Comstock v. Rodriguez

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	KENNETH DARYLE RODRIGUEZ 	No. 11-10-14645 JA
Debtor.
DENISE COMSTOCK f/k/a DENISE RODRIGUEZ,
Plaintiff/Counter-Defendant,
v. 	Adversary No. 10-1206 J
KENNETH DARYLE RODRIGUEZ,
Defendant/Counter-Claimant,
MEMORANDUM OPINION
THIS MATTER is before the Court on the Third Motion for Summary Judgment and
Memorandum in Support (“Motion for Summary Judgment on Counter-Claim”) filed by the
Defendant/Counter-Claimant, Kenneth Daryle Rodriguez, by and through his attorney, Don F.
Harris. 	Plaintiff/Counter-Defendant Denise Comstock, pro se, opposes the Motion for
Summary Judgment on Counter-Claim. 	See Response to Debtor’s Third Motion for Summary
Judgment and Memorandum in Support (“Response”)(Docket No. 37).
After consideration of the Motion for Summary Judgment on Counter-Claim, the
Response thereto, the evidence and affidavits offered by both parties and in support of their
respective positions, and being otherwise sufficiently informed, the Court finds that the Motion
for Summary Judgment should be granted, in part. 	Plaintiff has failed to raise a genuine issue of
material fact regarding the nature of the debt at issue in this adversary proceeding.
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BACKGROUND AND PROCEDURAL HISTORY
Plaintiff Denise Comstock filed this adversary proceeding to determine dischargeability
of debt on December 13, 2010. The debt at issue in this adversary proceeding arises from
dissolution of marriage proceedings between the parties. The original complaint included non-
dischargeability claims under 11 U.S.C. §§ 523(a)(5) and (a)(15); and, alternatively, non-
dischargeability claims under 11 U.S.C. §§ 523(a)(2), (a)(4), and (a)(6). See Complaint to
Determine Dischargeability of Debt (Docket No. 1). 	Defendant Kenneth Daryle Rodriguez filed
a Motion for Summary Judgment (“First Motion for Summary Judgment”) on February 22, 2011
requesting, among other things, a determination that debt at issue is non-dischargeable under 11
U.S.C. § 523(a)(15), but not under 11 U.S.C. § 523(a)(5). See Docket No. 5. Plaintiff filed a
response and cross-motion for summary judgment on March 18, 2011. See Plaintiff’s Response
to Motion for Summary Judgment and Cross Motion for Summary Judgment (Docket No. 6).
The Court denied the cross-motions for summary judgment and entered a Memorandum
Opinion. See Docket Nos. 8 - 10. In the Memorandum Opinion, the Court found, among other
things, that 1) the copies of the Marital Settlement Agreement and Final Decree of Dissolution of
Marriage with Reservation of Jurisdiction offered by the Defendant in support of his motion for
summary judgment were not properly authenticated; 2) Plaintiff’s Response to Motion for
Summary Judgment and Cross Motion for Summary Judgment raised factual issues not pleaded
in her original complaint; and 3) that genuine issues of material fact precluded summary
judgment on the issue of whether the debt at issue constitutes a non-dischargeable domestic
support obligation under 11 U.S.C. § 523(a)(5). 	See Memorandum Opinion (Docket No. 8).
Plaintiff was given an opportunity to amend her complaint. See Order Denying Plaintiff’s Cross-
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Motion for Summary Judgment and Allowing Plaintiff to File an Amended Complaint (Docket
No. 10).
On June 15, 2011, Plaintiff filed a motion to dismiss this adversary proceeding. See
Docket No. 11. 	Defendant then filed a second motion for summary judgment on June 24, 2011
See Docket No. 13. 	Following a preliminary hearing on the Plaintiff’s motion to dismiss, held
July 11, 2011, the Court gave Defendant an opportunity to file a counterclaim on or before July
21, 2011. 	See Order Arising from Preliminary Hearing on Plaintiff’s Motion to Dismiss
(Docket No. 19). The Court then dismissed Plaintiff’s complaint with prejudice after Defendant
filed his counterclaim.
Defendant’s Counterclaim for Declaratory Relief and for Return of Preference
(“Counterclaim”)(Docket No. 16), filed July 19, 2011, includes the following requests for relief:
1) a determination that the debt at issue relating to the disbursement of retirement funds is not a
domestic support obligation subject to 11 U.S.C. § 523(a)(5) and 11 U.S.C. § 507(a)(1), but
rather a non-dischargeable debt under 11 U.S.C. § 523(a)(15); and 2) recovery of a $15,000
payment to the Plaintiff as a preferential transfer under 11 U.S.C. § 547.
On August 22, 2011, counsel for Plaintiff Denise Comstock was permitted to withdraw as
counsel of record for Plaintiff. See Docket No. 20. Following the withdrawal of Plaintiff’s
counsel, the parties attended mediation, which was not successful. 	Defendant filed the Motion
for Summary Judgment on Counter-Claim on October 22, 2011. See Docket No. 29. Plaintiff
filed her response to the Motion for Summary Judgment on Counter-Claim on November 23,
2011, and Defendant filed a reply on December 13, 2011. See Docket Nos. 37 and 35.
