Yelverton v. De Nagy-Unyom (In re Yelverton)

• Decision Date: 24 September 2012
• Docket Number: Case No. 09-00414,Adversary Proceeding No. 12-10011
• Parties: In re STEPHEN THOMAS YELVERTON, Debtor. STEPHEN THOMAS YELVERTON, Plaintiff, v. ALEXANDRA N. SENYI DE NAGY-UNYOM, Defendant.
• Court: United States Bankruptcy Courts. District of Columbia Circuit

In re STEPHEN THOMAS YELVERTON, Debtor.

STEPHEN THOMAS YELVERTON, Plaintiff,

v.ALEXANDRA N. SENYI DE NAGY-UNYOM, Defendant.

Case No. 09-00414

Adversary Proceeding No. 12-10011

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLUMBIA

Dated: September 24, 2012.

The document below

________

S. Martin Teel, Jr.

U.S. Bankruptcy Judge

(Chapter 7)

Not for publication in

West's Bankruptcy Reporter

MEMORANDUM DECISION RE CROSS-MOTIONS FOR SUMMARY JUDGMENT

This is an action filed by the debtor, Stephen Thomas Yelverton, seeking a determination that all monetary obligations owed to his former wife, Alexandra N. Senyi de Nagy-Unyom, including those arising under a prenuptial agreement, are dischargeable and thus discharged by his discharge under 11 U.S.C. § 727. The parties have filed cross-motions for summary judgment.

In his motion, Yelverton contends that because the prenuptial agreement was not ratified, merged into, or incorporated into the decree of divorce, the obligations arising under that agreement are contractual obligations and not domestic support or marital obligations excepted from discharge under 11 U.S.C. §§ 523(a)(5) and 523(a)(15). In her motion, Senyi contends that her claims against Yelverton are excepted from discharge: (a) pursuant to 11 U.S.C. § 523(a)(2)(B) because Senyi reasonably relied upon statements made by Yelverton, who was acting in bad faith and with the intent to deceive, regarding his intent to honor the obligations set forth in the prenuptial agreement; (b) pursuant to 11 U.S.C. § 523(a)(6) because Yelverton's allegedly false statements regarding his drafting of the agreement to be enforceable and to ensure support of Senyi were made with the intent to defraud Senyi; (c) pursuant to 11 U.S.C. § 523(a)(5) because the claims constitute domestic support obligations; and (d) pursuant to 11 U.S.C. § 523(a)(15) because they arise under a judgment of absolute divorce entered in the Superior Court of the District of Columbia.¹

For the reasons that follow, the court concludes that:

1. Senyi has met her burden to show that the $7,000monthly marital support payments and the $17,000 monthly alimony payments described in the prenuptial agreement and referred to in the divorce decree are nondischargeable obligations under § 523(a)(5) or § 523(a)(15), and will grant summary judgment in Senyi's favor as to those portions of her claim.

2. As to Senyi's $140,000 claim for employment-related income and the $26,000 claim for unpaid rental obligations mentioned in the prenuptial agreement, Senyi has failed to produce or point to any evidence adequate to support a finding that these are nondischargeable obligations under § 523(a), and I will grant summary judgment in favor of Yelverton as to these obligations.

3. Finally, Senyi's claims include a postnuptial document wherein Yelverton agreed to pay to her the first $100,000 he receives out of the proceeds of the debtor's interest in a family corporation owning a North Carolina pig operation. Senyi has not shown that this obligation, if a monetary claim, is of a nondischargeable character, and I will grant Yelverton summary judgment as to that obligation, without prejudice to Senyi's later seeking a determination of nondischargeability for any monetary claim awarded to her, based on the postnuptial document, in remand proceedings in the Superior Court under D.C. Code § 16-910.

4. To the extent that remand proceedings in the Superior Court result in an award of property to Senyi that is effective against the bankruptcy estate, such an award will not constitute a claim for money and thus will not present an issue of dischargeability. To the extent that, in lieu of Senyi actually obtaining property from Yelverton, the remand proceedings result in an award of a money claim against Yelverton, then at that juncture Senyi can seek a judgment declaring the debt to be nondischargeable under § 523(a)(15).

I

The following are the material facts as to which, at this juncture, there is no genuine dispute.

The parties signed a prenuptial agreement on September 29, 2006, in the presence of a Notary Public in Hamilton, Bermuda. The agreement provided, inter alia, that:

1. Yelverton was to "provide $7,000 per month to [Senyi] during the marriage for her support and use;"

2. Senyi was "entitled to a draw of $10,000 per month after December, 2006" in connection with her role as an employee of a partnership formed by Yelverton and Senyi ("Yelverton-Senyi"), with the details of Senyi's employment set forth in a separate employment contract dated March 1, 2007;

3. Yelverton was to rent an apartment owned by Senyi and located in Paris as a business office for Yelverton-Senyi at a rental rate of 950 Euros per month for a term of three years so long as the business was in operation; and4. "In the event of termination of the marriage . . . . [Yelverton] agrees to pay alimony of $17,000 per month, so long as [Senyi] is single, plus child support. This amount may not be lowered by any court in order to protect [Senyi's] interests."

