Steven K. Bailey

NOT RECOMMENDED FOR PUBLICATION
File Name: 26b0001n.06
BANKRUPTCY APPELLATE PANEL
OF THE SIXTH CIRCUIT
IN RE: STEVEN K. BAILEY,
Debtor.
REGINA CREMEANS, personal representative of the
estate of Rebecca Bailey, deceased,
Plaintiff-Appellant,
v.
STEVEN K. BAILEY,
Defendant-Appellee.
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Nos. 24-8023/25-8002
Appeal from the United States Bankruptcy Court
for the Eastern District of Kentucky at Ashland.
No. 1:22-bk-10013—Douglas L. Lutz, Bankruptcy Judge.
Decided and Filed: February 2, 2026
Before: BAUKNIGHT, Chief Judge; GUSTAFSON and MERRILL,
Bankruptcy Appellate Panel Judges.
_________________
COUNSEL
ON BRIEF: Robert W. Miller, Grayson, Kentucky, for Appellant. Bruce E. Blackburn,
BLACKBURN LAW, PLLC, Raceland, Kentucky, for Appellee.
_________________
OPINION
_________________
SUZANNE H. BAUKNIGHT, Chief Bankruptcy Appellate Panel Judge. These appeals
arise from orders entered after remand following the prior Panel’s determination that judgment on
>

Nos. 24-8023/25-8002 In re Bailey Page 2
the pleadings was not appropriate.1 On remand, after trial, the bankruptcy court ruled for the
debtor, finding that the plaintiff-creditor had not established the elements required to find the debt
nondischargeable pursuant to either § 523(a)(4) or (a)(5). The trial ruling is the subject of the first
appeal. In the second appeal, the bankruptcy court ruled (without prejudice) that the plaintiff-
creditor had not demonstrated cause for relief from the automatic stay or established a right to
setoff. For the reasons that follow, we AFFIRM.
ISSUES ON APPEAL
The Appellant has set forth the following issues on appeal:
Case No. 24-80232
1. Did the bankruptcy court err in finding at trial that a portion of the debt was not
nondischargeable pursuant to § 523(a)(4)?
2. Did the bankruptcy court err in finding at trial that all or a portion of the debt was
not nondischargeable as a domestic support obligation pursuant to § 523(a)(5)?
3. Did the bankruptcy court err in excluding from evidence the deposition testimony
of state family court judge Hon. David Flatt?
Case No. 25-80023
1. Did the bankruptcy court err in denying the motion for relief from stay to carry out
setoff?
2. Did the bankruptcy court err in holding that the setoff could not be allowed after
plan confirmation?
3. Did the bankruptcy court err in overruling the motion to amend the judgment?
4. Did the bankruptcy court err in ordering Appellant to execute a deed to the debtor?
1Bailey v. Bailey (In re Bailey), No. 23-8001, 2024 WL 1511984 (B.A.P. 6th Cir. Apr. 8, 2024).
2These issues are paraphrased from Appellant’s brief, in which they differ from the Statement of Issues filed
by Appellant. [Compare Statement of Issues at 1, BAP Case No. 24-8023, ECF No. 7, with Appellant’s Br. at 1-2,
BAP Case No. 24-8023, ECF No. 21.]
3Because Appellant’s Civil Appeal Statement of Parties and Issues and Appellant’s brief differ and seem to
be duplicative, the Panel has paraphrased the issues raised by Appellant. [Compare Statement of Issues, BAP Case
No. 25-8002, ECF No. 4, with Appellant’s Br. at 1-2, BAP Case No. 25-8002, ECF No. 11.]

Nos. 24-8023/25-8002 In re Bailey Page 3
JURISDICTION
Under 28 U.S.C. § 158(a)(1), the Panel has jurisdiction to hear appeals “from final
judgments, orders, and decrees” issued by a bankruptcy court. “Orders in bankruptcy cases qualify
as ‘final’ when they definitively dispose of discrete disputes within the overarching bankruptcy
case.” Ritzen Grp., Inc. v. Jackson Masonry, LLC, 589 U.S. 35, 37, 140 S. Ct. 582, 586 (2020)
(citing Bullard v. Blue Hills Bank, 575 U.S. 496, 501, 135 S. Ct. 1686, 1691 (2015)). Orders that
“fully dispose of the adversary proceeding” are final. Church Joint Venture, L.P. v. Bedwell (In re
Blasingame), 598 B.R. 864, 868 (B.A.P. 6th Cir. 2019); see also Geberegeorgis v. Gammarino (In
re Geberegeorgis), 310 B.R. 61, 63 (B.A.P. 6th Cir. 2004) (“[A]n order that concludes a particular
adversarial matter within the larger case should be deemed final and reviewable in a bankruptcy
setting.” (citations omitted)).
Here, the orders and judgments on appeal are “procedurally complete and determinative of
[the parties’] substantive rights.” Smith v. U.S. Bank Nat’l Assoc. (In re Smith), No. 19-8021, 2019
WL 4271977, at *2 (B.A.P. 6th Cir. Sept. 10, 2019) (quoting Ritzen Grp., Inc. v. Jackson Masonry,
LLC (In re Jackson Masonry, LLC), 906 F.3d 494, 501 (6th Cir. 2018), aff’d, 589 U.S. 35, 37)).
Additionally, Appellant raises issues on appeal concerning the bankruptcy court’s evidentiary
ruling regarding the admissibility of deposition testimony. “[I]t is well settled in this circuit that
an appeal from a final judgment draws into question all prior non-final rulings and orders.” In re
Blasingame, 598 B.R. at 868 (quoting Cattin v. Gen. Motors Corp., 955 F.2d 416, 428 (6th Cir.
1992)).
STANDARD OF REVIEW
A determination of the dischargeability of a debt presents mixed questions of law
and fact. Kraus Anderson Cap., Inc. v. Bradley (In re Bradley), 507 B.R. 192, 196
(B.A.P. 6th Cir. 2014). The appellate court “must break it down into its constituent
parts and apply the appropriate standard of review for each part.” Id. (citing Bank
of Montreal v. Off. Comm. of Unsecured Creditors (In re Am. HomePatient, Inc.),
420 F.3d 559, 563 (6th Cir. 2005) (citations omitted)). Legal determinations are
reviewed de novo and factual findings are reviewed under the clearly erroneous
standard. Bradley, 507 B.R. at 196. “Mixed questions are not all alike.” U.S. Bank
N.A., Trustee ex rel. CWCapital Asset Mgmt. v. Vill. at Lakeridge, LLC, 583 U.S.
387, 395-96, 138 S. Ct. 960, 967 (2018). “[T]he standard of review for a mixed

