Barnes v. Vonderhuevel

UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
In re: 	M ARK A. V ONDERHUEVEL ,
Debtor
Case No. 	05-38447
Adv. No. 	05-3419
SHARON M ARIE BARNES ,
Plaintiff
v.
M ARK A. V ONDERHUEVEL ,
Defendant
Judge L. S. Walter
Chapter 7
DECISION DENYING DEBTOR-DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT
The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157(a) and 1334, and
the standing General Order of Reference in this District. This matter is before the court on the
motion for summary judgment filed by Debtor-Defendant Mark A. Vonderhuevel [Adv. Doc.
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.
Dated: May 08, 2006
____________________________________________________________
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16]; and the responsive memorandum filed in opposition by Plaintiff Sharon Marie Barnes
[Adv. Doc. 21]. No reply was timely filed.
SYNOPSIS
Plaintiff Sharon Marie Barnes (“Barnes”) filed a complaint in this adversary proceeding
to determine the dischargeability of obligations owed by Debtor-Defendant Mark A.
Vonderhuevel (“Debtor”) pursuant to the parties’ divorce decree. Barnes asserts in the complaint
that the obligations are in the nature of spousal support and nondischargeable pursuant to 11
U.S.C. § 523(a)(5). Following the filing of his answer, the Debtor filed a motion for summary
judgment arguing that the language of the divorce decree clearly states that no spousal support is
to be awarded and, consequently, the undisputed facts support that the obligations are
dischargeable.
The court concludes that the language in the divorce decree is ambiguous regarding
whether the obligations are in the nature of spousal support. Furthermore, the labeling of an
obligation as something other than spousal support is not conclusive. Pursuant to Calhoun and
other Sixth Circuit precedent, the court must look behind the language of the divorce decree to
determine whether the obligations are actually in the nature of support even if they are not
clearly labeled as such in the divorce decree. For these reasons, the court denies the Debtor’s
motion for summary judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Barnes and Debtor were divorced in June of 2004 by Judgment Entry and Decree of
Divorce (“Decree”) entered in the Shelby County Ohio Common Pleas Court. [Adv. Doc. 16, Ex.
1.] The pertinent language of the Decree regarding spousal support states as follows:
A. Spousal Support
No spousal support shall be awarded to either party, however, the issue of spousal
support shall remain under the continuing jurisdiction of the Court. The Plaintiff [Debtor]
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acknowledges that the Defendant [Barnes] has accepted the provisions of this Agreed
Judgment Entry, which includes the refinancing of the mortgage by Plaintiff and the
payments by Plaintiff to Defendant as a property settlement agreement. The parties agree
that these provisions are made in lieu of spousal support which would otherwise be
required for the support of the Defendant. In agreeing to the provisions for a property
division, the parties specifically intend that the Defendant will have those assets as set
forth in this Agreed Judgment Entry. 	The parties also specifically intend that the
Defendant will be free of those liabilities which have been assumed by the Plaintiff in this
agreement. The effect of this agreed allocation of assets and liabilities is in part to
provide for the maintenance and support of the Defendant. If for any reason the
Defendant does not receive those assets as agreed, or for any reason she must pay any of
the debts assigned to Plaintiff, the parties recognize that the effect will be to cause
Defendant to be in need of spousal support. It is the specific intention of the parties that
the obligations of the Plaintiff as set forth in this Agreed Entry are actually in the nature
of alimony, maintenance, and support for bankruptcy purposes for the Defendant and thus
are not intended by them to be dischargeable in bankruptcy. However, if Plaintiff abides
by the terms of this Agreed Entry, then the payments made by the Plaintiff are a property
settlement agreement and not subject to income tax by the Defendant. The parties agree
that the issue of spousal support shall be subject to the continuing jurisdiction of the court
for the purposes of establishment, termination or modification in both amount and
duration, in the event that Plaintiff obtains relief in any bankruptcy court from any
obligation due directly or indirectly to Defendant, or obtains relief from any debt which
the Defendant must as a result pay, or modifies the property division between the parties
to which the Defendant is entitled by virtue of this Agreed Judgment Entry, thus affecting
the need for support by the Defendant.
