Van Hoose v. Van Hoose
| Decision Date | 23 June 1983 |
| Docket Number | Bankruptcy No. 3-81-02096 |
| Citation | 31 BR 332 |
| Parties | Millard E. VAN HOOSE, Virginia Van Hoose 3105 Seymore St-Kennard, Cable, Ohio 43009, Plaintiffs, v. Margaret Ann VAN HOOSE Lot # 190, Marysville Trailer Court, Marysville, Ohio 43040 Defendant. In the Matter of Millard E. VAN HOOSE, Virginia Van Hoose, Debtors. |
| Court | U.S. Bankruptcy Court — Southern District of Ohio |
David E. Larson, Dayton, Ohio, for plaintiffs/debtors.
Gerald L. Anderson, Mechanicsburg, Ohio, for defendant.
George W. Ledford, Englewood, Ohio, trustee.
DECISION AND ORDER
This matter is before the court upon Complaint filed on 22 February 1982 by the Debtor herein, Millard Van Hoose. The Complaint alleges his ex-wife Margaret, the Defendant herein, violated the automatic stay provisions of the Bankruptcy Code, 11 U.S.C. § 362. Defendant's answer denies any violation of the automatic stay. At a prior hearing before the Court of Common Pleas, Champaign County, Ohio, which involved the same parties present in the instant case, there was a deferral of any findings until this Court resolved the issue whether certain obligations owed by Debtor under the terms of a divorce decree were dischargeable in bankruptcy pursuant to 11 U.S.C. § 1328.
Trial on the Complaint was set for 14 April 1982. The parties requested and were granted a continuance in an attempt to negotiate a settlement and, failing that, to prepare a stipulation of agreed facts and memoranda of law. The parties did not succeed in settling, waived pretrial conference and hearing, and submitted the matter to the Court on a joint stipulation of facts, an affidavit of Defendant, and briefs. The following decision is based on the stipulations including Defendant's affidavit, legal briefs, and stipulated exhibits setting forth the proceedings from the Court of Common Pleas in Champaign County. The Court also takes judicial notice of Debtor's Chapter 13 case record (No. 3-81-02096) and of the proceedings in Household Finance Corporation v. Millard and Margaret Van Hoose (No. 3-81-0205).
Millard E. Van Hoose, Plaintiff and Debtor herein, and Margaret Ann Van Hoose, Defendant, were granted a decree of divorce on 4 May 1978 in the Court of Common Pleas, Champaign County, Ohio. The decree dissolved their marriage of ten and a half years which had produced 3 minor issue. The divorce decree granted custody of the 3 children to Margaret and ordered Millard to pay $45.00 per week plus poundage and all the children's medical expenses. The decree awarded Margaret "temporary alimony" of $15.00 per week along with payment of her rent and utilities until she returned to work from temporary sick leave. Margaret also received all personal property of the marriage which, pertinent to this proceeding, included certain household goods purchased and financed through Household Finance Corporation (HFC). Millard and Margaret comade the note to HFC. Finally, the divorce decree ordered Millard to pay all "debts of the marriage" (including the joint debt owed to HFC) and to hold Margaret harmless therefrom.
Millard and his present wife filed their joint petition for relief under Chapter 13 on 28 July 1981. Debtors duly scheduled HFC as an unsecured creditor (its security interest is in certain of Debtors' household goods exempted pursuant to 11 U.S.C. § 522(d) and O.R.C. § 2329.66(A)(4)(b)). The parties stipulated the amount due to HFC as $1,333.63, consistent with HFC's properly filed proof of claim. The Court confirmed Debtors' plan on 8 September 1981, which provided, in pertinent part, for a distribution of approximately 25% to unsecured creditors.
Margaret received notice of his joint Chapter 13 Petition on 1 September 1981. On 21 September 1981 Millard's attorney responded to a phone call from Margaret with a letter advising her that because of Millard's Chapter 13 filing, some of the creditors to whom they were jointly liable may attempt to force payment by her on some of their comade debts. (Note 11 U.S.C. § 1301). He further suggested if she was forced to pay on such debts she should submit a proof of claim to the Chapter 13 Trustee, who would likely reimburse her for 5% of the amount claimed. The letter closed by admonishing her not to seek satisfaction from Millard personally. Debtor's attorney warned, in pertinent part, "If you do attempt to collect anything from Millard, you may be held in contempt of Federal Bankruptcy Court."