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SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law. Fed.R.Civ.P. 56(c), made applicable to adversary proceedings by Fed.R.Bankr.P. 7056.
In considering a motion for summary judgment, the Court must “‘examine the factual record and
reasonable inferences therefrom in the light most favorable to the party opposing summary
judgment.’” Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796 (10 th Cir. 1995)(quoting
Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10 th Cir. 1990)).
“[A] party opposing a properly supported motion for summary judgment may not rest on mere
allegation or denials of his pleading, but must set forth specific facts showing that there is a
genuine issue for trial” through affidavits or other supporting evidence. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
MATTERS FOR DETERMINATION ON SUMMARY JUDGMENT
Plaintiff’s Response identifies the following nine issues for determination: 	1) whether
tuition for the education of the parties’ children at the Albuquerque Academy is non-
dischargeable support; 2) whether the misappropriated IRA debt is non-dischargeable as a
domestic support obligation; 3) whether the misappropriated IRA debt is non-dischargeable
because it arises from fraud and deceit; 4) whether the misappropriated IRA debt is non-
dischargeable because it was obtained through use of a statement of writing that is materially
false or made with intent to deceive; 5) whether the misappropriated IRA debt is non-
dischargeable because it was provided in a final judgment in a United States Court; 6) whether
the misappropriated IRA debt is non-dischargeable because it was incurred in connection with a
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divorce decree; 7) whether the debt results from a judgment, order, or other decree entered in
any Federal or State judicial or administrative proceeding, any settlement agreement entered into
by the Debtor, or any court order for any damages, fine, penalty, citation or restitutionary
payment, attorney fee, cost or other payment owed by the Debtor; 8) whether the $15,000
payment the Plaintiff received toward that debt three days prior to the bankruptcy being filed, as
ordered by the State District Court as a partial payment arising from the misappropriation of the
Plaintiff’s retirement accounts, was a preference; and 9) whether the Plaintiff can continue to
collect prejudgment interest until her funds are fully returned as ordered in a judgment by State
District Court on December 21, 2009. 	See Response, pp. 1 – 2. Because the Plaintiff’s
Complaint was dismissed with prejudice, the Court may consider only the issues raised in the
Counterclaim. Plaintiff’s identified issue numbers 11 , 3 through 5, or 72 were not raised in the
Counterclaim. Therefore, it is not appropriate for the Court to consider those issues.
The issues contained in the Defendant’s Counterclaim to be adjudicated in this adversary
proceeding are: 1) whether the debt arising from the Defendant’s disbursement of funds from
certain retirement accounts contrary to the terms of the parties’ marital settlement agreement
constitutes a non-dischargeable debt under 11 U.S.C. § 523(a)(5) or 11 U.S.C. § 523(a)(15); and
2) whether Defendant’s payment of $15,000 to Plaintiff within 90 days of the filing of the
Defendant’s voluntary petition under Chapter 11 of the bankruptcy case constitutes an avoidable
preference under 11 U.S.C. § 547. 	Finally, because both parties address the issue of whether
Plaintiff is entitled to pre-judgment interest on her claim represented by the July 12, 2010
1The only debt relating to the non-dischargeability claim raised in Defendant’s counter claim is the debt arising from
Defendant’s disbursement of funds from the retirement account. 	The obligation to pay tuition at the Albuquerque
Academy (which Plaintiff contends Defendant failed to do, giving rise to a debt in excess of $29,000) and the nature
of that obligation, was not included in the Defendant’s Counter-claim. Consequently, the Court will not address that
issue as part of this adversary proceeding.
2 Plaintiff’s issue numbers 2 and 6 relate to the determination of whether the debt arising from the Defendant’s
disbursement of the funds from the retirement account is in the nature of support, and Plaintiff’s issue 8 is
Defendant’s preference claim.
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judgment, the Court will resolve this issue even though it was not raised in Defendant’s
counterclaim. 3
FACTS NOT SUBJECT TO GENUINE DISPUTE
The following material facts are not subject to genuine dispute: \
1. 	Plaintiff and Defendant were married in 1995.
2. 	In 2003, a Plaintiff filed a Petition for Dissolution of Marriage in the Second Judicial
District Court, State of New Mexico, County of Bernalillo in Case No. D-202-DM-
2003-04507 (“State Court Dissolution Action.”).
3. 	In connection with the State Court Dissolution Action, the parties participated in
settlement facilitation and reached a mediated agreement on December 21, 2005 “in
relation to the division of all the property, the debts, with the exception of Dr.
Rodriguez’s credit card debt; retirement and insurance policies.” See Defendant’s
Statement of Undisputed Facts, ¶ 9; Plaintiff’s Response, ¶ 8; Court’s Findings of
Fact and Conclusions of Law entered in the State Court Dissolution Action, ¶ 6 -
Exhibit C. 	Both parties were represented by counsel in the settlement facilitation.
