Pitt v. Darrell

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

In re:

GREGORY EUGENE DARRELL,

Debtor. Case No: 8:22-BK-04976-RCT

PATTI PITT,

Appellant,

v. Case No: 8:23-cv-01076-MSS

GREGORY EUGENE DARRELL,

Appellee.

ORDER

THIS CAUSE comes before the Court for consideration of Appellant Patti

Pitt’s appeal of the bankruptcy court’s Order Granting Defendant’s Motion for

Summary Judgment. (Dkt. 1) Upon consideration of all relevant filings, the entire

bankruptcy record, the Parties’ briefs, and being otherwise fully advised, the Court

REVERSES the bankruptcy court’s ruling and REMANDS the case to the bankruptcy

court for further proceedings consistent with this Order.

I. BACKGROUND

In this appeal, Appellant Patti Pitt (“Pitt”) challenges the bankruptcy court’s

grant of summary judgment to Debtor Gregory Eugene Darrell (“Darrell”) on the

question of whether a debt Darrell owes Pitt is nondischargeable under 11 U.S.C. §

523(a)(5) or § 523(a)(15). (Dkts. 1, 8) Darrell and Pitt married on June 22, 2019, and

divorced on February 28, 2023. (Dkt. 2-23 at 2) At some point during this time, Darrell

and Pitt separated. (Id.) Once they were separated, Pitt sued Darrell in the civil

division of the Thirteenth Judicial Circuit Court for Hillsborough County for money

Darrell owed her. (Id.; Dkt. 2-17 at 1) Specifically, Pitt sought $3,000 for back rent,

$1,800 on a personal loan dated November 12, 2016 (prior to the marriage), and $6,728

for one-half the cost of their wedding. (Dkt. 2-17 at 1)

The state court held a non-jury trial on Pitt’s claims. (Id.) The Parties did not

dispute that Darrell owed Pitt $3,000 for back rent and $1,800 for the personal loan.

(Id.) As to the wedding cost, the state court held the evidence showed Darrell had

agreed to pay for half of the cost of the wedding in monthly payments. (Id. at 1–2) On

March 15, 2022, the court awarded Pitt $8,670.51 (the “Debt”), which equals the

amount she sought, $11,528, minus the value of some of Darrell’s property that Pitt

sold without his permission, $2,857.49. (Id.)

Pitt petitioned for dissolution of the marriage in family court. (See Dkt. 2-18)

On February 28, 2023, the family court entered a final judgment of dissolution which

stated, “There are no issues relating to equitable distribution of assets and debts or

support for this Court to address.” (Id. at 1)

Two months before the divorce was final, on December 16, 2022, Darrell filed

for Chapter 7 bankruptcy. (Dkt. 2-6) One week after entry of the final judgment of

dissolution, on March 6, 2023, Pitt filed an adversary complaint in the bankruptcy

proceeding. (Dkt. 2-14) She sought a determination that the Debt is nondischargeable

under 11 U.S.C. § 523(a)(5) or § 523(a)(15). (Id.) On March 21, 2023, the bankruptcy

court entered an Order of Discharge. (Dkt. 2-23 at 3) On March 29, 2023, Darrell

moved for summary judgment on the issues Pitt raised in her adversary complaint.

(Dkt. 2-16) On May 9, 2023, the bankruptcy court entered an order granting summary

judgment, finding the exceptions to discharge in § 523(a)(5) and § 523(a)(15) do not

apply to the Debt. (Dkt. 2-23) Therefore, the bankruptcy court found the Debt is

dischargeable. (Id.) Pitt appeals the bankruptcy court’s order.

II. STANDARD OF REVIEW

In reviewing bankruptcy court judgments, a district court functions as an

appellate court. 28 U.S.C. § 158(a); see also In re Coady, 588 F.3d 1312, 1315 (11th

Cir. 2009). It reviews the bankruptcy court’s legal conclusions de novo but must accept

the bankruptcy court’s factual findings unless they are clearly erroneous. In re Chira,

567 F.3d 1307, 1310–11 (11th Cir. 2009). “[A] 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.” United

States v. United States Gypsum Co., 333 U.S. 364, 395 (1948). The district court also

reviews de novo the bankruptcy court’s determinations as to the legal significance

accorded to the facts. In re Sunshine-Jr. Stores, Inc., 198 B.R. 823, 825 (M.D. Fla.

1996). In hearing a bankruptcy appeal, the district court may reverse, affirm, or modify

only issues actually presented to the trial judge. In re Gardner, 455 F. Supp. 327 (N.D.

Ala. 1978).

Here, it would appear that the bankruptcy court determined factually that the

Debt was not comprised of any nondischargeable obligation, which the Court finds to

be legally incorrect. Alternatively, the bankruptcy court found that the facts did not

support a finding that any part of the debt was nondischargeable, which the Court

finds is clearly erroneous as to the rent portion and not based on a fully developed

record as to the remaining portions of the Debt. Either way, the matter requires

reversal with further proceedings consistent with the following discussion.

