# Petition for Writ of Certiorari — Sherman v. Sherman

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2004
- **Citation:** 540 U.S. 1179

## Text

oui UM? UT 4ii, UD.

FILED

03 800 NOV 26 2003
No.

IN THE

Supreme Court of the Anited States

LAWRENCE SHERMAN,
Petitioner
V. |
LYNNE SHERMAN
Respondent

On Petition for Writ of Certiorari
To The Court of Appeals of Maryland

PETITION FOR WRIT OF CERTIORARI

JONATHAN S. GREENE

Counsel of Record

KRISTINE K. HOWANSKI
Howanski & Greene
401 Washington Ave.
Towson, MD 21204
410-296-8166

Questions Presented

I. Did the State Court err in disregarding the broad
discharge of bankruptcy claims recognized in Johnson v.
Home State Bank?

Il. Should state courts be allowed to disregard the broad.
discharge of bankruptcy claims recognized in Johnson v.
Home State Bank?

Meissen mh

TABLE OF AUTHORITIES

CASES

Choate v. Choate
97 Md. App. 347, 629 A.2d 1304 (1993) ........---- 12

Dexter v. Dexter
105 Md. App. 678, 661 A.2d 171 (1995),

cert. denied, 341 Md. 27, 668 A.2d 36 (1995) ..... 12,17
Farrey v. Sanderfoot

eee) 0) eo os >
Grady v. A.H. Robins Co.

839 F.2d 198 (4" Cir. 1988) .....--. eee ee eee eee: 16
In re Aslan

65 B.R. 826 (Bankr. C.D. Cal. 1986), rev ‘d on other
grounds, 909 F.2d 367 (9 Cir. 1990). .........: 9, 10, 19
In re Ter Bush

273 B.R. 625 (Bankr. S.D. Cal. 2002)........----- 10, 11
In re Udell

18 F.3d 403 (7 Cir. 1994) ......222- ee eeee: 12, 13, 19
In re Young

214 B.R. 905 (Bankr. D. Idaho 1997).......------ 10, 19

Johnson v. Home State Bank
501 U.S. 78 (1991) .........---- 5, 14, 15, 16, 17, 18, 19

Kennedy v. Medicap Pharmacies, Inc.

267 FS 495 16" Cit. 2OGT). gn. ccctccicnss '2, 13, 19
Keys v. Keys
93 Md. App. 677, 614 A.2d 975 (1992) ............. 12

Qhio v. Kovacs
GE a BPE As ov ceed ectasaves taut 7, 8, 9, 11

Paradiso v. Paradiso
88 Md. App. 343, 594 A.2d 1200 (1991), .
cert. denied, 325 Md. 95, 599 A.2d 447 (1991) ........ 12

Pennsylvania Dept. of Public Welfare v. Davenport
se ee er ee nn ena 16, 17

Roxse Homes, Inc. v. Roxse Homes Ltd. Partnership
83 B.R. 185 (D. Mass 1988), aff’g In re Roxse Homes, Inc.,

74 B.R. 810 (D. Mass 1987). ..... RPL NE ter he 8, 19
Stewart Foods, Inc. v. Broecker
GOW Dil 064 GR Cae, UO an hn koe cc ev ce cceniaas, 15
STATUTES
Pe Eres Se ORs cos ee l, 2. 5, 14, 15
OTHER MATERIALS

H.R. Rep. No. 95-595, 95" Cong., 1% Sess. 309 (1977),
reprinted in 1978 U.S.C.C.A.N. 5963, 6266 .......... 16

S. Rep. No. 95-989, 95" Cong., 2d Sess. 22 (1978),
reprinted in 1978 U.S.C.C.A.N. 5787, 5808 .......... 16

iV

OPINIONS BELOW

The Order of the Maryland Court of Appeals denying the
Petition for Writ of Certiorari is reported at 831 A.2d 5,
376 Md. 546 (2003) and is reproduced in the Appendix at
Al. The Order of the Maryland Court of Special Appeals
denying reconsideration is unreported and reproduced in the
Appendix at A2. The Opinion of the Maryland Court of
Special Appeals affirming the judgment below is
unreported (No. 1367, Sept. term 2001) and reproduced in
the Appendix at A3-A21. The Amended Order of the
Circuit Court for Harford County of August 3, 2001 is
unreported and reproduced in the Appendix at A22-A23.
The Opinion and Order of the Circuit Court for Harford
County of July 31, 2001 is unreported and reproduced in
the Appendix at A24-A43.

JURISDICTION
The Maryland Court of Appeals denied the Petition for
Writ of Certiorari by Order of August 28, 2003. The
jurisdiction of this Court is invoked under 28 U.S.C. §
1257(a).
STATUTORY PROVISIONS INVOLVED

11 U.S.C § 101(5) in pertinent part provides:

{C]laim means —

(A) right to payment, whether or not
such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or

(B) right to an equitable remedy for
breach of performance if such breach gives
rise to a right to payment, whether or not
such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or
unsecured[.]