4. 	The Report and Recommendations of the Special Master filed by Peter H. Johnstone
in the State Court Dissolution Action following the settlement facilitation between the
parties, reported that “settlement was reached on all issues except for child support
issues, spousal support issues and custody/timesharing issues” and that “[e]ach party
3In considering a motion for summary judgment, the Court “may evaluate the pleadings both in terms of their
content at the time of their submission and as they might be amended at some later date.” 10A Wright, Miller and
Kane, Federal Practice and Procedure, §2722 at 368 (1998). Cf. Redmond v. Ellis County Abstract & Title Co. (In re
Liberty Livestock Co.), 198 B.R. 365, 376 (Bankr.D.Kan. 1996)(noting that, absent prejudice, an affirmative defense
may be raised by a party for the first time on summary judgment)(citing In re National Lumber and Supply, Inc., 184
B.R. 74, 79 (Bankr.9 th Cir. 1995)); In re Zweibon, 565 F.2d 742, 748 n. 20 (D.C. Cir. 1977)(stating that “it is now
settled that the process of amendment may be initiated by presentation of an issue for the first time in a motion for
summary judgment.”)(citations omitted).
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gets one-half (1/2) of all retirement accounts.” 	See Defendant’s Statement of
Undisputed Facts, ¶ 10; Plaintiff’s Response, ¶ 3; Report and Recommendations of
the Special Master p.1 and p. 4, ¶ G. – Exhibit D.
5. 	The division of property contained in the mediated agreement was incorporated into
the Partial Marital Settlement Agreement entered into by the parties and filed in the
Second Judicial District Court, State of New Mexico, County of Bernalillo in Case
No. D-202-DM-2003-04507 (“State Court Action.”) on April 14, 2008. See
Defendant’s Statement of Undisputed Material Facts, ¶ 9; Plaintiff’s Response, ¶ 3;
and Partial Marital Settlement Agreement - Exhibit A.
6. 	The twenty-page Partial Marital Settlement Agreement is detailed and addresses
topics that include: Article II: Child Custody and Support; Article III: Property and
Debts; Article VI: Equalization; Article VII: Interim Support; Article VIII:
Temporary Support; and Article IX: Spousal Support.
7. 	Article III of the Partial Marital Settlement Agreement in a section entitled “Division
of Property” provided that Plaintiff and Defendant each would receive one-half of all
of the parties’ retirement accounts. 	See Partial Marital Settlement Agreement,
Article III, A. Division of Property, 1.b. and 2.b., pp. 4 and 5 	– Exhibit A.
8. 	The Partial Marital Settlement Agreement awarded Plaintiff an equalization payment
in the amount of $145,000. See Partial Marital Settlement Agreement, Article VI.
Equalization.
9. 	The Partial Marital Settlement Agreement reserved the issue of spousal support and
child support for later determination by the state court. See Partial Marital Settlement
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Agreement, Article IX: Spousal Support and Article XIII: Reserved Issues - Exhibit
A.
10. The state court entered a Final Decree of Dissolution of Marriage with Reservation of
Jurisdiction (“Final Decree”) in the State Court Dissolution Action on April 14, 2008
following a trial held June 14, 15, and 16, 2006 in which both parties were
represented by counsel. See Exhibit A. The Final Decree contained findings of fact
and conclusions of law made by the state court. Id.
11. The Final Decree incorporated the Partial Marital Settlement Agreement by reference.
Id.
12. The Final Decree addressed child support and alimony. 	Id.
13. The Final Decree awarded alimony pursuant to New Mexico statutes relating to
spousal support, N.M.S.A. 1978 § 40-4-7(E)(1 – 10). Defendant’s Statement of
Undisputed Facts, ¶ 12; Plaintiff’s Response, ¶ 5; Final Decree, Article III.
14. The Final Decree awarded child support. Final Decree, Article II.
15. The awards of alimony and child support in the Final Decree did not address division
of the Retirement Account (See Final Decree, Articles II and III) as the division of the
Retirement Funds had been provided for in the Partial Marital Settlement Agreement.
16. No Qualified Domestic Relations Orders (QDROs) were prepared dividing the
retirement assets.
17. On December 21, 2009, the state court entered an Order (the “Order Directing
Repayment of Retirement Funds”) determining that Defendant cashed in various
IRAs and retirement funds that were owned one-half by Plaintiff, and awarding
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Plaintiff judgment in the amount of $61,935.00, plus interest at the statutory rate of
8.75% from the time it was cashed in April of 2007. 	See Exhibit B.
18. On July 12, 2010, the state court entered an Order (the “Enforcement Order”) finding
Defendant in contempt of prior orders of issued by the state court, including the Order
Directing Repayment of Retirement Funds. The Enforcement Order awarded
Plaintiff judgment against Defendant in the amount of “$48,092.19 for monies owed
pursuant to the prior Order of the Court on December 21, 2009 plus attorney’s fees of
$1,282.50, plus 8.75% from December 21, 2009 for a total judgment of $50,454.75.”
See Exhibit I.
19. Defendant did not make all the payments required under the Enforcement Order.
Consequently, a bench warrant was issued for his arrest and Defendant was
incarcerated.
