Opinion
Case No. 07-59297 Adv. Pro. No. 14-02192
01-21-2015
In re: Frank M. Byers, III, Debtor. Patricia A. Byers, Plaintiff, v. Frank M. Byers, III, Defendant.
Copies To: Amy Gullifer, Attorney for Defendant (via CM/ECF) Patricia A. Byers PO Box 429 Thornville, OH 43076 Patricia A. Byers 14835 Shoreline Dr. W. Thornville, OH 43076
Chapter 13 MEMORANDUM OPINION AND ORDER ON DEFENDANT'S MOTION FOR MORE DEFINITE STATEMENT OR MOTION TO DISMISS
This cause came on for consideration of the Motion for a More Definite Statement or Motion to Dismiss (Doc. 47) (the "Motion"), filed by Defendant Frank M. Byers, III ("Defendant"), on October 24, 2014. The Motion requests an order requiring Plaintiff Patricia A. Byers ("Plaintiff") to file a more definite statement of her Objection to the Discharge of Claim 4-1 (Doc. 1), or, in the alternative, an order dismissing this adversary proceeding for insufficient service of process and/or for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(5) & (6). Plaintiff has not filed any response to the Motion.
Federal Rule of Civil Procedure 12 is applicable to adversary proceedings pursuant to Federal Rule of Bankruptcy Procedure 7012.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and General Order 05-02, entered by the United States District Court for the Southern District of Ohio, referring all bankruptcy matters to this Court. Venue in this Court is proper pursuant to 28 U.S.C. §§ 1408 and 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (H), (I), and (O).
I. Factual and Procedural Background
Defendant filed a petition for relief under Chapter 13 of the Bankruptcy Code in 2007. Plaintiff is the former spouse of Defendant. Although Plaintiff was active in the early stages of the bankruptcy case, her filings were ultimately resolved, and Defendant's Chapter 13 Plan proceeded to confirmation. Defendant received a Chapter 13 discharge on December 30, 2013.
Plaintiff subsequently commenced an aggressive campaign of filings designed to secure payment of her prepetition claim. Among the filings was a document titled "Creditor Patricia A Byers' Objection to the Discharge of Claim 4-1 Pursuant to 11 USC § 101(14)(A)(i)(B)(C)(i-iii) § 1328(c)(2) § 523(a)(2)(4)(5)(6)(15), Fed. Civ. Rule P. 60(b)(1)(3)(5) ORC Title 13 § 1336.07 28 USC § 455 § 144" (Doc. 1) (hereinafter, the "Complaint"). The Clerk opened this adversary proceeding, and the Court entered an Order explaining that the document would be treated as a complaint in light of the mandate of Federal Rule of Bankruptcy Procedure 7001 that a proceeding to determine dischargeability of debt or to object to discharge is an adversary proceeding. See Order Proposing to Dismiss Adversary Proceeding (Doc. 5).
Although it is difficult to discern the various claims scattered throughout the Complaint, it appears to the Court that the Complaint seeks the following relief: (i) an order vacating Defendant's Chapter 13 discharge pursuant to Federal Rule of Civil Procedure 60(b)(1), (3), and (5) and/or an order revoking Defendant's discharge pursuant to 11 U.S.C. § 1328(e); (ii) recusal of Judge Preston from presiding over Defendant's Chapter 13 case and related proceedings; (iii) an order determining that Plaintiff's prepetition claim is nondischargeable pursuant to 11 U.S.C. § 523(a) and/or 11 U.S.C. § 1328(c); and (iv) an order avoiding certain transfers made by Defendant pursuant to Ohio Revised Code § 1336.01, et seq. The Court, having reviewed the Complaint, finds that it fails to state a claim upon which relief can be granted, and therefore, must be dismissed.
Federal Rule of Civil Procedure 60 is made applicable to bankruptcy cases by Federal Rule of Bankruptcy Procedure 9024.