Nos. 24-8023/25-8002 In re Bailey Page 4
question all depends—on whether answering it entails primarily legal or factual
work.” Id.
Doe v. Boland (In re Boland), 596 B.R. 532, 537 (B.A.P. 6th Cir. 2019). “Under a de novo standard
of review, the reviewing court decides an issue independently of, and without deference to, the
trial court’s determination.” Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R.
798, 800 (B.A.P. 6th Cir. 2007) (citation omitted). A factual finding “is clearly erroneous when
although there is evidence to support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.” Bradley, 507 B.R. at 196
(quoting Riverview Trenton R.R. Co. v. DSC, Ltd. (In re DSC, Ltd.), 486 F.3d 940, 944 (6th Cir.
2007)). If a bankruptcy court’s factual conclusion is “plausible in light of the record viewed in its
entirety, the court of appeals may not reverse it[.]” Anderson v. City of Bessemer City, N.C., 470
U.S. 564, 574, 105 S. Ct. 1504, 1511 (1985). Further, the appellate court cannot find clear error
when “there are two permissible views of the evidence,” even if the appellate court might have
“weighed the evidence differently.” King v. Zamiara, 680 F.3d 686, 694 (6th Cir. 2012) (citation
omitted)).
Concerning Appellant’s challenge to the bankruptcy court’s denial of the motion for relief
from the automatic stay, the Panel must apply the abuse-of-discretion standard. State Bank of
Florence v. Miller (In re Miller), 513 F. App’x 566, 570 (6th Cir. 2013) (“We review the
bankruptcy court’s decision to deny relief from the automatic stay for an abuse of discretion.”
(citation omitted)).
FACTS
Steven Bailey (“Debtor” or “Steven”) and Rebecca Bailey (“Appellant” or “Rebecca”)
were married on December 24, 1980. While married, the couple owned and operated Tri-State
Roofing and Remodeling, Inc. (“Tri-State”). In 2013, Steven initiated divorce proceedings, which
ended up being contentious. While the divorce was proceeding, Steven remained in possession
and control of the business and was ordered by the state court to place business income in “the

Nos. 24-8023/25-8002 In re Bailey Page 5
business account.”4 (Order, Adv. P. 22-01001, ECF No. 112-1 (“Restraining Order”).) Steven did
not comply with the Restraining Order and was held in contempt of court by the state court. At the
conclusion of the divorce case in August 2016, the state court held that Steven had used
approximately $320,000.00 that should have been segregated in the business account. The state
court awarded Rebecca a judgment in the amount of $160,000.00 representing half of the business
income while the divorce was pending (“$160,000 Judgment”). Steven appealed, and the
Kentucky Court of Appeals affirmed the judgment.
In February 2022, Steven filed a chapter 13 bankruptcy petition in the Eastern District of
Kentucky. In his chapter 13 bankruptcy case, Steven scheduled the debt owed to Rebecca as
unsecured.5 Rebecca filed a proof of claim and an objection to the Debtor’s chapter 13 plan and
initiated an adversary proceeding asserting that the debt should be held nondischargeable. Rebecca
asserted that the $160,000 Judgment6 arose from defalcation while acting as a fiduciary, and/or
embezzlement, and/or spousal support making it nondischargeable.
Proceedings Reviewed in the 2023 Appeal
The bankruptcy court granted Steven’s motion for judgment on the pleadings on September
26, 2022, dismissing some of Rebecca’s claims. (Mem. Op. and Order Granting Motion for J. on
the Pleadings in Part & Denying M. for Partial Summ. J. (“September 26, 2022 Opinion”), Adv.
P. 22-01001, ECF No. 54.) In the September 26, 2022 Opinion, the bankruptcy court held that
Rebecca had not stated a claim under § 523(a)(5) because the $160,000 Judgment was not labeled
as a support obligation and the divorce decree did not show any indication that it was intended as
support, such as being contingent upon any subsequent events. (Id. at 5.) The bankruptcy court
also dismissed Rebecca’s claim under § 523(a)(4) that the $160,000 Judgment was
4Appellant uses the term “business account” for the Tri-State account into which the state court ordered
Debtor to deposit all proceeds received by either party for Tri-State. (See Appellant’s Br. at 4.)
5The confirmed plan, however, treated Rebecca’s claim as secured by a judicial lien to the extent of
$95,509.32 after avoidance of the portion that impaired Steven’s exemption. (Agreed Order Confirming Amended
Chapter 13 Plan Filed March 28, 2024 (“Order Confirming Plan”), Case No. 22-10013, ECF No. 161; Amended
Chapter 13 Plan at 4, Case No. 22-10013, ECF No. 123.) Steven’s answer to Rebecca’s complaint noted that his then-
unconfirmed plan proposed to pay a portion of the debt to Rebecca as secured.
6Rebecca’s claim included 6% post-judgment interest on the $160,000 Judgment.

Nos. 24-8023/25-8002 In re Bailey Page 6
incurred through “fraud or defalcation while acting in a fiduciary capacity or larceny.” (Id.) The
bankruptcy court determined that the complaint did not allege any facts supporting the existence
of an express trust or a trust res and, thus, Steven did not have the fiduciary duty required for a
finding of defalcation. (Id. at 6.) The bankruptcy court also held that the complaint did not allege
that the funds “wrongfully came into the debtor’s possession” and, therefore, could not support a
cause of action for larceny. (Id. at 7.) The bankruptcy court, however, found that the complaint
sufficiently alleged a plausible claim for embezzlement and denied Steven’s motion. (Id. at 7-8.)
The bankruptcy court then denied Rebecca’s motion for summary judgment on the embezzlement
claim because genuine issues of material fact existed concerning Steven’s alleged fraudulent
intent. (Id. at 8-9.)7
Rebecca did not attend the November 30, 2022 trial due to illness.8 The court heard
testimony only from Steven on that day. The bankruptcy court offered Rebecca the opportunity
to submit further evidence or put on further proof, but she declined. (See Tr. Nov. 30, 2022 H’rg
at 55:23-56:3, Adv. P. 22-01001, ECF No. 92; Status Report, Adv. P. 22-01001, ECF No. 75.)
The bankruptcy court closed the evidence on December 16, 2022, and deemed the matter
submitted.
The bankruptcy court then entered its December 21, 2022 Opinion, which included the
summary judgment determinations not relevant to the current appeals, as well as judgment for
Steven on the embezzlement count, finding that Rebecca had not carried her burden of proof at
trial to show a fraudulent intent on Steven’s part. (Adv. P. 22-01001, ECF No. 77 at 9-14.)
Rebecca filed an appeal, which was argued before the Bankruptcy Appellate Panel on November
7, 2023. On April 8, 2024, the Panel issued an opinion affirming in part but reversing as to the
judgment on the pleadings relative to the § 523(a)(4) claim for defalcation and the § 523(a)(5)
claim.
7The bankruptcy court also denied Rebecca’s motion for summary judgment on a purported § 523(a)(6)
claim, finding that the complaint did not assert a § 523(a)(6) cause of action and that a prior motion to amend the
complaint had previously been denied. (Id. at 9.)
8Rebecca has since passed away. Her personal representative has been substituted as Appellant on behalf of
Rebecca’s estate.