* STATEMENT OF THE CASE
A. The Parties, the Bankruptcy and the Divorce

Petitioner Lawrence R. Sherman and Respondent
Lynne P. Sherman were married to each other on July 5,
1975. During the course of the marriage, two children were
born to the parties, namely Angela Sherman and
Christopher Sherman, both of whom reached the age of 18
years and thus were emancipated prior to the
commencement of divorce proceedings. The parties
separated on or about December 28, 1998. The parties
entered into a Marital Settlement Agreement on June 30,
1999. Among other things, the agreement provided that
Mr. Sherman would take the following actions:

1) Transfer to Ms. Sherman his one-third
interest in a townhouse owned jointly with
Ms. Sherman and the parties’ daughter;

2) Transfer to Ms. Sherman his one-quarter
interest in the parties’ time share units
located in Pennsylvania and Florida;

3) Sign an MVA Gift Certification form and
transfer the title of a 1997 Lincoln Town Car
to Ms. Sherman.

4) Turn over certain personal property to Ms.
Sherman.

The Agreement also provided that the parties would
annually alternate usage of their jointly owned timeshare
unit in Cancun, Mexico.

The parties reached a disagreement over the
provisions of the agreement, and Ms. Sherman filed a
complaint seeking enforcement of the agreement just five
months after its execution, on December 6, 1999. After
some negotiation, the parties appeared before Judge
William O. Carr in the Circuit Court for Harford County,
Maryland on April 11, 2000, and they placed the terms for a
modification of the agreement on the record. Among the
modifications was a provision whereby the parties would
sell their Cancun timeshare unit and split the proceeds of
sale. The other modification of note was that Mr. Sherman
would evenly transfer his one-third interest in the Towson
townhouse to Ms. Sherman and the parties’ daughter so that
each of the recipients would own half of the property.

On October 12, 2000, Mr. Sherman filed a Chapter
13 petition for bankruptcy in the U.S. Bankruptcy Court for
the District of Maryland. The Circuit Court for Harford
County, Maryland stayed the domestic relations case
pending the bankruptcy action. Mr. Sherman’s Chapter 13

3

case was converted to a Chapter 7 case. Ms. Sherman and
her counsel received proper notice of the bankruptcy
proceedings, and they attended the meeting of creditors.
Ms. Sherman, however, never filed any objection to the
discharge of Mr. Sherman’s debts. Mr. Sherman was
granted a discharge by the bankruptcy court for all the
claims against him on April 3, 2001.

On June 25, 2001, the parties appeared before Judge
Maurice W. Baldwin, Jr., in the Circuit Court for Harford
County, Maryland, for the trial of the divorce. Counsel for
Petitioner argued that the property obligations of the
Petitioner were discharged in the bankruptcy action, thereby
raising the federal question in this case. At.the conclusion
of trial, Judge Baldwin directed counsel to submit
memoranda regarding the impact of the bankruptcy
discharge. Although he asked counsel to submit
memoranda on the issue, Judge Baldwin articulated at the
close of the hearing an inclination to require Mr. Sherman
to make certain property transfers. After reviewing the
attorneys’ memoranda, on July 31, 2001, Judge Baldwin
issued a Memorandum Opinion and Order and Judgment of
Absolute Divorce consistent with his statements from the
bench that set out particular obligations for each party from
the Marital Settlement Agreement and the modifications
made on the record made in April 2000. In particular,
Judge Baldwin found that certain obligations for transfer of
property_by Mr. Sherman were not discharged by the
bankruptcy court. Among other things, Judge Baldwin
ordered Mr. Sherman to transfer his interest in the
timeshares, the Towson townhouse, certain personal
property and the Lincoln automobile, and he ordered that
the Cancun timeshare be sold and the proceeds of sale
divided between the parties.

4
j
4

In reviewing the-federal law to determine whether
Mr. Sherman’s contractually agreed obligations should be
enforced or considered discharged by the bankruptcy
court, Judge Baldwin embraced the federal question before
this Court. (Appendix at XX) The judge correctly
identified the statute that governs the definition of a claim,
namely 11 U.S.C. § 101(5). The statute provides the
following:

[C]laim means —

(A) right to payment, whether or not
such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or

(B) right to an equitable remedy for
breach of performance if such breach gives
rise to a right to payment, whether or not
such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured
or unsecured[.]

In order to ascertain whether a particular legal obligation
meets the definition of “claim,” the reviewing court
engaged in “straightforward statutory construction to be
resolved by reference to ‘the text, history and purpose’ of
the Bankruptcy Code.” Johnson v. Home State Bank, 501
US. 78, 83 (1991), quoting Farrey v. Sanderfoot, 500 U.S.
291, 298 (1991).

Judge Baldwin attempted to engage in statutory
construction, but he based his decision on a
misinterpretation of the statute. In the Memorandum

i Me ee

Opinion, Judge Baldwin set forth the following explanation
for his order:

According to bankruptcy law, if a
claim means a “right to payment” as it is so
broadly defined by Congress, then it would
follow that any pre-petition claim that
Plaintiff has against Defendant which
requests monetary relief or could possibly
result in a claim for monetary payment(s) is
unenforceable at this point based on
Defendant’s discharge in bankruptcy.
Therefore this Court no longer has authority
to enforce any pre-bankruptcy obligations of
the Defendant which result in a monetary
award or payment to the Plaintiff. However,
any obligations of the Defendant to the
Plaintiff arising out of the Agreement and
subsequent stipulation on the record which
are solely equitable and do not foreseeably
result in a claim for monetary relief, are
valid and enforceable obligations. Thus, this
Court has the authority to compel specific
performance of certain outstanding property
settlement obligations remaining between
the parties.