III. DISCUSSION

Pitt appeals the bankruptcy court’s order finding the Debt dischargeable. Pitt

also contends the bankruptcy court denied her due process when it ruled on the motion

for summary judgment without a hearing. Additionally, she argues the bankruptcy

court and Darrell’s attorney suffered from a conflict of interest due to the attorney’s

status as “an officer of the court,” and that Darrell may be hiding financial transactions

from the bankruptcy court.

A. Dischargeability

Pitt’s primary contention on appeal is that the bankruptcy court erred in ruling

the Debt dischargeable. Through Chapter 7 bankruptcy, a debtor may obtain a

discharge of “all debts that arose before the date of the order for relief.” 11 U.S.C. §

727(b). Certain debts, however, are nondischargeable. See id. at § 523(a). Pitt argues

the exceptions to discharge in 11 U.S.C. § 523(a)(5) or § 523(a)(15) apply to the Debt,

rendering it nondischargeable.1

Section 523(a)(5) makes debt “for a domestic support obligation”

nondischargeable. Section 523(a)(15), on the other hand, makes nondischargeable any

debt

to a spouse, former spouse, or child of the debtor and not of the kind described

in [§ 523(a)(5)] that is 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[.]

A nondischargeable spousal debt can either be a domestic support obligation or a debt

described by paragraph (15). It cannot be both.

a. 11 U.S.C. § 523(a)(5)

Section 523(a)(5) makes debt “for a domestic support obligation”

nondischargeable. The Bankruptcy Code defines “domestic support obligation” as

a debt that accrues before, on, or after the date of the order of relief . . . that is—

(A) owed to or recoverable by—

(i) a spouse, former spouse, or child of the debtor . . .; or

(ii) a governmental unit;

(B) in the nature of alimony, maintenance, or support . . . of such spouse,

former spouse, or child of the debtor . . ., without regard to whether such

debt is expressly so designated;

(C) established or subject to establishment before, on, or after the date of

the order for relief . . ., by reason of applicable provisions of—

(i) a separation agreement, divorce decree, or property settlement

agreement;

(ii) an order of a court of record; or

(iii) a determination made in accordance with applicable

nonbankruptcy law by a governmental unit; and

1 Appellant also cites § 523(a)(19)(B) to support her argument. This paragraph applies to debt arising

from the violation of securities laws or the commission of common law torts connected to the purchase

or sale of securities. Thus, this paragraph does not apply to the Debt.

(D) not assigned to a nongovernmental entity . . . .

11 U.S.C. § 101(14A). The Debt did not arise from a court order dissolving the Parties’

marriage, but the statute does not mandate that a debt be decreed by a divorce court

to be a domestic support obligation. Indeed, a debt owed to a former spouse in the

nature of support established by an order of a court of record would fall within §

101(14A)’s definition. Therefore, the bankruptcy court was required to determine

whether the Debt, or any portion of it, was “in the nature of alimony, maintenance, or

support.”

Although the question of “[w]hether a given debt is in the nature of support is

an issue of federal law[,]” federal courts seek guidance from state law in making the

determination. Cummings v. Cummings, 244 F.3d 1263, 1265 (11th Cir. 2001). In this

analysis, “the touchstone for dischargeability under § 523(a)(5) is the intent of the

parties.” Id. at 1266. Cummings also teaches that the intent of the relevant court must

also be ascertained. Id.

The record is undisputed that a pro rata portion of the Debt2 was for rent and

was awarded during the time of the separation. As to the intent of the state court, the

state court acknowledged in its final judgment that the dispute was “between a

married, but now separated, couple” and noted the Parties’ plan to divorce. (Dkt. 2-17

at 1, 2) And, although the state court was not acting as a divorce court when it rendered

2 The pro rata portion of the Debt attributable to back rent equals $2,256.38. Pitt initially requested a

total of $11,528. Back rent in the amount of $3,000 constituted approximately 26 percent of the total

requested award. The state court, however, reduced the requested award by the amount of money Pitt

made from selling Darrell’s personal property without his permission. After the state court’s

deduction, the total was $8,670.51. Twenty-six percent of $8,670.51 is $2,256.38.

its judgment in Pitt’s favor, it would appear that the portion of the Debt that was for

rent was incurred during the period of separation.3 The Court finds this fact is

persuasive on the question of intent under the precedent set by Cummings and dictates

a finding that a portion of the Debt was for a domestic support obligation. 244 F.3d at

1266 (“To the extent the [divorce] court intended a portion of the obligation to function

as support, that debt is nondischargeable under § 523(a)(5).”). Therefore, the Court

reverses the Bankruptcy Court’s determination that the portion of the Debt that was

for rent was nondischargeable under 11 U.S.C. § 523(a)(5).