Nos. 24-8023/25-8002 In re Bailey Page 7
Proceedings on Remand
After the BAP remanded for further proceedings on the § 523(a)(4) and (a)(5) claims, the
bankruptcy court conducted a trial on August 14, 2024. The bankruptcy court determined that
Rebecca had not carried her burden of proving that the $160,000 Judgment should be deemed
nondischargeable under either § 523(a)(4) or (a)(5). Rebecca filed a timely appeal. (Case No. 24-
8023.)
Following the bankruptcy court’s post-remand trial decision, Rebecca sought relief from
the automatic stay in the bankruptcy case to pursue a setoff. In her motion, Rebecca asserted that
the April 8, 2024 BAP opinion gave her setoff rights. While the motion for relief from the
automatic stay was pending, the court conducted a hearing and entered the Order Confirming Plan
on November 18, 2024. (Case No. 22-10013, ECF No. 161.) On December 2, 2024, Rebecca
timely moved to amend the Order Confirming Plan.
On December 18, 2024, the bankruptcy court entered an Order Denying Motion to Amend
Judgment. (Case No. 22-10013, ECF No. 178.) Also on December 18, 2024, the bankruptcy court
entered an Order Denying Creditor’s Motion for Relief from the Automatic Stay and Granting
Debtor’s Motion to Compel9 (“Order Denying Relief”), which denied Rebecca’s request for stay
relief because she “failed to provide a developed legal argument as to either (a) the standard
applicable to motions to modify the automatic stay, or (b) the existence of her setoff right under
nonbankruptcy law.”10 (Order Denying Relief at 2, Case No. 22-10013, ECF No. 177.) Rebecca
filed another timely appeal. (Case No. 25-8002.)
9The bankruptcy court granted Debtor’s request to require Rebecca to transfer to Steven the real property
against which she sought to pursue setoff. (Order Denying Relief at 6-7, Case No. 22-10013, ECF No. 177.)
10The bankruptcy court held that § 362(b)(2)(A)(ii) contains an express exception to the automatic stay which
allows a creditor to return to state court to establish or modify a domestic support obligation. (Order Denying Relief
at 1, Case No. 22-10013, ECF No. 177.) Thus, the court held that it did not need to modify the stay to allow such
action. (Id.) Nothing in the record suggests that Rebecca filed anything in the state court seeking to modify the
domestic support obligation.

Nos. 24-8023/25-8002 In re Bailey Page 8
DISCUSSION
Case No. 24-8023
I. Defalcation Under § 523(a)(4)
After remand from the BAP, Rebecca filed a motion for partial summary judgment on the
§ 523(a)(4) claim, arguing that the terms of the Restraining Order and the divorce decree
established the elements for finding fraud or defalcation in a fiduciary capacity. Steven argued
that the BAP opinion only addressed whether a ruling on the pleadings was appropriate and
asserted that the bankruptcy court’s original holdings were still relevant and applicable. At a pre-
trial conference, the bankruptcy court instructed the parties to address whether the Restraining
Order created an express trust under Kentucky law. (Aug. 7, 2024 H’rg at 2:45-4:20, Adv. P. 22-
01001, ECF No. 122.) The bankruptcy court heard oral argument on the motion for summary
judgment but reserved its ruling and conducted a trial. After trial, at which only Steven testified
and Rebecca did not attend, the bankruptcy court found that the Restraining Order, on which
Rebecca had relied almost exclusively, did not create an express or technical trust under Kentucky
law.
Section 523(a)(4) renders nondischargeable any debt “for fraud or defalcation while acting
in a fiduciary capacity, embezzlement or larceny.” 11 U.S.C. § 523(a)(4). “To except a debt from
discharge as a defalcation, the preponderance of the evidence must establish ‘(1) a preexisting
fiduciary relationship, (2) a breach of that fiduciary relationship, and (3) a resulting loss.’” Long
v. Piercy (In re Piercy), 21 F.4th 909, 926 (6th Cir. 2021) (quoting Bd. of Trs. of the Ohio
Carpenters’ Pension Fund v. Bucci (In re Bucci), 493 F.3d 635, 639 (6th Cir. 2007) (quoting
Commonwealth Land Title Co. v. Blaszak (In re Blaszak), 397 F.3d 386, 390 (6th Cir. 2005))).
The “fiduciary capacity” requirement will be found only in “situations involving an express or
technical trust relationship arising from placement of a specific res in the hands of the debtor.” In
re Blaszak, 397 F.3d at 391 (citation omitted). To establish an express trust, a plaintiff must show
the following: “(1) an intent to create a trust; (2) a trustee; (3) a trust res; and (4) a definite
beneficiary.” Id. (citations omitted).

Nos. 24-8023/25-8002 In re Bailey Page 9
At trial, the bankruptcy court observed Steven (the only witness) “to be a reluctant witness
who distrusted Plaintiff’s counsel . . . but otherwise found his testimony credible.” (Mem. Op.
Granting J. to Def. (“Sept. 2024 Mem. Op.”) at 11, Adv. P. 22-01001, ECF No. 131, Sept. 19,
2024.) Ultimately, as to Appellant’s § 523(a)(4) claim, the bankruptcy court held:
The summary judgment and trial record established that [Steven] operated Tri-State
and received business proceeds that he did not deposit into a Tri-State account as
the 2013 Restraining Order required. Further, as the family court held in 2016 that
[Rebecca] was entitled to receive half the proceeds that should have been deposited
in Tri-State’s account during the divorce proceedings, and [Rebecca] did not
receive these funds, [Rebecca] also proved [Steven’s] failure to deposit the funds
ultimately resulted in her loss. But [Rebecca] did not establish that a fiduciary
relationship existed between [Rebecca] and [Steven] based on a trust imposed on
the business proceeds.
(Id. at 14-15.)
The bankruptcy court reviewed the text of the Restraining Order, which Rebecca argued
created a trust. The Restraining Order provided that the funds in Tri-State’s accounts “shall remain
there until further orders of the Court.” (Restraining Order at 3, Adv. P. 22-01001, ECF No. 112-
1.) It further directed that “[n]either party shall convey, encumber, or dispose of any assets of the
parties, including but not limited to, the assets of Tri-State . . . during the pendency of this action.”
(Id.)
The bankruptcy court found that the Restraining Order did not establish a trust for three
reasons. First, the Restraining Order did not contain the words “trust,” “trustee,” “fiduciary,”
“beneficiary,” or “escrow account.” (Sept. 2024 Mem. Op. at 16.) Second, it did not state that
Rebecca or anyone else had any entitlement to any funds deposited into Tri-State’s account. (Id.)
The bankruptcy court also noted that Tri-State is (or was) a separate legal entity and that Rebecca
had not offered any proof that funds deposited into Tri-State’s account would be distributed to her
at the conclusion of the divorce proceeding. (Id.) Third, the bankruptcy court noted that “the
Restraining Order does not state [that Steven] would administer or oversee funds in the account,
i.e., serve as trustee of the trust res for a designated beneficiary.” (Id.) The bankruptcy court
concluded that “the Restraining Order itself does not provide support for at least three of the four

