Stocker v. Stocker

[Cite as Stocker v. Stocker, 2012-Ohio-5821.]

STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF WAYNE )

SUSAN M. STOCKER C.A. No. 12CA0021

Appellee

v. APPEAL FROM JUDGMENT
ENTERED IN THE
JOHN W. STOCKER COURT OF COMMON PLEAS
COUNTY OF WAYNE, OHIO
Appellant CASE No. 09-DR-0192

DECISION AND JOURNAL ENTRY

Dated: December 10, 2012

WHITMORE, Presiding Judge.

{¶1} Appellant, John Stocker (“Husband”), appeals from the judgment of the Wayne

County Court of Common Pleas. This Court affirms.

I

{¶2} Husband and Susan Stocker (“Wife”) were married in 1978. On March 18, 2010,

the parties entered into an in court settlement agreement, which was incorporated into a divorce

decree filed on April 30, 2010. The divorce decree, in relevant part, required that the martial

home be sold. Pending the sale, Husband was required to make payments on the first mortgage

and Wife was required to make payments on the home equity loan. If the home were to sell for

less than the total loan obligations, each party would be liable for 50% of the deficiency balance

and would have to use their best efforts to pay such deficiency. It was made known that both

parties were contemplating bankruptcy, and the divorce decree stated that “nothing herein
 2

prevents either party from filing for bankruptcy protection or discharge regarding any of the

debts set forth herein.”

{¶3} After the divorce, but prior to the sale of the home, both Husband and Wife filed

for bankruptcy and stopped making mortgage payments. Husband filed for Chapter 7

bankruptcy in July 2010, which was discharged in November 2010. Wife filed for Chapter 13

bankruptcy in May 2010, which was discharged March 2011.

{¶4} The home was sold in late December 2010 for $2,472.89 less than the combined

mortgages. Husband learned of the deficiency balance at the time of closing, which Wife paid in

full. Wife did not attempt to negotiate a lower payoff amount with the mortgage company.

Subsequently, Wife filed a motion for contempt, seeking compensation from Husband for his

failure to make payments on the first mortgage. After conducting hearings, the magistrate found

Husband was financially liable to Wife, and the trial court overruled Husband’s timely

objections. Husband now appeals and raises eight assignments of error for our review. For ease

of analysis, we rearrange and consolidate some of the assignments of error.

II

Assignment of Error Number Three

THE TRIAL COURT ERRED AS A MATTER OF LAW AS ITS DECISION
ON THE MOTION OF SUSAN EXCEEDS THE CONCURRENT
JURISDICTION OF THE COURTS OF THE STATE OF OHIO WHEN
ADDRESSING A DISCHARGE IN BANKRUPTCY.

Assignment of Error Number Four

THE TRIAL COURT ERRED AS A MATTER OF LAW, AND ABUSED ITS
DISCRETION, WHILE AWARDING JUDGMENT TO SUSAN AS THE
DIVORCE DECREE DOES NOT CONTAIN “HOLD-HARMLESS”
PROVISIONS CREATING A POST-DIVORCE OBLIGATION ON JOHN TO
PAY A POST-DECREE FINANCIAL DEFICIENCY.
 3

Assignment of Error Number Six

THE TRIAL COURT ERRED BY FINDING THAT THE DEFICIENCY PAID
BY SUSAN AT THE TIME OF THE SALE OF THE MARITAL RESIDENCE
WAS AN OBLIGATION TO A FORMER SPOUSE ADDRESSED IN A
DIVORCE DECREE AND IS NON-DISCHARGEABLE IN THE
BANKRUPTCY PROCEEDINGS.

{¶5} In his third, fourth, and sixth assignments of error, Husband argues that the trial

court erred by (1) exceeding its jurisdiction when addressing the dischargeability of the mortgage

debt, (2) creating a post-divorce obligation when the decree did not contain a “hold-harmless”

provision, and (3) finding the past due mortgage payments were non-dischargeable debt.

{¶6} “Generally, absent an error of law, ‘the decision to adopt, reject, or modify a

magistrate’s decision lies within the discretion of the trial court and should not be reversed on

appeal absent an abuse of discretion.’” Cirino v. Cirino, 9th Dist. No. 11CA009959, 2011-Ohio-

6332, ¶ 7, quoting Barlow v. Barlow, 9th Dist. No. 08CA0055, 2009-Ohio-3788, ¶ 5. An abuse

of discretion indicates that the court’s decision was arbitrary, unconscionable, or unreasonable.

Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).