20. Defendant entered into a stipulated order with Plaintiff that would result in his release
from jail by promising immediate payment to Plaintiff of $15,000. See Stipulated
Order Resolving Emergency Motion to Set Terms and Order Release from Custody,
attached to Second Affidavit of Kenneth Daryle Rodriguez.
21. On September 10, 2011, Plaintiff was paid $15,000 with funds provided by
Defendant’s parents.
22. Three days later, Defendant filed a voluntary petition under Chapter 11 of the
Bankruptcy Code on September 13, 2011.
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CONCLUSIONS OF LAW
A. Whether the Debt Constitutes A Domestic Support Obligation
Whether a debt is in the nature of support is made according to federal bankruptcy law,
not state law.4 In Sampson v. Sampson (In re Sampson), 997 F.2d 717 (10 th Cir. 1993), the
Tenth Circuit conducted a two-part inquiry to determine whether an obligation constituted a non-
dischargeable support obligation: 	1) what was the parties’ shared intent regarding the nature of
the obligation; and 2) what was the substance of the obligation. Sampson, 997 F.2d at 723. In
ascertaining the shared intent of the parties, the labels ascribed to a particular debt in a marital
settlement agreement or divorce decree are not determinative.5 In ascertaining the substance of
the obligation, “[t]he critical question . . . is “‘the function served by the obligation at the time of
the divorce.’” Sampson, 997 F.2d at 725-726 (quoting Gianakas v. Gianakas (In re Gianakas),
917 F.2d 759, 763 (3d Cir. 1990)). Factors used to determine the true nature of an obligation
include: 1) the relative financial circumstances of the parties; 2) the language and substance of
the marital settlement agreement or divorce decree; 3) the degree to which the obligation enables
the receiving spouse to afford daily living expenses; and 4) the parties’ future prospects for
financial support.6 The party asserting that the obligation at issue is non-dischargeable under
4Loper v. Loper (In re Loper), 329 B.R. 704, 707 (10th Cir.BAP 2005). See also, In re Goin, 808 F.2d 1391, 1392
(10 th Cir. 1987)(per curiam).
5See Sampson, 997 F.2d at 722-723 (stating that “the label attached to an obligation does not control. . . . ‘a
bankruptcy court must look beyond the language of the decree to the intent of the parties and the substance of the
obligation’ to determine whether the obligation is actually in the nature of alimony, maintenance or support.”)(citing
Goin, 808 F.2d at 1392)(emphasis in Sampson). See also, Goss v. Goss (In re Goss), 131 B.R. 729, 731
(Bankr.D.N.M. 1991)(“To determine if the obligation is nondischargeable alimony or support or if it is merely
designated as such in the document, the initial inquiry must be to determine the intent of the parties at the time they
entered into their agreement.”)(citing In re Yeates, 807 F.2d 874 (10 th Cir. 1986)); Phegley v. Phegley (In re
Phegley), 443 B.R. 154, 158 (9 th Cir. BAP 2011)(stating that “[a] divorce decree’s characterization of an award as
maintenance or alimony does not bind a bankruptcy court but is however a starting point for the determination of the
award’s intended function.”)(citations omitted).
6Johnson v. Hamblen (In re Hamblen), 233 B.R. 430, 434 (Bankr.W.D.Mo. 1999)(stating that “most courts have
narrowed the inquiry down to one or more of three main factors: (1) the language and substance of the dissolution
decree or separation agreement; (2) the relative financial circumstances at the time of the dissolution; and (3) the
degree to which the obligation enables the recipient to maintain daily necessities.”)(citations omitted). See also
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11 U.S.C. § 523(a)(5) as a debt that is actually in the nature of support bears the burden of proof
to establish the true nature of the debt by a preponderance of the evidence.7
i) 	Shared Intent of the Parties
Although the labels used by the parties to describe the obligation are not determinative,
even if such language is unambiguous, the language used by the parties in a written marital
settlement agreement is persuasive evidence of the parties’ shared intent. Sampson, 997 F.2d at
723 (citing Yeates v. Yeates (In re Yeates), 807 F.2d 874, 878 (10 th Cir. 1986)). 	This is
particularly true where, as here, the marital settlement agreement resulted from a settlement
facilitation in which both spouses were represented by counsel, the twenty-page Partial Marital
Settlement Agreement resulting from the settlement facilitation is quite detailed, and the state
court itself determined and awarded alimony and child support after a lengthy evidentiary trial.
The Partial Marital Settlement Agreement provided that Plaintiff and Defendant each would
receive one-half of the retirement accounts under a section of the agreement entitled Division of
Property. The language in the Partial Marital Settlement Agreement designating division of the
retirement funds as part of the parties’ division of the marital property is strong evidence of the
parties’ shared intent when considered in the context of the circumstances surrounding the
negotiation of the agreement, the detailed nature of the agreement, the parties’ express
reservation of child support and alimony issues for the state court judge, and the state court’s
award of alimony and child support following a lengthy trial.
