Means v. Grant

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
In re
ROBERT GENE GRANT,
Debtor.
JAMIE MEANS,
Plaintiff,
v.
ROBERT GENE GRANT,
Defendant.
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Case No. 04-21801
CHAPTER 7
Adv. No. 04-2085
OPINION ON COMPLAINT OBJECTING TO DISCHARGEABILITY OF DEBT
On October 3, 2005, 	the court held a trial 	on the Amended Complaint for
Determination of Dischargeability of Certain Debt and Objection to the Discharge of Debtor
under 11 U.S.C. § 727 filed by Jamie Means. 	Ms. Means appeared through her counsel
Phillip T. Willoughby. The defendant/debtor, Robert Gene Grant (Debtor), appeared through
his counsel Stephen R. Winship. 	The 11 U.S.C. § 727 claim for relief was dismissed on
August 19, 2004.
Jurisdiction
The court has jurisdiction over this adversary proceeding pursuant to 28 U .S.C. § 157
& 1334. The claim is brought pursuant to 11 U.S.C. § 523(a)(15) and is a core proceeding
under 28 U.S.c. § 157(a)(2)(I).
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Findings of Fact
Divorce Obligations
This dispute originates from the parties' divorce, established by a Judgment and
Decree of Divorce (Decree) entered September 15,2003 by default against the Debtor. The
parties continue to litigate the default divorce in state court. The Decree provides for custody
and support of the couple's minor child and a division of property and marital debts. 	The
relevant provisions of the Decree are:
DEBTS
2. DEFENDANT [Debtor] shall pay the following debts and save and
hold PLAINTIFF [Ms. Means] harmless therefrom and defend her from any
claims therefore and indemnify her for any liability thereon, including
litigation costs and attorney fees incurred by her defending any claim and in
any action by her against DEFENDANT for indemnification:
a. 	All credit card debt in his name;
b. 	All medical bills for services to him;
c. 	All debt secured by property set over to him herein;
d. 	All debt related to Grant Well Service, the shop and five
(5) acres;
e. 	Greg 	Pasek, 	Accountant 	(for 	2002 	tax 	return 	for
Defendant and Grant Well Service); and
f. 	All debt incurred by him since March 1, 2003.
INSURANCE
1. DEFENDANT is the insuring parent and shall maintain a reasonably
comprehensive policy of health and accident insurance covering the minor
child.
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3.(b). 	If DEFENDANT does not maintain insurance as required, he
shall pay all health care expenses of the child.
Ms. Means claims the Debtor owes her $2,820 for medical expenses incurred for the
couple's son. 	She also paid $28,345 for Grant Well Service debts which fall under the
indemnification clause of the Decree. Those joint obligations included a $3,553 debt on a
Ford truck owned by Grant Well Service and a deficiency judgment of$7,918.13. Also, the
net proceeds of$16,874 from the sale of the residence Ms. Means received under the Decree
were paid to satisfy liens filed for Grant Well Service debts.
Parties' Financial Situations
Neither of the parties' testimony reconciled completely with the documentary evidence
admitted to establish their income and expenses. 	Ms. Means' current income consists of
earnings of$l ,900 per month and child support from the Debtor of$542 per month for a total
of $2,442. Her net income after taxes is approximately $1,900 per month.
Ms. Means' monthly expenses total $2,109 and include a $475 per month payment on
a loan she incurred to pay some of the debts for which she now seeks indemnification from
the Debtor. Ms. Means also makes a loan payment for a new boat in the amount of $420 per
month. The shortfall in her budget is paid by her boyfriend, with whom she resides. 	Ms.
Means drives a 2004 Suburban owned and paid for by her boyfriend.
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The Debtor's written income information submitted at trial shows a net monthly
income of $2,475. The income was based on an hourly rate of $16 earned driving a haul
truck for Manpower, and some overtime at time and a half. 	However, by the time of the
trial, the Debtor was driving the same haul truck for the Powder River Coal Company and
earning a higher hourly rate, i.e., $19.55. The Debtor testified that his "bottom line" income
is the same regardless.