{¶7} In our review, “we consider the trial court’s action with reference to the nature of

the underlying matter.” Tabatabai v. Tabatabai, 9th Dist. No. 08CA0049-M, 2009-Ohio-3139, ¶

18. “An agreed divorce decree * * * is an agreement of the parties that is made an order of the

court. Contract principles apply to the interpretation of such agreements, and the interpretations

are reviewed de novo on appeal as questions of law.” (Emphasis omitted.) Miller v. Miller, 9th

Dist. No. 10CA0034-M, 2011-Ohio-4299, ¶ 22, quoting Zimmer v. Zimmer, 10th Dist. No.

00AP383, 2001 WL 185356, *2 (Feb. 27, 2001).
 4

Jurisdiction

{¶8} Federal law determines whether a debt is non-dischargeable in bankruptcy.

However, state and federal courts share concurrent jurisdiction to determine whether a debt

should be characterized as non-dischargeable. See Barnett v. Barnett, 9 Ohio St.3d 47, 49-50

(1984), modified by statute, 11 U.S.C. 523(a)(15).

{¶9} To the extent that Husband argues that the trial court exceeded its concurrent

jurisdiction because the federal bankruptcy court had already determined the debt was

dischargeable, there is nothing in the record to support Husband’s assertion that the bankruptcy

court had already determined the mortgage debt was dischargeable. Husband filed a notice of his

Chapter 7 bankruptcy discharge with the trial court. However, the notice did not indicate which

debts were discharged. Therefore, the trial court was not precluded from deciding if the debt fell

within §523(a)(15), making it non-dischargeable under federal law. See Barnett at 49-50.

{¶10} Husband further argues that the trial court exceeded its jurisdiction because Wife

“did not object to the discharge or commence adversary proceedings to determine

dischargeability [in federal court].” “However, with the enactment of BAPCPA, [the

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,] a non-debtor spouse no

longer has an affirmative duty to file an adversary proceeding when seeking to have a

nondischargeability determination made pursuant to [11 U.S.C.] §523(a)(15).” In re Holmes,

N.D.Ohio Nos. 08-3113 & 08-31595, 2009 WL 1586792, *2 (Feb. 20, 2009). The trial court was

within its jurisdiction to decide if the debt should be characterized as non-dischargeable under

federal law. See Barnett, 9 Ohio St.3d at 49-50. See also §523(a)(15).

Debt Between Former Spouses

{¶11} The divorce decree, in relevant part, provided the following:
 5

Marital Residence. The parties are the owners of a residence located at 1410
West Market Street, Orrville, Ohio which shall be immediately listed for sale and
sold. Upon sale the proceeds shall be applied to the first mortgage indebtedness
due National City Bank, nka, PNC Bank, the home equity loan due National City
Bank, nka, PNC Bank, any valid liens and expenses of sale. Thereafter, the net
sale proceeds, if any, shall be divided fifty percent to each party.

If this residence has not been sold through a realtor by August 1, 2010 the same
shall be advertised and sold at auction on September 1, 2010.

In the event of a short sale, each party shall be jointly liable on any deficiency and
each party shall use their best efforts to pay such deficiency, however, either party
may file bankruptcy proceedings, if otherwise eligible, in that regard.

Pending sale, [Husband] shall have exclusive possession of this residence. Debt
service on the residence until sale be paid as follows: the first mortgage payable
to National City Bank, nka, PNC Bank shall be paid by [Husband] and the home
equity loan due National City Bank, nka, PNC Bank shall be paid by [Wife].

***

The court was advised that bankruptcy is being contemplated by [both parties]
and nothing herein prevents either party from filing for bankruptcy protection or
discharge regarding any of the debts set forth herein.

{¶12} Husband argues that the divorce decree intentionally did not contain any

indemnification or “hold-harmless” language as it relates to the mortgage debt, and therefore,

§523(a)(15) does not apply and the debt is dischargeable in bankruptcy. Wife argues the lack of

“hold-harmless” language is not relevant and the debt is non-dischargeable because §523(a)(15)

applies. We agree that the lack of indemnification language by itself is not dispositive of

whether a debt falls within §523(a)(15), but it is a factor to consider when determining whether a

debt even exists.

{¶13} The enactment of BAPCPA in 2005 made “any debt falling with[in] the scope of

[11 U.S.C.] §523(a)(15) absolutely non[-]dischargeable.” In re Williams, 398 B.R. 464, 468

(N.D.Ohio 2008).