Goin, 808 F.2d at1392-1393 (stating that “[s]everal factors are pertinent to the bankruptcy court’s determination of
whether the debt is support: (1) if the agreement fails to provide explicitly for spousal support, the court may
presume that the property settlement is intended for support if it appears under the circumstances that the spouse
needs support; (2) when there are minor children and an imbalance of income, the payments are likely to be in the
nature of support; (3) support or maintenance is indicated when the payments are made directly to the recipient and
are paid in installments over a substantial period of time; and (4) an obligation that terminates on remarriage or
death is indicative of an agreement for support.”)(citation omitted).
7Young v. Butler (In re Butler), 308 B.R. 1, 21 (Bankr.S.D.N.Y.2004)(citations omitted).
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The Affidavit of Kenneth Daryle Rodriguez dated April 11, 2011 (“First Rodriquez
Affidavit”) states that he and Plaintiff attended a settlement conference that resulted in a
settlement of property division issues, including the division of the retirement accounts, that the
court held a separate trial on the issue of support as part of the State Court Dissolution Action,
and that as part of that separate trial the parties never discussed using the retirement funds as
support. See First Rodriguez Affidavit, ¶¶ 4 and 9. The Affidavit of Denise Comstock dated
March 16, 2011 (“First Comstock Affidavit”) avers that she will use the funds she recovers to
pay her debts and living expenses. 	See Docket No. 29, attachment 9, ¶ 16. 	The Affidavit of
Denise Comstock dated November 23, 2011 (“Second Comstock Affidavit”) again avers that the
retirement accounts that were awarded to her in connection with the dissolution of marriage
proceedings are an essential part of her support. See Second Comstock Affidavit, ¶ 8 – Docket
No. 38. 	The Second Comstock Affidavit also states that the tuition for the children’s education
is a part of their support. 	Id. ¶ 5. 	These averments contained in the First Comstock Affidavit
and the Second Comstock Affidavit say nothing about whether the parties together (or even
whether Ms. Comstock independently) intended the division of the retirement accounts to
function as support at the time of the dissolution proceedings. 	Plaintiff’s contention that she
now intends to use funds to pay for living expenses is insufficient to create a genuine issue of
material fact regarding the shared intent of the spouses for the obligation to serve as support at
the time of the divorce.8
8 The parties’ shared intent must be “determined by the totality of the circumstances at the time of the award.”
Hamblen, 233 B.R. at 434 (citing In re Frye, 231 B.R. 71, 73 (Bankr.E.D.Mo. 1999)). In fact, the parties’ current
income is not relevant to the determination of their shared intent at the time the obligation arose. ). See Goss, 131
B.R. at 731 (stating that “[t]he time frame relevant to the Court’s determination of the parties’ intent is the time of
the divorce. An inquiry as to whether the circumstances necessitating support have changed is specifically barred by
the Tenth Circuit’s holding in Sylvester v. Sylvester, 865 F.2d 1164 (10 th Cir. 1989).”). See also, See Lewis v.
Trump (In re Trump), 309 B.R. 585, 594 (Bankr.D.Kan. 2004)(“The parties’ current income is not relevant to the
determination of dischargeability under § 523(a)(5).”)(citation omitted).
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ii) 	Substance of the Obligation
The fact that Plaintiff currently may need the retirement funds at issue to pay for the
education expenses of her children and for living expenses and intends to use the funds for these
types of expenses does not convert the debt into a domestic support obligation. 	As explained
above, to constitute a domestic support obligation, there must first be evidence that the parties
intended the obligation to function as support at the time the obligation arose, and second, that
the obligation in fact functions as support. Sampson, 997 F.2d at 723.9 Factors relevant to the
determination of the nature of the obligation also support a finding that the debt at issue is a
property division. 	First, the Partial Marital Settlement Agreement expressly reserved the issue
of support for later determination, and, in fact, both spousal support and child support were
awarded to Plaintiff in the Final Decree. 	Second, the Partial Marital Settlement Agreement did
not provide that Defendant’s obligation regarding the retirement funds would terminate upon
death or remarriage. 	The retirement funds were simply divided in half between the parties
pursuant to the Partial Marital Settlement Agreement. Such an arrangement is consistent with a
property settlement.10 The Court, therefore, finds and concludes that the Defendants
9 See also Moberly v. Johnston (In re Moberly), 266 B.R. 187, 189 (Bankr.N.D.Cal. 2001)(“In order to determine
whether a debtor’s obligation is in the nature of support, the court must ascertain the intention of the parties at the
time they entered in their agreement.”)(citing In re Combs, 101 B.R. 609, 615 (9 th Cir. BAP 1989)).
10 See Sampson, 997 F.2d at 723 (noting that a provision in an agreement for the obligation to survive remarriage is
“indicative of a property settlement.”)(citing Sylvester v. Sylvester, 865 F.2d 1164, 1166 (10th Cir. 1989)(per
curiam)(remaining citation omitted)); Bailey v. Bailey (In re Bailey), 285 B.R. 15, 20 (Bankr.N.D.Okla.
