Ronald J. Phillips

In re
RONALD PHILLIPS,
Debtor
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MASSACHUSETTS
EASTERN DIVISION
Chapter 7
Case No. 09-10650-FJB
MEMORANDUM OF DECISION ON
MOTION OF ROSEANNE PHILLIPS FOR ORDER
THAT AUTOMATIC STAY IS INAPPLICABLE OR,
IN THE ALTERNATIVE, FOR RELIEF FROM THE AUTOMATIC STAY
Roseanne Phillips (“Roseanne”), former wife of the chapter 7 debtor, Ronald Phillips
(“Ronald”), is entitled to payment from Ronald under two orders of the Massachusetts Probate
and Family Court. Both orders were issued in conjunction with the parties’ 1989 divorce
judgment and related Marital Separation Agreement. The first, known as the Modification
Judgment and entered by agreement of the parties in 2004, extended the deadline in the
Separation Agreement for Ronald to pay $250,000 to Roseanne from the original date in 2004
to November 10, 2009, and it further required Ronald to make weekly payments to Roseanne
until the $250,000 was paid in full; the Modification Judgment characterized these obligations
(both the $250,000 lump sum payment and the interim weekly payments) as alimony. The
second order, known as the Contempt Judgment and entered on December 18, 2008, required
Ronald to pay an arrearage of $21,210 due under the Modification Judgment, plus attorney’s
fees of $3,625, on or before January 30, 2009; the Contempt Judgment characterized the
arrearage at issue as alimony. On January 29, 2009, Ronald filed a chapter 7 petition, thereby
commencing this case and obtaining the protection of the automatic stay.
By the motion before the court, Roseanne seeks (i) a declaration that her enforcement of
the Modification and Contempt Judgments against Ronald, but not against assets of his
bankruptcy estate, falls within the scope of the exception from the automatic stay for “collection
of a domestic support obligation from property that is not property of the estate,” as set forth in
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1 The Court has held a hearing on the motion and received the documents adduced by
the parties as exhibits to the motion and opposition but has not held an evidentiary hearing. In
view of the documents produced and the arguments of the parties, no evidentiary hearing was
necessary for resolution of the issues presented.
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11 U.S.C. § 362(b)(2)(B), or, in the alternative (ii) relief from the automatic stay to enforce these
judgments other than against assets of the estate. Ronald opposes the motion in both respects.
He first argues that the obligations in question, though labeled as alimony, are not in fact in the
nature of alimony or support and therefore are not “domestic support obligations” as defined in
11 U.S.C. § 101(14A) and used in § 362(b)(2)(B); he therefore would have the court conclude
that the enforcement of these judgments is not sheltered by the § 362(b)(2)(B) exception from
the stay. With respect to whether relief from the automatic stay should nonetheless be granted
to enforce these orders for cause, the cause being that the debt would appear to be excepted
from discharge, if not by 11 U.S.C. § 523(a)(5) then by 11 U.S.C. § 523(a)(15) (excepting from
discharge any debt to a former spouse incurred by the debtor in the course of a divorce or in
connection with a divorce decree or separation agreement), the debtor maintains that these
orders were not incurred in connection with their Separation Agreement and divorce judgment.
The Modification Judgment is not a simple restructuring and extension of the payment obligation
from the Separation Agreement; rather, he argues, it represents a wholly new obligation,
essentially a loan from Roseanne to Ronald that has nothing to do with their earlier divorce and
Separation Agreement. In fact, he alleges that the Modification Judgment was part of a larger
business venture, mostly unrelated to the divorce.
In view of the documentary record adduced by the parties in conjunction with the motion
and opposition, 1 the debtor’s position as to the latter issue is wholly implausible. Section
523(a)(15) of the Bankruptcy Code excepts from discharge any debt to a former spouse that is
not a domestic support obligation but that is otherwise “incurred by the debtor in the course of a
divorce or separation or in connection with a separation agreement, divorce decree or other
order of a court of record.” 11 U.S.C. § 523(a)(15). If the obligations imposed by the
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Modification Judgment are not domestic support obligations—in which case they would be
excepted from discharge by 11 U.S.C. § 523(a)(5)—they may yet be excepted from discharge
by § 523(a)(15) if they were incurred “in connection with a separation agreement [or] divorce
decree.” It appears that the Modification Judgment was entered in connection with the parties’
Marital Separation Agreement. The parties ’ Modification Stipulation for Judgment, which was
incorporated by reference into the Modification Judgment itself, and which Ronald himself
signed, says as much. It begins:
It is agreed by and between the parties [Roseanne as plaintiff and
Ronald as defendant] that the order within the original Separation
Agreement of April 13, 1989 requiring the husband pay the wife on
or about April 13, 2004, shall be modified as follows:
1. 	Defendant has paid to the plaintiff wife the sum of One
Hundred Thousand Dollars ($100,000).
2. 	The defendant will pay the balance of Two Hundred Fifty
Thousand Dollars ($250,000) to the plaintiff on or before
November 10, 2009.
