In Re Moralez

128 B.R. 526, 25 Collier Bankr. Cas. 2d 90, 1991 Bankr. LEXIS 852, 1991 WL 114100
CourtUnited States Bankruptcy Court, E.D. Michigan
DecidedJune 25, 1991
Docket19-02006
StatusPublished
Cited by8 cases

This text of 128 B.R. 526 (In Re Moralez) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Moralez, 128 B.R. 526, 25 Collier Bankr. Cas. 2d 90, 1991 Bankr. LEXIS 852, 1991 WL 114100 (Mich. 1991).

Opinion

SUPPLEMENTAL MEMORANDUM OPINION GRANTING MOTION TO LIFT STAY

STEVEN W. RHODES, Bankruptcy Judge.

I.

The debtor’s former spouse, Debra A. Moralez, has filed a motion to lift the stay so that she can file a nondischargeability action against the debtor under 11 U.S.C. § 523(a)(5) in state court. The parties’ divorce judgment requires the debtor to assume certain joint marital debts, and Mrs. Moralez prefers to litigate the discharge-ability of that obligation in the state court that entered the judgment.

The debtor, Mark Moralez, opposes the motion, contending that this Court is in the best position to interpret and apply 11 U.S.C. § 523(a)(5). Following oral argument, the Court granted the motion. This memorandum opinion supplements the decision given in open court at that time.

II.

The motion is filed pursuant to 11 U.S.C. § 362(d)(1), which states, . the court shall grant relief from the stay ... (1) for cause....”

The issue of whether to lift the stay to allow a creditor to pursue litigation against the debtor has been addressed in numerous prior decisions. Several themes emerge from these decisions:

A. The decision whether to lift the automatic stay is within the discretion of the Bankruptcy Court. In re Kemble, 776 F.2d 802 (9th Cir.1985); In re MacDonald, 755 F.2d 715 (9th Cir.1985); Pursifull v. Eakin, 814 F.2d 1501 (10th Cir.1987); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 814 F.2d 844 (1st Cir.1987); In re Sambo’s Restaurants, Inc., 38 B.R. 764 (9th Cir. BAP 1984); In re Dixie Broadcasting Inc., 871 F.2d 1023 (11th Cir.1989), ce rt. denied, — U.S.-, 110 S.Ct. 154, 107 L.Ed.2d 112 (1989); In re White, 851 F.2d 170 (6th Cir.1988); In re Castlerock Properties, 781 F.2d 159 (9th Cir.1986).

B. The decision whether to lift the stay should be made on a case by case basis. In re Kelly, 125 B.R. 301 (Bankr.D.Kan.1991); In re MacDonald, 755 F.2d 715 (9th Cir.1985); In re Johnson, 115 B.R. 634 (Bankr.D.Minn.1989); In re Tucson Estates, Inc., 912 F.2d 1162 (9th Cir.1990).

C. In deciding whether to lift the stay, the Bankruptcy Court should balance the harm to the parties. In re Opelika Mfg. Corp., 66 B.R. 444 (Bankr.N.D.Ill.1986); In re Turner, 55 B.R. 498 (Bankr.N.D.Ohio 1985); In re Gatke Corp., 117 B.R. 406 (Bankr.N.D.Ind.1989); In re Salisbury, 123 B.R. 913 (S.D.Ala.1990); In re Parkin *528 son, 102 B.R. 141 (Bankr.C.D.Ill.1988); In re Todd Shipyards Corp., 92 B.R. 600 (Bankr.D.N.J.1988); In re Bible, 110 B.R. 1002 (Bankr.S.D.Ga.1990); In re Johnson, 115 B.R. 634 (Bankr.D.Minn.1989).

D. The Bankruptcy Court should consider the effect of lifting the stay on the administration of the bankruptcy estate. In re Towner Petroleum Co., 48 B.R. 182 (Bankr.W.D.Okla.1985); In re Curtis, 40 B.R. 795 (Bankr.D.Utah 1984); In re Tucson Estates, Inc., 912 F.2d 1162 (9th Cir.1990); In re Bible, 110 B.R. 1002 (Bankr.S.D.Ga.1990); In re Johnson, 115 B.R. 634 (Bankr.D.Minn.1989).

E. The Bankruptcy Court should consider whether the tribunal where the creditor proposes to litigate has special expertise in dealing with the issues, In re Lahman Mfg. Co., 31 B.R. 195 (Bankr.D.S.D.1983), Pursifull v. Eakin, 814 F.2d 1501 (10th Cir.1987), especially when domestic relations issues are involved, In re White, 851 F.2d 170 (6th Cir.1988), In re Baker, 75 B.R. 120 (Bankr.D.Del.1987); In re Pacana, 125 B.R. 19 (9th Cir. BAP 1991); In re Kelly, 125 B.R. 301 (Bankr.D.Kan.1991); In re Bible, 110 B.R. 1002 (Bankr.S.D.Ga.1990); In re MacDonald, 755 F.2d 715 (9th Cir.1985), or when the intent of a state court order is an issue. In re Kincaid, 55 B.R. 652 (Bankr.W.D.Ky.1985).

III.

The Court has concluded that there is cause to lift the stay to allow Mrs. Mora-lez to litigate her nondischargeability claim in state court, for the following reasons:

A. The primary authority interpreting 11 U.S.C. § 523(a)(5) is In re Calhoun, 715 F.2d 1103 (6th Cir.1983). In that case, the Sixth Circuit held, “The issue of when an assumption of joint debts is ‘in the nature of alimony, maintenance or support’ as opposed to a division of communal property is to be determined by federal bankruptcy law.” 715 F.2d at 1107. The court went on to state, “While state law is not binding, it nonetheless may provide a useful source of ‘guidance’.” 715 F.2d at 1108. After concluding that the “fresh start” concept of bankruptcy must also be given weight, the court announced a three step test to be used in determining whether the assumption of joint debts is in the nature of alimony or support and therefore nondischargeable. 715 F.2d at 1109.

The first test is whether the state court or the parties intended to create an obligation to provide support. The second test is whether the assumption obligation has the effect of providing necessary support. The third test is whether the amount of support, represented by the assumption obligation is manifestly reasonable under traditional concepts of support.

This Court concludes that the state court which imposed the assumption obligation in the first instance is as able, if not better able, to address each of these three tests. First, the state court is best able to address its own intent. Second, the fact finding processes necessary to determine the effect of the assumption are essentially the same in the state court as in the bankruptcy court; indeed, the state court may have already examined the issue when it fixed the assumption obligation in the first instance.

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Bluebook (online)
128 B.R. 526, 25 Collier Bankr. Cas. 2d 90, 1991 Bankr. LEXIS 852, 1991 WL 114100, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-moralez-mieb-1991.