II. Dismissal for Failure of Process
The Motion first seeks dismissal of the Complaint under Federal Rule of Civil Procedure 12(b)(5) for failure of process. Specifically, the Motion indicates that, on September 17, 2014, the clerk issued a summons, but Plaintiff failed to file an executed summons. Federal Rule of Civil Procedure 4(l) , however, only requires that proof of service be made to the Court; it does not require a separate filing showing that the summons was executed.
The filing of the summons and certificate of service on September 17, 2014, was Plaintiff's most recent of several attempts to secure and serve a proper summons.
Federal Rule of Civil Procedure 4(l) is made applicable to adversary proceedings pursuant to Federal Rule of Bankruptcy Procedure 7004(a)(1).
Upon review of the record, the Court finds that, attached to the summons filed with the Court, are certificates of service indicating that Plaintiff served the summons and Complaint upon Defendant and Defendant's attorney on September 19, 2014. The Court finds said filing sufficient for proving service, and, as Defendant does not allege any other defect in service, this prong of the Motion must be denied.
III.Dismissal for Failure to State a Claim
A. Standard of Review
When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the facts articulated in the complaint must be taken in a light most favorable to the plaintiff and accepted as true. Bovee v. Coopers & Liebrand CPA, 272 F.3d 356, 360-61 (6th Cir. 2001). A motion to dismiss should be granted if the complaint lacks some factual context sufficient to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligations to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. The Court need not accept as true legal conclusions or unwarranted factual inferences. Bovee, 272 F.3d at 361.
Typically, the Court is restricted to the pleadings when deciding a motion to dismiss attacking the legal sufficiency of the allegations contained in the complaint. However, in addition to the allegations of the complaint, the Court may also consider other materials integral to the complaint, public records, and other materials appropriate for judicial notice. Bovee, 272 F.3d at 360-61; New England Health Care Employees Pension Funds v. Ernst & Young LLP, 336 F.3d 495, 501 (6th Cir. 2003), cert. den'd, 450 U.S. 1183 (2004); Wyser-Pratte Management Co., Inc. v. Telxon Corp., 413 F.3d 553, 560 (6th Cir. 2005).
B. Discussion
i. Request for an Order Vacating or Revoking Defendant's Discharge
In her Complaint, Plaintiff requests an order vacating Defendant's Chapter 13 discharge pursuant to Federal Rule of Civil Procedure 60(b)(1), (3), and (5). Rule 60(b) provides:
On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
Fed. R. Civ. P. 60(b). Any request for relief under Rule 60(b) must be made within a reasonable time. Fed. R. Civ. P. 60(c).(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
According to the Complaint, the events that justify vacating Defendant's discharge took place sometime after 2009, when Plaintiff and Defendant reconciled and Plaintiff moved back into Defendant's home. Plaintiff indicates that she did not object to Defendant's discharge prior to its entry because she "feared for her safety, well-being and her life." However, the Complaint also indicates that Plaintiff was "evicted" from Defendant's home sometime in 2012, more than a year prior to Defendant's completion of his Chapter 13 plan and entry of discharge. Plaintiff cannot claim that, after she moved out of Defendant's home, there was a continuing threat that prevented her from objecting to Defendant's discharge. The Court therefore finds that Plaintiff's request to vacate Defendant's discharge was not filed within a reasonable time, as required by Federal Rule of Civil Procedure 60(c). Further, setting aside Defendant's discharge would be futile: Plaintiff has not demonstrated that any additional relief would be available to her or the bankruptcy estate, if the discharge were vacated.
The Complaint alternatively seeks an order revoking Defendant's discharge pursuant to 11 U.S.C. § 1328(e). Section 1328(e) allows the Court to revoke a discharge only if: "(1) such discharge was obtained by the debtor through fraud; and (2) the requesting party did not know of such fraud until after such discharge was granted." 11 U.S.C. § 1328(e) (emphasis added).
