Agwara v. Agwara et al
Filing
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OPINION AND ORDER. Bankruptcy Court is affirmed. Motion to expunge lis pendens 19 is denied. Motion to strike 21 is denied as moot. Signed by Judge Robert C. Jones on 3/30/16. (Copies have been distributed pursuant to the NEF - JC)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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In re LIBORIOUS IHECHERE AGWARA,
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Debtor.
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LIBORIUS IHECHERE AGWARA,
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Bankr. No. 13-bk-17576-BTB
Appellant,
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2:15-cv-01544-RCJ
vs.
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OPINION AND ORDER
KELECHI AGWARA and VICTORIA L.
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NELSON,
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Appellees.
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This case is an appeal of a final order of the Bankruptcy Court granting Appellee Kelechi
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Agwara’s motion to approve a family court divorce decree and comfort order. Appellee also
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moves the Court to expunge lis pendens (ECF No. 19), which Appellant moves to strike (ECF
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No. 21).
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I.
FACTS AND PROCEDURAL HISTORY
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On May 23, 2012, Appellant Liborius Ihechere Agwara (“Appellant”) filed a complaint
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for divorce in state court. On September 4, 2013, Appellant filed a voluntary bankruptcy petition
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under Chapter 13. (See Pet., ECF No. 1 in Bankr. No. 13-17576). Appellant and Appellee
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Kelechi Agwara (Appellant’s ex-wife) (“Appellee”) filed a stipulation for relief from the
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automatic stay so the Family Court could adjudicate family law issues, including a division and
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award of property and assets that were property of the estate. (See Stipulation, ECF No. 59 in
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Bankr. No. 13-17576). The Bankruptcy Court approved the stipulation on December 3, 2013.
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(See Order, ECF No. 67 in Bankr. No. 13-17576). On December 4, 2013, the Bankruptcy Court
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granted Appellant’s motion to convert the case to a Chapter 11 case. (See Order, ECF No. 70 in
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Bankr. No. 13-17576). On May 6, 2014, the Bankruptcy Court appointed Victoria Nelson as a
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Chapter 11 trustee for Appellant’s bankruptcy estate. (See Order, ECF No. 183 in Bankr. No. 13-
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17576). On July 14, 2014, the Bankruptcy Court granted Nelson’s motion to convert the case to a
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Chapter 7 case. (See Order, ECF No. 219 in Bankr. No. 13-17576).
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On March 25, 2015, the Family Court entered a divorce decree awarding to Appellant a
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net value of assets totaling $1,820,446.00 and to Appellee $307,965.00, with an equalization
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award of $756,240.00 to Appellee. (Divorce Decree, 9–11, ECF No. 376-1 in Bankr. No. 13-
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17576). On July 1, 2015, the Bankruptcy Court approved a stipulation between Trustee Nelson
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and Appellee requiring Nelson to abandon the bankruptcy estate’s interest in the property
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awarded to Appellee in the divorce decree, including value Appellant has claimed as exempt
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from the estate. (See Order, ECF No. 394 in Bankr. No. 13-17576). On July 30, 2015, the
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Bankruptcy Court granted Appellee’s Motion for Bankruptcy Court Approval of the Family
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Court Divorce Decree and Comfort Order to Collect Upon Exempt and Abandoned Assets. (See
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Order, ECF No. 479 in Bankr. No. 13-17576). The order required Appellant to turn over the
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abandoned property, including any exempt value, to Appellee. (Id.). Appellant filed an appeal of
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that order in this Court on August 12, 2015. (See Notice of Appeal, ECF No. 1; ECF No. 505 in
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Bankr. No. 13-17576).
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II.
BANKRUPTCY APPEAL
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A.
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A bankruptcy court’s conclusions of law, including its interpretations of the bankruptcy
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code, are reviewed de novo, and its factual findings are reviewed for clear error. See Blausey v.
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U.S. Trustee, 552 F.3d 1124, 1132 (9th Cir. 2009). A reviewing court must accept the
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bankruptcy court’s findings of fact unless it is left with the definite and firm conviction that a
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mistake has been committed. See In re Straightline Invs., Inc., 525 F.3d 870, 876 (9th Cir. 2008).
