Rippberger v. Lamey

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re:
BRYAN A. LAMEY, Case No. 14-13729 ta7
Debtor.
ANN RIPPBERGER,
Plaintiff,
v. Adv. No. 15-01026 t
BRYAN A. LAMEY,
Defendant.
MEMORANDUM OPINION
After a trial on the merits, the Court must decide how much of Defendant’s debt to Plaintiff
is nondischargeable under 11 U.S.C. § 523(a)(15).1 The Court concludes the nondischargeable
amount is $125,000.
I. Findings of Fact2
Plaintiff and Defendant are in the midst of a divorce. The division of their property is
governed by a premarital agreement signed March 5, 2010 (the “Agreement”), which provides in
part:
5.2 The parties understand that Ann Rippberger may, from time to time, choose
not to be employed while married to and residing with Bryan A. Lamey. If she
should choose not to be employed, or accepts less than full employment during the
marital union, Bryan A. Lamey understands that she will forego the opportunity to
earn income equal to her premarital earnings history. Therefore, in the event of a
dissolution of marriage, if Ann Rippberger did not receive earned income of more
than $50,000.00 per annum on average while married to and residing with Bryan
1 Unless otherwise noted, all statutory references are to 11 U.S.C.
2 To the extent any finding of fact is construed as a conclusion of law, it is adopted as such, and vice versa.
The Court may make additional findings of fact and conclusions of law as it deems appropriate.
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A. Lamey, he agrees to make a cash payment, or distribution of property in-kind,
to her according to the following terms, as limited therein:
a. If separated or residing apart after one (1) year, but before the third (3rd)
anniversary: The greater of $150,000.00, or, the value of Ann Rippberger’s interest
in any Joint Property plus any separate property received by post-marriage gift from
Bryan Lamey, at the time of marital dissolution.3
Paragraphs 5.2(b) - (d) contain identical language, except Plaintiff would receive: $250,000 for
three to five years; $350,000 for five to seven years; and $500,000 for more than seven years.
Paragraph 5.2(e) contains examples that “are intended to be instructive on the parties’ intent”
regarding paragraphs 5.2(a)-(d):
Under 5.2.a, assume separation in year two (2) and ultimate marital dissolution.
Assume the value of Ann Rippberger’s interest in Joint Property is $100,000.00,
and she has received no post-marriage separate property gifts from Bryan. Bryan
may pay Ann $150,000.00 in exchange for Ann’s relinquishment of her interest in
Joint Property. Or, Bryan may agree to relinquish his interest in the Joint Property
up to $50,000.00 so that Ann’s interest equates to $150,000.00 of total value….
[T]hese examples shall [not] be construed to mean that Ann would retain the value
of her Joint Property interest and post-marriage separate gift property in addition to
a cash payment of $150,000.00 from Bryan. . . .
The Agreement also provides:
5.3 Any definition of the phrases “marital union” or “while married” used above
shall not include any time the parties are separated and not residing in the same
residence…. [P]ayment and/or distribution shall be made within a commercially
reasonable time after the issuance of a decree of divorce….
And elsewhere:
18 Any controversy arising out of or relating to this Agreement, or breach
thereof, shall first be submitted to the process of mediation through the services of
a mediator on whom the parties mutually agree.
Attached to the Agreement is a list of each party’s separate property as of March 5, 2010.
Plaintiff’s list of property (signed by Defendant) includes an entry for “Boats, RV’s, Autos,
3 The parties did not own joint property. Only gifts are at issue.
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Motorcycle” valued at $65,000. The entry refers to a Cadillac Escalade Defendant gave Plaintiff
as a Christmas present in 2009.4
Before marrying, Plaintiff and Defendant dated on and off for eight years. The relationship
was volatile. Plaintiff and Defendant were married in Hawaii on March 16, 2010. After the
wedding, Plaintiff and her children moved into Defendant’s house.5 Plaintiff kept her own house,
however, which remained vacant. Plaintiff quit her job shortly before the wedding and was
unemployed during most of the marriage. Plaintiff’s average annual income never exceeded
$50,000 when she lived with Defendant.