2002)(obligation that does not terminate upon death or remarriage is indicative of a property settlement); Butler, 308
B.R. at 21 (“the characterization given to the award by the divorce decree and the context in with the disputed
provisions appear” is one factor relevant to the determination of the true nature of the obligation); Gatliff v. Gatliff
(In re Gatliff), 266 B.R. 381, 387 (Bankr.N.D.Ill. 2000)(listing various factors relevant to the consideration of
whether an obligation constitutes alimony, maintenance, or support, including whether the obligation is payable in a
lump sum (property settlement), or in installments over a period of time (support)). See also, In re Korwin, 379 B.R.
80, 85 (Bankr.W.D.Pa. 2007)(finding within the context of a debtor’s claim of exemption that the asset at issue was
intended as a property settlement, and did not, therefore, constitute exemptible alimony or support when there was
an “explicit, separate provision for alimony” in the parties’ agreement). If the marital settlement agreement fails to
provide explicitly for support, the court may presume that the award was intended as support even if labeled as a
property settlement if it appears that the spouse needs support. Bailey, 285 B.R. at 19-20 (quoting Yeates, 807 F.2d
at 878). Here, to the contrary, both spousal support and child support were addressed separately.
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obligations under the division of retirement funds provisions of the Partial Marital Settlement
Agreement represent obligations in connection with the division of marital property, are not in
the nature of alimony, maintenance, or support, and are not domestic support obligations.
The Order Directing Repayment of Retirement Funds and the Enforcement Order that
give rise to the obligation at issue in this adversary proceeding were entered as a result of
Defendant’s use of the retirement accounts contrary to the Partial Marital Settlement Agreement.
Because the division of the retirement accounts is part of the property settlement, the debt
represented by the Order Directing Repayment of Retirement Funds and the Enforcement Order
likewise does not constitute a domestic support obligation. 	The facts not subject to genuine
dispute establish that Defendant’s debt to Plaintiff arising from Defendant’s misuse of the
retirement funds is a debt arising as part of a property settlement, and is not a domestic support
obligation. The Court will, therefore, grant Defendant’s motion for summary judgment on this
claim. The debt is, however, nevertheless non-dischargeable under 11 U.S.C. § 523(a)(15)
because the debt was incurred by the debtor in connection with an order issued in the State Court
Dissolution Action, is owed to a former spouse, and is not in the nature of alimony, maintenance,
or support.
B. Whether the Pre-petition payment to Plaintiff of $15,000 Constitutes an Avoidable
Preferential Transfer
Defendant asserts that a $15,000 payment made to Plaintiff shortly before Defendant
filed his voluntary petition under Chapter 11 of the Bankruptcy Code constitutes a recoverable
preferential transfer. 	Preferential transfers are governed by 11 U.S.C. § 547(b), which provides:
Except as provided in subsection (c) and (i)11 , the trustee12 may avoid any transfer of an
interest of the debtor in property –
11 Subsections (c) and (i) are inapplicable here.
12 A chapter 11 debtor in possession has the powers of a trustee, and can assert a preferential transfer claim under 11
U.S.C. § 547. See 11 U.S.C. § 1107(a) (“a debtor in possession shall have all of the rights . . . of a trustee serving in
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(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such
transfer was made –
(3) made while the debtor was insolvent;
(4) made –
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the
petition, if such creditor at the time of such transfer was an insider; and
(5) that enables the creditor to receive more than such creditor would receive if—
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by
the provisions of this title.
11 U.S.C. § 547(b).
The debtor in possession has the burden of establishing all elements necessary to establish a
preference under 11 U.S.C. § 547(b). See 11 U.S.C. § 547(g).
Plaintiff challenges whether the transfer of the $15,000 to her within the 90-day
preference period was a transfer of an “interest of the debtor in property” within the meaning of
11 U.S.C. § 547(b). 	The Bankruptcy Code does not define “interest of the debtor in
property.”13 For purposes of determining whether the property transferred constitutes an
interest of the debtor in property, the Court is guided by the definition of property of the estate as
defined in 11 U.S.C. § 541(a). Moses, 256 B.R. at 645.14 Property of the estate is very broadly
defined in 11 U.S.C. § 541. 15 It includes all of the debtor’s legal and equitable property interests
as of the petition date. 11 U.S.C. § 541(a). And though state law defines property interests for
a case under this chapter.”). See also Double J. Cattle Co. v. Geis (In re Double J Cattle Co.), 203 B.R. 484, 487
(Bankr.D.Wyo. 1995)(acknowledging that “[t]he Bankruptcy Code also grants the trustee (debtor in possession) the
power to avoid certain preferential transfers pursuant to § 547.”).
13Parks v. FIA Card Services, N.A. (In re Marshall), 550 F.3d 1251, 1254 (10th Cir. 2008); In re Kemp Pacific
Fisheries, Inc., 16 F.3d 313, 315 (9 th Cir. 1994); Manchester v. First Bank & Trust Co. (In re Moses), 256 B .R. 641.
645)(10 th Cir. BAP 2000)(observing that “[t]he phrase ‘transfer of an interest of the debtor in property’ in § 547(b) is
not expressly defined in the Bankruptcy Code. . .”)(citations omitted).