The Debtor was working a 32-hour week at regular time alternating with a 48-hour
week, that included eight hours overtime. However, the overtime has been cut back. The
Debtor may only receive 80 hours straight time in the future. Calculated over 26 pay periods,
the Debtor's monthly income varies from $3,388 to $3,610. 	If the withholding rate is the
same as when he was employed for Manpower, i.e., 34%, the Debtor's monthly income will
vary from $2,237 to $2,416, depending on the availability of overtime. Thus, the "bottom
line" is the same.
The Debtor's monthly expenses are reasonable and total $2,147. This figure does not
include attorney fees of $200 per month incurred in the ongoing domestic relations dispute,
a recent rent increase of $60 per month, and higher transportation expenses of at least $150.
The debtor owns no property to speak off. Additionally, the Debtor has no excess income
to pay a $26,000 nondischargeable federal tax obligation or to negotiate a repayment plan.
The Debtor has an inoperable vehicle and drives his girlfriend's car to the mine. He
makes no contributions to his retirement plan. The Debtor budgets $50 per month for food
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and $40 per month for clothing. 	However, the Debtor's girlfriend lives with him, and her
contributions to the budget, if any, were not disclosed.
Conclusions of Law
Ms. Means is seeking an exception to the Debtor's discharge of the debts totaling
$31,165 under 11 U.S.C. § 523(a)(15). 	The section provides two exceptions to the
presumption of nondischargeability of marital debts which are not support. A debtor is not
discharged from any debt incurred in the course of a divorce unless:
(A) the debtor does not have the ability to pay such debt from income
or property of the debtor not reasonably necessary to be expended for the
maintenance or support of the debtor or a dependent of the debtor ... ; or
(B) discharging such debt would result in a benefit to the debtor that
outweighs the detrimental consequences to a spouse, former spouse, or child
of the debtor.
The creditor has the burden to prove by a preponderance ofthe evidence that the debt
is not dischargeable. 	Grogan v. Garner, 498 U.S. 279,291, 111 S. Ct. 654,661 (1991) .
Under § 523(a)(15), the creditor has the burden of proving the existence of a marital debt.
The Bankruptcy Code, under § 523(a)(15), sets up a rebuttable presumption that the
debt is nondischargeable. Consequently, the majority of courts addressing the issue has ruled
the debtor has the ultimate burden to show the applicability of either or both exceptions. In
re Crosswhite, 148 F.2d 879 (7th Cir. 1998); In re Slover, 191 B.R. 886, 891 (Bankr. E.D.
Okla. 1996). 	The bankruptcy courts in the Tenth Circuit have generally adopted this
allocation of the burden of proof. See, e.g., In re Hammond, 236 B.R. 751, 766 (Bankr. D.
Utah 1998).
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Under § 523(a)(15)(A), the Debtor must show that he does not have the ability to pay
the debt. In this case, the court concludes the Debtor has no excess income or property from
which to pay the obligation. Even when he is earning overtime pay, which he testified is no
longer likely, his income is insufficient.
Because the Debtor does not have the ability to repay the debt, an analysis under §
523(a)(2)(B) is unnecessary. 	However, even under that subsection discharging the debt
outweighs the detriment to Ms. Means. Ms. Means is current on the loan payment and has
already satisfied the third party creditor claims arising out of Grant Well Service. She is in
a better financial situation than is the Debtor.
The court will issue a judgment discharging the obligations. Ms. Means did not plead
a § 523 (a)(5) claim for relief with regard to the Debtor's failure to provide medical insurance
for the minor child and the resulting expenses. 	However, to the extent such a claim is
determined by a state court to be in the nature of support, that debt would not be discharged
despite this opinion and judgment.
DATED th~ay of October, 2005.
Service to:
Phillip Willoughby
Stephen Winship
By the Court
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