Thus Roseanne and even Ronald himself understood the Modification Judgment to be a
modification, restructuring, and extension of obligations in their Separation Agreement. In
addition, the amounts in issue are plainly derived from the Separation Agreements requirement
of a $350,000 payment. Therefore, both in substance and in the intent and understanding of
both parties, the Modification Judgment represents an obligation incurred by the debtor in
connection with their separation agreement.
Ronald argues that the Modification Agreement is a “loan,” under which, in exchange for
periodic payments of interest (the monthly payments of “alimony” required by the Modification
Judgment), Roseanne agreed to an extension of time for repayment. The extension was
designed to enable Ronald to complete a real estate development project that he hoped would
result in a sale whose proceeds would fund the $250,000 still then owing on the $350,000
obligation. In the words of Ronald’s counsel: the Modification Stipulation
transferred the remaining balance of the Property Settlement [i.e.,
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2 Under Grella v. Salem Five Cents Savings Bank, 42 F.3d 26 (1 st Cir. 1994), the
adjudication of a motion for relief is not a preclusive determination on the merits of the
underlying substantive issues, such as the issues of dischargeability presented here.
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the $350,000 obligation] into a loan to the Debtor for the benefit of
the Project in consideration of this subordination [sic] the Debtor
agreed to pay interest on the loan and pay the balance of the two
hundred and fifty thousand ($250,000) on or before November
10th, 2009.
Ronald does not contend that this “loan” involved an advance of new funds by Roseanne. Still,
he maintains that it changed the underlying character of the debt from one arising from the
marital Separation Agreement into something else, a loan having no connection to the
Separation Agreement within the scope and meaning of § 523(a)(15).
Ronald’s characterization of the new obligation as a loan, as opposed to a mere
extension of a preexisting obligation to pay, is wholly implausible. No new funds were
advanced, and the Modification Stipulation plainly presents the new obligation as a modification
of an obligation originating in the Separation Agreement. Moreover, even if the new obligation
could fairly be deemed a loan, it still is a modification of an obligation contained in the
Separation Agreement, and therefore, even as a loan, would constitute an obligation “incurred
by the debtor . . . in connection with a separation agreement” within the meaning of §
523(a)(15). I conclude, for purposes of the present motion, 2 that the debt in question would be
excepted from discharge, if not by § 523(a)(5) then at least by § 523(a)(15).
Ronald argued at the hearing that the debt cannot be excepted from discharge for
another reason: the deadline for Roseanne to file a complaint to determine the dischargeability
of the debt has passed, but Roseanne has filed no such complaint. The deadline to which ths
argument refers was established by a stipulation between the parties. 	The stipulation, which
the court approved, stated that as to Roseanne, “the deadline to file a complaint to determine
the dischargeability of any debt to Roseanne Phillips is hereby extended until May 15, 2009.”
The unstated premises of Ronald’s argument are (1) that the deadline established by
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3 Prior to its amendment in 2005, § 523(c)(1) included complaints under subsection
(a)(15) among those for which a timely complaint was required. The Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005 (“BAPCPA”) substantially rewrote subsection
(a)(15) and also amended § 523(c)(1) to remove the requirement of a timely complaint for debts
under (a)(15). The present case was commenced after the effective date of BAPCPA and
therefore is governed by the Code as amended by that act.
4 No discharge has entered to date because the deadline for certain creditors to object
to discharge was extended to August 11, 2009.
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this stipulation applied to any complaint to determine dischargeability, not only those that must
be filed by a preexisting deadline, and (2) that the consequence of failure to file a complaint to
determine the dischargeability of the debt by the deadline is that the debt is not excepted from
discharge. Neither premise is warranted. First, the parties’ stipulation expressly “extended” a
deadline; it follows that the stipulation applied only to such complaints to determine
dischargeability as were subject to a deadline. By operation of 11 U.S.C. § 523(c)(1) and F ED.
R. BANKR. P. 4007( C), complaints to determine dischargeability under subsections 523(a)(2),
(a)(4), and (a)(6) are subject to a deadline, but no such deadline exists for complaints under §
523(a)(5) and (a)(15), the subsections at issue here. 3 Second, § 523(c)(1) dictates that the
consequence of failure to timely file a complaint for dischargeability as to certain debts—those
arising under subsections 523(a)(2), (a)(4), and (a)(6)—is that the debtor shall be discharged
from a debt of that kind; but the Bankruptcy Code and Federal Rules of Bankruptcy Procedure
make no similar provision for debts being challenged under other subsections of § 523(a). For
both reasons, the failure of Roseanne to file a complaint by the extended deadline is not
dispositive of the dischargeability of the debts in question under subsections (a)(5) and (a)(15).
Where the obligations in question would be excepted from any discharge that Ronald
may receive in this case, 4 and Roseanne does not seek to enforce the orders in question
against assets of the bankruptcy estate, no cause exists to delay her enforcement of the orders.
Accordingly, the Court concludes that she has established cause for relief from the automatic
stay, and a separate order will enter granting such relief. Having so concluded, the Court need
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not and does not address Roseanne’s alternative request for a determination that her
enforcement of the Probate Court orders is not subject to the stay.
Date: August 13, 2009 	_______________________________
Frank J. Bailey
United States Bankruptcy Judge
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