James Thomas, et al v. Jennifer Clark

Filing

OPINION filed : The bankruptcy court's judgment is AFFIRMED. Decision not for publication. Jeffrey S. Sutton; David W. McKeague; and Raymond M. Kethledge (AUTHORING), Circuit Judges.

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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0028n.06
No. 14-5735

FILED

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

Jan 08, 2015
DEBORAH S. HUNT, Clerk

In re: JAMES ALBERT THOMAS; REBECCA )
MARIE THOMAS,
)
)
Debtors.
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----------------------------------------------------------------- )
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JAMES ALBERT THOMAS; REBECCA MARIE )
THOMAS,
)
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Appellants,
)
v.
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JENNIFER CLARK,
)
)
Appellee.
)

ON APPEAL FROM THE
BANKRUPTCY APPELLATE
PANEL OF THE SIXTH
CIRCUIT

Before: SUTTON, McKEAGUE, and KETHLEDGE, Circuit Judges.
KETHLEDGE, Circuit Judge. James and Rebecca Thomas appeal the bankruptcy court’s
determination that certain debts James owes to his ex-wife Jennifer Clark are domestic-support
obligations and therefore nondischargeable in bankruptcy. We affirm.
James Thomas (hereafter “Thomas”) and Jennifer Clark married in 1995 and had two
children together. In 1999, they bought a family home in Ironton, Ohio with a loan secured by a
mortgage. They took out a second mortgage on the house in 2001. In 2003, they divorced in
Ohio state court. The divorce decree required Thomas to pay Clark $510 per month in child
support, and to convey to Clark his interest in the family home. The decree also required Clark

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Thomas v. Clark
to pay both mortgages on the home, but did not otherwise require Thomas or Clark to pay
spousal support.
Thomas and Clark remarried each other a year later, but divorced again in 2007. The
second divorce decree gave Clark primary custody of the children, required Thomas to pay Clark
$369 per month in child support, and required Clark to pay the first mortgage. In addition, this
decree required Thomas and Clark to make equal payments on the second mortgage, but
provided that Clark would receive all proceeds from a sale of the home. As with the first
divorce, neither spouse owed the other spousal support.
Thomas did not make any payments on the second mortgage. Just over a year after the
second divorce, Clark sold the family home. At that point, Clark discovered that a company
called Auto Now had a judgment lien on the home because Thomas had failed to make payments
on his car. Clark used all of the sale proceeds to pay off Auto Now’s lien as well as the first and
second mortgages.
Clark later sued Thomas through the divorce action to collect on various debts, including
past-due child support.

The court noted that Thomas had caught up on his child-support

payments, but ordered Thomas to reimburse Clark for his share of the second mortgage ($7,500)
and for the judgment lien ($5,000). R. 52 at 38.
Rather than reimburse Clark, however, Thomas and his second wife Rebecca filed a joint
petition for Chapter 13 bankruptcy. Clark filed a proof of claim for $12,500—the amount of the
mortgage and lien debts. Thomas and his wife objected, arguing that the claim improperly
treated those debts as domestic-support obligations, which are nondischargeable in bankruptcy
under 11 U.S.C. § 523(a)(5). The bankruptcy court held a hearing and ruled that the debts were

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domestic-support obligations. The Bankruptcy Appellate Panel of the Sixth Circuit affirmed.
This appeal followed.
Although our review follows that of the Bankruptcy Appellate Panel, we review the
bankruptcy court’s decision. See In re United Producers, Inc., 526 F.3d 942, 946 (6th Cir.
2008). We review for clear error the bankruptcy court’s factual determination that a debt is a
nondischargeable support obligation. In re Sorah, 163 F.3d 397, 400 (6th Cir. 1998).
Thomas first challenges the bankruptcy court’s finding that the lien and mortgage debts
are “in the nature of support.” To qualify as a domestic-support obligation, a debt must be,
among other things, “in the nature of alimony, maintenance, or support . . . of [a] spouse, former
spouse, or child of the debtor . . . , without regard to whether such debt is expressly so
designated[.]” 11 U.S.C. § 101(14A)(B). A debt is “in the nature of support” if two conditions
are met: first, “the state court or parties intended to create a support obligation”; and second, the
debt has “the actual effect of providing necessary support.” In re Fitzgerald, 9 F.3d 517, 520
(6th Cir. 1993).
Here, the bankruptcy court properly examined the language and structure of the two
divorce decrees to determine whether the mortgage debt is in the nature of support. See In re
Calhoun, 715 F.2d 1103, 1107-09 & n.7 (6th Cir. 1983). The first decree ordered Thomas to pay
more child support than the Ohio guidelines required. The state court said that this “deviation is
in the best interests of the children as [Clark] is paying both mortgages on the marital property.”
R. 51 at 25. In the second decree Thomas was ordered to pay less child support, but was also
ordered to pay half of the second mortgage. This change suggests that the mortgage payments
were intended to provide necessary support in the form of keeping Clark and the children in the
family home.

