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In re Dunne

April 12, 2010

IN RE: PATRICK R. DUNNE AND KATHLEEN M. DUNNE, DEBTORS.
KATHLEEN MARIE DUNNE, FKA KATHLEEN MARIE LIND, PLAINTIFF-APPELLANT,
v.
RICHARD KEITH LIND, DEFENDANT-APPELLEE.



The opinion of the court was delivered by: Hon. Janet T. Neff

OPINION

Plaintiff Kathleen Dunne appeals from a decision of the Bankruptcy Court, holding that she incurred a non-dischargeable debt to her former husband, defendant Richard Keith Lind, as a result of his post-divorce repayment of loan to a joint creditor. Having reviewed the record and carefully considered the parties' appellate briefs, this Court affirms the decision of the Bankruptcy Court. Contrary to Dunne's argument on appeal, the Court finds reasoning of Gibson v. Gibson (In Re Gibson), 219 B.R. 195 (B.A.P. 6th Cir. 1998) persuasive and dispositive of the issues presented.

I. Facts

The underlying facts are undisputed, and are presented herein as cited by the parties and the Bankruptcy Court. The parties were married on April 12, 1986 (Trial Tr. at 34:17). In May 1993, Dunne enrolled in law school, graduating in January 1996 (id. at 34:21-23; 36:8-9). In October 1995, Dunne secured a bar study loan ("BSL"), which Lind co-signed (id. at 35:8-11, 15-19).

On March 21, 1996, Dunne filed for divorce, and a final Judgment of Divorce entered on October 11, 1996 (Trial Tr. at 36:10-12; 37:4-5). Under the Divorce Judgment, the parties essentially split the joint marital debt (Op.*fn1 at 2), with Dunne agreeing to repay her law school loans, including the BSL (Trial Tr. at 38: 21-24; 39:1-4; 50:7-10). Dunne made payments on her student loans through June of 2006 (id. at 39: 8-25; 40: 1-4). She subsequently filed Chapter 7 bankruptcy, which prompted the BSL creditor, Sallie Mae, to seek payment from Lind (Op. at 2; Trial Tr. at 58:17-24). Although Sallie Mae did not accelerate the BSL loan, Lind voluntarily paid the loan in full (Op. at 2).

Lind then sought repayment from Dunne by filing an action in state court to enforce the Divorce Judgment (Trial Tr. at 42:13-17). Dunne removed the action to the Bankruptcy Court and filed the instant adversary proceeding to determine the dischargeability of the debt owed to Lind. Following a bench trial, the Bankruptcy Court, the Honorable Scott W. Dales, entered a final judgment in favor of Lind, determining that the $8,762.74 Lind paid to Sallie Mae was a debt paid by the Debtor's former spouse, the debt arose in the connection to the parties' divorce proceedings and was non-dischargeable pursuant to 11 U.S.C. § 523(a)(15) (Op. at 1). See Dunne v. Lind (In re Dunne), Ch. 7 Case No. DG 06-04435, Adv. No. 07-80615 (Bankr. W.D. Mich. December 2, 2008).

II. Legal Standard

On appeal to this Court from a bankruptcy court's final order or judgment, the bankruptcy court's conclusions of law are reviewed de novo. Pierce v. Underwood, 487 U.S. 552, 557-58 (1988); In re Rowell, 359 F. Supp. 2d 645, 647 (W.D. Mich. 2004). Issues of statutory interpretation are questions of law, and are thus subject to review de novo. ITT Indus. v. BorgWarner, Inc., 506 F.3d 452, 457 (6th Cir. 2007). The district court may affirm, modify, or reverse a bankruptcy judge's judgment, order, or decree or remand with instructions for further proceedings. FED. R. BANKR. P. 8013. The party contesting the dischargeability of a debt has the burden of proving the elements by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 287 (1991); Hart v. Molino (In re Molino), 225 B.R. 904, 907 (6th Cir. B.A.P. 1998).

III. Analysis

Whether the debt at issue is dischargeable is governed by 11 U.S.C. § 523(a)(15). That section excepts from discharge a debt:

(i) to a former spouse

(ii) not of a kind described in § 523(a)(5), and

(iii) incurred by the debtor in the course of a divorce or divorce decree.

The Bankruptcy Court found that Dunne implicitly incurred a non-dischargeable obligation to Lind in the course of the parties' divorce proceedings, and that the resulting debt was ...


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