Opinion
CIVIL ACTION NO. 03-CV-40109-GAO
January 30, 2004
MEMORANDUM AND ORDER
In a petition to the bankruptcy court, the appellant, Leonard J. Diana, sought to discharge certain debts, including $5,000 he owes the appellee, Robin Wallace, his former wife, pursuant to a judgment of divorce and a judgment of contempt entered by the Massachusetts Probate and Family Court. Wallace commenced an adversary proceeding in the bankruptcy court, seeking a determination that the debt was non-dischargeable, and she filed a motion for summary judgment, a memorandum in support, and an affidavit. Diana filed a cross-motion for summary judgment and a memorandum in opposition to Wallace's motion and in support of his cross-motion. The bankruptcy judge granted Wallace's motion to strike Diana's papers, finding that the cross-motion was untimely because he filed it after the court-ordered deadline and that the memorandum did not comply with F.R.Bankr.P. 7056 because the facts Diana asserted were not supported by proper citations to affidavits or other evidence. The court also granted Wallace's motion for summary judgment, finding that Diana's debt to Wallace was not dischargeable in bankruptcy because it was in the nature of child support.
On appeal, Diana claims that the bankruptcy court erred when it struck his cross-motion and memorandum and when it granted Wallace's motion for summary judgment. For the reasons set forth below, the order of the bankruptcy court is affirmed.
I. Wallace's motion to dismiss the appeal .
Wallace has moved to dismiss the appeal, arguing that Diana failed to properly serve Wallace with a copy of the record appendix on appeal. She has also argued that Diana has perpetrated a fraud on this Court because, while he purports to be acting pro se, he is in fact improperly receiving legal advice from his brother, who is an attorney, and possibly other sources.
Wallace's motion to dismiss is denied. While Wallace's claims are not insignificant, 1 do not find Diana's conduct, even if as Wallace has alleged, to warrant dismissal. Rather the more prudent course is to decide the merits of the appeal, which the parties have fully briefed.
II. Diana's appeal of the bankruptcy court order .
A. Wallace's motion to strike .
The bankruptcy court has broad discretion to make case-management decisions, and those decisions are reviewed only for abuse of discretion. See, e.g., Brandt v. Wand Partners, 242 F.3d 6, 18 (1st Cir. 2001) (bankruptcy court's discovery decisions are reviewed for abuse of discretion); Noonan v. Rauh (In re Rauh), 119 F.3d 46, 52 n. 10 (1st Cir. 1997) (bankruptcy court's denial of motion to amend complaint reviewed for abuse of discretion); Choinski v. Choinski (In re Choinski), 214 B.R. 515, 518 (B.A.P. 1st Cir. 1997) ("Litigation management decisions fall within the ambit of the trial court's broad discretionary powers."). There is no question that Diana's cross-motion was untimely under the established timetable and that his memorandum was not properly supported with citations to evidence. It was within the bankruptcy judge's discretion to sanction Diana's non-compliance, and he did not abuse his discretion in striking Diana's paper.
Even if I were to conclude that the judge had erred, that error would have been harmless. The record reflects that despite his order striking the paper, the bankruptcy judge considered the merits of Diana's allegations and arguments and found them unpersuasive. For example, during the hearing on the summary judgment motions, the judge allowed Diana to argue the facts and law he had presented in his memorandum, and at the conclusion of the hearing the judge stated,
I've considered the argument in the memoranda, and I've actually considered after hearing the argument modifying my ruling on the other motion to strike, vacating that order, and denying the motion for summary judgment, but I don't think in the practical world it matters because based on the arguments that I've heard, I don't believe there's any basis for Mr. Diana's claiming that these payments that were made pursuant to various court orders of the Probate Court were anything other than child support. . . .
And as 1 said, were I not to have granted the motion to strike, I would have denied the motion for summary judgment filed by the defendant, Mr. Diana.
Tr. at 19-20. In considering Diana's appeal, I have considered the allegations and arguments Diana advanced below, and for the reasons that follow, I too find that they are without merit.
B. Wallace's motion for summary judgment and Diana's cross-motion .
In considering an appeal from a bankruptcy court order, I review for clear error the court's findings of fact and review de novo its conclusions of law. E.g. Werthen v. Werthen (In re Werthen), 329 F.3d 269, 272 (1st Cir. 2003); F.R.Bankr.P. 8013.
The Bankruptcy Code, 11 U.S.C. § 523(a)(5), excepts from discharge any debt "to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record. . . ." Section 523(a)(15) also excepts from discharge debt that is "not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation . . . unless (A) the debtor does not have the ability to pay such debt from income or property of the debtor . . . or (B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor." Therefore, a debt that is in the nature of property settlement, and not in the nature of support, is not exempt from discharge under § 523(a)(5) but may be exempt under § 523(a)(15).
In her summary judgment motion, Wallace argued that the debt is in the nature of support and not dischargeable under § 523(a)(5). Diana argued that the debt is in the nature of property settlement, not support; that § 523(a)(15) applies; and that the debt should be discharged because the balance of competing interests described in § 523(a)(15)(A) and (B) tips in his favor. As the party objecting to the discharge of debt in bankruptcy, Wallace had the burden to show, by a preponderance of the evidence, that the debt is not dischargeable. E.g. Werthen, 329 F.3d at 271; Hastings v. Konick (In re Konick), 236 B.R. 524, 527 (B.A.P. 1st Cir. 1999).
To determine whether a debt qualifies as support or property settlement, "courts must `look beyond the label attached to an obligation by a settlement agreement and examine its true nature.'" Schultz v. Schultz (In re Schultz), 204 B.R. 275, 276 (D. Mass. 1996) (citation omitted). "[T]he essential issue is whether, at the time the obligation was created, the parties (or the court imposing the judgment) intended that it function as support." Werthen v. Werthen (In re Werthen), 282 B.R. 553, 556 (B.A.P. 1st Cir. 2002). "The inquiry focuses on how the obligation was meant to function. [The court] must examine the circumstances that existed at the time that the obligation was created. . . . `Circumstances at the bankruptcy filing, at the time of trial, or in prospect play no proper role in the § 523(a)(5) inquiry." Id. at 558 (alteration in original) (citations omitted).
The bankruptcy court found that the debt arose from Diana's child support obligations and not property settlement:
I don't believe there's any basis for Mr. Diana's claiming that these payments that were made pursuant to various court orders of the Probate Court were anything other than child support. It's clear to me that that was what the agreement is, and if there was a mistake in the amount, it did not change the nature of the payment that was agreed to and ordered by the Probate Court.
Tr. at 19-20.
The bankruptcy court's order is affirmed because the uncontroverted evidence supports the finding that the debt, at the time it arose, was intended to function as child support, and Diana did not present any evidence that would support a finding that it was not. Diana did not argue that, at the time of the divorce judgment or the contempt judgment, the probate court or the parties intended the payments to function as anything other than child support. Rather, he asked the bankruptcy court to make a post hoc determination that the original child support award was erroneous and should be reformed. He argued that his original agreement to pay $181.25 per week for child support was based on an erroneous calculation which overstated his, and understated Wallace's, future income. He also argued that Wallace's financial condition after the child support award issued demonstrates that she does not need assistance supporting the children. His evidence and arguments did not raise a dispute concerning the intent of the parties or the probate court at the time the debt originated. Lacking a genuine, trial-worthy issue of fact, the bankruptcy judge correctly granted summary judgment in Wallace's favor.
III. Conclusion.
Accordingly, the bankruptcy court's order is AFFIRMED.