Plaintiff alleges that sometime after moving back in with Defendant in 2009, she found documents that "prove fraud with particularity" by Defendant and his father. Aside from the fact that the Complaint fails to indicate how the documents prove that Defendant obtained his discharge by fraud, it appears that Plaintiff discovered the documents prior to entry of Defendant's discharge. Thus, Plaintiff's claim for revocation of Defendant's discharge must be dismissed.
ii. Request for Recusal of Judge Preston
Plaintiff's Complaint next seeks the recusal of Judge Preston pursuant to 28 U.S.C. §§ 455 and 144. Plaintiff, however, previously filed a motion for recusal of Judge Preston in Defendant's Chapter 13 case (hereinafter, "Motion for Recusal"), which was based upon substantially the same allegations set forth in the Complaint. The Court denied the Motion for Recusal, holding that Plaintiff "failed to illustrate an extrajudicial source factor or pervasive bias compelling disqualification of the assigned judge." Ord. Denying Creditor Patricia A. Byers' Motion for Recusal of Judge C. Kathryn Preston (In re Byers, Case No. 07-59297, Doc. 270). Plaintiff filed an untimely notice of appeal to the Bankruptcy Appellate Panel for the Sixth Circuit Court of Appeals (the "BAP"), along with a motion seeking an extension of time to appeal the order denying the Motion for Recusal (hereinafter, "Motion for Extension of Time"). The Court entered an order denying the Motion for Extension of Time, and Plaintiff filed a motion for reconsideration of that order (hereinafter, "Motion for Reconsideration"), which the Court also denied. Plaintiff subsequently filed a timely notice of appeal of the order denying the Motion for Reconsideration.
The appeals of the order denying Plaintiff's Motion for Reconsideration and of the order denying Plaintiff's Motion for Recusal are currently pending before the BAP, case numbers 14-8040 and 14-8029, respectively. The BAP is holding the latter appeal in abeyance pending the resolution of Plaintiff's appeal of the order denying the Motion for Reconsideration.
The Court finds that it may lack jurisdiction to determine Plaintiff's request for recusal of Judge Preston, as set forth in the Complaint. Generally, "the filing of an appeal divests the bankruptcy court of jurisdiction over those aspects of the case involved in the appeal, but the bankruptcy court retains jurisdiction over other issues not presented in the appeal." In re Big Rivers Elec. Corp., 266 B.R. 100, 103 (W.D. Ky. 2000). However, such rule does not apply if the appeal is untimely. See Rucker v. U.S. Dep't of Labor, 798 F.2d 891, 892 (6th Cir. 1986) (citation omitted).
In the instant case, the timeliness of the appeal of the order denying Plaintiff's Motion for Recusal is dependent upon the outcome of the appeal of the order denying the Motion for Reconsideration. Should the BAP reverse this Court's denial of the Motion for Reconsideration and find that Plaintiff's Motion for Extension of Time should have been granted, thus rendering the appeal of the order denying Plaintiff's Motion for Recusal timely, this Court would lack jurisdiction over the instant request for recusal of Judge Preston.
However, even in the event that this Court retains jurisdiction over Plaintiff's request for recusal, the Court's order denying the Motion for Recusal is law of the case, and therefore, Plaintiff's request for the recusal of Judge Preston, as set forth in the Complaint, must nonetheless fail. See Rouse v. DaimlerChrysler Corp., 300 F.3d 711, 715 (6th Cir. 2002) ("Under the law-of-the-case doctrine, findings made at one point in the litigation become the law of the case for subsequent stages of that same litigation.") (citation omitted). See also U.S. v. Adesida, 129 F.3d 846, 850 (6th Cir. 1997) ("The law-of-the-case doctrine bars challenges to a decision made at a previous stage of the litigation which could have been challenged in a prior appeal[.]") (citation omitted). Accordingly, Plaintiff's claim seeking the recusal of Judge Preston must be dismissed either because the Court lacks jurisdiction to consider such request, or because Plaintiff is barred from bring such claim under the law-of-the-case doctrine.