The parties were lawfully married on September 30, 2006, one day after executing the prenuptial agreement. The prenuptial agreement was drafted solely by Yelverton. Additionally, Yelverton solely drafted two Employment Contracts dated March 1, 2007 and March 1, 2008, which governed the terms of Senyi's employment with the Yelverton-Senyi partnership.

On April 2, 2008, Yelverton and Senyi executed a one-sentence document wherein Yelverton stated "I, Stephen Thomas Yelverton, agree to give my wife, Alexandra-Nicole Senyi de Nagy-Unyom, the first $100,000 in proceeds that I receive from the sale of my interest in my family's pig operation in North Carolina." Both parties have referred to this as a "promissory note." As proceedings in the main bankruptcy case have shown, Yelverton's interest in the pig operation was via the shares he held in Yelverton Farms, Ltd. The chapter 7 trustee in the main case has liquidated the debtor's shares in Yelverton Farms, Ltd. by way of a settlement with the other shareholders of that corporation. See Memorandum Decision re Debtor's Motion to Vacate Order Approving Settlement, Dkt. No. 506 in Case No. 09-00414 (In re Yelveton, --- B.R. --- (Bankr. D.D.C. Aug. 8, 2012)), as to which Yelverton has filed a notice of appeal.

The parties have been legally separated since April 15, 2008. Senyi filed for a dissolution of marriage on October 28, 2008; the parties filed an uncontested praecipe on October 28, 2008; and the hearing for an uncontested divorce took place on December 12, 2008, at which time Yelverton contested the divorce despite the uncontested praecipe and separation agreement.

Yelverton filed for relief under Chapter 11 of the Bankruptcy Code on May 14, 2009. In a December 30, 2009 order, this court lifted the automatic stay for the limited purpose of permitting the parties' divorce proceedings in Case No. 2008 DRB 003258 to go forward in the Superior Court. The court did not lift the stay to permit enforcement of a monetary judgment against the debtor. The case was converted to a case under Chapter 7 on August 20, 2010, and Yelverton received a Chapter 7 discharge on December 3, 2010.

Senyi's claims whose dischargeability is at issue include those she has asserted by a proof of claim in the bankruptcy case in order potentially to receive a distribution from the estate as a creditor. On September 1, 2009, Senyi filed a proof of claim in the amount of $649,600, and she filed an amended proof of claim on October 15, 2010, in the amount of $612,600. The amended proof of claim is based largely on obligations established by the parties' prenuptial agreement, and is comprised of the following monetary claims: (1) $329,000 inspousal support based upon 47 months of non-payment of the $7,000 monthly support Yelverton was obligated to pay to Senyi during the marriage; (2) $140,000 in salary based upon the $10,000 monthly compensation Senyi was entitled to receive pursuant to a March 1, 2007 employment contract with the Yelverton Law Firm, PLLC, which agreement is referenced in the prenuptial agreement; (3) $26,000 based upon Yelverton's obligation to rent from Senyi her apartment located in Paris; (4) alimony of $17,000 per month as of October 2010;² and (5) $100,000 based upon the postnuptial "promissory note" under which Senyi was to receive the first $100,000 in proceeds from Yelverton's interest in the family North Carolina pig operation.³ Yelverton's complaint seeks a determination that those claims are of a dischargeable character. The complaint, however, can be read as seeking a determination that any monetary obligations owed to Senyi and arising out oftheir marital relationship and the ensuing divorce proceeding. In remand proceedings in the Superior Court, discussed later, it is possible that additional obligations will be imposed against Yelverton and in favor of Senyi.

Yelverton placed the validity of the prenuptial agreement at issue during the divorce proceeding, contending that it was unconscionable, involuntary, the product of misrepresentation and fraud. He further argued that performance of the agreement was either impractical or impossible. On August 11, 2010, the Superior Court of the District of Columbia entered Findings of Factr Conclusions of Law, and Judgment of Absolute Divorce, rejecting Yelverton's argument. The Superior Court held that Yelverton "has not demonstrated that the Pre-Nuptial Agreement is invalid, or should be considered unenforceable by the Court." Dec. at 30. The Superior Court further ruled that:

the Court concludes that Defendant [Yelverton] is liable for $17,000.00 per month for alimony as per the Agreement, and is obligated to start alimony payments as of the date of this Order. He is also liable for any arrearages on his obligation of $7,000 per month in marital support to Plaintiff [Senyi] to the extent that he has not made these monthly payments during the marriage including the time

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