[Id., Section A.] 	Later sections of the Decree provide more detail as to the Debtor’s obligation
to make payments to Barnes and his obligation to refinance a mortgage mentioned in Section A.
Specifically, Section C of the Decree requires the Debtor to refinance two mortgages with Bank
One and release Barnes from all obligations relating to same. [Id., Section C.] 	In Section L, the
Decree addresses the Debtor’s business assets and interests in A.R.M.S., Inc. and Freistuhler &
Vonderhuevel Enterprises, Ltd. [Id., Section L.] The Decree awards the Debtor “all right, title
and interest in these business interests.” [Id.] In exchange, the Debtor is to pay Barnes the sum
of $75,000, in three $25,000 payments, as a “property settlement” representing Barnes’s
equitable interests in the businesses. [Id.]
On August 19, 2005, Debtor filed a Chapter 7 bankruptcy petition listing the remaining
$50,000 of his debt to Barnes as an unsecured debt. [Case # 05-38447, Doc. 1, Schedule F.] The
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Debtor further scheduled a $26,781.48 debt to Bank One as an unsecured debt. [Id.] On October
26, 2005, Barnes filed her amended complaint in this adversary proceeding to determine both the
$50,000 debt owed directly to her and the $26,781.48 debt owed to Bank One nondischargeable
obligations pursuant to 11 U.S.C. § 523(a)(5).
SUMMARY JUDGMENT STANDARD
The appropriate standard to address the Debtor’s motion for summary judgment filed in
this adversary proceeding is contained in Fed. R. Civ. P. 56(c) and incorporated in bankruptcy
adversary proceedings by reference in Fed. R. Bankr. P. 7056. Rule 56(c) states in part that a
court must grant summary judgment to the moving party if:
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 a judgment as a matter of
law.
Fed. R. Civ. P. 56(c). In order to prevail, the moving party, if bearing the burden of persuasion
at trial, must establish all elements of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 331
(1986). If the burden is on the nonmoving party at trial, the movant must: 1) submit affirmative
evidence that negates an essential element of the nonmoving party’s claim; or 2) demonstrate to
the court that the nonmoving party’s evidence is insufficient to establish an essential element of
the nonmoving party’s claim. Id. at 331-32. Thereafter, the opposing party “must come forward
with ‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citations omitted); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-251 (1986). All inferences drawn from the underlying facts must
be viewed in a light most favorable to the party opposing the motion. Matsushita, 475 U.S. at
586-88.
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LEGAL ANALYSIS
Marital debts in the nature of support are nondischargeable in bankruptcy pursuant to 11
U.S.C. § 523(a)(5). A debt falls within the parameters of 11 U.S.C. § 523(a)(5), if it is a debt:
(5) 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,
determination made in accordance with State or territorial law by a
governmental unit, or property settlement agreement, but not to the extent
that--
. . . .
(B) such debt includes a liability designated as alimony,
maintenance, or support, unless such liability is actually in
the nature of alimony, maintenance, or support.
11 U.S.C. § 523(a)(5).
Under this provision, the burden is on the non-debtor spouse to prove that the debt is a
nondischargeable support obligation. Sorah v. Sorah (In re Sorah), 163 F.3d 397, 401 (6th Cir.
1998). Unlike other dischargeability provisions under § 523(a), the nondischargeability
provision of § 523(a)(5) is construed broadly to promote the Congressional policy that favors
enforcement of obligations for spousal and child support. Luman v. Luman (In re Luman), 238
B.R. 697, 704 (Bankr. N.D. Ohio 1999).
When a state court clearly labels an obligation as support in a divorce decree, the
bankruptcy court is to give that label deference. Sorah, 163 F.3d at 401. 	Specifically, when that
label is coupled with other traditional state law indicia of support, the obligation should be
“conclusively presumed to be a support obligation by the bankruptcy court.” Id.