Defendant’s wealth came primarily from the sale of his accounting firm, a transaction that
netted him millions. Defendant kept large amounts of cash in a safe at his house. The cash came
from frequent trips to Las Vegas, where he and Plaintiff traveled for high stakes gambling.
Defendant brought his winnings or any remaining cash back and put it in the safe.
Defendant paid the couple’s expenses, including the mortgage on his house, utilities, and
other living expenses. Defendant also paid Plaintiff’s credit card bills, which could total $20,000-
$30,000 a month. The credit card charges were for joint and personal expenses, in unknown
amounts. Finally, Defendant gave Plaintiff around $2,000 in cash each month during the marriage
so Plaintiff could pay joint and personal expenses. Neither party viewed the expense payments,
the credit card payments, or the monthly cash as gifts. The money went towards the maintenance
and support of Plaintiff and the family.
Plaintiff and Defendant lived together from March 16, 2010 until June 2011. They had a
serious fight during a June vacation, which prompted Plaintiff to return to New Mexico with her
4 The title of the Cadillac remained in Defendant’s name until spring 2012, when he signed it over to a third
party so Plaintiff could trade it in for a Range Rover.
5 Plaintiff has two children, and Defendant has three. The parties do not have children together.
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children and move back into her house. Plaintiff also filed a divorce petition and obtained a
restraining order. On June 29, 2011, Defendant’s counsel wrote Plaintiff a letter offering to pay
$150,000 pursuant to the Agreement. It is unclear whether Plaintiff responded.
The restraining order was dissolved around July 2011,6 but the parties had little or no
contact for the next several months. The divorce petition was eventually dismissed for lack of
prosecution.
In November 2011, Plaintiff and Defendant began “rekindling” their relationship.
However, they did not live together again until November 2012, when Plaintiff and her children
moved back into Defendant’s house.7
After the reconciliation Plaintiff and Defendant lived together for about seven more
months. In June 2013, Plaintiff moved out for good and filed a second divorce petition. While
that case was pending the parties agreed to mediate their disputes, but they never did.8
Of the 39 months from the marriage until Plaintiff finally moved out, the parties lived
together for 22 or 23 months.
In June 2014 Defendant sold his house. By a settlement offer dated June 5, 2014, he
proposed to pay $25,000 of the sale proceeds to Plaintiff in partial satisfaction of his debt under
the Agreement:
I will pay you $25,000 upon closing. I will pay you the greater of 25% of my
portion of the proceeds or $50,000 assuming my distribution is $100,000 or more
6 At about this time, Defendant gave Plaintiff $10,000.
7 The testimony on this point conflicted. Plaintiff asserted she moved back in November 2011, not
November 2012, but the Court accepts Defendant’s timeline for three reasons. First, Defendant testified
that his daughter was upset when, during her graduation party in May 2012, Plaintiff and Defendant
appeared at Defendant’s house for the first time as a reunited couple. Second, Plaintiff’s home was sold at
a foreclosure sale in 2012, and November 2012 coincides with when Plaintiff was forced to move out of
her house. Third, Defendant placed Plaintiff on the payroll of his company United RV Sales, LLC in
November 2012.
8 Plaintiff’s second petition also was dismissed for lack of prosecution. Defendant filed his own divorce
petition in Oklahoma in September 2015. The case is pending.
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when the Las Cruces property sells. These distributions do not represent payment
in full of the $150,000 represented in the Prenuptial agreement. Assuming
acceptance of the current offer and sale of Las Cruces Property, the remaining
balance of $57,000 will be subject to negotiation once I am employed or determined
through mediation.
Plaintiff accepted the offer after making several revisions. She revised the title of the
settlement offer to clarify that it was made “[p]ursuant to the Pre-marital Agreement….” She also
revised the last sentence to read:
Assuming acceptance of the current offer on sale of the marital residence and/or
sale of all or a portion of the Las Cruces Property, the remaining balance ($150,000
less the total of the two above described payments) will be paid in full over a period
of not more than 6 months upon my acceptance of employment.
Plaintiff received $25,000 from the sale of Defendant’s house on June 20, 2014. The payment was
listed on the HUD-1 Settlement Statement as a “marital settlement to Ann Rippberger.”