Nos. 24-8023/25-8002 In re Bailey Page 10
elements of an express trust under Kentucky law” and that Rebecca “did not otherwise establish
those elements with other admitted evidence.” (Id. at 17.)
Appellant attempts to discount the reasons given by the bankruptcy court for dismissing
her claim.11 Regarding the bankruptcy court’s first reason – that the Restraining Order did not
identify a trustee – Appellant argues that both Steven and Rebecca were “reciprocal or mutual
trustees” because either was required to deposit any proceeds from the business into the business
account.12 (Appellant’s Br. at 7, 9-10.) Appellant notes that the Sixth Circuit allows for dual or
joint trustees. (Id. at 10.)
In addressing the bankruptcy court’s finding that the Restraining Order did not use any
terms typically associated with a trust, such as “trustee,” “fiduciary,” “beneficiary,” or “escrow
account,” Appellant argues that the lack of these words does not “change the plain language or
obvious intent of the [R]estraining [O]rder.” (Id. at 12.) Appellant asserts on appeal that the facts
of the case establish a “technical trust” created by operation of law. (Id. at 10-11.) Citing In re
Piercy and In re Patel,13 Appellant asserts that Kentucky Revised Statutes section 403.190, which
governs division of marital property, should have been considered in addition to the Restraining
Order, arguing:
The [R]estraining [O]rder in question cannot be judged or determined solely on the
status of a restraining order but must be interpreted and considered in conjunction
with KRS 403.190 the Kentucky statute, regarding division of property, between
husband and wife, for which the Honorable Family Court Judge was using the civil
rule and trying to preserve and divide assets, and the laws regarding the duties of
corporate officers and directors, more fully set forth herein.
11Appellant’s brief asserts that the BAP’s prior opinion establishes that a trust existed and that the bankruptcy
court erred by disregarding “the law of the case.” (Appellant’s Br. at 8.) This argument fails. The BAP’s prior
opinion did not find that a trust existed. Rather, it held that the failure to establish or fund a specific account did not
prevent a trust from existing. The Panel remanded the case for further findings because judgment on the pleadings
was inappropriate given that legal error, and because it was error for the bankruptcy court “to decide the existence of
or intent to create a trust without reviewing or relying on the document purporting to create the trust.” Bailey v. Bailey
(In re Bailey), No. 23-8001, 2024 WL 1511984, at *9 (B.A.P. 6th Cir. Apr. 8, 2024).
12The concept that they were both trustees appears to be a new argument not previously raised to the
bankruptcy court. The previous filings appear to refer to only Steven as the trustee.
13Appellant’s Brief incorrectly cites In re Patel. The correct citation is Patel v. Shamrock Floorcovering
Servs., Inc. (In re Patel), 565 F.3d 963 (6th Cir. 2009).

Nos. 24-8023/25-8002 In re Bailey Page 11
(Id. at 12.) Appellant explains further that a technical trust arose out of Steven and Rebecca’s
status as corporate officers in Tri-State. (Id. at 13.) Appellant points to Kentucky Revised Statutes
sections 271B.8-300 and 271B.8-420, which govern standards of conduct for directors of a public
benefit corporation14 and officers of a private corporation or association, respectively, asserting
that the statutes create a fiduciary duty to preserve all partnership assets. (Id.)
Appellant failed to raise this argument to the bankruptcy court. Indeed, the bankruptcy
court noted that “Plaintiff never alleged or attempted to prove that a statute (state or federal) created
a technical trust.” (Sept. 2024 Mem. Op. at 18.) Neither the summary judgment brief, the trial
brief, nor the trial transcript contain any argument that either of the now-cited statutes created a
trust or a fiduciary duty. The only reference to any statutory authority concerning a trust was at
the trial, when Appellant’s counsel argued: “And that’s what we have in this case. We have, we
believe, a trust created by operation of law because you have – and that law being Kentucky’s
rules regarding temporary injunctions, Kentucky’s rules regarding corporate officers, their duty to
the corporation.” (Tr. Aug. 14, 2024 H’rg at 13:8-12, Adv. P. 22-01001, ECF 156 (emphasis
added)). Notwithstanding that the sole argument in the trial brief was that the state court order
“clearly created the trust,” not that a statute created a trust (Pl.’s Trial Br. at 5 ¶ 1, Adv. P. 22-
01001, ECF No. 121), Appellant now argues that the bankruptcy court “erred in focusing solely
on the language of the [R]estraining [O]rder and failing to consider the underlying relationship
between the parties, their obligations to one another, and their obligations toward their business.”
(Appellant’s Br. at 14.) The perfunctory and opaque manner in which Appellant raised this
argument (only) at trial, without specifically citing the allegedly applicable Kentucky statute or
explaining how it applied to the parties (see Tr. Aug. 14, 2024 H’rg at 13:8-12, Adv. P. 22-01001,
ECF No. 156), deprives the Panel of opportunity for meaningful review. “[A]ppellate courts
ordinarily do not consider issues raised for the first time on appeal.” Nyamusevya v. CitiMortgage,
14“Public benefit corporation,” as used in section 271B.8-300, is defined as “a for-profit corporation that is
intended to produce a public benefit and to operate in a responsible manner, balancing the stockholders’ pecuniary
interests, the best interests of those materially affected by the corporation’s conduct, and the public benefit identified
in its articles of incorporation.” Ky. Rev. Stat. Ann. § 271B.1-400 (West). Because the record contains no evidence
that Tri-State was a public benefit corporation, section 271B.8-300 does not apply.

Nos. 24-8023/25-8002 In re Bailey Page 12
Inc. (In re Nyamusevya), No. 19-8027, 2021 WL 193965, at *7 (B.A.P. 6th Cir. Jan. 20, 2021)
(citations omitted). Thus, these arguments are waived.15
Lastly, Appellant asserts that the parties’ names in the caption of the Restraining Order is
a “sufficient manifestation of intent to create the status of a beneficiary to a trust[.]” (Appellant’s
Br. at 14.) Appellant cites no authority to support this assertion. Moreover, at trial, Appellant
argued that Rebecca “owned the other half of the business, and was ultimately determined by the
Family court to be entitled to half of the proceeds that should have went [sic] into that account.”
(Tr. Aug. 14, 2024 H’rg at 5:25-6:3, Adv. P. 22-01001, ECF No. 156.) Appellant did not explain
how the future determination of entitlement equates to a finding that Rebecca was an intended
beneficiary of the alleged trust at the time it was allegedly created. Appellant does not address the
language of the Restraining Order requiring both parties to preserve the business assets in business
accounts for future determination. Further, Appellant provides no evidence that Rebecca was the
intended beneficiary at the time the Restraining Order was entered. In short, Rebecca did not show
that the beneficiary requirement for the creation of an express trust was satisfied.
In the prior BAP opinion, the Panel remanded this issue because judgment on the pleadings
was not appropriate. Rather than develop an evidentiary record or raise additional arguments at
trial, Rebecca asserted that the BAP’s opinion conclusively found the existence of an express trust.
The BAP opinion, however, did not. Rebecca did not carry her burden of proof or persuasion.
The bankruptcy court’s decision is AFFIRMED.
II. Domestic Support Obligation Under § 523(a)(5)
Appellant also argues that the $160,000 Judgment owed to her is spousal support and is
nondischargeable under § 523(a)(5). Specifically, § 523(a)(5) provides:
15Even if the argument had not been waived, the Kentucky Court of Appeals has ruled that “[o]fficers and
directors owe fiduciary duties to the corporation, not the shareholders.” Gross v. Adcomm, Inc., 478 S.W.3d 396, 400
(Ky. Ct. App. 2015). Thus, the statutes cited by Appellant do not appear to create a technical trust or a fiduciary duty
between shareholders.