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Clark’s testimony strengthens that inference. Clark said that she and Thomas had wanted
the children to remain in the family home so that her parents—who lived next door—could
provide child care. She also said that she could not afford to pay both mortgages without
Thomas’s help. Thus, the bankruptcy court did not clearly err in finding that the parties and the
state court intended that the mortgage debt would serve as a support obligation, and that the debt
actually provided necessary support.
Thomas offers several responses. He first contends that no support obligation was
intended because neither decree expressly provided for spousal support. By the express terms of
§ 101(14A)(B), however, the state court’s label for an obligation does not determine whether the
obligation is in the nature of support. See 11 U.S.C. § 101(14A)(B); see also Calhoun, 715 F.2d
at 1111. Instead, the bankruptcy court should look to the nature of the obligation to determine if
it was actually meant for support. See Calhoun, 715 F.2d at 1107. Thomas also asserts that the
second divorce decree contemplated a sale of the family home. But he offers no evidence to
refute Clark’s testimony that, at the time of the divorce, she and Thomas intended for the
children to stay in the home.
Thomas next contends that the mortgage debt was not necessary for domestic support,
because Clark was employed as a surgical technician (she made $16.00 per hour) and because
she sold the house years before Thomas filed for bankruptcy. But again Thomas does not refute
Clark’s testimony that she could not afford to pay the second mortgage on her own. In addition,
as the bankruptcy court observed, the likely reason why the state court ordered that Clark would
receive all proceeds from a sale of the home was to allow her to use that money to buy a new
home for her and the children. And when Thomas failed to pay his portion of the second
mortgage, he decreased the amount of money available for her to do so. Indeed, Clark received

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no money from the home’s sale after she paid off the mortgages and the lien; she ended up owing
more than $800. R. 50-2 at 4.
Finally, Thomas says that he was unemployed at the time of the second divorce and could
not afford to pay the debt. But Thomas’s employment status does not change the debt’s nature as
a support obligation. See Fitzgerald, 9 F.3d at 521. Thus, the bankruptcy court did not clearly
err in finding that the mortgage debt was in the nature of support.
As to the lien debt, Clark testified that neither she, nor the state court, knew about the
judgment lien at the time of the divorce. But the lien also reduced the amount of money that
Clark received from the sale of the family home. As shown above, the state court likely intended
that Clark receive that money to buy a new home. Thus, the lien—which was attached to the
family home, after all—reduced the amount of support that the state court meant to be available
to Clark and the children. That means the bankruptcy court did not clearly err in finding that the
lien debt was likewise in the nature of support.
Thomas next argues that the debts should be dischargeable because they are excessive.
When a debt is in the nature of support, the full debt is nondischargeable unless the debt “is so
excessive as to be unreasonable under traditional concepts of support.” See id. at 520. The debt
is only unreasonable if it “substantially exceed[s]” the debtor’s present and foreseeable ability to
pay at the time the debt is assumed. See Calhoun, 715 F.2d at 1110. Here, there is no evidence
that any of the state court orders imposed an excessive financial burden on Thomas. Clark
testified that their incomes were roughly equal, apparently despite Thomas’s occasional lay-offs.
The child-support worksheets that accompany both divorce decrees support her testimony.
Finally, as the bankruptcy court noted, the total debt amount is relatively low.
bankruptcy court did not clearly err in finding that the debt amounts are reasonable.

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Thus, the

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Finally, Thomas objects to the proof of claim on the ground that it was filed against his
co-debtor Rebecca as well as Thomas. He says that Rebecca is not responsible for the debts.
But Thomas did not offer any authority or other support for this objection to this court, the
Bankruptcy Appellate Panel, or the bankruptcy court. “[I]ssues adverted to in a perfunctory
manner, unaccompanied by some effort at developed argumentation, are deemed waived.”
McPherson v. Kelsey, 125 F.3d 989, 995 (6th Cir. 1997) (internal quotation marks omitted). We
therefore decline to consider this argument.
The bankruptcy court’s judgment is affirmed.

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