According to the language contained in the Memorandum,
the trial judge read the bankruptcy statute’s definition of
claim to exclude legal obligations that are solely equitable
and that do not result in foreseeable claims for monetary
relief. The trial judge then classified certain property
settlement legal obligations as to be within this latter
category, disregarding whether the equitable claims could

eS aa eae eee

give rise to right of payment.

Judge Baldwin issued an Amended Order on August
3, 2001 in order to correct the spelling of Ms. Sherman’s
maiden name in the original order.

B. Appellate Court Proceedings

Petitioner appealed the orders of the Circuit Court
for Harford County to the Maryland Court of Special
Appeals. The parties filed briefs and appeared for oral
argument before Judges Andrew L. Sonner, James A.
Kenney III, and Lawrence F. Rodowsky (retired). The
Maryland Court of Special Appeais issued an Opinion in
the case on April 21, 2003, which affirmed the decision of
the Circuit Court for Harford County.

In writing the opinion for the Maryland Court of
Special Appeals, Judge Rodowsky struggled with the
congressional intent of the bankruptcy discharge statute,
relying on the case of Ohio v. Kovacs, 469 U.S. 274 (1985),
to shore up the argument that some circumstances must
exist where equitable claims do not give rise to right of
payment. In that case, a pollution cleanup order (an.
affirmative injunction) was construed as having been
“converted” into an obligation to pay money, insofar as the
polluter did not comply with the cleanup order and an
appointed receiver performed the tasks and sought
reimbursement. Judge Rodowsky proposed that the
affirmative injunction in Ohio v. Kovacs was not an order
for the payment of money, but the breach of that injunction
was “converted” into a separate damage remedy that was a
dischargeable claim. Judge Rodowsky did not comment
that this Court in Ohio v. Kovacs also noted that breach of

the injunction could have resulted in contempt or criminal
penalties. This Court’s decision therefore makes the
distinction between the remedy of specific performance for
the original environmentai wrongs (stage one relief) and the
remedies to be applied when specific performance does not
occur (stage two relief). This Court in Ohio v. Kovacs does
not address whether money damages could have been
sought as an alternative to the specific performance remedy
found in the initial affirmative injunction to clean up the
pollution (stage one relief). In the case of the Shermans,
the Petitioner’s obligations under the parties’ marital
settlement agreement could be satisfied either by money
damages or by specific performance. As a result,
Petitioner’s specific performance liability should have been
negated by his bankruptcy discharge.

Recognizing that Maryland law had not addressed
these issues previously, Judge Rodowsky also grappled
with conflicting opinions from other states that have
considered aspects of this case. But rather than focusing on
the laws of states such as Idaho, which most congruently
reflects the laws of Maryland, Judge Rodowsky looked to
the laws of states in which Maryland’s remedies are clearly
unavailable. Judge Rodowsky first considered Roxse
Homes, Inc. v. Roxse Homes Ltd. Partnership, 83 B.R. 185
(D. Mass 1988), aff’g In re Roxse Homes, Inc., 74 B.R. 810
(D. Mass 1987). The Roxse case noted that an award of
specific performance in Massachusetts indicates that money
damages are inadequate, and thus specific performance
obligations are not dischargeable claims. In contrast,
Maryland law does not recognize the same principle of
excluding money damages as inadequate per se when
specific performance is awarded. Although Judge
Rodowsky’s opinion relied on the Roxse case, the

Massachusetts opinion offered no guidance to the case of
the Shermans nor to Maryland law.

Judge Rodowsky then considered the California
case, In re Aslan, 65 B.R. 826 (Bankr. C.D. Cal. 1986),
rev'd on other grounds, 909 F.2d 367 (9" Cir. 1990). The
Aslan court noted that a debtor can reject an executory
contract for sale in bankruptcy, thus transforming the
potential specific performance action into a dischargeable
claim. Judge Rodowsky compared this “conversion” to the
one he construed in Ohio v. Kovacs, stating that the “non-
debtor party’s election of the equitable remedy of specific
performance, a nonclaim remedy, would be transformed
into a claim by rejection.” In California, however, the
person who elects to reject the contract and invoke the
remedy of specific performance is the debtor, not the
creditor. If the creditor had the choice of performance or
damages, the debtor’s rejection of the contract would
remove the damages option, leaving the option of specific
performance, which the As/an court viewed as
dischargeable. The Aslan court did not say whether the
claim would be discharged if the creditor had the ability to
choose specific performance as its remedy, but nothing in
that case-suggested that specific performance would be
anything but dischargeable. In contrast to Ohio v. Kovacs,
where failure to perform an affirmative obligation can
subject one to money damages for the costs incurred by
someone else who performs the obligation, the Aslan court
identified that rejection of an affirmative obligation gives
rise to the right of specific performance. There is nothing
in the Aslan case to support the comparison set forth by
Judge Rodowsky and there is no connection identified
between the circumstances of the As/an case and the case of
the Shermans.