To qualify as the type of marital debt excepted from discharge under §523(a)(15),
the [party contesting the dischargeability of the debt] bears the burden to establish
 6

the existence of three elements: (1) the debt in question is to a spouse, former
spouse or child of the debtor; (2) the debt is not a support obligation of the type
described in §523(a)(5); and (3) the obligation was incurred in a separation
agreement, divorce decree or other order of a court of record.

Id. We must first determine, therefore, “whether there is a debt owed within the meaning of the

statute.” In re Gibson, 219 B.R. 195, 203 (6th Cir.1998), quoting In re Henson, 197 B.R. 299,

302-303 (E.D.Ark.1996). Specifically, we must determine whether Husband has incurred a debt

to Wife.

{¶14} An example of where Husband incurs a non-dischargeable debt under §523(a)(15)

is when a divorce decree specifically requires Husband to “pay a third-party obligation directly

to [Wife] or to hold [Wife] ‘harmless’ on a third-party obligation.” In re Gibson at 202-203.

This is because “[a] requirement in a divorce decree to hold harmless or indemnify a spouse for

joint obligations incurred during a marriage creates a ‘new’ debt, running solely between the

former spouses.” In re Williams at 469. “[H]owever, the determination of whether a debtor

incurs a debt in connection with a [divorce decree] is not limited to the use of hold harmless or

other specific indemnification language.” In re Gibson at 203.

{¶15} The Bankruptcy Code defines a “debt” as the “liability on a claim.” 11 U.S.C.

§101(12). The Code further defines a “claim” as a:

(A) right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured; or

(B) right to an equitable remedy for breach of performance if such breach gives
right to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.

11 U.S.C. §101(5). The United States Supreme Court has said that “a ‘right to payment,’ * * *

‘is nothing more nor less than an enforceable obligation.’” Cohen v. de la Cruz, 523 U.S. 213,

218 (1998). See also In re Gibson at 202.
 7

{¶16} Here, the divorce decree required, while the sale of the home was pending,

Husband to pay the first mortgage and Wife to pay the home equity loan. The language in this

portion of the decree is firm; “[t]he first mortgage * * * shall be paid by [Husband] * * *.” In

contrast, the language used with respect to any deficiency balance created by a short sale is not

absolute. Instead, that portion provided that “each party will use their best efforts to pay [half of]

such deficiency.” Under the plain language of the divorce decree, Wife had the right to seek

enforcement of Husband’s obligation to pay the first mortgage. Therefore, we conclude that

Husband, in the divorce decree, incurred a debt in favor of Wife. See In re Gibson, 219 B.R. at

205. This debt is non-dischargeable under §523(a)(15), “notwithstanding that the debt is payable

to a third party and the [divorce decree] lacks hold harmless or other indemnification language.”

Id.

{¶17} Husband argues that it was the express intent of both parties to file bankruptcy

and to discharge all of the debt in the divorce decree. Moreover, Husband argues, the trial court

had already determined the debts in the divorce decree were dischargeable in bankruptcy, and

therefore, collateral estoppel prevented the court from revisiting the issue. The divorce decree

provided the following provision:

The court was advised that bankruptcy is being contemplated by [both parties]
and nothing herein prevents either party from filing for bankruptcy protection or
discharge regarding any of the debts set forth herein.

{¶18} To be clear, Husband was permitted to file bankruptcy with regard to his

obligation on the first mortgage. See In re Williams, 398 B.R. at 469-470. The mortgage was a

joint debt, owned by both Husband and Wife. Husband’s bankruptcy discharged only his

obligation to PNC Bank. See id. However, Husband is not permitted to discharge the “new

debt” he incurred in the divorce decree in favor of Wife. “[W]here a spouse is obligated under a
 8

separation agreement to pay a third-party debt, a debt in favor of the other spouse arises which is

non[-]dischargeable under §523(a)(15), ‘notwithstanding that the debt is payable to a third party

and the Separation Agreement lacks hold harmless or other indemnification language.’” Id. at

469, quoting In re Gibson, 219 B.R. at 205. “[A]ny debt falling with[in] the scope of

§523(a)(15) [is] absolutely non[-]dischargeable.” In re Williams at 468.

{¶19} Because Husband incurred a debt in favor of Wife in the divorce decree, such

debt is non-dischargeable under §523(a)(15). Further, the trial court was within its jurisdiction in

so finding. Accordingly, Husband’s third, fourth, and sixth assignments of error are overruled.

Assignment of Error Number One

THE TRIAL COURT ERRED AS A MATTER OF LAW BY DENYING
JOHN’S MOTION TO DISMISS THE MOTION OF SUSAN AS HER
MOTION REQUESTED A MODIFICATION OF A DIVISION OF PROPERTY
ORDER.

