16‐143‐cv
In re: David Kadoch
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 5th day of October, two thousand sixteen.
PRESENT: DENNY CHIN,
SUSAN L. CARNEY,
Circuit Judges,
RICHARD M. BERMAN,
District Judge. *
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IN RE: DAVID KADOCH,
Debtor.
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LAURIE KADOCH,
Appellant,
v. 16‐143‐cv
* Judge Richard M. Berman, United States District Judge for the Southern District
of New York, sitting by designation.
DAVID D. KADOCH,
Appellee,
JOHN R. CANNEY,
Trustee.
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FOR APPELLANT: JAMES B. ANDERSON, Ryan Smith &
Carbine, Ltd., Rutland, Vermont.
FOR APPELLEE: JENNIFER R. EMENS‐BUTLER, Obuchowski
& Emens‐Butler, P.C., Bethel, Vermont.
Appeal from the United States District Court for the District of Vermont
(Murtha, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Appellant Laurie Kadoch (ʺLaurieʺ) appeals from the district courtʹs
judgment entered December 15, 2015, affirming the order of the United States
Bankruptcy Court for the District of Vermont (Brown, B.J.) entered April 3, 2015, and its
order entered April 17, 2015, denying her motion for reconsideration. In its orders, the
bankruptcy court overruled Laurieʹs objections to the claim of debtor‐appellee David
Kadoch (ʺDavidʺ) to a homestead exemption. The district court explained its reasons in
an opinion and order also entered December 15, 2015. We assume the partiesʹ
familiarity with the underlying facts, the procedural history of the case, and the issues
on appeal.
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Laurie and David were married for many years. In 2004 and 2005, they
borrowed money from Laurieʹs parents to renovate their property in Quechee, Vermont
(the ʺPropertyʺ). They divorced in 2010, and their final divorce decree reflected their
stipulation that David would sell the house and the parties would use the proceeds to
repay the outstanding loan from Laurieʹs parents, and that until the Property was sold
David could remain in sole possession. In October 2010, a state court judgment was
entered on the debt against David in favor of Laurieʹs mother, and in July 2014, David
was found in contempt of the divorce decree because he failed to sell the Property.
David filed for bankruptcy on October 10, 2014 and claimed a homestead
exemption in the Property under Vermont law, Vt. Stat. Ann. tit. 27, § 101; Vt. Stat. Ann.
tit. 12, § 3023. Laurie and her mother objected to the homestead exemption; the
bankruptcy court overruled the objection and ruled Davidʹs homestead exemption
effective. After the bankruptcy court denied Laurieʹs motion for reconsideration, she
appealed to the district court. The district court affirmed.
Laurie argues that (1) the Rooker‐Feldman doctrine deprived the
bankruptcy court of jurisdiction to decide whether David was entitled to a homestead
exemption, (2) Laurie and Davidʹs divorce decree excluded the Property from the
bankruptcy estate, (3) the bankruptcy court erred in its calculation of equity in the
homestead property, and (4) the bankruptcy court abused its discretion when it denied
her motion to reconsider.
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ʺThe rulings of a district court acting as an appellate court in a
bankruptcy case are subject to plenary review.ʺ In re Stoltz, 315 F.3d 80, 87 (2d Cir.
2002). ʺ[W]e review the bankruptcy court decision independently, accepting its factual
findings unless clearly erroneous but reviewing its conclusions of law de novo.ʺ In re
Baker, 604 F.3d 727, 729 (2d Cir. 2010). The bankruptcy courtʹs decision to deny Laurieʹs
motion for reconsideration is reviewed for abuse of discretion. In re Coudert Bros. LLP,
673 F.3d 180, 186 (2d Cir. 2012). We conclude, based on our review of the record and
the relevant case law, that that the district court correctly affirmed the bankruptcy
courtʹs order overruling Laurie and her motherʹs objections to Davidʹs homestead
exemption and the order denying reconsideration.
First, the Rooker‐Feldman doctrine did not bar the bankruptcy court from
determining whether a homestead exemption applied because David did not lose in the
state family court and the issue of the homestead exemption was not raised in those
proceedings. The state court divorce decree was a so‐ordered stipulation imposing
obligations on both Laurie and David, and by requesting a homestead exemption,
David was not ʺseeking review and rejectionʺ of the divorce decree. Exxon Mobil Corp.
v. Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005).
Second, notwithstanding the divorce decree, the Property remained
property of the bankruptcy estate because it did not create either a lien on the Property
or a debt owed by David to Laurie; rather, both Laurie and David were required to sell
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their interests in their jointly owned Property to pay joint marital debt. Although the
family court determined how Laurie and David would manage their debts and
liabilities, once David filed in bankruptcy, the family court decree could not override
his discharge in bankruptcy, except as permitted by the Bankruptcy Code. See in re
Palmer, 78 B.R. 402, 406 (Bankr. E.D.N.Y. 1987); see also Ridgway v. Ridgway, 454 U.S. 46,
55 (1981) (ʺ[A] state divorce decree, like other law governing the economic aspects of
domestic relations, must give way to clearly conflicting federal enactments.ʺ).
Third, the bankruptcy court did not clearly err in concluding that there
was sufficient equity in the Property to which a homestead exemption could attach or in
computing the allocation of net proceeds from the sale. See In re Kleinfeldt, No. 06‐10415,
2007 WL 2138748, at *4 (Bankr. D. Vt. July 23, 2007).
Finally, the bankruptcy court did not abuse its discretion when it denied
Laurieʹs motion for reconsideration. The issue of whether the homestead property was
excepted from discharge because of 11 U.S.C. § 523(a)(15), and the other issues raised in
her motion for reconsideration, could have been or should have been raised in the
original motion. See Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).
Moreover, the bankruptcy court considered and rejected the § 523(a)(15) issue on the
merits. See Order Denying Laurie Kadochʹs Motion to Reconsider, App. at 13 (ʺEven if
the Court were to find [Davidʹs] obligation to [Laurieʹs mother] was non‐dischargeable
pursuant to § 523(a)(15), this would not alter the Courtʹs conclusion that [David] is
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entitled to a homestead exemption to which [Laurieʹs mother]ʹs debt is subject.
Dischargeability and enforcement of debts are distinct questions.ʺ). The bankruptcy
court did not err in holding that the divorce decree did not preclude Davidʹs invocation
of the homestead exemption in subsequent bankruptcy proceedings.
Accordingly, we affirm substantially for the reasons stated by the district
court in its thorough and well‐reasoned December 15, 2015 opinion and order. We have
considered all of Laurieʹs remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
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