McGregor v. McGregor

CourtUnited States Bankruptcy Court, M.D. Florida
DecidedSeptember 30, 2019
Docket8:16-ap-00758
StatusUnknown

This text of McGregor v. McGregor (McGregor v. McGregor) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McGregor v. McGregor, (Fla. 2019).

Opinion

ORDERED.

Dated: September 30, 2019

Michael G. Williamson Chief United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION www.flmb.uscourts.gov In re: Case No. 8:11-bk-14531-MGW Chapter 13 Deborah Claire McGregor, Debtor. eS Deborah Claire McGregor, Adv. No. 8:16-ap-00758-MGW Plaintiff,

Bruce McGregor, Defendant.

ORDER AND MEMORANDUM OPINION DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION If what transpired here wasn’t so unfortunate, this case would be a comedy of errors. Start with the fact that the Debtor’s ex-husband and his lawyers didn’t realize the Debtor was able to discharge her marital debt obligations in this chapter 13 case,

leading the Debtor’s ex-husband to violate the automatic stay by trying to set off $30,000 of the Debtor’s (dischargeable) unpaid marital debt obligations against his future alimony obligations. Making matters worse, the Debtor, rather than coming to

this Court to stop her ex-husband’s efforts, basically spent more than $45,000 to pay lawyers to stop her ex-husband from obtaining a $30,000 judgment, which would have been void anyway because it was obtained in violation of the automatic stay. Although this Court ruled that the ex-husband’s efforts to modify his alimony obligations violated the stay, the Court awarded the Debtor only $6,291.75 in

damages—rather than the $70,000 or so she sought—because she failed to mitigate her damages by coming to this Court first. Had she done so, the Debtor could have avoided all but the $6,291.75 in damages the Court awarded her. The Debtor now contends the Court’s finding that she failed to mitigate her damages was a clear error of law or fact because the evidence at trial showed she insisted her bankruptcy lawyer

come to this Court to stop her ex-husband’s efforts but that her lawyer refused to do so. Even assuming that’s true, the Supreme Court has long recognized that clients must be held accountable for the acts and omissions of their lawyers. Because the Debtor is held accountable for her lawyer’s inactions, the fact that her lawyer may

have been responsible for the Debtor’s failure to mitigate her damages is not a basis for reconsidering the Court’s final judgment. Background After more than twenty-five years of marriage, Deborah McGregor and Bruce McGregor divorced in 2010.1 Under the final judgment of divorce, Bruce was

obligated to pay Deborah $5,000 per month in permanent alimony.2 The divorce judgment also obligated Bruce to pay 66% of the couple’s $180,000 or so in credit card and student loan debt; Deborah was liable for the remaining 34% (or $62,000).3 Eighteen months after the parties’ divorce was final, Deborah filed for chapter

13 bankruptcy. In her bankruptcy petition, Deborah listed Bruce on Schedule F as holding an unsecured claim in an unknown amount.4 Bruce received notice of the bankruptcy case and ultimately filed an $11,195.39 proof of claim for Deborah’s share of the marital debt that he had paid up to that point.5 On January 13, 2012, the Court confirmed Deborah’s proposed chapter 13 plan.6 Under Deborah’s confirmed

plan, Bruce would share pro rata in a $3,689 distribution to unsecured creditors (Bruce’s share came to a little more than $600).7

1 Adv. Doc. No. 44, ¶ 1. Customarily, the Court refers to parties by their surnames. Because the parties here share the same surname, the Court will refer to the parties by their first names. 2 Pl.’s Ex. 1 at ¶¶ 1 – 2, Adv. Doc. No. 47-1. 3 Id. at ¶¶ 21 – 22. 4 Pl.’s Ex. 13, Adv. Doc. No. 47-13. 5 Pl.’s Exs. 14 & 15, Adv. Doc. No. 47-14 & 47-15. 6 Pl.’s Ex. 16, Adv. Doc. No. 47-16. 7 Id.; see also Doc. No. 39. Ordinarily, the confirmation order would have ended things between the couple, even if unsatisfactorily. But Bruce, presumably unhappy with being stuck with Deborah’s share of the marital debt, went back to the divorce court in New