Assignment of Error Number Two

THE TRIAL COURT ABUSED ITS DISCRETION BY DENYING JOHN’S
MOTION TO DISMISS AS THE DOCTRINE OF COLLATERAL ESTOPPEL
PRECLUDED THE TRIAL COURT FROM MODIFYING ITS PRIOR
DIVISION OF PROPERTY AND DEBT ORDER.

Assignment of Error Number Seven

THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING
JUDGMENT TO SUSAN AND AGAINST JOHN IN AN AMOUNT THAT
EXCEEDS THE AMOUNT OF THE PAYMENT PAID BY SUSAN AT THE
TIME OF THE SALE OF THE MARTIAL RESIDENCE.

{¶20} In his first, second, and seventh assignments of error, Husband argues that the

court erred when it modified the divorce decree’s division of martial property and abused its

discretion when it determined the amount of the award. We disagree.

{¶21} We incorporate the standard of review set forth above. Accordingly, we review

the trial court’s decision to adopt the magistrate’s decision for an abuse of discretion. Cirino,
 9

2011-Ohio-6332, at ¶ 7, quoting Barlow, 2009-Ohio-3788, at ¶ 5. In conducting our review, “we

consider the trial court’s action with reference to the nature of the underlying matter.”

Tabatabai, 2009-Ohio-3139, at ¶ 18. The underlying matter is an agreed divorce decree, a

contract, which is review de novo. Miller, 2011-Ohio-4299, at ¶ 22, quoting Zimmer, 2001 WL

185356, at *2.

{¶22} The court may not, absent consent by both parties, modify a property division

incorporated into a divorce decree. R.C. 3105.171(I); Straw v. Straw, 9th Dist. No.

04CA008433, 2004-Ohio-4065, ¶ 4. However, a court may enforce its own orders, including

divorce decrees. R.C. 3105.65(B); Straw at ¶ 4.

{¶23} Here, the trial court merely enforced the divorce decree and did not modify the

property division. The divorce decree required, pending sale of the marital property, Husband to

pay the first mortgage and Wife to pay the home equity loan. Both parties failed to comply. In

its decision, the magistrate thoroughly detailed the current positions of the parties and what the

positions of the parties would have been if they had both made payments on the loans as required

by the terms of the divorce decree. In summary, the sale of the home resulted in a $2,472.89

deficiency, which was paid by Wife. If both parties had paid the respective mortgages the sale of

the home would have netted each party $2,850.43. In total, Wife would have had an additional

$5,323.32 if both parties had complied with the terms of the divorce decree. The court then

made adjustments to this total, subtracting the deficit created by her failure to pay the home

equity loan and Husband’s portion of escrow refunds that had been paid to Wife.1 In total, the

1
The court found Wife received a total of $471.50 from two separate escrow refunds. The
record is unclear as to whether Wife actually received two escrow refunds. However, neither
party challenges this amount and the issue does not prevent the resolution of Husband’s
assignments of error.
 10

court determined Wife would have had an additional $4,896.68 if the terms of the divorce decree

had been obeyed by both parties.

{¶24} The trial court’s order did not modify the property division in the divorce decree.

Instead, the judgment granted to Wife was merely an amount she was entitled to under the terms

of the decree. Further, the court did not abuse its discretion in calculating the award amount.

Accordingly, Husband’s first, second, and seventh assignments of error are overruled.

Assignment of Error Number Eight

THE TRIAL COURT’S DECISION AWARDING JUDGMENT TO SUSAN IN
AN AMOUNT THAT EXCEEDS THE AMOUNT PAID BY SUSAN AT THE
TIME OF THE SALE OF THE MARTIAL RESIDENCE IS AGAINST THE
MANIFEST WEIGHT OF THE EVIDENCE.

{¶25} In his eighth assignment of error, Husband argues that the court’s award amount

was against the manifest weight of the evidence. We disagree.

{¶26} A trial court’s decision to adopt a magistrate’s decision should not be reversed on

appeal absent an abuse of discretion. Cirino, 2011-Ohio-6332, at ¶ 7, quoting Barlow, 2009-

Ohio-3788, at ¶ 5. In our review, “we consider the trial court’s action with reference to the

nature of the underlying matter.” Tabatabai, 2009-Ohio-3139, at ¶ 18. “When reviewing

whether a judgment is against the manifest weight of the evidence in a civil context, the standard

of review is the same as that in the criminal context.” Boggs v. Boggs, 9th Dist. No. 3229-M,

2002 WL 432372, *1 (Mar. 20, 2002). In a challenge as to the weight of the evidence:

[t]he [reviewing] court * * * weighs the evidence and all reasonable inferences,
considers the credibility of the witnesses and determines whether in resolving
conflicts in the evidence, the [finder of fact] clearly lost its way and created such a
manifest miscarriage of justice that the [judgment] must be reversed and a new
trial ordered.
 11

(Alterations sic.) Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, ¶ 20, quoting State

v. Thompkins, 78 Ohio St.3d 380, 387 (1997). Manifest weight challenges the burden of

persuasion. Eastley at ¶ 19.

