Young v. Young (In re Young)

497 B.R. 904
CourtUnited States Bankruptcy Court, W.D. Arkansas
DecidedJune 10, 2013
DocketBankruptcy No. 6:08-bk-70230; Adversary No. 6:10-ap-07215
StatusPublished
Cited by5 cases

This text of 497 B.R. 904 (Young v. Young (In re Young)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Young v. Young (In re Young), 497 B.R. 904 (Ark. 2013).

Opinion

MEMORANDUM OPINION

RICHARD D. TAYLOR, Bankruptcy Judge.

Jonathan Young, the debtor (“debtor”), filed his Complaint on December 30, 2010, and Amended Complaint (“Complaint”) on January 5, 2011, seeking damages and in-junctive relief against his ex-wife, Krista-lynn Young, now Kristalynn Stephens (“Stephens”), for violation of the automatic stay. The gravamen of the Complaint concerns Stephens’s postpetition efforts in state court to hold the debtor in contempt for failure to pay a prepetition judgment for attorney’s fees and restitution as well as postpetition alimony. Trial concluded [906]*906on April 22, 2013. Thereafter, the court took this matter under advisement.

For the reasons stated below, the relief requested in the Complaint is denied in part and granted in part. The debtor did not introduce sufficient evidence to warrant injunctive relief. The debtor did prove a willful violation of the automatic stay and is entitled to nominal damages of $250 and attorney’s fees of $500. Additionally, the court will issue an order directing Kathy A. Cruz to show cause why she should not be sanctioned pursuant to Federal Rule of Bankruptcy Procedure 9011 and directing the debtor to show cause why his case should not be dismissed for cause pursuant to 11 U.S.C. § 1307, including section 1307(c)(ll).

I. Jurisdiction

This court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (C), and (O). The following opinion constitutes findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052.

II. Findings of Fact

After the debtor filed bankruptcy, Stephens sought to collect prepetition attorney’s fees, restitution, and postpetition alimony in the Circuit Court of Garland County, Arkansas (“Circuit Court”). Her efforts resulted in the debtor’s incarceration. Stephens concurrently sought payment of the same pre-and postpetition domestic support obligations in the debtor’s bankruptcy case. The debtor responded in a manner inconsistent with the United States Bankruptcy Code’s (“Code”) statutory scheme concerning the treatment of domestic support obligations.

The debtor also alleges a willful violation of the automatic stay. As a complete defense, Stephens interposes a broad order lifting the automatic stay, which the debt- or’s counsel approved, that arguably permitted her to aggressively pursue the debtor. Both the Circuit Court and the Arkansas Court of Appeals favorably concurred with Stephens’s interpretation of the order lifting the stay. The debtor disagrees and now seeks damages.

A. Divorce-Pre-Bankruptcy

The Honorable Marcia R. Hearnsberger (“Judge Hearnsberger”) entered a Decree of Divorce (“Decree”) granting the Youngs’ divorce on November 1, 2007. (Debtor’s Ex. 41.) Three provisions of the Decree are pertinent to the subsequent order lifting the stay, the debtor’s initial and modified plans, and the contempt that resulted in this adversary proceeding. Specifically, the Decree ordered the debtor to pay Stephens (1) $1100 a month in alimony beginning September 2007, subject to review after one year; (2) $10,890 in attorney’s fees and costs at $300 a month beginning October 2007; and (3) $2350 in restitution for wedding rings at $100 a month beginning October 2007. (Debtor’s Ex. 41 at 2.)

The debtor promptly failed to comply with the Decree. In January 2008, Judge Hearnsberger briefly jailed the debtor for contempt for, inter alia, missed alimony payments. The debtor’s parents immediately posted a $5000 bond that secured his release.

The debtor appealed the Decree and the subsequent contempt. The appeal continued during the bankruptcy discussed below and occasioned Stephens’s request for relief from the automatic stay.

B. Bankruptcy

On January 24, 2008, shortly after his first experience in jail, the debtor filed a voluntary Chapter 7 case. (Ch. 7 Yol. Pet., Jan. 24, 2008, ECF No. 1.) The debt- or’s original Schedule E listed the prepetition November 2007 “Judgment” (actually the Decree) for attorney’s fees of $10,890 [907]*907and restitution of $2350. (Pet. 22, ECF No. 1.) Each obligation was listed as a priority debt under section 507(a)(1). The debtor’s Schedule E did not contain any reference to alimony. (Pet. 22, ECF No. 1.) On his Schedule J, the debtor itemized his $1100 monthly alimony payment to Stephens as an ongoing expense. (Pet. 28, ECF No. 1.)

By the January 2008 filing date, five months of alimony, or $5500, had accrued ($1100 for September 2007 through January 2008). The full restitution and attorney’s fee awards remained outstanding. The $5000 bond, posted by the debtor’s parents and released to Stephens on February 7, 2008, satisfied all but $500 of the prepetition accrued alimony. (Debtor’s Ex. 44; Debtor’s Ex. 46 at 69.)

1. Motion to Lift Stay

Sherry Daves (“Daves”), representing Stephens, filed a Motion for Relief from Stay (“Stay Motion”) on May 6, 2008. (Debtor’s Ex. 3.) The Stay Motion provided in pertinent part:

5. A subsequent hearing on a petition for contempt for nonpayment by the Debtor was held in Circuit Court, and the Debtor appealed the Circuit Court’s ruling against him. A transcript and brief have been filed in the Court of Appeals and the time is approaching for the Creditor, Kristalynn Young, to file her brief before the Appellate Court.
6. The Creditor, Kristalynn Young, seeks relief from stay from the Bankruptcy Court to pursue her State Court remedies.
7. The stay provision of 11 U.S.C. § 362 of the Bankruptcy Code should be relaxed with regard to this Creditor with a valid claim or interest in and to the subject property and she should be released to pursue her usual lawful remedies against the Debtor.
WHEREFORE, the Movant/Creditor prays that this Court will order 'that relief from the automatic stay be granted so that the Movant/Creditor, and her successors and assigns, may pursue her lawful State Court remedies, and for all other just and proper relief to which she may be granted.

(Debtor’s Ex. 3 at 2.)

Kathy A. Cruz (“Cruz”), representing the debtor, filed a Response to Motion for Relief from Stay (“Response”), which provided in pertinent part:

7.

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Bluebook (online)
497 B.R. 904, Counsel Stack Legal Research, https://law.counselstack.com/opinion/young-v-young-in-re-young-arwb-2013.