To support his position, Judge Rodowsky argued
that another California case also holds “that an asserted
right to specific performance is not a claim.” /n re Ter
Bush, 273 B.R. 625 (Bankr. S.D. Cal. 2002), noted that
breach of an agreement to transfer real property (a single
family dwelling) cannot be adequately compensated by
money damages, pursuant to California statute. Because
money damages were thus inadequate, the breach could not
give rise to a right of payment and thus would not be
discharged in bankruptcy. Maryland contains no such
statute or case law, and thus the case does not bear on
Judge Rodowsky’s interpretation of the Petitioner’s
obligations. Furthermore, the As/an court did not hold that
an asserted right to specific performance is not a claim, as
Judge Rodowsky claimed. The As/an opinion only held that
the involuntary right to specific performance is a claim and
remained silent with regard to the issue of an asserted right
to specific performance. As/an leaves the result as the same
in cither case in that the creditor remains with the right of
specific performance, be it voluntary or involuntary. If the
creditor could choose performance or damages for the
breach, then the underlying breach gives rise to a right of
payment, precisely as indicated in 11 U.S.C. § 101(5).°

Judge Rodowsky momentarily located the
proverbial needle in the haystack, but then let it slip away.
Judge Rodowsky considered Jn re Young, 214 B.R. 905
(Bankr. D. Idaho 1997), noting that in Idaho, money
damages are adequate for breach of contract and thus
specific performance can be discharged in bankruptcy.
Judge Rodowsky did note that “Idaho law does not differ
from that of Maryland.” In Idaho, specific performance is a
dischargeable claim. With these same legal underpinnings,
Judge Rodowsky could have found that specific

10

performance should also be dischargeable in Maryland, but
concerned about squeezing a legal result into the proverbial
Procrustean bed, the judge simply brushed aside the key
observation of the similarity between Idaho and Maryland
by stating, “We are not persuaded by the reasoning of the
Idaho court.” Without any elaboration, Judge Rodowsky
stated that the case “seems inconsistent” with limited
legislative history and the rationale employed in Ohio v.
Kovacs, even though there is nothing in the limited
legislative history that would prohibit the Idaho court and
the Maryland court from taking the position that specific
performance can be discharged where money damages are
an adequate alternative remedy. The concern expressed in
the statute’s legislative history is where only nominal
damages are available, which would clearly be inadequate.
Similarly, the focus of Ohio v. Kovacs is breach of a court
order for specific performance that resulted in money
damages: In Ohio v. Kovacs, the obligation of specific
performance had already matured and the resulting breach
of that obligation is what gave rise to a right of payment,
not the breach of some other obligation that could result in
specific performance. For the Shermans, there is no
existing order for specific performance, and thus the breach
of the underlying obligation could result in specific
performance or money damages, unlike in Ohio v. Kovacs.
Dissatisfied by the law of Idaho, Judge Rodowsky
steered instead toward the Jn re Ter Bush, in which the
California court was forced to make a determination based
on the California statute which per se finds money damages
inadequate to cure breach of an agreement to transfer real
property (a single family dwelling). Maryland lacks any
such statute, or any case law for that matter, which holds
that money damages are inadequate to cure breach of an

11

LE |

agreement to transfer real property. To the contrary,
Maryland law is flooded with examples of the application
of monetary values to assets in divorce, and how the
valuation of such assets is required in marital property
determinations.' Judge Rodowsky tried to tie up the
supposedly strong analogy by pointing out that the
Respondent sought only an affirmative injunction and not
damages, and thus payment of money was not an alternative
since it was not viable or adequate. While payment of
money might not be adequate under the California state
statute, there is no such bar in Maryland law, as Judge
Rodowsky explicitly recognized in his analysis.

Judge Rodowsky also asserted that two cases
dealing with the enforcement of covenants not to compete
support the conclusion that Petitioner’s specific
performance obligations were not discharged in bankruptcy.
However, neither Jn re Udell, 18 F.3d 403 (7" Cir. 1994)

1 Breach of a marital settlement agreement provision for the transfer
of property can give rise to a claim for money damages. See Dexter v.
Dexter, 105 Md. App. 678, 661 A.2d 171 (1995). In Dexter, the Court
awarded money damages to a spouse who was supposed to receive a
portion of her spouse’s pension benefit on an “if, as and when” basis.
In the case at hand, monetary values can be ascertained for real
property, time share property, a motor vehicle, and personalty such as
furniture. See Choate v. Choate, 97 Md. App. 347, 629 A.2d 1304
(1993) (valuation of real property performed by appraiser); Keys v.
Keys, 93 Md. App. 677, 614 A.2d 975 (1992) (valuation of
automobile); Paradiso v. Paradiso, 88 Md. App. 343, 594 A.2d 1200
(1991), cert. denied, 325 Md. 95, 599 A.2d 447 (1991) (valuation of
personalty such as furniture). Such valuations are required in most
divorce cases where a spouse seeks a transfer of marital property.
Breach of a marital settlement agreement to transfer property can thus
lead to a claim for the value of the property to be transferred as
damages for the breach.