On December 30, 2014, Defendant filed this bankruptcy case. Plaintiff brought the
adversary proceeding several months later, arguing that Defendant owed her $350,000 in
nondischargeable debt. Defendant responded that his obligation was $150,000, less the $25,000
partial payment and various gifts he gave Plaintiff.9 The parties agree that the Agreement governs
the amount due, and that such amount (if any) is nondischargeable under § 523(a)(15). The
Agreement provides it should be construed under New Mexico law.
II. DISCUSSION
A. Construing the Agreement.
1. Contract Interpretation Rules. “A premarital agreement is a contract,” to be
interpreted under the rules governing contract construction. Kimbrell v. Kimbrell, 2010 WL
4060974, *4 (N.M. App. 2010); Turley v. Turley, 103 P.2d 113 (N.M. 1940).
9 The Court analyzes each alleged gift below, and incorporates the discussion into the findings by this
reference.
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“The central objective in construing a contract is to ascertain and give effect to the
intentions of the parties.” Manuel Lujan Ins., Inc. v. Jordan, 673 P.2d 1306, 1308 (N.M. 1983).
Courts must “view the contract as a harmonious whole, give meaning to every provision, and
accord each part of the contract its significance in light of other provisions.” Pub. Serv. Co. of
N.M. v. Diamond D Constr. Co., 33 P.3d 651, 659 (N.M. App. 2001). “The purpose, meaning and
intent of the parties to a contract is to be deduced from the language employed by them.”
ConocoPhillips Co. v. Lyons, 299 P.3d 844, 852 (N.M. 2013) (quoting Cont’l Potash, Inc. v.
Freeport–McMoran, Inc., 858 P.2d 66, 80 (N.M. 1993)).
“[W]here [the] language is not ambiguous, it is conclusive,” and the inquiry ends. Id.
However, where the language is “reasonably and fairly susceptible of different constructions, an
ambiguity exists.” Benz v. Town Center Land, LLC, 314 P.3d 688, 695 (N.M. App. 2013); Mark
V, Inc. v. Mellekas, 845 P.2d 1232, 1235 (N.M. 1993) (an ambiguity exists when the parties’
expressions of mutual assent lack clarity). Courts may consider extrinsic evidence to determine
whether an ambiguity exists and the meaning of ambiguous language. C.R. Anthony Co. v. Loretto
Mall Partners, 817 P.2d 238, 242-43 (N.M. 1991) (in evaluating whether a term is ambiguous, “a
court may hear evidence….”). The evidence can include testimony about: (1) the parties’ intent;
(2) the circumstances surrounding the making of the contract; (3) usage of trade, course of dealing,
and course of performance; and (4) the conduct of the parties. ConocoPhillips, Co., 299 P.3d at
852; Mark V, 845 F.2d at 1236; Benz, 314 P.3d at 695.
2. How Long Did the Parties Reside Together? To determine the amount of
the debt, the Court must first decide whether the periods in paragraphs 5.2 were tolled while the
parties were living apart. The total time between the marriage (March 2010) and Plaintiff’s final
move-out (June 2013) was 39 months. That would put Defendant’s obligation at $250,000
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(paragraph 5.2(b) of the Agreement). If the separation from June 2011 until November 2012 is
deducted from the 39 months, however, the resulting 22 months or so would peg Defendant’s
obligation at $150,000 (paragraph 5.2(a)). Finally, if paragraph 5.3--the section that stops the
clock for a separation--does not apply, the obligation could arguably be $350,000 because it has
been over 5 years since the marriage and the parties are not yet divorced (paragraph 5.3(b)).
The Agreement is unclear on these points. Paragraph 5.3 defines “marital union” and
“while married” to exclude times when “the parties are separated and not residing in the same
residence.” Neither defined term is used in the exact language giving rise to the obligations in
sub-paragraphs 5.2(a)-(d), however. Despite the drafting issues, the Court holds that it furthers
the purpose of the parties, and is consistent with the circumstances, to construe paragraph 5.2 so
that time was tolled when the parties and their children lived in separate houses. Defendant
testified this was the intent, and both parties used $150,000 (the amount due after 1-3 years) as the
starting figure while negotiating a partial settlement after the final separation.
