UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

CORBIN DIVISION

 

 

IN RE:

JIMMY FARLEY

DEBTOR CASE NO. 89-00284

 

 

 

JIMMY FARLEY PLAINTIFF

 

VS. ADV. NO. 89-0140

 

BEULAH M. VANWINKLE DEFENDANT

 

OPINION AND ORDER

 

This matter is pending before the Court for ruling upon the pleadings, depositions and exhibits filed herein. The parties have memorialized Stipulations and represented to the Court that the facts stipulated are sufficient for the Court to make its ruling. This Court has jurisdiction of this matter pursuant to 28 U.S.C. '1334(b); it is a core proceeding pursuant to 28 U.S.C. '157(b)(2)(I).

FINDINGS OF FACT

The plaintiff herein, Jimmy Farley, filed a bankruptcy petition in this Court on May 25, 1989. This proceeding was initiated on June 28, 1989, by the plaintiff's filing of a Motion for Contempt against the defendant, asking the Court to direct that she cease garnishment proceedings against him. The Court, on its own motion, directed that the Motion be treated as a complaint pursuant to Bankruptcy Rule 9014. The defendant filed her Answer and Counterclaim on July 27, 1989, alleging that the Order of Wage Garnishment was obtained pursuant to a judgment entered against the plaintiff on May 2, 1989, in Rockcastle Circuit Court in Civil Action No. 87-CI-219, and that the judgment debt is owed for alimony, maintenance and support and is therefore nondischargeable pursuant to 11 U.S.C. '523(a)(5). The plaintiff filed his Reply to Counterclaim on August 10, 1989.

On July 21, 1989, the defendant moved the Court to enter an order providing that all monies collected by the defendant's attorney pursuant to the Order of Wage Garnishment be held by that attorney in escrow, or in the alternative, that they be paid into the Court and held pending further orders of the Court. On January 19, 1990, this Court entered an Order granting the defendant's Motion to escrow the funds garnished. The Court left open the determination of whether the judgment entered against the plaintiff in Rockcastle Circuit Court represents a debt for alimony, maintenance or support pursuant to 11 U.S.C. '523(a)(5).

According to the Stipulations filed in this proceeding, the plaintiff and the defendant were married on July 31, 1982, and separated on September 12, 1987. No children were born of their marriage. A divorce decree was entered on December 21, 1987, incorporating a property settlement agreement. The settlement agreement provided for various assumptions of indebtedness by the plaintiff, including an indebtedness on a 1987 Ford Ranger truck, and for the plaintiff to hold the defendant harmless. The settlement agreement was silent as to possession of marital property, including the truck. The settlement agreement contained no specific provision for alimony, maintenance or support, although it stated in part that the parties were "disirous (sic) of settling all their property rights, alimony claims,...and all rights and claims of all types, past, present, and future arising and existing as a result of their marital relationship;...".

After the divorce, the defendant took possession of the 1987 Ford Ranger truck. The plaintiff made monthly payments of $258.88 each on the truck until February 4, 1989, when it was repossessed by the Fifth Third Bank which had a security interest therein for the purchase price. The indebtedness remaining at the time of repossession was $9587.86. In this regard, judgment was entered against the plaintiff in Rockcastle Circuit Court in the Civil Action referred to hereinabove. Subsequent to the entry of judgment, garnishment was issued.

Additionally, the parties have stipulated that at the time of the entry of the decree of dissolution of marriage the plaintiff had an income of $180.00 per week, gross, and monthly expenses totalling $729.00; the defendant had an income of $255.00 per week, gross, and monthly expenses totalling $946.50. The plaintiff's current income is $4.00 per hour for less than 40 hours per week. His monthly expenses remain approximately the same. The defendant currently earns $4.60 per hour; her current expenses total $1343.54 per month. The defendant incurs further monthly expenses for her daughter and receives weekly child support from her daughter's father to assist in the payment of these expenses.

Both parties testified by deposition in this proceeding. The plaintiff testified that the only property acquired during the marriage was the 1987 Ford Ranger truck, a 1979 Mercury Marquis, and a house trailer. The house trailer was financed by the defendant, and the plaintiff stated that he never made any payments on it. (Farley depo., pp. 4-5). When asked about the parties' intentions concerning the property settlement agreement, the plaintiff stated, "I intended to pay these bills and that is all." (Farley depo., p. 7). He testified that the parties only discussed possession of the truck after their divorce, and that the discussion concerned "[h]er taking possession of the truck and paying for it or giving it back to me and letting me pay for it and her taking the Mercury." (Farley depo., p. 10). The plaintiff testified that before the truck was repossessed he told the defendant that he was no longer able to pay on it and that if she was going to keep it she was going to have to pay for it. (Farley depo., p. 12; 15).

As concerns possession of the truck, the defendant testified as follows:

I had a nice car and he took it and traded it in on that truck. I had an Olds Cutlass. I said you have traded my car in and it is not fair for me to take that car, the other car. So, he agreed that I take the truck and he takes the car and he will pay for both of them until paid in full. That was the agreement. (VanWinkle depo., p. 6).