12

nor Kennedy v. Medicap Pharmacies, Inc., 267 F.3d 493
(6 Cir. 2001), accomplish this goal. /n re Udell held that a
right to equitable relief for breach of performance is a claim
if the right to payment is an alternative remedy, because the
two remedies are substitutes for each other. The Udell
court found that the breach in its case gave rise to two
independent remedies - specific performance as a negative
injunction for future behavior and liquidated damages for
the past harm. The Udell court specifically noted that there
was no money damage that would be a substitute for the
injunction not to breach the covenant not to compete. 18
F.3 403, 409-410 (1994). For the Shermans, the
Respondent could have sought money damages in lieu of
specific performance, insofar as the property was of the
type that could be valued, as opposed to the damages in
Udell.

Kennedy v. Medicap Pharmacies, Inc. aptly noted
that a claim is deemed discharged if the court finds that a
monetary avard is adequate compensation and an
injunction not appropriate. Insofar as Kennedy is also a
case involving breach of a covenant not to compete, as
opposed to transfer of property between spouses, it is not
surprising that the case concurred with the Udell court.
Neither Kennedy nor Udell have any relevance to the
situation facing the Shermans.

Petitioner filed a motion for reconsideration with
the Court of Special Appeals on May 21, 2003. The Court
of Special Appeals denied the motion on June 10, 2003 and
issued the mandate on the same day. The Petitioner filed a
Petition for Writ of Certiorari with the Maryland Court of
Appeals. The Petition was denied on August 28, 2003.

13

REASONS FOR GRANTING THE PETITION

The state courts of Maryland have attempted to
eviscerate the legislative intent of Congress in enacting 11
U.S.C. §101(5) and the judicial intent of this Court in
upholding the breadth of bankruptcy discharge in Johnson
v. Home State Bank, 501 U.S. 78 (1991). By placing
narrow constraints on a federal law interpreted by this
Court, the state courts are undermining the authority of this
Court to interpret definitively the meaning of federal law.
The appellate opinion in this case further points to conflict
among federal and state courts that have decided this issue.
The petition should be granted because the state court
holdings fundamentally misconstrue this Court’s holding in
Johnson v. Home State Bank and suggest only further
confusion among the states in interpreting 11 U.S.C.
§101(5).

1. THE STATE COURT ERRED IN
DISREGARDING THE BROAD
BANKRUPTCY DISCHARGE RECOGNIZED
IN JOHNSON V. HOME STATE BANK

In both the trial court opinion from the Circuit Court
for Harford County and the appellate opinion from the
Maryland Court of Special Appeals, the case of Johnson v.
Home State Bank is disregarded. Both opinions actually
ignore the Johnson case almost entirely. Judge Baldwin’s
Memorandum opinion only notes the case in a string
citation (A33), while Judge Rodowsky’s opinion only notes
that Petitioner raised the case to support his claim (A7).
Neither opinion addresses this Court’s intent in identifying

14

the breadth of discharge of bankruptcy obligations.
Under 11 U.S.C. §101(5), a claim is defined as:

(1) right to payment,
whether or not such right is
reduced to judgment,
liquidated, unliquidated,
fixed, contingent, matured,
unmatured, disputed,
undisputed, legal, equitable,
secured or unsecured; or

(2)right to an
equitable remedy for breach
of performance if such breach
gives rise to a right to
payment, whether or not such
right to an equitable remedy
is reduced to judgment, fixed,
contingent, matured,
unmatured, disputed,
undisputed, secured or
unsecured [.]

Judge Baldwin’s decision in the Circuit Court for
‘Harford County was based on a misinterpretation of the
statute in which he failed to give the definition of claim the
broadest available definition intended by Congress to deal
with all of a debtor’s legal obligations, as directed by this
Court in Johnson and the Fourth Circuit Court of Appeals
in Stewart Foods, Inc. v. Broecker, 64 F.3d 141 (4" Cir.
1995). Judge Baldwin excluded claims that gave rise to a
right to an equitable remedy for breach of performance if

iD .

re |

such claims do not foreseeably lead to a nght to payment, a
limitation that is not contained within the statute and is at
odds with congressional intent and the holdings of this
Court. Congress intended by the language it used to adopt
the broadest available definition of the term “claim.”
Johnson at 83; Pennsylvania Dept. of Public Welfare v.
Davenport, 495 U.S. 552, 558 (1990). Congress intended
that this broadest of definitions would deal with all of the
debtor’s legal obligations. As noted in the congressional
reports prior to enactment of the statute:

By this broadest possible |
definition, and by the use of
the term throughout the title
11, especially in subchapter 1
of chapter 5, the bill
contemplates that all legal
obligations of the debtor, no
matter how remote or
contingent, will be able to be
dealt with in the bankruptcy
court.

H.R. Rep. No. 95-595, 95" Cong., 1" Sess. 309
(1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6266; S.
Rep. No. 95-989, 95" Cong., 2d Sess. 22 (1978), reprinted
in 1978 U.S.C.C.A.N. 5787, 5808; noted in Davenport at
558; see also Grady v. A.H. Robins Co., 839 F.2d 198, 200
(4" Cir. 1988).