Plaintiff argues the June 2011 break-up did not “stop the clock” because it was not a
permanent separation, and that Plaintiff’s domicile remained the marital home owned by
Defendant. While the Court agrees that not every brief separation would toll the time periods in
paragraph 5.2, the June 2011 separation was significant: Plaintiff filed for divorce, got a restraining
order, and moved back to her house for 16 months.
Taking into account the 16 month separation, the parties resided together for about 23
months. Paragraph 5.2(a) ($150,000 for 1-3 years) therefore applies.
3. Should Any Gifts Reduce the $150,000? The Agreement is also ambiguous
about whether any gifts from Defendant to Plaintiff reduced the amount he otherwise would owe
her. Paragraphs 5.2(a)-(d) require payment of the greater of a specified amount or the value of
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post-marriage gifts. Paragraph 5.2(e), on the other hand, gives examples clearly showing that the
amounts specified in paragraphs 5.2(a)-(d) are reduced by the value of any gifts.
The Court rejects the interpretation that gifts should be ignored, as it would read paragraph
5.2(e) out of the Agreement. Bank of New Mexico v. Sholer, 691 P.2d 465 (N.M. 1985) (“The
Court will not adopt an interpretation that would create conflict…”). Paragraph 5.2(a) uses
imprecise language, but overall the parties’ intent is reasonably clear. Paragraph 5.2(e)’s examples
are “intended to be instructive on the parties’ intent under [paragraph 5.2]” and shall not “be
construed to mean that [Plaintiff] would retain the value of her … post-marriage separate gift
property in addition to [the specified] cash payment.” Defendant’s obligation to pay Plaintiff
$150,000 therefore should be reduced by the value of any gifts he gave her during the marriage.
The Court analyzes whether the following alleged gifts should reduce Defendant’s
$150,000 obligation:
Transfer/Payment Was it a post-marriage gift?
Cadillac Escalade No. Defendant clearly gave the Cadillac to Plaintiff before the wedding,
as he acknowledged in Plaintiff’s list of assets attached to the Agreement.
His argument based on title ownership is overruled.
Payment of credit card
debt
No. The evidence is that most of the charges were for joint expenses.
Neither party viewed the payments as gifts.
Periodic cash
payments totaling
$2,000+ per month
No. The evidence does not show whether the cash was used for joint
expenses. Even if some of it paid Plaintiff’s personal expenses, which is
highly likely, Defendant viewed the money as support and maintenance.
There is no evidence the parties viewed the cash as gifts.
$2,500 plumbing bill
for Plaintiff’s house
No. Same.
$10,000 check in
summer 2011
No. There was little evidence why Defendant gave Plaintiff the check. It
could have been to help Plaintiff with her expenses, as was customary
during the marriage, or it could have been in consideration for Plaintiff
agreeing to lift the restraining order. In any event, it was not a gift.
Two $7,500 checks in
December, 2013.
No. These payments present a closer call, as they were made after the
final break-up, but the Court finds they were not gifts. Defendant made
the payments toward his wife’s maintenance, as was customary.
Defendant did not view the payments as gifts that reduced his obligation
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under the Agreement, as evidenced by his subsequent settlement offer
where he stated that his debt was $150,000.
The Court concludes that none of the alleged post-marriage gifts should reduce the
$150,000 obligation.
4. Partial Payment of the Debt. The $25,000 payment from the sale proceeds
of Defendant’s house was a partial payment of his $150,000 obligation to Plaintiff. Plaintiff
acknowledged as much in her draft of the June 5, 2014 settlement offer: she described the
remaining debt under the Agreement as “$150,000 less the total of the … above described
[$25,000] payment.”
B. Mediation. Defendant asserted in his answer that he owes Plaintiff nothing because
she breached her mediation obligation under the Agreement. This argument is overruled. The
Agreement requires that any dispute “shall first be submitted to the process of mediation…,” but
it does not spell out the consequences for failing to comply. Further, there is no evidence about
why the parties never went to mediation. It could be that they agreed to forego mediation, or that
Defendant, rather than Plaintiff, declined to mediate.10
C. The Court Will Liquidate the Debt. In closing argument, Defendant argued for the
first time that the divorce court, rather than this Court, should liquidate the debt. This argument
also is overruled. Bankruptcy courts and state courts have concurrent jurisdiction to determine the
nondischargeability of debt under § 523(a)(15). In re Read, 2015 WL 4178728, * 7 (Bankr. D.R.I.