The remaining portions of the Debt do not appear to fall within the exception

to dischargeability set forth in 11 U.S.C. § 523(a)(5). A loan debt incurred prior to the

marriage and the shared cost of a wedding do not check any of the boxes for

consideration of “alimony, maintenance, or support.”

b. 11 U.S.C. § 523(a)(15)

The exception to discharge in § 523(a)(15), however, may apply to the portion

of the Debt related to the loan and the cost of the wedding. A debt is nondischargeable

under § 523(a)(15) if it is (1) a debt to a spouse, a former spouse, or child of the debtor,

(2) not a domestic support obligation, and (3) incurred during a divorce or separation

or “in connection with a separation agreement, divorce decree, or other order of a

court record.” In re Monassebian, 643 B.R. 388, 393 (Bankr. E.D.N.Y. 2022); In re

Reynolds, 546 B.R. 232, 236 (Bankr. M.D. Fla. 2016) (“Courts typically rely on §

3 The state court noted that the loan portion of the Debt was incurred prior to the marriage but did

not make this determination with respect to the rent.

523(a)(15) when former spouses divide property or have other disputes that do not

involve domestic support obligations[.]”). “The primary purpose of bankruptcy law is

to provide an honest debtor with a fresh start[.]” In re Brown, 541 B.R. 906, 910

(Bankr. M.D. Fla. 2015). Accordingly, courts construe exceptions to discharge

liberally in favor of the debtor. Id. However, juxtaposed to this principle, “[b]oth the

legislative history of the Bankruptcy Code amendments and case law . . . illustrate that

§ 523(a)(15) should be broadly and liberally construed to encourage payment of

familial obligations rather than to give a debtor a fresh financial start.” Id. at 910–11;

Burstein v. Nonte, No. 22-cv-267, 2023 WL 5435608, at *2 (E.D. Va. Aug. 23, 2023)

(noting the BAPCPA eliminated two defenses to nondischargeability under §

523(a)(15) in 2005, making debts falling within its scope “nondischargeable without

qualification”).

In In re Brown, the debtor improperly removed funds from a Florida Prepaid

College Savings Account opened for the benefit of her daughter. 541 B.R. at 908–09.

The debtor and the daughter’s father, who were never married, both contributed to the

account before the debtor closed it and accepted the refund. Id. at 909. The father sued

the debtor in county court and obtained a judgment ordering the debtor to pay him

and the daughter $7,508.71. Id. Within a year of the judgment, the debtor filed for

Chapter 7 bankruptcy. Id. The father sought a determination that the judgment was

nondischargeable under several exceptions in § 523(a), including paragraph (15). Id.

The bankruptcy court held that § 523(a)(15) “is much broader than other similar non-

dischargeability provisions and excepts from discharge any debt owed to the child of

a debtor as determined by a state court[.]” Id. at 910. “The Judgment, a debt due by

the Debtor to her child as determined by a Florida County Court made under Florida

state law, fits within the non-dischargeability test articulated in § 523(a)(15).” Id. at

911–12. The court reasoned, “It is exactly this type of family obligation, albeit to a

minor child not a former spouse[,] that the Bankruptcy Code prefers over the fresh

start promised to debtors. That the parents never married and that no divorce action

was filed is irrelevant.” Id. at 912.

Here, the record reflects that portion of the Debt comprised of the loan and

wedding cost could meet all the criteria of § 523(a)(15). The Debt was owed to a

spouse, it is not a domestic support obligation (other than the rent discussed above),

and it was incurred by way of a separate court decree during the marriage. Although

the Debt facially meets all the requirements, the Court declines to hold that such a debt

categorically falls within the ambit of § 523(a)(15). See Burstein, 2023 WL 5435608,

at *6 (discussing case law holding debt owed to former spouses is dischargeable where

it arose from, for example, the parties’ landlord-tenant relationship, or other dealings

unrelated to the dissolution of the marriage). In this case, it is unclear whether the loan

obligation derived from a marital obligation because the record reflects that it arose

prior to the marriage. Also, the intent of neither the Parties nor the state court is clear

from the existing record with respect to that loan. Likewise, it is unclear when the

agreement about sharing wedding costs was made between the Parties and how the

state court or the Parties viewed this debt with respect to the marital relationship and

associated obligations. See In re Harnage, No. 13–bk–01045, 2013 WL 5880411, at *2

(Bankr. M.D. Fla. Nov. 1, 2013) (reasoning that although the debts were originally

incurred before the divorce, defendant’s agreement to pay to the plaintiff a contribution

to the payment of the debts arose in the course of the divorce, therefore, the obligation

fell within the purview of § 523(a)(15)). Hence, resolution of the dischargeability

question on summary judgment was inappropriate.