14 See also, Begier v. IRS, 496 U.S. 53, 58-59, 110 S.Ct. 2258, 110 L.Ed.2d 46 (1990)(“For guidance [in examining
preferential transfers], then, we must turn to § 541, which delineates the scope of ‘property of the estate’ and serves
as the postpetition analog to § 547(b)’s ‘property of the debtor.’”).
15 Marshall, 550 F.3d at 1255 (observing that “‘[t]he scope of [§] 541 is broad and should be generously construed .
. .’”)(quoting Baer v. Jones (In re Montgomery), 224 F.3d 1193, 1194 (10 th Cir. 2000)(quotations omitted)).
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purposes of bankruptcy16 , the Court “‘must still look to federal bankruptcy law to resolve’ the
extent to which that interest is property of the estate.”17
The primary aim of 11 U.S.C. § 547 is to preserve property that would have been
property of the debtor’s bankruptcy estate available for distribution to creditors had the transfer
not occurred.18 In evaluating whether the debtor had a legal or equitable interest in the
transferred property for purposes of applying 11 U.S.C. § 547, some courts employ a dominion
and control test that examines the degree to which the debtor exercised dominion or control over
the transferred property.19 If the debtor exercised dominion or control over the transferred
property, the transfer is a transfer of “an interest of the debtor in property” recoverable under 11
U.S.C. § 547(b).20 A pre-petition loan of funds to the debtor is generally considered “an interest
of the debtor in property” for purposes of 11 U.S.C. § 547(b). 21
‘When a debtor uses the funds of a third party to pay an obligation of the debtor the court
must look to the source of the control over the disposition of the funds in order to
determine whether a preference exists. If the debtor controls the disposition of the funds
and designates the creditor to whom the monies will be paid independent of the third
party whose funds are being used in partial payment of the debt, then the payments made
by the debtor constitute a preferential transfer.’
16See Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979)(“Property interests are created
and defined by state law.”).
17 Bailey v. Big Sky Motors, Ltd. (In re Ogden), 314 F.3d 1190, 1197 (10 th Cir. 2002)(quoting Rine & Rine
Auctioneers, Inc. v. Myers (In re Rine & Rine Auctioneers, Inc.), 74 F.3d 854, 857 (8th Cir. 1996)).
18 See Begier v. IRS, 496 U.S. at 58 (“the purpose of the avoidance provision is to preserve the property includable
within the bankruptcy estate- [i.e.] the property available to distribution to creditors . . . ); Bailey v. Hazen (In re
Ogden), 243 B.R. 104, 112-113 (10 th Cir. BAP 2000)(noting “that the purpose of § 547 is to treat creditors similarly
during the preference period” which is why “through § 547 the trustee can recover property that would have been
part of the estate but for the preferential transfer.”)(citations omitted).
19 See Marshall, 550 B.3d at 1255 (citing, as examples of this approach, McLemore v. Third Nat’l Bank in Nashville
(In re Montgomery), 983 F.2d 1389, 1395 (6 th Cir. 1993) and In re Smith, 966 F.2d 1527, 1531 (7 th Cir. 1992)).
Other courts focus on whether the transfer caused a diminution of the bankruptcy estate. Id. See also, Moses, 256
B.R. at 645 (stating that “‘the fundamental inquiry under §547(b) will be whether the Debtor had a legal or equitable
interest in the property [transferred] such that the transfer at issue diminished or depleted the Debtor’s
estate.’”)(quoting Ogden, 243 B.R. at 113)(remaining citations omitted).
20 Marshall, 550 B.R. at 1255.
21 See Kemp Pacific Fisheries, 16 F.3d at 316 (“Generally, ‘courts have held that transfers by a debtor of borrowed
funds constitute transfers of the debtor’s property.’”)(quoting In re Smith, 966 F.2d 1527, 1533 (7 th Cir.
1992)(remaining citations omitted)).
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Miller v. Martin (In re Goss), 378 B.R. 320, 327 (Bankr.E.D.Okla. 2007)(quoting In re
Jaggers, 48 B.R.33, 36-37 (Bankr.W.D.Tex. 1985)).
Here, the affidavit testimony addressing the $15,000 creates an issue of fact as to whether
the property would have been property of the Defendant’s bankruptcy estate had it not been
transferred, and, consequently, whether the transfer was an “interest of the debtor in property”
within the meaning of 11 U.S.C. § 547(b). 	The Second Rodriguez Affidavit includes the
following averment: “I made a payment of $15,000 on September 10, 2011 from money that my
parents lent me.” See Second Rodriguez Affidavit, ¶ 10. 	The Second Rodriguez Affidavit also
includes the following statement: 	“My attorney negotiated an order allowing for my release
from custody upon the immediate payment of $15,000 toward the debt on September 10, 2010.”