iii. Request that Plaintiff's Claim be Determined Nondischargeable
Plaintiff's prepetition claim arose from divorce proceedings in the Delaware County Court of Common Pleas, Division of Domestic Relations. To evidence her claim, on February 13, 2008, Plaintiff filed proof of claim 4-1 (the "Claim") in Defendant's Chapter 13 case. The Claim and the attached documents indicate that the basis for the Claim was a property settlement between Plaintiff and Defendant. The Complaint asserts that the Claim is nondischargeable pursuant to 11 U.S.C. § 523(a)(2), (4), (5), (6), and (15), and 11 U.S.C. § 1328(c).
a. Dischargeability under § 523(a)(5)
Excepted from a Chapter 13 discharge are certain debts listed in 11 U.S.C. § 1328(a)(1) and (2), including debts of the kind specified in § 523(a)(5) - known as domestic support obligations. The Bankruptcy Code defines a "domestic support obligation" as follows:
[A] debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is--
(A) owed to or recoverable by--
(i) a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
11 U.S.C. 101(14A) (emphasis added).
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child's parent, legal guardian, or responsible relative for the purpose of collecting the debt.
In Long v. Calhoun (In re Calhoun), 715 F.2d 1103 (6th Cir. 1983), the Sixth Circuit Court of Appeals articulated a test for determining whether an obligation that was not specifically designated as alimony or maintenance, was nonetheless in the nature of support, and thus, nondischargeable.
First, the obligation constitutes support only if the state court or parties intended to create a support obligation. Second, the obligation must have the actual effect of providing necessary support[]. Third, if the first two conditions are satisfied, the court must determine if the obligation is so excessive as to be unreasonable under traditional concepts of support. Fourth, if the amount is unreasonable, the obligation is dischargeable to the extent necessary to serve the purposes of federal bankruptcy law.Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517, 520 (6th Cir. 1993) (citing Calhoun, 715 F.2d at 1109-10). "The burden of demonstrating that an obligation is in the nature of support is on the non-debtor." Id. (citing Calhoun, 715 F.2d at 1111).
In Fitzgerald and Sorah v. Sorah (In re Sorah), 163 F.3d 397, 402 (6th Cir. 1998), the Sixth Circuit Court of Appeals clarified that the second prong of the Calhoun test is not applicable when the obligation was specifically labeled as alimony, maintenance, or support by the domestic court. However, when the obligation was not labeled as such, as in the instant case, courts are to apply the full Calhoun test. See Norbut v. Norbut (In re Norbut), 387 B.R. 199, 206 (Bankr. S.D. Ohio 2008).
In the instant case, Plaintiff contends that, although her Claim is not labeled alimony, maintenance, or support, the Claim nonetheless is for a domestic support obligation. The Complaint, however, does not allege any facts sufficient for finding that Plaintiff's Claim is in the nature of support, and therefore, Plaintiff's request for relief under § 523(a)(5) must be dismissed. The Court will afford Plaintiff the opportunity to file an amended complaint to allege facts sufficient to support a finding that her Claim is in the nature of a support obligation under the test set forth above.
b. Dischargeability under § 523(a)(2), (4), (6) & (15) and § 1328(c)
The Complaint additionally asserts that Plaintiff's Claim is nondischargeable pursuant to 11 U.S.C. § 523(a)(2), (4), (6), and (15), and 11 U.S.C. § 1328(c). Section 1328(c), however, only applies to a hardship discharge under § 1328(b). As Defendant received a discharge pursuant to § 1328(a), subsection (c) is inapplicable to the instant case. Further, the debts described in § 523(a)(6) and (15) are not excepted from the effect of a discharge granted under § 1328(a). See 11 U.S.C. § 1328(a)(2). Accordingly, the Complaint fails to state a claim under § 523(a)(6) and (15) and § 1328(c).