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(a) A discharge under section 727, 1141, 1192, 1228(a), 1228(b), or 1328(b) of this
title does not discharge an individual debtor from any debt—
. . . .
(5) for a domestic support obligation[.]
11 U.S.C. § 523(a)(5). Section 101(14A) defines a “domestic support obligation” as:
[A] debt that accrues before, on, or after the date of the order for relief in a case
under this title, including interest that accrues on that debt as provided under
applicable nonbankruptcy law notwithstanding any other provision of this title, that
is –
(A) owed to or recoverable by – (i) a spouse, former spouse, or child of
the debtor or such child’s parent, legal guardian, or responsible
relative; or (ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support . . . of such spouse,
former spouse, or child of the debtor or such child’s parent . . . ;
(C) established . . . [by] a separation agreement, divorce decree, or
property settlement agreement; [or] an order of the court of record; . . .
and
(D) not assigned to a nongovernmental entity, unless that obligation is
assigned voluntarily by the spouse, former spouse, child of the debtor,
or such child’s parent, legal guardian, or responsible relative for the
purpose of collecting the debt.
11 U.S.C. § 101(14A)(A)–(D).
In its first opinion, the bankruptcy court held that the complaint and attached documents
(including the state court divorce decree)16 “lack factual allegations which, if taken as true, would
plausibly support a finding that (1) the ‘state court or parties intended to create a support
obligation’ or (2) ‘[this] debt has ‘the actual effect of providing necessary support.’” (September
26, 2022 Op. at 5.) The bankruptcy court noted that the divorce decree awarded Rebecca monthly
maintenance payments of $250, separate from the $160,000 Judgment. The bankruptcy court also
noted that the $160,000 Judgment was “not labeled . . . as a support obligation” and “does not
make this debt contingent upon any subsequent events.” (Id. at 5.) Finally, the bankruptcy court
16The bankruptcy court noted that Rebecca’s original complaint attached several documents that were
incorporated into the complaint by reference and considered those documents in evaluating the motions before it.
(Sept. 26, 2022 Op. at 2 n.1.)

Nos. 24-8023/25-8002 In re Bailey Page 14
considered the state court’s statement that the business supported the parties during their marriage
but rejected that statement as an indication that the state court intended for the “$160,000
Judgment” to be in the nature of support. (Id.)
The bankruptcy court’s initial decision correctly recognized that the determination of
whether an award in a divorce decree is in the nature of support is not solely dependent on the
terminology used by the state court.
In Long v. Calhoun (In re Calhoun), 715 F.2d 1103, 1109-10 (6th Cir. 1983), the
Sixth Circuit enunciated a four-part analysis for making the determination whether
an obligation that was not specifically designated as alimony or maintenance was
actually in the nature of support, and thus, nondischargeable. As subsequently re-
stated in Fitzgerald:
First, the obligation constitutes support only if the state court or
parties intended to create a support obligation. Second, the
obligation must have the actual effect of providing necessary
support. Third, if the first two conditions are satisfied, the court
must determine if the obligation is so excessive as to be
unreasonable under traditional concepts of support. Fourth, if the
amount is unreasonable, the obligation is dischargeable to the extent
necessary to serve the purposes of federal bankruptcy law.
Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517, 520 (6th Cir. 1993) (citing
Calhoun, 715 F.2d at 1109-10). “The burden of demonstrating that an obligation
is in the nature of support is on the non-debtor.” Fitzgerald, 9 F.3d at 520 (citing
Calhoun, 715 F.2d at 1111).
In re Thomas, 511 B.R. 89, 95 (B.A.P. 6th Cir. 2014), aff’d, 591 F. App’x 443 (6th Cir. 2015),
cited in Sept. 26, 2022 Op. at 4-5.
After the BAP vacated the bankruptcy court’s dismissal of the § 523(a)(5) claim under
Federal Rule of Civil Procedure 12(c), the bankruptcy court held a trial to allow Rebecca to present
evidence that the state court judge intended to create a domestic support obligation in awarding
Rebecca the $160,000 Judgment. Appellant argues that under Kentucky Revised Statutes section
403.200, Kentucky law required the bankruptcy court to consider all property and monetary awards
in determining separate maintenance; ergo, any property or monetary awards are by their nature
also support awards. (Appellant’s Br. at 16 (“The Family Court Judge was required by law to

Nos. 24-8023/25-8002 In re Bailey Page 15
treat the amount of $205,000.00 to be used for the Wife’s support, and to reduce other
maintenance.” (emphasis in original)).)
A. The bankruptcy court did not abuse its discretion by refusing to admit into evidence
the state court judge’s deposition.
After remand, Rebecca took deposition testimony from the state court judge, Hon. David
Flatt, attempting to further support her argument that the amount awarded for her interest in the
business was intended to be a support obligation. (Tendered Dep., Adv. P. 22-01001, ECF No.
126-1.) Appellant asserts that “Judge Flatt’s deposition was not taken [or] tendered in an attempt
to alter or change the divorce judgment. Rather his deposition was taken to clarify the intent and
purpose of said judgment and the specific provisions therein.” (Appellant’s Br. at 17.) The
bankruptcy court, however, sustained Debtor’s objection to the admission of Judge Flatt’s
deposition testimony on parol evidence and relevance grounds. This evidentiary ruling is reviewed
for an abuse of discretion. Graf v. Morristown-Hamblen Hosp. Ass’n, 155 F.4th 578, 588 (6th Cir.
2025).
The bankruptcy court noted that Kentucky courts only use parol evidence to interpret a
writing in limited circumstances, including when ambiguity exists. (Sept. 2024 Mem. Op. at 22.)
The bankruptcy court, however, found no ambiguity in the language of the divorce decree,
noting that Rebecca “did not argue the Divorce Decree is ambiguous, while [Debtor] contended
it was unambiguous.” (Id. at 23.) Moreover, the bankruptcy court found that Rebecca had not
explained “how Judge Flatt’s testimony clarified or provided context or meaning to any
specific term in the Divorce Decree.” (Id.) Finally, the bankruptcy court stated that Rebecca “did
not argue the Divorce Decree is not a fully integrated instrument or that Judge Flatt’s
testimony offered an additional, consistent term to the Divorce Decree.” (Id.) As a result, the
bankruptcy court sustained Debtor’s objection to admission of the deposition testimony based on
the parol evidence rule. (Id. at 23-24.)
On appeal, Appellant argues that the divorce decree is incomplete because it “was not
intended to address issues of federal bankruptcy law.” (Appellant’s Br. at 18.) Appellant correctly
asserts that “[t]he document was simply intended to address a division of property and allocation
of assets under Kentucky divorce law.” (Id.) But nondischargeability under the Bankruptcy Code