Jersey and asked the court to modify his alimony obligations going forward and to award him a credit for Deborah’s share of the marital debt that he had already paid (which was close to $20,000 by that point).8 Bruce’s efforts to modify his alimony obligations violated the automatic stay. To be sure, efforts to modify a domestic support obligation are generally excepted

from the automatic stay.9 But when, like in this case, a former spouse seeks to modify a domestic support obligation based solely on a debtor’s failure to pay a dischargeable debt, the request for a modification constitutes a setoff in violation of Bankruptcy Code § 362(a)(7).10 This is particularly true when, like here, the party seeks a dollar-for-dollar adjustment based on the amount of the dischargeable debt.11

Although it’s doubtful Deborah understood the intricacies of § 362(b)(2)(A)(ii) and § 362(a)(7), she credibly claims that she believed Bruce’s conduct violated the automatic stay. And based on that belief, she apparently asked her bankruptcy lawyer to stop Bruce’s efforts. As Deborah tells it, her bankruptcy lawyer responded that he

8 Pl.’s Ex. 2, Adv. Doc. No. 47-2. 9 11 U.S.C. § 362(b)(2)(A)(ii). 10 Foster v. Burns (In re Foster), 574 B.R. 19, 27 - 28 (Bankr. D. Maine 2017). 11 Id. at 28. needed to look into it because, in his view, Bruce’s efforts fell within a “gray area.” When her bankruptcy lawyer didn’t get back to her, Deborah says she went to the chapter 13 trustee, who advised her that he couldn’t give legal advice but suggested to

her that she sit in her bankruptcy lawyer’s office and wait for him. Rather than press the issue and file something with this Court, Deborah instead told her New Jersey divorce lawyer, whom Deborah claims raised Deborah’s bankruptcy with the New Jersey divorce court. There are no filings from Deborah’s divorce lawyer in the record. But in response to Bruce’s initial request to modify his

alimony obligations, the divorce court did order the parties to brief what effect Deborah’s bankruptcy case had on Bruce’s alimony obligation and the former couple’s marital debt.12 Whatever doubts the divorce court had about the effect of Deborah’s chapter 13 case, if any, apparently were allayed by the brief that Bruce’s divorce lawyer

submitted in January 2013, which argued (erroneously as it turns out) that Deborah’s marital debt obligations were nondischargeable under Bankruptcy Code § 523(a)(15).13 Three months after that brief was filed, the state court concluded that Deborah’s obligation to pay 34% of the marital debt was not discharged by her

12 Adv. Doc. No. 44-1, Ex. G. Shortly after the Court’s request, Deborah’s bankruptcy lawyer wrote to her divorce lawyer to notify the divorce lawyer that Deborah had, in fact, filed for bankruptcy and that Bruce had notice of and an opportunity to participate in Deborah’s bankruptcy case. Pl.’s Ex. 23, Adv. Doc. No. 47-23. 13 Pl.’s Ex. 6, at p. 14, l. 18 – p. 15, l. 20, Adv. Doc. No. 47-6. bankruptcy.14 Then, in September 2013, the divorce court entered a $30,401.26 judgment in Bruce’s favor for Deborah’s share of the marital debt that he had paid.15 It wasn’t until a year later, at a hearing on Bruce’s request to use the cash

surrender value of Deborah’s life insurance policy to satisfy the $30,401.26 judgment, that the divorce court (now presided over by a new judge) realized Bruce’s collection efforts had, in fact, violated the automatic stay.16 At an October 2014 hearing, New Jersey Superior Court Judge Daniel J. Yablonsky explained that Bankruptcy Code § 523(a)(15), which provides for the discharge of a debt arising

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Link v. Wabash Railroad
370 U.S. 626 (Supreme Court, 1962)
United States v. Boyle
469 U.S. 241 (Supreme Court, 1985)
In Re Luikart
319 B.R. 1 (M.D. Florida, 2003)
Henkel v. Lickman (In Re Lickman)
297 B.R. 162 (M.D. Florida, 2003)
Clayton v. King (In Re Clayton)
235 B.R. 801 (M.D. North Carolina, 1998)
In re Fundamental Long Term Care, Inc.
493 B.R. 620 (M.D. Florida, 2013)
Foster v. Burns (In re Foster)
574 B.R. 19 (D. Maine, 2017)

Cite This Page — Counsel Stack

Bluebook (online)
McGregor v. McGregor, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcgregor-v-mcgregor-flmb-2019.