Quintanilla v. Crews

CourtUnited States Bankruptcy Court, N.D. California
DecidedMarch 30, 2020
Docket19-04027
StatusUnknown

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

Bluebook
Quintanilla v. Crews, (Cal. 2020).

Opinion

EDWARD J. EMMONS, CLERK iar) □□ U.S. BANKRUPTCY COURT 2 □□□□ □ NORTHERN DISTRICT OF CALIFORNIA □□ □□□ is Lis □□ | 2 The following constitutes the order of the Court. Signed: March 30, 2020 3 4 LES Re SO oo 5 CharlesNovack = U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re: Case No. 11-45982 CN 10 CYNTHIA CREWS, Chapter 13 11 Debtor. 12 E € 13|| CYNTHIAM. QUINTANILLA, Adversary No. 19-4027 CN

O 44 Plaintiff, MEMORANDUM DECISION AFTER TRIAL © I5] vs. 5 16 |} CARL M. CREWS,

17 Defendant. v 5 5 18 2 19 On February 12, 2020, this court conducted a trial in this adversary proceeding. All

20 || appearances were noted on the record. The following constitutes this court’s findings of fact and

21 || conclusions of law under Federal Rule of Bankruptcy Procedure 7052(a)(1). 22 Plaintiff Cynthia Quintanilla (“Quintanilla”) and defendant Carl. M. Crews (“Crews”) are e: 23 || spouses who divorced in 2010. While both parties were represented by counsel during the early 24 || stages of the dissolution action (which Quintanilla filed in February 2008), they apparently were pre 25 || se parties on December 14, 2010 when the Alameda County Superior Court entered their Dissolutic 26 || Judgment. The parties’ dissolution action (the “Dissolution Action”) contained the usual twists anc 27 || turns. Quintanilla’s gross monthly income ($6,131.00) was greater than Crews’ monthly income 28 || ($2,050.00), and the Alameda County Superior Court (by order dated February 9, 2010) awarded hi

MEMORANDUM OF DECISION AFTER TRIAL

1 temporary monthly spousal support of $416. The parties had two minor children and Quintanilla 2 was awarded full physical custody and child support. The parties asserted community property 3 interests in four properties: the marital residence (3440 Oak Knoll Boulevard, Oakland), rental 4 properties at 6325 MacArthur Boulevard, Oakland, and 852 Dolores Street, San Leandro, and 5 property located at 221 Virginia Street in Hayward where Quintanilla operated an adult care 6 boarding facility. Crews owned Oak Knoll as his separate property before the parties married, and 7 he conveyed fee title to Quintanilla in 2002 to help smooth over certain marital indiscretions. 8 During the Dissolution Action, the parties may have disputed the characterization of these properties 9 and the family businesses, and one of Crews’ attorneys asserted that Crews was entitled to a “right of 10 reimbursement” for Oak Knoll. While these (and other issues) were raised in the Dissolution Action, 11 there is no evidence indicating that the Superior Court formally addressed them. Instead, the parties 12 voluntarily divided their real and personal property assets and resolved their child and spousal 13 support obligations via a consensual Dissolution Judgment. The Dissolution Judgment (Exhibit 1) is 14 a 17 page Judicial Council of California form completed by the parties. In pertinent part, the 15 Dissolution Judgment (see paragraph 1 of the “Property Order Attachment to Judgment”) awarded to 16 Quintanilla fee title to all of the real properties along with the furniture in those properties, certain 17 vacation timeshares, the family businesses, including their inventory and assets, and her jewelry and 18 the vehicles in her possession. This award was “subject to an equalizing, non-taxable payment as 19 stated herein below.” Crews received the furniture and jewelry in his possession, a 1973 Porsche, 20 and 1998 Mercedes Benz. 21 Paragraph 3 of the Property Order Attachment addressed the equalization payment referenced 22 in paragraph 1. Paragraph 3 states that Quintanilla shall pay Crews “108,000.00 payable as follows: 23 nontaxable payment of $3000 per month, commencing August 1, 2010 over 36 months.” The 24 Dissolution Judgment also contained a “Spousal, Partner Or Family Support Order Attachment” in 25 which both parties waived spousal support. Paragraph 10 of this Attachment states that “Spousal 26 support has been waived by both parties in final settlement of all issues. [Crews] receives a 27 disproportionate share of property buy out in lieu of spousal support.” The parties signed a 28 stipulation acknowledging that they agreed to the Dissolution Judgment’s terms and requested that 1 The Superior Court enter it, which it did. 2 During trial, neither Crews nor Quintanilla coherently explained how they determined the 3 amount and duration of the equalization payments. Quintanilla testified that Crews proposed this 4 amount to her attorney and that it may have reflected the marital community’s equity interest in the 5 Oak Knoll property, which equity (via cash-out refinances) was apparently used to renovate that 6 property and help purchase some of the other real properties. Quintanilla stated, however, that she 7 knew little about the value of the Oak Knoll property, and this court concludes that her entire 8 testimony on this issue is conjecture.1 Crews’ testimony was equally unenlightening. He stated that 9 Quintanilla’s attorney presented him with the terms, which he believed were derived in part from the 10 Disso Master program.2 While he acknowledged that he waived spousal support, he stated that he 11 did so because he believed that Quintanilla would live up to her end of the bargain (i.e., make the 12 $3,000 monthly payments). In other words, Crews was more than willing to accept these payments, 13 which would have more than doubled his monthly income, regardless of their character. Both Crews 14 and Quintanilla were unaware how a bankruptcy filing could affect Crews’ right to collect these 15 payments. 16 The documentary evidence also does not explain these terms. Neither the Dissolution Action 17 pleadings introduced into evidence nor the bankruptcy schedules filed in this court reveal any equity 18 in the real properties, and the total value of the remaining community property (as listed by 19 Quintanilla in her soon to be filed Chapter 13 and as testified to by Crews) was far less than 20 $108,000.3 Nor could Quintanilla afford these monthly payments, since her net income was 21 $4,713.00 (as listed in the Spousal Support Order Attachment).4 Quintanilla made only one 22 23 1 Given the amount of the equalization payments and the significant financial stress they imposed on her, Quintanilla’s inability to explain their calculation is surprising. 24 2 Quintanilla’s family law attorney did not testify at trial. 25 3 Quintanilla’s most significant asset was her ACERA retirement account, which was her 26 separate property. 27 4 Her soon to be filed Chapter 13 listed substantially different gross income and expense 28 amounts, but with the same result: little excess income to make such a large monthly payment to 1 $3,000/month payment to Crews. 2 Quintanilla filed a Chapter 13 bankruptcy in August 2011. She listed her debt to Crews on 3 her Bankruptcy Schedule F as a dischargeable obligation representing the “Amount ... awarded ex- 4 husband Carl Crews to equalize the community property based [on] the marital settlement between 5 Debtor and ex-husband (stipulated judgment).” Her Chapter 13 plan proposed monthly payments of 6 $300, and did not treat the equalization payments as a non-dischargeable debt. Crews timely filed a 7 proof of claim which asserted that the equalization payments constituted a priority, non- 8 dischargeable domestic support obligation as defined by Bankruptcy Code § 101(14A). Quintanilla 9 objected to his proof of claim, and the parties ultimately stipulated to return to Alameda County 10 Superior Court to resolve this issue (the “Stipulation”). The Stipulation’s recitals and terms are 11 illuminating. The Stipulation, which the parties executed in early March 2012, provides in pertinent 12 part: 13 “Creditor filed on July 7, 2011, a claim (Claim No.

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