Nos. 24-8023/25-8002 In re Bailey Page 16
is based on the nature of the debt created by the state divorce judgment so that the state court did
not need to “address issues of federal bankruptcy law.”
Whether an award is a “spousal support” under § 523(a)(5) is based on the nature of the
award as determined by the state court. Accordingly, Appellant’s argument on appeal that the
divorce decree is incomplete fails. Moreover, Appellant appears not to have raised this argument
to the bankruptcy court at trial. The bankruptcy court expressly noted that Appellant (1) failed to
argue that the decree was ambiguous; (2) failed to explain how the deposition testimony “clarified
or provided context or meaning to any specific term in the Divorce Decree”; and (3) failed to argue
that “the Divorce Decree is not a fully integrated instrument or that [the judge’s] testimony offered
an additional, consistent term to the Divorce Decree.” (Mem. Op. at 23.) As previously noted,
“[a]ppellate courts ordinarily do not consider issues raised for the first time on appeal.” In re
Nyamusevya, No. 19-8027, 2021 WL 193965, at *7 (B.A.P. 6th Cir. Jan. 20, 2021) (citations
omitted)).
Moreover, Appellant did not explain to the bankruptcy court or this Panel how the state
court judge’s deposition would demonstrate an intention to treat the $160,000 Judgment as spousal
support. Appellant admits that the state divorce decree “parroted and referenced various concepts
and terminology from Kentucky divorce statutes” (Appellant’s Br. at 18) but does not point to any
language in the deposition that would have provided clarification as to the nature of the $160,000
Judgment.17
Appellant has not demonstrated an abuse of discretion by the bankruptcy court in excluding
the state court judge’s deposition testimony. The bankruptcy court’s evidentiary ruling is
AFFIRMED.
17In the tendered deposition, the state court judge merely agrees that he followed Kentucky law, which
required him to consider the amount of property or assets awarded as part of a determination as to maintenance
payments. He answered “yes” to the question: “in setting the amount of maintenance by considering the fact that
[Rebecca] would have this $205,000 to apply to her support and reasonable needs, that’s really to his benefit because
it results in a lower maintenance; is that fair?” (Tendered Dep. at 12:5-11.)

Nos. 24-8023/25-8002 In re Bailey Page 17
B. The bankruptcy court’s factual findings were not clearly erroneous.
Appellant argues that the state court judge “awarded a nominal sum of maintenance in this
case . . . no doubt because, although[] surely the trial judge realized that [Rebecca] could not
survive and meet her basic needs with Two Hundred Fifty dollars ($250.00) per month, the Family
Court intended the award of $205,000.00 to be used for her maintenance and support[.]”
(Appellant’s Br. at 16.) Appellant also argues that Kentucky Revised Statutes section 403.200
required the Family Court Judge to consider property awarded in a divorce decree in allocating
maintenance and support. Appellant’s argument conflates a property settlement with support; she
asserts, without any foundation, that some part of a property settlement must be treated as support
because if it were not awarded, the maintenance award would be higher. However, a reduced
support obligation alone does not convert property distribution into a support obligation.
The bankruptcy court’s ruling noted that Rebecca did not attempt to address at trial any of
her economic or personal circumstances or how those circumstances bore on the property and
maintenance obligations in the divorce decree. (Sept. 2024 Mem. Op. at 25.) Rebecca “offered
no evidence of what the family court knew about these identified considerations when calculating
the maintenance payment.”18 (Id.) The bankruptcy court thoroughly explained what Rebecca
might have done to meet her burden:
More specifically, [Rebecca] did not introduce evidence about [her] and
[Debtor’s] respective education, professional training, or work skills and abilities,
other than that [Debtor] operated Tri-State and [Rebecca] did not. [Rebecca] did
not offer evidence of any property or other financial resources in [her] or [Debtor’s]
possession before the divorce was filed, during the divorce proceedings, or post-
divorce; thus, for example, this Court has no way to assess the import of the family
court’s award to [Rebecca] in the Divorce Decree of “all of the furnishing in the
marital residence and all other personalty of the Parties.” [Rebecca] presented no
evidence about the value of the three parcels of real property noted in the Divorce
Decree, including the 155.5 acre parcel awarded to [her] and the 20 acre parcel
18The considerations identified in the divorce decree include: “financial resources of [Plaintiff], including
the martial [sic] property apportioned to her, and her ability to meet her needs independently, the time necessary to
acquire sufficient education or training to enable [her] to find appropriate employment, the standard of living
established during the marriage, the duration of the marriage, the age and the physical and emotion condition of
[Plaintiff], and the ability of [Defendant] to meet his needs while meeting those of the spouse seeking maintenance.”
(Id. (quoting the divorce decree).) Notably, the excluded deposition testimony of the state court judge also did not
address these considerations. (See generally Depo. of David Flatt, Adv. P. No. 22-01001, ECF No. 126-1.)

Nos. 24-8023/25-8002 In re Bailey Page 18
ordered to be sold with the proceeds to be split between the parties. [Rebecca]
provided no proof of her income, expenses, or standard of living, at any time before
or after [she] and [Debtor] stopped cohabiting and their divorce proceedings began.
Thus, [Rebecca] did not offer sufficient evidence to explain the disparity of earning
power between [her] and [Debtor], her need for economic support and stability, and
whether the lump sum awards pertaining to their joint business would have had the
actual effect of providing necessary support to [Rebecca].
(Id. at 26 (citations omitted).)
On appeal, Appellant has failed to contradict the bankruptcy court’s conclusions about the
dearth of evidence. Instead, Appellant asserts that because Kentucky law requires consideration
of property awarded before maintenance is awarded, the property distribution award must be for
support, at least in part. (Appellant’s Br. at 16.) Without evidence, however, the bankruptcy court
was unable to determine what, if any, part of the property award might have been necessary for
Rebecca’s support. The Panel finds no clear error in the bankruptcy court’s determination.
Rebecca simply failed to carry her burden of proof. Accordingly, the bankruptcy court’s
determination that Rebecca did not prove that the debt was a support obligation is AFFIRMED.
Case No. 25-8002
I. Relief from the Automatic Stay
In the second appeal, Appellant argues that the bankruptcy court erred in overruling and
denying her motion for relief from stay to carry out setoff. Specifically, Appellant argues that
there is a presumption of setoff and that there was no assertion or suggestion that any other creditor
would be prejudiced by Appellant’s claim of setoff. (Appellant’s Br. at 19-20.)
The bankruptcy court’s factual findings are reviewed for clear error and its legal
conclusions de novo. The bankruptcy court’s decision to deny relief from the automatic stay is
reviewed only for an abuse of discretion. See Baxter v. Sarmadi, 602 F. App’x 322, 324 (6th Cir.
2015).
Under 11 U.S.C. § 362(d)(1) a party in interest may obtain relief from stay by
showing “cause,” including the lack of adequate protection in property of such a
party in interest. “Cause” for relief from stay is not defined by § 362(d)(1).
Therefore, “courts must determine whether discretionary relief is appropriate on a
case-by-case basis.” Laguna Assocs. Ltd. P’ship v. Aetna Cas. & Sur. Co. (In re