Standard of Review
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B.
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The Court affirms the Bankruptcy Court’s order requiring Appellant to turn over to
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Appellee the property awarded to her in the divorce decree. In his opening brief, Appellant
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essentially makes three arguments for reversing the Bankruptcy Court’s order: (1) the
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Bankruptcy Court failed to determine whether the debts in the divorce decree were non-
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dischargeable; (2) the Bankruptcy Court erred by approving the divorce decree, including
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requiring Appellant to transfer to Appellee exempt and abandoned assets; and (3) the Bankruptcy
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Court “[c]reated a superpriority class of creditor consisting of one Creditor—Kelechi Agwara,”
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(Appellant’s Opening Br., 9–10, ECF No. 9).
Analysis
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1.
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Appellant argues the Bankruptcy Court’s order should be reversed because the Court
Determination of Dischargeability
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failed to determine whether the specific debts in the divorce decree were non-dischargeable. The
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Bankruptcy Court was not required to make a debt-specific dischargeability determination
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because the bankruptcy code clearly makes debt from a divorce decree non-dischargeable:
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A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title
does not discharge an individual debtor from any debt . . . to a . . . former spouse .
. . 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, or
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a determination made in accordance with State or territorial law by a
governmental unit.
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11 U.S.C. § 523(a)(15). Appellant owes a debt to his former spouse as part of a divorce decree
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issued by a state court in accordance with state law. The Bankruptcy Court did not err on this
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issue.
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2.
Approval of the Divorce Decree
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Appellant argues the Bankruptcy Court erred by approving the divorce decree, including
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requiring Appellant to transfer to Appellee exempt and abandoned assets. He also argues that
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“the Trustee has no role to play regarding exempt assets.” (Appellant’s Opening Br., 15). The
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Bankruptcy Court did not err by approving the divorce decree. The Court lifted the automatic
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stay so the Family Court could adjudicate the divorce and property division. The Family Court
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then awarded to Appellee the property at issue here. The Bankruptcy Court then enforced its own
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ruling—that the Family Court could adjudicate the divorce and property division—by approving
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the divorce decree. See 28 U.S.C. § 1651 (“The Supreme Court and all courts established by Act
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of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions
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and agreeable to the usages and principles of law.”).
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To facilitate its approval of the divorce decree, the Bankruptcy Court then approved the
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stipulation requiring the trustee to abandon the bankruptcy estate’s interest in the property
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awarded to Appellee in the divorce decree. Nothing prevents the Bankruptcy Court from using
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an abandonment order or the trustee’s services to carry out the Court’s duties. See Catalano v.
C.I.R., 279 F.3d 682, 687 (9th Cir. 2002) (“the bankruptcy court may issue an abandonment
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order in a bankruptcy proceeding that involves issues other than abandonment, such as automatic
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stay litigation”). Abandoning the assets identified in the divorce decree freed those assets from
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claims by other creditors, allowing the Court to enforce the divorce decree which created for
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Appellant non-dischargeable debt.1
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Appellant argues the Bankruptcy Court should not have turned over to Appellee the
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exempt or abandoned assets because those assets return to him as the debtor. Although exempt
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and abandoned assets return to the debtor, here the Bankruptcy Court enforced the state divorce
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decree which required those assets, including those exempted and abandoned, to be awarded to
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Appellee, in fulfillment of Appellant’s non-dischargeable debt.2 Appellant received full due
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process in state court. He is not challenging the validity of the divorce decree. The Bankruptcy
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Court rightly “avoid[ed] incursions into family law matters” by approving the Family Court’s
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decree. In re Mac Donald, 755 F.2d 715, 717 (9th Cir. 1985) (“It is appropriate for bankruptcy
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Appellant argues the Bankruptcy Court erred by transferring the abandoned property to his exwife instead of to pre-petition creditors. In reality, the Court was simply enforcing the divorce
decree. Further, Appellant likely does not have standing to raise this argument on appeal. “‘To
have standing to appeal a decision of the bankruptcy court, an appellant must show that it is a
person aggrieved who was directly and adversely affected pecuniarily by an order of the
bankruptcy court.’” In re Popp, 323 B.R. 260, 265 (B.A.P. 9th Cir. 2005) (quoting McClellan
Fed. Credit Union v. Parker (In re Parker), 139 F.3d 668, 670 (9th Cir.1998) (internal
quotations omitted). “A ‘person aggrieved’ is someone whose interest is directly affected by the
bankruptcy court’s order, either by a diminution in property, an increase in the burdens on the
property, or some other detrimental effect on the rights of ownership inherent in the property.”