10 In closing, Defendant’s counsel also mentioned that the Agreement mandates mediation, apparently as
part of a jurisdiction or abstention argument. Since the first mention of the argument was during closing,
the Court concludes Defendant waived any defense based on the mediation clause. See, e.g., Miller Brewing
Co. v. Fort Worth Distrib. Co., Inc., 781 F.3d 494, 497 (5th Cir. 1986) (a party waives mediation and
arbitration rights when it invokes the judicial process to the detriment of the other party); In re The
Consolidated FGH Liquidating Trust, 419 B.R. 636, 645 (Bankr. S.D. Miss. 2009) (quoting Miller); In re
Wheeler Hospitality, Inc., 2013 WL 1335642, at *24 (Bankr. N.D. Tex. 2013) (same). See also In re Cox
Enterprises, Inc., 790 F.3d 1112, 1117 (10th Cir. 2015) (party waived right to compel arbitration by failing
timely to assert right and substantially participating in litigation).
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2015); In re Lemoine, 2012 WL 5906939, *2 (Bankr. E.D. Pa. 2012); In re Holland, 2015 WL
4600382, *2 (Bankr. S.D. Ga. 2015); In re Tinnel, 2014 WL 2809727, *2 (Bankr. E.D. Tenn.
2014). See also In re Taylor, 737 F.3d 670 (10th Cir. 2013) (affirming bankruptcy court’s
nondischargeability determination under § 523(a)(15)). When the bankruptcy court has
jurisdiction to declare a debt nondischargeable under § 523(a), it may also liquidate that debt. In
re Riebesell, 586 F.3d 782, 793 (10th Cir. 2009) (“a bankruptcy court, in addition to declaring a
debt non-dischargeable, has jurisdiction to liquidate the debt”).
Even if the Court were tempted to abstain in cases of this type, it would not do so at this
late stage. The complaint asks the Court to determine the amount of the nondischargeable debt,
and the entire trial was on that issue. Defendant did not file a motion for abstention or similar
relief. The amended answer contains arguments about tolling and gift transfers, and Defendant
“requests that this Court rule that the premarital agreement is wholly dischargeable.” Such a ruling
would necessarily require the Court to liquidate the debt by determining the starting amount and
any subsequent deductions.
D. Attorney Fees. Finally, Plaintiff asks for attorney fees in connection with her
prosecution of this adversary proceeding. Plaintiff appears to argue that since she could have
received a fee award in divorce court for enforcing the Agreement, she should get such an award
here. This argument is unavailing. Each litigant must pay their “own attorney’s fees, win or lose,
unless a statute or contract provides otherwise.” Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct.
2158, 2164, (2015). The statutes on which Plaintiff relies are state court statutes governing the
dissolution of marriage. See N.M.S.A. 1978 § 40-4-7 (New Mexico divorce statute, stating: “In
any proceeding for the dissolution of marriage… The court may make an order, relative to the
expenses of the proceeding, as will ensure either party an efficient preparation and presentation of
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his case.”) (emphasis added); Okla. Stat, Title 43, § 110 (2012) (Oklahoma divorce statute,
providing: “Upon granting a decree of dissolution of marriage … the court may require either
party to pay such reasonable expenses of the other …”). Those statutes do not apply here, as this
is not a divorce proceeding and the Court cannot grant a decree of dissolution. This adversary is
governed by § 523(a)(15), which provides no basis for a fee award.
III. CONCLUSION
Defendant owes Plaintiff $150,000 under the terms of the Agreement and the facts of the
case, payable once the divorce is finalized. Defendant has already paid $25,000 of his obligation.
The Court therefore will enter a separate declaratory judgment that the nondischargeable debt
under the Agreement is $125,000.
_______________________________________
Hon. David T. Thuma
United States Bankruptcy Judge
Entered: April 12, 2016
Copies to:
William F. Davis
6709 Academy NE, Suite A
Albuquerque, NM 87109
James T. Burns
1801-B Rio Grande Blvd NW
Albuquerque, NM 87104
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