Nos. 24-8023/25-8002 In re Bailey Page 19
Laguna Assocs. Ltd. P’ship), 30 F.3d 734, 737 (6th Cir. 1994) (citing Indus. Ins.
Servs., Inc. v. Zick (In re Zick), 931 F.2d 1124, 1129 (6th Cir. 1991)).
State Bank of Florence v. Miller (In re Miller), 459 B.R. 657, 676 (B.A.P. 6th Cir. 2011), aff’d,
513 F. App’x 566 (6th Cir. 2013).
Appellant’s motion for relief from the automatic stay sought relief to take two actions.
First, the stay relief motion sought an adjustment of Debtor’s domestic support obligation.19
Second, the motion sought to pursue any setoff rights she may have by taking possession of real
property deeded in her name but which Debtor uses as his residence, located at 631 Wampler
Branch, Greenup, Kentucky (the “Property”). Regarding the request to pursue setoff, Rebecca
argued that a right to setoff existed, citing cases in which the right to setoff exists, but she did not
explain why she was entitled to relief from the stay. The bankruptcy court noted that the
motion did not discuss § 362(d). (Order Denying Relief at 3, Case No. 22-10013, ECF No. 177.)
Appellant fails to address this conclusion in her appellate brief. Instead, Appellant focuses on her
arguments that a right to setoff exists, without pointing the Panel to where she explained why she
was entitled to stay relief.
As the BAP has previously explained secured creditors are not entitled to relief from the
stay simply by virtue of their secured status, without demonstrating that cause for relief from the
automatic stay exists.
In support of its motion, the IRS argues that the mere existence of its right to setoff
tax overpayments against tax liabilities, 26 U.S.C. § 6402(a), which is preserved in
bankruptcy cases under § 553(a), constitutes cause for relief from stay under
§ 362(d)(1). See, e.g., In re Whitaker, 173 B.R. 359 (Bankr. S.D. Ohio 1994);
United States v. Orlinski (In re Orlinski), 140 B.R. 600, 604 (Bankr. S.D. Ga. 1991)
(both granting postconfirmation relief from stay to permit the exercise of setoff
rights). But cf. United States v. Johnson (In re Johnson), 136 B.R. 306 (Bankr.
M.D. Ga. 1991) (confirmed plan precludes IRS from exercising setoff right so long
as IRS is adequately protected). However, notwithstanding reported decisions that
have accepted the IRS’s argument, the proposition that the mere existence of a
right to setoff is cause for relief from stay is a tenuous one at best. As noted by
the bankruptcy court, “[s]etoff, in effect, elevates an unsecured claim to secured
19As to the first request for relief, the bankruptcy court found that it need not modify the stay because there
is an express exception to the automatic stay which applies to the requested relief. See 11 U.S.C. § 362(b)(2)(A)(ii).
Appellant does not challenge this conclusion.

Nos. 24-8023/25-8002 In re Bailey Page 20
status.” Univ. Med. Ctr. v. Sullivan (In re Univ. Med. Ctr.), 973 F.2d 1065, 1079
(3d Cir. 1992) (citing Lee v. Schweiker, 739 F.2d 870, 875 (3d Cir. 1984)); see
11 U.S.C. § 506(a). Yet secured creditors are not entitled to relief from stay
simply by virtue of their secured status. They still must demonstrate cause to
lift the stay.
I.R.S. v. Shultz (In re Shultz), No. 05-8038, 2006 WL 1407466, at *4, 347 B.R. 115 (Table) (B.A.P.
6th Cir. 2006) (emphases added). Therefore, even if Appellant could prove that a right to setoff
exists, she still has not carried her burden of proving that the bankruptcy court erred in denying
relief from stay because she needs to show more than a right to setoff – she needs to show that
there is cause for relief from the stay. The bankruptcy court’s Order Denying Relief from the Stay
is AFFIRMED.
II. Rebecca’s Claim to Setoff
A. The bankruptcy court did not err in ruling that Rebecca failed to prove that setoff
is appropriate.
Addressing the focus of Appellant’s argument concerning setoff, she simply did not prove
that she has a right to set off debt against property. The bankruptcy court found that Appellant
“simply declares she is entitled to this relief. She failed to provide a developed legal argument as
to either (a) the standard applicable to motions to modify the automatic stay, or (b) the existence
of her setoff right under nonbankruptcy law.” (Order Denying Relief at 2, Case No. 22-10013,
ECF No. 177.)
In her appellate brief, Appellant points to the transcript from the December 11, 2024
hearing on the motion for relief from stay. (Appellant’s Br. at 19.) Appellant notes that she cited
several cases to the bankruptcy court and that Debtor conceded that a right to setoff exists under
Kentucky law. (Id.) To the bankruptcy court and on appeal, Appellant argues that there is a
presumption in favor of allowing setoff and that it should be liberally allowed.
Section 553 states that “this title does not affect any right of a creditor to offset a
mutual debt owing by such creditor to the debtor that arose before the
commencement of the case under this title against a claim of such creditor against
the debtor that arose before the commencement of the case . . . .” According to this
provision, a creditor can offset its losses against its profits when the creditor and
debtor have mutual, pre-petition obligations.

Nos. 24-8023/25-8002 In re Bailey Page 21
Ky. Cent. Ins. Co. v. Brown (In re Larbar Corp.), 177 F.3d 439, 445 (6th Cir. 1999) (alteration in
original).
A setoff is defined as “[a] debtor’s right to reduce the amount of a debt by any sum
the creditor owes the debtor; the counterbalancing sum owed by the creditor.”
Black’s Law Dictionary 1496 (9th ed. 2009). It “allows entities that owe each other
money to apply their mutual debts against each other, thereby avoiding ‘the
absurdity of making A pay B when B owes A.’” Citizens Bank of Md. v. Strumpf,
516 U.S. 16, 18, 116 S. Ct. 286, 289 (1995) (quoting Studley v. Boylston Nat’l Bank,
229 U.S. 523, 528, 33 S. Ct. 806, 808 (1913)). The right of setoff is recognized by
11 U.S.C. § 553[.]
In re Miller, 459 B.R. at 675 (citation modified).
Appellant points to cases that she asserts hold that setoff should be liberally applied.
(Appellant’s Br. at 19.) Appellant, however, does not explain how those cases apply here; she
does not explain the factual patterns or the legal conclusions of those cases or how they relate to
the present case. The only legal point she attempts to argue in her approximately two pages of
argument is that a setoff in this case would not prejudice other third-party creditors because she is
the “only creditor who is significantly affected by this Bankruptcy at all.” (Appellant’s Br. at 20.)
She simply does not develop her argument.
Appellant failed to explain to the bankruptcy court – nor does she attempt to explain to this
Panel – how her obligation to sign the deed over to Debtor as required by the divorce decree is a
mutual obligation of debt, juxtaposed with Debtor’s requirement to pay her the $160,000 Judgment
awarded in the divorce decree. Instead, Appellant relies heavily on the concurrence by Judge
Dales in the BAP’s prior opinion; however, nothing in that concurring opinion establishes that
Appellant is entitled to a setoff. First, Judge Dales’s concurrence specifically acknowledges that
it is dicta. Bailey v. Bailey (In re Bailey), No. 23-8001, 2024 WL 1511984, at *19 (B.A.P. 6th Cir.
Apr. 8, 2024) (Dales, J., concurring) (“I join the balance of the Panel’s decision but write separately
to offer observations (admittedly in dicta) that have no place in the main opinion.”). Moreover,
on remand, a concurring opinion is not binding on the bankruptcy court. See Frasier v. Evans,
992 F.3d 1003, 1017 (10th Cir. 2021) (citation omitted) (“[A] concurring opinion is not binding
on us’—even one from a Supreme Court Justice—and, therefore, such an opinion is relevant only
insofar as its analysis is ‘persuasive.”); United States v. Duvall, 740 F.3d 604, 610 (D.C. Cir. 2013)

