶ 23. Plaintiff claims that around August 2011, Defendant stopped making these payments. Id. at ¶ 24. Plaintiff seeks to have the court declare these payments to be domestic support obligations and to find them to be non-dischargeable debts of the Defendant. Id. at ¶¶ 22–26. Plaintiff also seeks a declaration that the debts are non-dischargeable under § 523(a)(6)

, claiming Defendant willfully and maliciously refused to pay her the above amounts under the Settlement Agreement. Id. at ¶¶ 27–30.

On November 18, 2015, Defendant filed an answer. See Answer, Nov. 18, 2015, ECF No. 6. Defendant denies all of Plaintiff's allegations. See id. at ¶ 2. Defendant also counterclaims that Plaintiff filed this claim as a general unsecured claim after the date to object to discharge had already passed. See id. at ¶¶ 4–5.

Plaintiff filed a motion for summary judgment on March 1, 2016. See Pl.'s Mot. Plaintiff claims Defendant owes her ongoing domestic support obligations, including weekly $100 maintenance payments, the mortgage payments, and other bills related to the marital property. Id. at 12–16. Plaintiff argues these are non-dischargeable under § 523(a)(5)

. Id. Plaintiff also alleges Defendant is in arrears on his maintenance payments and other support obligations. Pl.'s Statement of Undisputed Material Facts ¶ 18, Mar. 1, 2016, ECF No. 14 ("Pl.'s SMF"). Plaintiff asserts Defendant did not make the $100 weekly maintenance payments from August 1, 2011 through January 1, 2015. Id. ¶ 21. Plaintiff claims Defendant has not made any post-petition mortgage payments since September 1, 2011, nor has he paid the oil, propane, electric, or water bills since August 1, 2011. Id. ¶¶ 19–20.

Plaintiff claims equitable considerations require tolling of the time to file an objection to discharge per Federal Rule of Bankruptcy Procedure 4007(c)

. Pl.'s Mot. 7. Plaintiff claims she was omitted from Debtor's voluntary petition and was not given notice of the 11 U.S.C. § 341 meeting of creditors, and that Debtor filed a late proof of claim on her behalf, which incorrectly classifies the debt as a general unsecured claim. Id. Plaintiff is legally blind and 100% disabled and claims she did not become aware of Defendant's default in certain domestic support and maintenance obligations until the parties' mortgagee, Fannie Mae, commenced judicial foreclosure proceedings against the marital residence in the Supreme Court of the State of New York. See Pl.'s SMF ¶ 10. Plaintiff claims she did not have notice of any of the bankruptcy proceedings. Id. ¶ 13. Plaintiff only became aware of Debtor's bankruptcy filing and Chapter 13 plan through the letter from Debtor's bankruptcy counsel, dated September 16, 2010. Id.

Plaintiff claims that in drafting the terms of the Settlement Agreement, the parties intended to create a debt necessary for Plaintiff's support. Pl.'s Mot. 9–10. Plaintiff urges this Court to interpret the Settlement Agreement as a matter of law on summary judgment. Id.

Plaintiff also claims that the Defendant's liability on the mortgage, as well the missed payments, are non-dischargeable obligations pursuant to § 523(a)(6)

, as a debt incurred by willful and malicious injury. Id. at 17. Plaintiff claims Defendant has refused to participate in the sale of the residence and the foreclosure action. Id. at 19. Plaintiff states that should the residence be sold, Defendant is entitled to the equity in the residence. Id. at 13. Plaintiff claims Defendant willfully and maliciously disregarded his obligation to pay Plaintiff's support and maintenance, and that a discharge of his liability on the mortgage would be a willful and malicious disregard of those obligations in the future. Id. at 18–20.

On March 2, 2016, Defendant filed a cross-motion for summary judgment. See Def.'s Mot. Defendant argues that Plaintiff's claims for non-dischargeability under § 523(a)(6)

must be denied as they were not timely filed pursuant to Federal Rule of Bankruptcy Procedure 4007(c). Id. at 2–5. Defendant further argues that Plaintiff cannot prove the debt was incurred willfully or maliciously. Id. at 5–9.

Defendant claims that Plaintiff is bound by her treatment under Defendant's confirmed chapter 13 plan as an unsecured claim. Id. at 9. Defendant argues that a claim, even a claim filed by the debtor, is presumed valid unless a party in interest objects. Id. at 10. Defendant argues Plaintiff received timely notice of the case and the plan. Id. at 11. Defendant also asserts that the confirmation order is res judicata and that such a late objection to claim should not be allowed here, even if the debt is non-dischargeable. Id. at 15–17.

Defendant further claims that the debt is not a domestic support obligation and is instead a debt to a spouse incurred in connection with a divorce or separation under § 523(a)(15)

, which is dischargeable under § 1328(a). Id. at 11–12. Defendant claims the debt to Plaintiff did not end on death or remarriage, and instead ended with a sale of the property. Id. at 14. Further, Defendant claims the language of the Settlement Agreement evidences an intent to create a property settlement, not a domestic support obligation. Id. at 14–15.

Both parties filed opposition papers to the other's motion for summary judgment. See Pl.'s Aff. in Opp'n to Def.'s Summ. J., Mar. 16, 2016, ECF No. 16; Mem. Law in Reply to Pl.'s Mot. Summ. J., Mar. 16, 2016, ECF No. 20. The Court notes the opposition papers and has taken them into consideration. Further, the parties' cross-motions argue the same issues. As such, the Court will resolve the cross-motions on an issue-by-issue basis.

Discussion

There are two types of discharge provided for in a chapter 13 under 11 U.S.C. § 1328

. Under § 1328(a), if the debtor makes all required plan payments the debtor is eligible for a full compliance discharge. See 11 U.S.C. § 1328(a) ; Ambassadors Travel Servs. v. Liescheidt (In re Liescheidt), 404 B.R. 499, 503 (Bankr.C.D.Ill.2009). Where the debtor is unable to make all plan payments, the debtor may apply for a hardship discharge under § 1328(b). See, e.g., In re Lizzi, 2015 WL 1576513, at *3 (Bankr.N.D.N.Y. Apr. 3, 2015). The debtor may receive a hardship discharge only if the debtor proves the three required statutory conditions are met. 11 U.S.C. § 1328(b)(1)–(3)

; In re Inyard, 532 B.R. 364, 366 (Bankr.D.Kan.2015).

Although a discharge under § 1328(a)

is broader, a full compliance discharge does not discharge the debtor for any debts "of the kind specified in section 507(a)(8)(C) or in paragraph (1)(B), (1)(C), (2), (3), (4), (5), (8), or (9) of section 523(a) [.]" 11 U.S.C. § 1328(a)(2). The debts excepted from a full compliance discharge do not include § 523(a)(6), debts for "willful and malicious injury." A debtor who makes all plan payments and...