In using the broadest possible definition of “claim,”
the this Court adopted an expansive reading of the concept
of “right to payment”:

Soni ance

16

[T]o the extent the phrase
“right to payment” is
modified in the statute, the
modifying language
(“whether or not such right is
...”) reflects Congress’
broad rather than restrictive
view of the class of
obligations that qualify as a
“claim” giving rise to a
“debt.”

Davenport at 558. The “plain meaning of ‘right to
payment’ is nothing more nor less than an enforceable
obligation...” Id. at 559; cited in Johnson at 83. Judge
Baldwin correctly noted in the Memorandum that a claim
that “could possibly result in a claim for monetary
payment(s)” would be subject to the discharge of the
bankruptcy court. However, Judge Baldwin redefined the
statute to exclude obligations which are “solely equitable
and do not foreseeably result in a claim for monetary
relief.” This unnecessarily narrow definition attempted to
exclude enforceable obligations that otherwise would be
discharged in bankruptcy. Such judicial reinterpretation
undermines the authority of this Court. Q

Even if the narrowed redefinition utilized by Judge
Baldwin should be accepted, the Petitioner’s obligations
would still fall within the scope of discharged claims.
Breach of a marital settlement agreement provision for the
transfer of property can give rise to a claim for money
damages. See Dexter v. Dexter (In Dexter, money damages
were awarded to a spouse who was supposed to receive a
portion of her spouse’s pension benefit on an “if, as and

17

when” basis.) For the Shermans, monetary values can be
ascertained for real property, time share property, a motor
vehicle, and personalty such as furniture. As noted in
Footnote One above, monetary valuation of real property
performed by appraiser, monetary valuation of automobiles,
and monetary valuation of personalty such as furniture are
routinely performed in divorce cases. Breach of a marital
settlement agreement to transfer property can thus lead to a
claim for the value of the property to be transferred as
damages for the breach. As a result, the Petitioner’s
obligations could foreseeably give rise to a claim for
monetary payments.

An equitable remedy for breach of performance that
gives rise to a right of payment is a claim that is subject to
discharge in bankruptcy. Johnson at 83. The Respondent’s
claims for property owned by Petitioner were discharged in
his bankruptcy case. The Respondent could have
challenged Petitioner’s intention to discharge these claims
in the bankruptcy court, but did not so. Insofar as
Respondent did not challenge the discharge in bankruptcy
court and Petitioner was granted a discharge of the claims
against him, the Respondent should not be entitled to go
behind the discharge to obtain relief for her property
claims. Judge Baldwin did precisely this in misconstruing
this Court’s Opinion in Johnson.

s

II. STATE COURTS ARE IN CONFLICT AS
TO WHETHER THEY SHOULD

DISREGARD THE BREADTH OF |
BANKRUPTCY DISCHARGE RECOGNIZED ‘
IN JOHNSON V. HOME STATE BANK 4

18

_ Judge Rodowsky’s opinion in the Maryland Court
of Special Appeals makes a review of how other states have
addressed bankruptcy discharge issue for equitable claims.
Judge Rodowsky noted that the states have differing views
on how such claims should be handled. In Idaho, for
example, money damages are adequate for breach of
contract and thus specific performance can be discharged in
bankruptcy. In re Young. Under J udge Rodowsky’s
opinion, Maryland should take an opposite view. In
Massachusetts, money damages are not an adequate remedy
for breach of contract. Roxse Homes, Inc. California allows
for discharge of specific performance obligations under

_ certain conditions (depending on who elects the remedy). Jn
re Aslan. Depending on how a state looks at the issue, the
outcomes can be diametrically opposed.

The federal cases do not assist the states in their
reinterpretation of this Court’s position in Johnson. The
Sixth Circuit and Seventh Circuit cases on covenants not to
compete (Jn re Udell and Kennedy) do not shed light on the
specific performance obligations of property transfers, yet
they are cited in support of state court positions. Finally, the
use of Ohio v. Kovacs, a case which preceded this Court’s
opinion in Johnson by six years, does not clarify the
Court’s position with regard to dischargeability of equitable
obligations in bankruptcy. Without a clear statement from
this Court that equitable obligations are to be discharged in
bankruptcy as the statute requires and Johnson supports,
state courts will only continue to misconstrue what once
appeared to be established as federal law on this issue.

; 19

acacia ata

CONCLUSION

For the foregoing reasons, the Petition for Writ of
Certiorari should be granted.

Respectfully submitted,

JONATHAN S. GREENE
Counsel of Record
KRISTINE K. HOWANSKI
Howanski & Greene

401 Washington Ave.
Towson, MD 21204
410-296-8166

20

es i
ee

LAWRENCE R. SHERMAN * IN THE

*

COURT OF APPEALS

OF MARYLAND

3) Defendant must transfer/return the remaining
personal property items listed in Plaintiffs Exhibit 5 to
Plaintiff, excepting the hot tub and Rubbermaid storage
container which this Court simply does not define as patio
furniture; and 4) Defendant shall sign a gift certificate form
for and transfer the title of the 1997 Lincoln Town Car to
Plaintiff.