{¶27} Husband argues that the court erred in entering a judgment for $4,896.68 because

the decree specifically states that each party shall be liable for one half of any deficiency balance

resulting from a short sale of the martial property. The deficiency balance was $2,472.89;

therefore, according to Husband, he should only be liable for $1,236.45.

{¶28} While the divorce decree does expressly provide that Husband and Wife will each

be responsible for 50% of any balance owed after a short sale, the decree also expressly requires

Husband to pay the first mortgage on the property pending sale of the residence. As discussed

above, the court arrived at the judgment amount by comparing the current financial positions of

the parties to the financial position the parties would have been in had they both complied with

the terms of the divorce decree. In reviewing the record, the figures used by the magistrate were

testified to and reflected in the admitted exhibits. The judgment award granted in favor of Wife

was not against the manifest weight of the evidence. Accordingly, Husband’s eighth assignment

of error is overruled.

Assignment of Error Number Five

THE TRIAL COURT ERRED AS A MATTER OF LAW BY FINDING THAT
SUSAN WAS ENTITLED TO JUDGMENT AGAINST JOHN AS THE TRIAL
COURT LACKS JURISDICTION OVER PROPERTY OF THE
BANKRUPTCY ESTATE THAT WAS NOT SCHEDULED, OR ANY
PROPERTY THAT WAS ACQUIRED SUBSEQUENT TO THE FILING OF
THE BANKRUPTCY PROCEEDINGS, AS SUCH PROPERTY DOES NOT
VEST IN THE DEBTORS AND REMAINS THE EXCLUSIVE PROPERTY OF
THE TRUSTEE OF THE BANKRUPTCY ESTATE. STATED
DIFFERENTLY, THE TRIAL COURT’S DECISION EXCEEDS THE
CONCURRENT JURISDICTION OF THE STATE COURTS AS SUSAN
CANNOT RETAIN ANY MONEY COLLECTED AS SUCH MONEY MUST
BE PAID TO THE TRUSTEE AND DISTRIBUTED AMONG ALL
 12

UNSECURED CREDITORS THROUGH THE BANKRUPTCY
PROCEEDINGS.

{¶29} In his fifth assignment of error, Husband argues that if the judgment is

enforceable the award amount “constitutes unscheduled property that existed at the time of

[Wife’s] bankruptcy” and must be paid to the trustee. Specifically, the trial court had no

“authority to award one party money that is due and owing to a trustee in bankruptcy.”

{¶30} However, a court may enforce its own orders, including divorce decrees. R.C.

3105.65(B); Straw at ¶ 4. As discussed above, Husband’s failure to pay the first mortgage while

the sale of the marital home was pending was a breach of the terms of the divorce decree. The

trial court’s judgment sought to put Wife in the position she would have been if both parties had

complied with the terms of the divorce decree. The trial court’s judgment was merely an

enforcement of the court’s previous order, therefore, the court had jurisdiction to enter the

judgment.

{¶31} To the extent that Husband argues the trial court had no “authority to award one

party money that is due and owing to a trustee in bankruptcy,” Husband cites no law to support

the argument that the trial court had authority to determine whether the amount recovered by

Wife was “unscheduled property.” As this Court has repeatedly held, “[i]f an argument exists

that can support [an] assignment of error, it is not this [C]ourt’s duty to root it out.” Cardone v.

Cardone, 9th Dist. No. 18349, 1998 WL 224934, *8 (May 6, 1998). Husband’s fifth assignment

of error is overruled.

III

{¶32} Husband’s assignments of error are overruled. The judgment of the Wayne

County Court of Common Pleas is affirmed.

Judgment affirmed.
 13

There were reasonable grounds for this appeal.

We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Wayne, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

Costs taxed to Appellant.

BETH WHITMORE
FOR THE COURT

CARR, J.
DICKINSON, J.
CONCUR.

APPEARANCES:

JAMES M. RICHARD, Attorney at Law, for Appellant.

R. J. HULMUTH, Attorney at Law, for Appellee.