Id. at ¶ 7. 	The Second Comstock Affidavit states that on information and belief, “the $15,000
payment received by me was not paid by the Debtor, but rather by his father from his father’s
funds.” 	If Defendant’s father made a direct payment of $15,000 to Plaintiff from his own funds
without conveying any interest in those funds to the Defendant, the $15,000 would not have been
property of the Defendant’s bankruptcy estate under 11 U.S.C. § 541 had the transfer not
occurred, and, consequently, the transfer would not have been an “interest of the debtor in
property” for purposes of 11 U.S.C. § 547(b). It is not possible for the Court to determine based
on the evidence presented on summary judgment whether the $15,000 was first transferred to the
Defendant (as a loan) and then paid to Plaintiff, or whether Defendant’s father made a direct
payment of $15,000 to Plaintiff without conveying any interest in the funds to the Defendant.22
This genuine issue of material fact prevents the Court from granting summary judgment on this
claim.
22 Plaintiff attached a copy of a cashier’s check made payable to Denise Rael in the amount of $15,000 dated
September 9, 2010. See Exhibit H. An unauthenticated copy of the check cannot be considered by the Court in
connection with a summary judgment motion.
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C. Whether the Plaintiff is Entitled to Pre-judgment Interest
Plaintiff asserts that she is entitled to pre-judgment interest on a judgment issued by the
state court from April 2007 until the debt is paid in full in accordance with the Order Directing
Repayment of Retirement Funds. She reasons further that because the Enforcement Order is
based on the Order Directing Repayment of Retirement Funds, pre-judgment interest continues
to accrue. Defendant counters that the Enforcement Order quantified the total amount of the
judgment, including the amount of the pre-judgment interest she was entitled to receive, as of
July 12, 2010. 	This Court agrees.
The Enforcement Order includes a finding that Defendant was “in violation of prior
Orders of the Court.” 	See Enforcement Order, ¶ 1. 	The Enforcement Judgment then awarded
Plaintiff “$48,092.19 for monies owed pursuant to the prior . . . [Order Directing Repayment of
Retirement Funds] on December 21, 2009 plus attorney’s fees of $1,282.50, plus 8.75% from
December 21, 2009 for a total judgment of $50,454.75.” 	The Enforcement Order thus included
all amounts due under the prior Order Directing Repayment of Retirement Funds, including any
unpaid prejudgment interest awarded under the prior order owed as of the date of the
Enforcement Order. 	The Enforcement Order did not separately provide for payment of any pre-
judgment interest awarded under the prior order. Further, the Enforcement Order is a final order
that awarded a total judgment of $50,454.75 as of the date of that order. 	Once a judgment is
final, pre-judgment interest ceases to accrue; post-judgment interest runs from the date of the
judgment.23 The Court, therefore, finds that Plaintiff is not entitled to pre-judgment interest
23 See Wilson v. Union Pac. R.R.Co., 56 F.3d 1226, 1233 (10th Cir. 1995)(holding that post-judgment interest
“should be calculated from the date that a plaintiff’s damages are ‘meaningfully ascertained and included in a final,
appealable judgment.’”)(quoting MidAmerica Fed. Sav. & Loan v. Shearson/American Express, Inc., 962 F.2d 1470,
1476 (10 th Cir. 1992)(remaining citations omitted); Youngs v. American Nutrition, Inc., 537 F.3d 1135, 1146 (10 th
Cir. 2008)(relying on the clear language of 28 U.S.C. § 1961(a) which sets the statutory federal rate of post-
judgment interest, and finding that because the post-judgment interest goes into effect on the date of entry of the
judgment, the District Court properly ended pre-judgment interest on the date of the original judgment rather than
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from April of 2007 in addition to the amounts awarded by the Enforcement Order; the judgment
amount is fixed by the Enforcement Order in the amount of $50,454.75 as of July 12, 2010.
Whether Plaintiff is entitled to post-judgment interest on that amount is not an issue now before
the Court.
CONCLUSION
Based on the foregoing, the Court concludes that Defendant is entitled to summary
judgment determining that Defendant’s obligation relating to the division of retirement accounts
that ultimately resulted in the entry of the Enforcement Order giving rise to the debt at issue in
this adversary proceeding does not constitute a domestic support obligation within the meaning
of 11 U.S.C. § 523(a)(5). 	The obligation is, however, a non-dischargeable debt under 11 U.S.C.
§ 523(a)(15). 	Genuine issues of material fact preclude summary judgment on Defendant’s claim
to recover a payment of $15,000 to Plaintiff as a preferential transfer under 11 U.S.C. § 547(b).
Finally, Plaintiff is not entitled to continue to collect pre-judgment interest on the debt based on
the Order Directing Repayment of Retirement Funds or the Enforcement Order except to the
extent accrued pre-judgment interest is included in the $50,454.75 judgment contained in the
Enforcement Order. An order consistent with this Memorandum Opinion will be entered.
____________________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket:
the later date of the amended judgment). Cf. Smith v. City of Albuquerque, 105 N.M. 125, 126, 729 P.2d 1379,
1382 (Ct.App. 1986)(finding that where the trial court’s final judgment did not include an express provision for
prejudgment interest, claimant was not entitled to an award of prejudgment interest) .
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COPY TO:
Denise M. Comstock
Plaintiff
2037 Calle Pajaro Azul NW
Albuquerque, NM 87102
Don F Harris
Attorney for Defendant/Counter-Claimant
1120 Pennsylvania St, NE
Albuquerque, NM 87110
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