5 In using the term “transfer of property obligation,” this Court
is referring to those provisions of the Agreement which require a
transfer of interest in property between the parties. These provisions
include the transfer of Defendant’s interest in the Towson townhouse,
the Plaintiff's transfer of interest in the Bel Air property, both the
Defendant’s and the Plaintiff's transfers of interest in the time-share
units, the signing of the gift certificate form and transfer of
Defendant’s interest in the Lincoln Town Car, and the transfer/return
of personal property items to Plaintiff.

6 The plain language of the agreement that the Plaintiff is to
receive the Defendant’s interest in all three Cocoa Beach time-shares as
the agreement attempts to deal with all of the parties’ marital assets,
and it does not specifically refer to any type of division of the three
Cocoa Beach units owned by the parties’ and their children.

A36

As to the remaining financial obligations that
Defendant is alleged to owe Plaintiff under the Agreement,
this Court has no authority te compel performance based on
Defendant's discharge in bankruptcy. The other five
remaining obligations argued by Plaintiff at the hearing are
clearly "right to payment" obligations that were discharged
by the bankruptcy court. The following obligations of the
Defendant cannot be specifically enforced under the
Agreement as a result of his bankruptcy discharge: 1)
reimbursement for health insurance expenses for Plaintiff
and Christopher Sherman in the total amount of $385.11 to
Plaintiff; 2) reimbursement for Plaintiffs out-of-pocket
expenses due to Defendant's-time-share cancellation(s) in
the total amount of$6,717.45 to Plaintiff, 3) payment of
one- half of Defendant's settlement proceeds from his
resolved claim with his former employer, Physician
Support Services, LLC," to Plaintiff; 4) transfer of an
interest in Defendant's pension plan due to his non-
disclosure of his retirement benefit information to
Plaintiff:'5 and 5) payment of attorney's fees for Plaintiffs

7 From the testimony presented at the Court hearing, it is
estimated that this claim has a possible total value of $13,500.00.

8 It should be noted that in paragraph 10 of the Agreement, both
spouses agreed to a waiver of any interest in the other spouses’s
retirement benefits. This waiver was subsequently modified during the
April 11, 2000, stipulation on the record to be contingent on full
disclosure of his retirement benefits invalidates the waiver. This issue
has become moot based on this opinion and the Court’s finding that
any claim for an interest in Defendant’s retirement benefits is an
unenforceable “right to payment” claim based upon Defendant’s
discharge in bankruptcy.

A37

If Plaintiff wanted to argue that these five claims
arising out of the parties divorce and separation should
have been excepted as nondischargeable alimony,
maintenance and/or support under 11 U.S.C. 523 (a)(5),
then she clearly had the right to argue that position to the
bankruptcy court based on her participation and
representation by George Breschi, Esquire, in that
proceeding. As stated above, it is the creditor's obligation to
file a complaint as to nondischargeability within sixty days
of the date of the first meeting of creditors in an attempt to
have the bankruptcy court determine that a claim is
nondischargeable alimony, support and/or maintenance.
Since the Plaintiff failed to raise the issue during the
bankruptcy proceeding, she cannot now urge this Court to
view the claims as nondischargeable. The issue of whether
debts covered in a prior U .S. Bankruptcy Court case are
nondischargeable is clearly not within the equity court's
power to decide. Thus, the only authority that this court
may act on is the determination that all of Defendant's pre-
petition "right-to-payment" obligations, including those to
the Plaintiff, were clearly discharged by the bankruptcy
court.

The Court further finds that Defendant's remaining
argument that Plaintiffs Complaint should be dismissed for
her failure to join the parties' two adult children, Angela
and Christopher Sherman, in this lawsuit under Maryland

breaches of the Agreement invalidate this waiver and allow her to now
make a claim for her reasonable attorney’s fees incurred in this divorce
proceeding. This issue, too, has. become moot based on this opinion
and the Court’s finding that any claim for attorney’s fees is an
unenforceable “right to payment” claim based upon Defendant’s
discharge in bankruptcy.

A38

Rule 2-2111'’ is without merit. Defendant's transfer of
interest in the Towson townhouse neither impairs nor

- impedes Angela Sherman's interest in that property. In fact,
the parties’ stipulation on the record modifying the
Agreement actually has the effect of positively her interest
from one-third to one-half owner in the Towson property.
Likewise, as to the interest of Angela and Christopher in
the Pocono and three Cocoa Beach time-share units,
Defendant’s transfer of his one-quarter interest in those
units to Plaintiff in no manner impairs or impedes the
children’s interests in those same properties. The children
began with a one-quarter interest each in those same
properties, and will continue to have that same percentage
of interest, despite the transfer. Since it is evident neither
of the children's interests will be impaired or impeded as a
result of transfers resulting from specific enforcement of
the Agreement in this matter, the Defendant’s argument
that the children should be joined as necessary parties must
ultimately fail.

As a final note, the Court declines the invitation by
Plaintiff to award any type of punitive damages for
Defendant's noncompliance with the Agreement. Clearly,
both parties have to all of their obligations under the
Agreement for various reasons that are irrelevant to the
Court’s decision in this matter, and the Court does not find
that an award of punitive damages appropriate in this case.