On 4 November 1981, HFC instituted an adversarial proceeding to obtain relief from the codebtor stay pursuant to 11 U.S.C. § 1301(c). Margaret was duly served as a named Defendant; however, she filed no answer nor did she appear at the hearing. An agreed order, dated 18 November 1981, granted relief from the stay. HFC instituted collection efforts against Margaret to collect the portion of the debt Millard did not propose to pay under his Chapter 13 Plan. As a result of these efforts, Margaret agreed to pay HFC $40.00 per month for 25 months.
Prior to 10 February 1982 and presumably without the advice of counsel, Margaret wrote a letter to the Champaign County Common Pleas Court Judge who had presided over the divorce case. The letter complained that she was having to pay on debts ( that owing to HFC) on which she was to have been held harmless under the divorce decree. The Common Pleas Court sua sponte set the matter for hearing on 10 March 1982 to discuss the question of responsibility for payment of "debts of the marriage" and the effect of Millard's Petition in bankruptcy. The hearing resulted in a journal entry, dated 5 April 1982, withholding further action by the Common Pleas Court during the pendency of the Bankruptcy Court proceedings and Millard was directed to pay the court costs. In dicta, the state court suggested that its order in the divorce decree that Margaret be held harmless on certain "debts of the marriage" was "in the nature of an alimony order." The Court also notes that, at this hearing, Margaret attempted to withdraw her notification to the state court regarding the payments to HFC.
In their briefs, the parties devoted extensive argument to the issue of whether the "hold harmless" provision of the divorce decree and subsequent debt owing to Margaret was in the nature of alimony, maintenance, or support and thus dischargeable under 11 U.S.C. § 1328(a)(2). This discussion was apparently premised on the assumption that the Common Pleas Court hearing on the question of responsibility for payment of certain debts of the marriage and the resulting Journal Entry, which deferred to the Bankruptcy Court for a determination of the dischargeability of the debt, sufficed to bring the issue before the Bankruptcy Court for decision.
Initially the Court notes that issues of nondischargeability of alimony, maintenance, or support are properly justiciable in a Chapter 13 proceeding. See the "Emergency Model Rule for Operation of the Bankruptcy Court System," Rule (d)(3)(A). However, this Court is constrained to hold that the issue of dischargeability of the debt of the marriage owed by Millard and the sub-issue of the nature of that debt, though justiciable, have not been properly brought before the court in this case.
Obviously the filing of a complaint with the Clerk of the Bankruptcy Court is proper pleading form to raise issues of dischargeability. B.R.P. 701(7) and 703. Bankruptcy Rules of Procedure 13-407 provides that either a debtor or creditor may initiate such an action at any time, even after the case is closed. The only issue raised by complaint instanter is in regard to an alleged violation of the automatic stay.
11 U.S.C. § 362(d)(1) and (f) provide for termination of the automatic stay on the request of a party in interest for cause or where irreparable damage will result. Thus, Margaret could have, at any time since the filing of Debtor's Petition, requested that the stay be lifted so that she would be free to use the state court's enforcement power to exact payment from Millard. Of necessity, a decision of whether to grant relief from the stay would have required a determination of whether the debt was nondischargeable as alimony, maintenance, or support. In re Sak, 21 B.R. 305 (E.D.N.Y.1982).
11 U.S.C. § 1301(c) provides an opportunity to be heard from all interested parties at a proceeding to determine whether the codebtor stay should be removed. Thus, the nature of the debt and the issue of dischargeability could properly have been litigated in this Court when HFC sought removal of the codebtor stay. The Court specifically notes that Margaret duly received notice of the proceeding to remove the codebtor stay, but apparently chose not to contest the matter at that time.
Finally, 11 U.S.C. § 1324 gives any party in interest an opportunity to object to confirmation of the debtor's Chapter 13 Plan. Although there is no express provision in the Code requiring that a plan provide for 100% payment of any alimony, maintenance, or support (11 U.S.C. § 1322(a)), a strong argument could have been made that Millard's plan should not have been confirmed, given its failure to provide for full payment of a potentially nondischargeable debt for alimony, maintenance, or support. Under the ratio decidendi of this Court's opinion in Matter of Gaston, 25 B.R. 571 (Bkrtcy.1982), (see also Memphis Bank and Trust Co. v. Whitman, 692 F.2d 427 (6th Cir.1982) as cited therein), it may constitute "questionable conduct" for a debtor to seek and obtain a discharge under Chapter 13 of a debt otherwise nondischargeable, particularly if payments on the debt as "contracted" would not have been completed during the term of the plan, and if the debtor is capable of making the payments as originally contemplated. 11 U.S.C. § 1328(a)(2) declares any debt in the nature of alimony, maintenance, or support is non-dischargeable. Thus, the inclusion...
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