Thus, the Court reverses the bankruptcy court’s decision that the exception in §

523(a)(15) does not apply to the Debt as a matter of law. Although the state court

action establishing the Debt was not a divorce action, the Debt was incurred in

connection with an “other order of a court record.” Moreover, although the statute

read as written does not seem to require it,4 the state court acknowledged in its

judgment that the Parties were “a married, but now separated, couple,” and

acknowledged their plan to divorce. (Dkt. 2-17 at 1, 2) Furthermore, the state court

rendered its judgment during the period of the marriage, making the creditor liable to

his then spouse in an amount certain. If the bankruptcy court determines any part of

the Debt was a familial obligation, to permit the creditor to discharge this obligation

by seeking bankruptcy protection would disserve the interests of the plain exception to

dischargeability provided in § 523(a)(15).

4 All that § 523(a)(15) facially requires is that the debt have been incurred “in connection with a

separation agreement, divorce decree, or other order of a court record.” Courts construing this

language seem to consider the reference to a separation agreement or divorce proceeding to be a

requirement (see Burstein, 2023 WL 5435608, at *6 (gathering cases)), but the provision plainly says

or other order of a court record. It does not say “other order [of a divorce or domestic] court record.”

B. Due Process

Plaintiff’s challenge to the bankruptcy court’s decision not to hold a hearing on

the motion for summary judgment fails. The Due Process Clause of the Fourteenth

Amendment requires that notice and an opportunity for hearing be provided before a

person’s rights may be determined in an action. See Mullane v. Cent. Hanover Bank

& Trust Co., 339 U.S. 306, 314 (1950). However, it is “‘well settled’” in the Eleventh

Circuit that a court is not required to hold an oral hearing before deciding a summary

judgment motion. Smith v. School Bd. of Orange Cnty., 487 F.3d 1361, 1367 (11th

Cir. 2007) (citations omitted); see also Microbix Biosys., Inc. v. BioWhittaker, Inc.,

184 F. Supp. 2d 434, 440 n.5 (D. Md. 2000) (“[A]n opportunity to be heard does not

always require a hearing. It is, for example, well-settled that motions to dismiss or for

summary judgment can be resolved without requiring a hearing.”).5 Both Parties were

given notice of their opportunity to file memorandums in support of their respective

positions. Additionally, Pitt was given notice that the court could consider the matter

without a hearing. Consequently, the court afforded Pitt Due Process as required by

the Constitution. On remand, the bankruptcy court may conclude that a hearing would

assist the court in resolving this dispute, but that is left to the sound discretion of the

court.

5 Fed. R. Civ. P. 56 governs motions for summary judgment in bankruptcy proceedings. Fed. R. Bankr.

P. 7056.

C. Darrell’s Attorney: Scope of Authority & Conflict of Interest

Similarly, Pitt’s assertion that an impermissible conflict of interest precluded

Darrell’s counsel, Peter F. Zooberg, from litigating before the bankruptcy court results

from an apparent misunderstanding. Reference to Zooberg as “an officer of the court,”

“duly appointed[,] and a member of the Bar of this Court,” does not connote his being

a member of court staff or an arm of the court. These are merely terms of art that refer

to all lawyers who appear in court as a reminder of their duty of candor before the

court. They in no way suggest an impermissible relationship with the presiding judge

or give rise to a conflict of interest.

D. Alleged Hidden Transactions

Finally, this Court will not address Pitt’s contention that Darrell may receive

compensation or engage in transactions that he did not disclose to the bankruptcy

court. See In re Lett, 632 F.3d 1216, 1226–27 (11th Cir. 2011) (citing Hormel v.

Helvering, 312 U.S. 552, 556 (1941)) (“‘Ordinarily an appellate court does not give

consideration to issues not raised below.’”). In her complaint, Pitt mentioned her belief

that Darrell’s nondisclosure was possible. (Dkt. 2-14 at 3) She alleged no facts to

support the contention, and the bankruptcy court did not address the issue in its order

granting summary judgment to Darrell. Therefore, the Court finds the issue was not

raised before the bankruptcy court and declines to address it at this time.

IV. CONCLUSION

Accordingly, the Court hereby ORDERS:

1. The judgment rendered in the bankruptcy action is REVERSED. The

case is REMANDED to the bankruptcy court to enter an Order that the

rent portion of the Debt is nondischargeable. The bankruptcy court is

further ordered to reconsider its decision as to whether the loan and/or

the shared wedding costs portion of the Debt should be considered

nondischargeable in light of this Order.

2. The Clerk is directed to terminate all pending motions and CLOSE this

case.

DONE and ORDERED in Tampa, Florida, this 15th day of April 2024.

MARY S_SGRIVEN

UNITED STATES DISTRICT JUDGE

Copies furnished to:

Counsel of Record

Any Unrepresented Person

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