- CONCLUSION
As to Plaintiff s Complaint, the Court finds that
there are several outstanding property settlement

10 Maryland Rule 2-211 requires parties to be joined “in the
action if in the person’s absence, (1) complete relief cannot be
accorded..., or (2) disposition of the action may impair or impede the
person’s ability to protect a claimed interest relating to the subject of
the action...”

A39

obligations that are specifically enforceable and
incorporates, but not merges mentioned provisions of the
Agreement, as modified by the parties' subsequent
stipulation on the record, into the parties Judgment of
Absolute Divorce.

Specifically, the Court finds that: 1) Defendant is to
transfer his one-third interest in the Towson townhouse to
Plaintiff and Angela Sherman as joint tenants in accordance
with paragraph 7 of the Agreement and the April 11, 2000,
modifications thereto; 2) Defendant shall transfer his one-
quarter interest in the parties' Pocono time-share unit and
all three Cocoa Beach time-share unit and all three Cocoa
Beach time-share units to Plaintiff'® in accordance with
paragraph 9 of the Agreement; 3) Defendant must
transfer/return remaining personal property items as listed
on Plaintiffs Exhibit 5 to Plaintiff in accordance with
paragraph 8A of the Agreement with the two above-listed
exceptions of the hot tub and Rubbermaid storage
container; 4) Defendant shall transfer the title and sign a
gift certificate form for the 1997 Lincoln Town Car to
Plaintiff in accordance with paragraph 8B of the
Agreement; 5) Plaintiff must transfer her interest in the Bel
Air property to the Defendant in accordance with paragraph
6 of the Agreement; 6) Plaintiff is to transfer her one-half
interest in the Orlando time-share unit to Defendant in
accordance with paragraph 9 of the Agreement; and 7)
Plaintiff and Defendant are required to sell the Cancun
time-share and split the proceeds equally in accordance
with the April 11, 2000, stipulation on the record.

11 The plain language of the agreement indicates that the
Plaintiff is to receive the Defendant’s interest in all three Cocoa Beach
time-shares as the agreement attempts to deal with all of the parties’
marital assets, and it does not specifically refer to any type of division
of the three Cocoa Beach units owned by the parties’ and their
children.

A40

LYNNE P. SHERMAN * IN THE
Plaintiff * CIRCUIT COURT
V. * FOR

LAWRENCE R. SHERMAN * HARFORD COUNTY

Defendant * Case No: 12-C-99-3055
1 * * ok oe
ORDER

The Circuit Court for Harford County having heard
arguments, taken testimony, considered the pleadings, and
issued a Memorandum Opinion, it is this 27 Day of July,
2001,

ORDERED as follows:

1. The Plaintiff, LYNNE P. SHERMAN, is
divorced absolutely from the Defendant,

LAWRENCE R. SHERMAN.

2. The Plaintiff, LYNNE P. SHERMAN, is grantea
the use of her maiden name, LYNNE P. TROUTWEIN.

3. The Defendant shall transfer his one-third interest
in the Towson townhouse to Plaintiff and Angela Sherman
as joint tenants in accordance with paragraph 7 of the
Agreement and the April 11, 2000, stipulated modifications
thereto;

4. The Defendant shall transfer his one-quarter
interest in the parties' Pocono time-share unit and all three
Cocoa Beach time-share units to Plaintiff in accordance
with paragraph 9 of the
Agreement

5. The Defendant shall transfer/return the remaining
personal property items as listed on Plaintiff s Exhibit 5 to
Plaintiff in accordance with paragraph 8A of the Agreement
except for the Hot tub and Rubbermaid storage container.

A41

ae

6. The Defendant shall sign a gift certificate form
for and transfer the title of the 1997 Lincoln Town Car to
Plaintiff in accordance with paragraph 8B of the
Agreement.

7. The Plaintiff shall transfer her interest in the Bel
Air property to the Defendant in accordance with paragraph
6 of the Agreement.

8. The Plaintiff shall transfer her one-half interest in
the Orlando time share unit to Defendant in accordance
with paragraph 9 of the Agreement.

9. The Plaintiff and Defendant shall sell the Cancun
time share and split the proceeds equally in accordance with
the April 11, 2000, stipulation on the record.

10. The parties' Marital Settlement Agreement dated
June 30, 1999, with the exception of the provisions
resulting in claims which were discharged by the
Defendant's bankruptcy as more fully described in the
attached Memorandum Opinion, are to remain in full force
and effect and to be incorporated, but not merged into the
parties’ Judgment of Absolute Divorce.

IT IS SO ORDERED THIS 24 DAY OF JULY,
2001.

“¢s/ oe
MAURICE W. BALDWIN, JR., Judge

True Copy:
Test: Charles G. Hiob, II, Clerk
By: “s/ ws

Deputy Clerk

cc: Henry W. Stewart, Esq.

Law Offices of Henry W. Stewart, P .A.
209 Courtland A venue

Towson, Maryland 21204

A42

George A. Breschi, Esq.
409 Washington A venue, Suite 600
Towson, Maryland 21204

Jonathan S. Greene, Esq.
Howanski & Greene

410 Washington Avenue, Suite 803
Towson, Maryland 21204

A43

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386001_0752%3A1. Public record. Not legal advice.