However, when an obligation is not clearly labeled as support, the lack of such a label
does not conclusively establish a non-support obligation or property settlement. Instead, the
bankruptcy court “must look behind the award that is made under state law and make an
independent inquiry to determine whether the award is actually in the nature of support.” Harvey
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v. McClelland (In re McClelland), 247 B.R. 423, 426 (Bankr. N.D. Ohio 2000). 	Sixth Circuit
cases, beginning with Calhoun, describe a four-step inquiry to determine whether an obligation
not clearly labeled as support is actually in the nature of support. See Long v. Calhoun, 715 F.2d
1103 (6th Cir. 1983). See also Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517 (6th Cir.
1993). The inquiry is fact intensive and includes determining whether the state court or parties
intended to create an obligation to provide support for the non-debtor spouse and whether the
obligation actually has the effect of providing support. See Calhoun, 715 F.2d at 1109.
On summary judgment, the Debtor argues that the language of the Decree conclusively
establishes that no support was to be awarded to Barnes. The Debtor focuses on the first
sentence of Section A of the Decree which states, “[n]o spousal support shall be awarded to
either party, however, the issue of spousal support shall remain under the continuing jurisdiction
of the Court.” [Doc. 16, Ex. 1, Section A.] 	That sentence, however, is only the first of a long
paragraph. Other sentences within the same paragraph indicate that the Debtor’s $75,000
obligation owed to Barnes and the refinancing of the Bank One mortgage debt may have been
intended as support by the parties and the state court. Section A of the Decree further states:
The Plaintiff [Debtor] acknowledges that the Defendant [Barnes] has accepted the
provisions of this Agreed Judgment Entry, which includes the refinancing of the
mortgage by Plaintiff and the payments by Plaintiff to Defendant as a property settlement
agreement. The parties agree that these provisions are made in lieu of spousal
support which would otherwise be required for the support of the Defendant.
* * *
The effect of this agreed allocation of assets and liabilities is in part to provide for
the maintenance and support of the Defendant. If for any reason the Defendant
does not receive those assets as agreed, or for any reason she must pay any of the
debts assigned to Plaintiff, the parties recognize that the effect will be to cause
Defendant to be in need of spousal support. It is the specific intention of the parties
that the obligations of the Plaintiff as set forth in this Agreed Entry are actually in
the nature of alimony, maintenance, and support for bankruptcy purposes for the
Defendant and thus are not intended by them to be dischargeable in bankruptcy.
However, if Plaintiff abides by the terms of this Agreed Entry, then the payments made
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by the Plaintiff are a property settlement agreement and not subject to income tax by the
Defendant. The parties agree that the issue of spousal support shall be subject to the
continuing jurisdiction of the court for the purposes of establishment, termination or
modification in both amount and duration, in the event that Plaintiff obtains relief in any
bankruptcy court from any obligation due directly or indirectly to Defendant, or obtains
relief from any debt which the Defendant must as a result pay, or modifies the property
division between the parties to which the Defendant is entitled by virtue of this Agreed
Judgment Entry, thus affecting the need for support by the Defendant.
[Id., emphasis added.] At the very least, this language creates ambiguity regarding whether the
Debtor’s obligations are intended as and are in the nature of support and that ambiguity must be
resolved at trial using the four-step inquiry discussed in Calhoun and its progeny.
CONCLUSION
Because genuine issues of material fact exist regarding whether the Debtor’s obligations
in the Decree are in the nature of support, the court DENIES the Debtor’s motion for summary
judgment.
SO ORDERED.
cc:
Sharon Marie Barnes
10081 Oakbrook Dr.
P.O. Box 704
Sidney, OH 45365
Tom O Merritt
219 South Garber Drive
Tipp City, OH 45371
Email: TMLO@aol.com
Mark A. Vonderhuevel
308 Stewart Avenue
Sidney, OH 45365
Roger E Luring
314 W Main St
Troy, OH 45373-3242
Email: rogerluring@woh.rr.com
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Dennis Stegner
111 East Cecil Street
Springfield, OH 45504
Email: dstegnertrus@bizwoh.rr.com
U.S. Trustee
Asst US Trustee (Day)
Office of the US Trustee
170 North High Street
Suite 200
Columbus, OH 43215-2417
# # #
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