She acknowledged that the property settlement agreement did not provide for her possession of the truck or that such possession would constitute maintenance or support. She maintained, however, that she and the plaintiff had some sort of prior agreement concerning possession of the truck. (VanWinkle depo., pp. 6-7; 9-10).

The defendant also testified that she had no idea what the plaintiff's income was while they were married, and that she never saw any of his pay checks. (VanWinkle depo., pp. 8-9). She stated that she never knew what the plaintiff did with his money, and that in fact he would borrow money from her. She stated that he would buy food and that he paid the electric bill. (VanWinkle depo., p. 12).

CONCLUSIONS OF LAW

In making the determination as to whether or not a debt is in the nature of alimony or support, the Court must consider four elements as set out in In re Calhoun, 715 F.2d 1103 (6th Cir. 1983). The first element to be considered is the intention of the parties. In the case at bar, did the parties intend to create an obligation for support by the plaintiff's making payments on the 1987 Ford Ranger truck? If the Court finds that the making of such payments was intended as support, it must next determine whether that has the effect of providing support necessary to ensure that the daily needs of the former spouse are satisfied. The Court must also look to the practical effect of the discharge of the debt for the truck payments on the former spouse's ability to sustain her daily needs. If the Court finds that the making of the truck payments has the effect of providing necessary support, the Court must finally determine that the amount of support represented by such payments is not so excessive that it is manifestly unreasonable under the traditional concepts of support. At 1109, 1110.

According to the dictates of Calhoun, the Court's first task is to discern the intention of the parties, as all the other elements depend on it. As pointed out above, the property settlement agreement does not make specific provision for support or maintenance for either party, although the agreement does contain some language suggesting that it was intended to dispose of alimony claims, among others. In the absence of specific language, however, the Court may, as pointed out in Calhoun, "consider any relevant evidence including those factors utilized by state courts to make a factual determination of intent to create support." At 1109. This point was discussed in more detail in Judge Guy's concurring opinion citing Calhoun in In re Singer, 787 F.2d 1033, 1036-1038, (6th Cir. 1986).

Relevant evidence of the parties' intent in the case at bar includes factors utilized by Kentucky courts to determine intent

to create support. KRS 403.200 provides that a court may grant an order seeking alimony only if it finds that the spouse seeking maintenance lacks sufficient property, including marital property apportioned to him, to provide for his needs and is unable to support himself through appropriate employment or is custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home. Once the court decides that support is appropriate, the amount and duration is determined by considering all relevant factors, including:

1) the financial resources of the party seeking maintenance, including the marital property apportioned to him, and his ability to meet his needs independently;

2) the time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment;

3) the standard of living established during the marriage;

4) the duration of the marriage;

5) the age and physical and emotional condition of the spouse seeking maintenance;

6) the ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance.

In applying these factors to the case at bar, the Court must look to the parties' own testimony and the facts stipulated herein. The plaintiff and the defendant were married for about five years. At the time the Decree of Dissolution was entered, the plaintiff was 53 years old and the defendant 42 years old. At the time he gave his deposition in June 1990, the plaintiff testified that he was disabled from having undergone surgery and was not working. (Farley depo., p. 2). The defendant testified that she brought considerable personal property to the marriage, including an automobile that the plaintiff later traded on the truck in controversy here. (VanWinkle depo., pp. 3; 6). Both were employed during the marriage and each apparently kept his or her own earnings. The defendant testified that she did not even know how much the plaintiff earned, and that he contributed very little to the upkeep of the household, only paying the electric bill and buying groceries. (VanWinkle depo., pp. 8-9; 12). There is nothing in the record of this case, in fact, to suggest that the defendant was ever dependent on the plaintiff. Whatever standard of living was attained during the marriage was apparently mostly the result of the defendant's efforts.

The stipulated facts concerning the parties' income and expenses at the time of the divorce and at present indicate that at the time of the divorce, the defendant was earning more than enough to meet her monthly expenses, while the plaintiff was doing little better than breaking even. At present, both the plaintiff and the defendant are earning less than at the time of the divorce. The defendant's expenses have increased and the plaintiff's have remained the same.

Taken altogether, the facts established in this case do not support a finding that the debt for the 1987 Ford Ranger truck was intended as alimony or support. The defendant was, for all intents and purposes, self-supporting during and after the marriage. Not only did the plaintiff contribute very little in the way of financial support during the marriage, he often borrowed money from her. Her testimony also indicates that the plaintiff's assumption of the debt for the truck was a quid pro quo for his having traded her car in to purchase the truck, and not indicative of an intent on his part to provide her with support. (VanWinkle depo., p. 6).

In consideration of all the foregoing, it is the opinion of this Court that the debt for the 1987 Ford Ranger truck does not qualify as an exception to discharge pursuant to 11 U.S.C. '523(a)(5) and the that debt is dischargeable in bankruptcy. It is further the opinion of this Court that the institution of garnishment proceedings was a violation of the automatic stay provisions of 11 U.S.C. '362, and the defendant is hereby ORDERED to cease such proceedings and return all monies garnished to the plaintiff.

Dated:

 

By the Court -

 

____________________________________

Judge

 

 

Copies to:

William D. Gregory, Esq.

Guy K. Duerson, Jr., Esq.

 

 

 

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