Aguiluz v. Bayhi (In Re Bayhi)

528 F.3d 393, 59 Collier Bankr. Cas. 2d 983, 2008 U.S. App. LEXIS 10614, 2008 WL 2068206
CourtCourt of Appeals for the Fifth Circuit
DecidedMay 16, 2008
Docket06-30196
StatusPublished
Cited by19 cases

This text of 528 F.3d 393 (Aguiluz v. Bayhi (In Re Bayhi)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aguiluz v. Bayhi (In Re Bayhi), 528 F.3d 393, 59 Collier Bankr. Cas. 2d 983, 2008 U.S. App. LEXIS 10614, 2008 WL 2068206 (5th Cir. 2008).

Opinions

WIENER, Circuit Judge:

In this appeal, we are called on to determine whether the bankruptcy court (and district court, in affirming the bankruptcy court) impermissibly vacated a state court judgment, enjoined further state court litigation, and held Appellant Robert N. Aguiluz in contempt, pursuant to United States Code, Title 11, § 524(a). Concluding that the state court judgment was not “a determination of the personal liability of the debtor with respect to any debt dis[397]*397charged,”1 we reverse, vacating the orders of the bankruptcy court and district court and remanding to the bankruptcy court with instructions.

I. FACTS AND PROCEEDINGS

Aguiluz and Appellee/Debtor Lisa C. Bayhi were married in Louisiana under a community property regime in March 1979. No separate property agreements or orders were entered into or made prior to or during the existence of the marriage.

While they were still married to each other, the parties obtained several student loans through the Student Loan Marketing Association (“Sallie Mae”), which were guaranteed by the United States. The couple consolidated several of these loans into a single loan (“the Loan”) in 1993.

Both parties now acknowledge that the Loan created a community obligation under article 2360 of the Louisiana Civil Code. In addition, both parties acknowledge that they were and remain solidarily liable for the entirety of the Loan.2

The nature of their solidary liability is that of equal principals, not principal and surety — a distinction that shall be shown to have significance.3 As the obligee of solidary co-obligors, Sallie Mae could demand full performance on the Loan obligation from either party or from both simultaneously. Irrespective of whether Sallie Mae has or should ever demand such performance from either Aguiluz or Bayhi alone, and irrespective of whether either co-obligor has or has not paid anything toward the other’s “virile portion” on the Loan,4 either party may have compelled (and at any time still may compel) “contribution”5 — not payment to themselves but directly to Sallie Mae — for his or her virile portion.6 As there are here but two soli-dary co-obligors, the virile portion of each is one-half of the Loan obligation.7

In August 1995, the parties separated. Their marriage was subsequently termi[398]*398nated pursuant to an April 1996 judgment of divorce.

In November 1996, the parties entered into a community property settlement agreement (“the Agreement”), which was filed in the public records for the Parish of East Baton Rouge, Louisiana. The stated purpose of the Agreement was “to settle and liquidate [all remaining] community debts and to separate certain community property items-” As to each community obligation other than the Loan, the parties assigned sole responsibility to one or the other.

As to the Loan, however, Paragraph TV of the Agreement stated that the parties “agree to split the Sallie Mae Consolidated Loan, each to pay one half (1/2) the monthly payment until the debt is paid. At any time, either party may relieve his [sic] or herself of this obligation by paying one half (1/2) the outstanding principal at the time such payment is made.” No effort was made to revise or modify the Loan (hence no novation),8 or to partition it into two separate debts;9 Sallie Mae could still demand full performance from either party. Thus, each party’s right to contribution inter se remained the same as before they executed the Agreement — either co-obligor was entitled to enforce contribution from the other for one-half of the Loan obligation — prospectively, in arrears, or both.10

In September 1999, Bayhi filed for bankruptcy protection under Chapter 7. She listed both Aguiluz and Sallie Mae as creditors, but each with claim amount of “$0.00.”11 A short two months later, the bankruptcy court granted Bayhi a general discharge under United States Code, Title 11, § 727.

Aguiluz did not object to Bayhi’s discharge, did not file a proof of claim, and did not seek to except any debt from dis[399]*399charge; and neither did Sallie Mae!12 Consequently, any debts that Bayhi owed to Aguiluz were discharged. Both parties agree, however, and the law acknowledges, that the discharge did not release Bayhi from her solidary Loan debt to Sallie Mae, as this debt was expressly exempted from discharge by one of the self-executing exceptions of the Bankruptcy Code, specifically, § 523(a)(8). As shall be seen in our discussion of In re Fields below, debts like state taxes and student loans, which are per se non-dischargeable, need not be claimed in bankruptcy proceedings to remain completely immune from discharge.

Even though, following her divorce and continuing after the execution of the Agreement, Bayhi had contributed her half of the periodic payments to Sallie Mae, she ceased making payments to Sallie Mae altogether when she filed her bankruptcy petition in 1999. This non-payment continued for the two months between that filing and the entry of the discharge order, and has continued for almost a decade since that time.

In February 2000, Aguiluz wrote to Ba-yhi’s then-counsel requesting an explanation for Bayhi’s failure to make her half of the periodic Loan payments. After receiving no response, Aguiluz filed a petition for declaratory judgment in state court13 in which he sought judicial recognition that the Loan debt owed to Sallie Mae was originally a community obligation and thus solidary. Eventually, Bayhi stipulated to this, and the state court entered a judgment to that effect in June 2001.

Despite entry of this judgment, however, Bayhi still did not resume paying her half of the Loan payments to Sallie Mae. So, in December 2001, Aguiluz filed a petition for specific performance in state court in which he sought an order mandating that Bayhi pay her half of the payments to Sallie Mae pursuant to the post-bankruptcy June 2001 judgment of the state court.14 Importantly, Aguiluz did not allege that he had made her payments and did not seek to recover any such amounts through contribution: He sought only to force her to pay her virile portion directly to Sallie Mae.

Unable to resolve that litigation amicably, Aguiluz filed a motion for summary judgment almost three years after initiating the action. Following oral argument and supplemental briefing, the state court granted Aguiluz’s motion and entered judgment in his favor in February 2005, directing Bayhi to resume making half of the Loan payments directly to Sallie Mae (no mention of repaying Aguiluz). This was more than five years after the closing of her bankruptcy case, during which time Bayhi had paid nothing to Sallie Mae, despite the non-discharge of her solidary liability on the Loan.

The state court’s order did not quell Bayhi’s penchant for litigation: In March 2005, without prior notice to Aguiluz, Ba-[400]*400yhi filed ex parte

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Cite This Page — Counsel Stack

Bluebook (online)
528 F.3d 393, 59 Collier Bankr. Cas. 2d 983, 2008 U.S. App. LEXIS 10614, 2008 WL 2068206, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aguiluz-v-bayhi-in-re-bayhi-ca5-2008.