Id. (quoting In re Fondiller, 707 F.2d 441, 442–43). Although Appellant has standing to appeal
the order as a whole, he is not directly or adversely affected by whether Appellee has priority to
obtain the estate’s assets before other creditors. Only creditors, not the debtor, have a pecuniary
interest in a dispute regarding priority, especially when a trustee is appointed to manage the
estate.
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Appellant quotes In re Graziadei, 32 F.3d 1408 (9th Cir. 1994) to argue the Bankruptcy Court
should not have turned over the exempted portion of his “homestead” to his ex-wife. Although
the Ninth Circuit held that “a bankruptcy court has no jurisdiction over homestead property and
that such property cannot be administered by the bankruptcy court,” id. at 1410 (quotations
omitted), the Court also noted that In re Graziadei involved payments to an attorney for fees and
costs rather than to an ex-spouse. Id. at 1410, n.4. It further noted that “the Nevada Supreme
Court held that a debtor is barred from using the homestead exemption as a defense against
making support payments to an ex-spouse” because “the homestead exemption’s very purpose
was to support family members of the debtor.” Id. at 1410 (citing Breedlove v. Breedlove, 691
P.2d 426 (1984)) (emphasis in original). The same rationale applies to the property in this case,
which Appellant owes to his ex-spouse.
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courts to avoid incursions into family law matters ‘out of consideration of court economy,
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judicial restraint, and deference to our state court brethren and their established expertise in such
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matters.’” (quoting In re Graham, 14 B.R. 246, 248 (Bankr. W.D. Ky. 1981))). The Bankruptcy
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Court did not err in approving the transfer of property required by the divorce decree, including
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the exempt and abandoned assets.
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3.
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Appellant likely has no standing to raise this issue on appeal.3 Even if he does, his
Superpriority Class
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argument fails. The Bankruptcy Court did not create a superpriority class favoring Appellee;
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rather, the Court merely approved the divorce decree, giving effect to a state court judgment. As
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described above, the Court’s approval of the divorce decree was valid and proper.
The Bankruptcy Court did not err by granting Appellee Kelechi Agwara’s Motion for
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Bankruptcy Court Approval of the Family Court Divorce Decree and Comfort Order to Collect
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Upon Exempt and Abandoned Assets. This Court affirms the order.
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III.
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MOTION TO EXPUNGE LIS PENDENS
Appellee offers evidence that Appellant has recorded lis pendens against three properties
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awarded to her in the divorce decree. She moves the Court to expunge lis pendens as to those
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properties (ECF No. 19). Appellant moves the Court to strike Appellee’s motion as a fugitive
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document (ECF No. 21).
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The Court denies the motion to expunge lis pendens because the Court does not have
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jurisdiction to hear it. District courts have jurisdiction to hear appeals from “final judgments,
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orders, and decrees” of the bankruptcy court pursuant to 28 U.S.C. § 158(a)(1), as well as certain
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interlocutory orders described in 28 U.S.C. § 158(a)(2). With this motion, Appellee is not
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See Footnote 1.
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appealing any order of the bankruptcy court. Moreover, this case involves only the appeal of the
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order approving the divorce decree. The Court denies the motion to expunge lis pendens, and it
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denies the motion to strike as moot.
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CONCLUSION
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IT IS HEREBY ORDERED that the order of the Bankruptcy Court is AFFIRMED, and
the Clerk shall close the case.
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IT IS FURTHER ORDERED that the motion to expunge lis pendens (ECF No. 19) is
DENIED.
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IT IS FURTHER ORDERED that the Motion to Strike (ECF No. 21) is DENIED as
moot.
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IT IS SO ORDERED.
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DATED: 28th day of March,
Dated this March 30, 2016. 2016.
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_____________________________________
ROBERT C. JONES
United States District Judge
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