Plaintiff's claims under § 523(a)(2) and (4) must also be dismissed. Pursuant to Federal Rule of Bankruptcy Procedure 4007(c), a complaint to determine dischargeability of a debt under § 523(a)(2) or (4) must be filed within sixty (60) days after the first date set for the meeting of creditors. In Defendant's Chapter 13 case, the first date set for the meeting of creditors was January 17, 2008, but Plaintiff did not file the Complaint until July 7, 2014. Therefore, Plaintiff's claims pursuant to § 523(a)(2) and (4) must be dismissed as untimely.
iv. Request for an Order Avoiding Certain Alleged Fraudulent Transfers
Lastly, the Complaint seeks relief pursuant to the Ohio Uniform Fraudulent Transfer Act ("UFTA"). See Ohio Rev. Code § 1336.01, et seq. Plaintiff alleges that Defendant made certain prepetition transfers that constitute a fraudulent conveyance under UFTA. Upon the commencement of a bankruptcy case, however, the trustee, or, in certain circumstances, the debtor, has the exclusive right to pursue a prepetition fraudulent conveyance under UFTA. 11 U.S.C. § 544. See In re Berg, 376 B.R. 303, 311 (Bankr. D. Kan. 2007) (holding that the strong-arm power of § 544(b) vests the trustee with the exclusive right to pursue fraudulent conveyance claims under state law). Accordingly, any claim asserted by Plaintiff under UFTA must be dismissed, as Plaintiff lacks standing to pursue such a claim.
IV. Conclusion
For the foregoing reasons, the Complaint fails to state a claim upon which relief can be granted and must be dismissed. The Court finds, however, that Plaintiff may have a cause of action under § 523(a)(5) of the Bankruptcy Code, and therefore, Plaintiff will be afforded an opportunity to file an amended complaint with respect to her claim under § 523(a)(5) only. No cause of action exists with respect to any other claims set forth in the Complaint.
Therefore, it is
ORDERED AND ADJUDGED that Defendant's Motion under Federal Rule of Civil Procedure 12(b)(6) is GRANTED, and any and all claims set forth in the Complaint are hereby DISMISSED. It is further
ORDERED AND ADJUDGED that the dismissal of the following claims are with prejudice: (i) any claim seeking to vacate Defendant's Chapter 13 discharge pursuant to Federal Rule of Civil Procedure 60(b)(1), (3), or (5); (ii) any claim seeking to revoke Defendant's Chapter 13 discharge pursuant to 11 U.S.C. § 1328(e); (iii) any claim seeking recusal of Judge Preston from presiding over Defendant's Chapter 13 case and/or other related proceedings; (iv) any claim seeking a determination of dischargeability of Plaintiff's prepetition claim pursuant to 11 U.S.C. § 523(a)(2), (4), (6), or (15), or under 11 U.S.C. § 1328(c); and (v) any claim under the Ohio Uniform Fraudulent Transfer Act, Ohio Revised Code § 1336.01, et seq. It is further
ORDERED AND ADJUDGED that the dismissal of Plaintiff's claim under 11 U.S.C. § 523(a)(5) is without prejudice. On or before February 10, 2015, Plaintiff shall file an amended complaint only with respect to her cause of action under § 523(a)(5). Said complaint shall be limited to facts and allegations necessary to assert a claim under § 523(a)(5), as described in section III(B)(iii)(a) of this opinion, and shall be served in accordance with Federal Rule of Bankruptcy Procedure 7004. Should Plaintiff fail to timely file an amended complaint, this adversary proceeding shall be dismissed. It is further
ORDERED AND ADJUDGED that the Motion's request for a more definite statement is denied as moot.
IT IS SO ORDERED.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
/s/ _________
C. Kathryn Preston
United States Bankruptcy Judge
Dated: January 21, 2015
Copies To: Amy Gullifer, Attorney for Defendant
(via CM/ECF) Patricia A. Byers
PO Box 429
Thornville, OH 43076 Patricia A. Byers
14835 Shoreline Dr. W.
Thornville, OH 43076