Nos. 24-8023/25-8002 In re Bailey Page 22
(“Justices who join the majority may of course express additional thoughts in a concurrence, but
concurrences do not bind lower courts in cases where there is a majority opinion.”) (Kavanaugh,
J., concurring).
Regardless of the deficiency of Appellant’s arguments on appeal, the bankruptcy court did
not err in holding that Appellant did not establish that she has a right to setoff under non-
bankruptcy law. The bankruptcy court correctly held that Appellant not only failed to demonstrate
a right to setoff, but also failed to offer a sufficient factual basis to show why the bankruptcy court
should exercise its discretion to allow a setoff under the relevant circumstances. (See Order
Denying Relief at 6.) The bankruptcy court noted that, under the Confirmed Plan, Appellant
retains her lien against the Property and will receive nearly $110,000 through the Plan. (Id.) In a
footnote, the bankruptcy court also noted that “[w]hile [Rebecca] failed to show she has a valid
right of setoff, if later she can establish a legal and factual basis under which such a right exists,
§ 553 will protect it.” (Id. at 6 n.2.) The bankruptcy court’s order regarding setoff is AFFIRMED.
B. The bankruptcy court did not rule that the Confirmed Plan precluded any right
to setoff.
Appellant asserts that the bankruptcy court erred in finding that confirmation of the chapter
13 plan prevented or superseded the right to setoff, listing the following issues:
• The Honorable Trial Court erred in finding that set off could not be allowed
after confirmation and therefore denying the Appellant set off.
• The Honorable Trial Court erred in finding and holding that confirmation of a
proposed plan prevented the Court from granting relief from the stay for
purpose of set off especially when the confirmation order was not final, as a
timely motion pursuant to Rule 59 had been filed, with regard to the order
confirming plan.
• The Honorable Trial Court erred in ruling that the Appellant’s statutory rights
to set off could be prevented or superseded by a provision of the debtor’s
proposed plan.
(Appellant’s Br. at 1-2.)
Appellant’s characterization of the bankruptcy court’s ruling is misleading. The
bankruptcy court did not hold that the right to setoff was superseded by plan confirmation, nor did

Nos. 24-8023/25-8002 In re Bailey Page 23
the bankruptcy court hold that the setoff was barred by plan confirmation. Rather, as discussed
supra, the bankruptcy court specifically noted that even following plan confirmation, if Rebecca
could establish a legal and factual basis under which such a setoff right exists, § 553 will protect
it. (Order Denying Relief at 6 n.2.)
III. Appeal of the Confirmation Order and Motion to Reconsider or Modify the
Confirmation Order
Although Appellant’s notice of appeal identifies the Agreed Order Confirming Chapter 13
Plan (Case No. 22-10013, ECF No. 161) and the Order Denying Motion to Amend Judgment (Case
No. 22-10013, ECF No. 178) as orders being appealed, Appellant’s brief does not mention,
discuss, or develop any arguments regarding either. Neither the brief nor the reply brief mentions
the standards applicable to either plan confirmation or to amend a judgment under Rule 9023.
Accordingly, those issues are waived on appeal.
IV. Appeal of the Order Requiring Rebecca to Execute a Deed to Debtor
Finally, Appellant argues that the bankruptcy court erred in its Order Denying Relief by
requiring Rebecca to execute a deed to convey the Property to Debtor as required by the divorce
decree and in compliance with the confirmed plan. The bankruptcy court explained that Rebecca’s
response to Debtor’s motion to compel her to transfer the Property in compliance with the
confirmed plan “offer[ed] neither legal authority nor any reasoned analysis to establish she does
not have to comply with the Plan and Confirmation Order.” (Order Denying Relief at 7, Case No.
22-10013-dll, ECF No. 177.) Because Rebecca had not shown she was entitled to stay relief and
could not rely on any right to setoff to justify her refusal to execute the deed, the bankruptcy court
granted Debtor’s motion to compel. (Id.) The bankruptcy court also pointed to the confirmed plan
as grounds to require Rebecca to execute the deed.20 (Id. (citing 11 U.S.C. § 1327; In re Crady,
No. 05-54401, 2006 WL 3876503, at *3 (Bankr. E.D. Ky. July 14, 2006) (citing Salt Creek Valley
Bank v. Wellman (In re Wellman), 322 B.R. 298, 301 (B.A.P. 6th Cir. 2004))).)
20See also United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 275, 130 S. Ct. 1367, 1380 (2010)
(finding a confirmation order “enforceable and binding” on a creditor notwithstanding legal error when the creditor
“had notice of the error and failed to object or timely appeal”).

Nos. 24-8023/25-8002 In re Bailey Page 24
Appellant’s sole argument on appeal on this issue is that Rebecca was entitled to offset the
Property against the debt owed by Debtor to Rebecca. (Appellant’s Br. at 28.) Because Appellant
has failed to show that any mutual debt existed for setoff, as explained above, the bankruptcy
court’s order requiring Rebecca to execute the deed is AFFIRMED.
CONCLUSION
Appellant did not develop legal arguments to support many of her issues raised on appeal.
This followed a similar failure in the bankruptcy court, where she made conclusory arguments that
were unsupported by either factual development or legal reasoning. It is well established that the
Panel does not rule on issues that were not properly addressed to the trial court and those which
are not properly raised on appeal.
“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at
developed argumentation, are deemed waived. It is not sufficient for a party to
mention a possible argument in the most skeletal way, leaving the court to . . . put
flesh on its bones.” McPherson v. Kelsey, 125 F.3d 989, 995-96 (6th Cir. 1997)
(alteration in original) (quoting Citizens Awareness Network, Inc. v. United States
Nuclear Regulatory Comm’n, 59 F.3d 284, 293-94 (1st Cir. 1995)).
Est. of Barnwell v. Grigsby, 801 F. App’x 354, 372 (6th Cir. 2020); see also In re Prather, No. 18-
8037, 2019 WL 3714971, at *4 (B.A.P. 6th Cir. Aug. 7, 2019) (“To evaluate an argument on the
merits concerning the [issues] would require the Panel to create that argument for Debtor out of
whole cloth. The Panel will not engage in that exercise.”)
Having fully reviewed Appellant’s briefs and the arguments presented, the Panel finds no
error. The bankruptcy court orders listed in both notices of appeal are AFFIRMED.