Now Updating
In re: DIANN MARIE CATES

Summarizing by Lars Fuller

Francis v. Wallace (In re Francis)

Citation:
BAP No. NC-13-1300-DJuKi; Bk No 12-11910; Adv. No 13-01040 (for publication)
Tag(s):
Ruling:
The Ninth Circuit BAP affirmed the Bankruptcy Court's summary judgment ruling that the debtor’s obligation to “pay and hold Wife harmless” from certain credit card debt under a marital dissolution judgment with debtor’s former wife were non-dischargeable under §523(a)(15).
Procedural context:
The debtor filed an adversary proceeding against his former wife seeking a determination that his obligation to pay certain credit card obligations pursuant to a marital dissolution judgment were not excepted from his discharge under §523(a)(15). Ex-wife answered and requested the Bankruptcy Court hold that such claims be deemed non-dischargeable. On the ex-wife’s motion for summary judgment, the Bankruptcy Court granted the ex-wife’s motion and held such claims to be non-dischargeable. Debtor appealed to the Ninth Circuit Bankruptcy Appellate Panel (“BAP”). The BAP affirmed the Bankruptcy Court’s ruling.
Facts:
Pre-petition, the debtor and his ex-wife stipulated to a marital dissolution judgment (“Judgment”) under which the debtor agreed to “pay and hold Wife harmless” from certain credit card debt. Subsequently, debtor stopped paying on the credit card debt and ex-wife commenced an action to enforce the Judgment. Debtor shortly thereafter filed for relief under chapter 7, and commenced an adversary proceeding seeking a determination that the debtor’s obligations to pay the credit card debt under the Judgment was not excepted from his discharge. In opposition to his ex-wife’s motion for summary judgment, the debtor argued that the “hold harmless” language in the Judgment did not give rise to a non-dischargeable debt under §523(a)(15) because he had no obligation to “indemnify” his ex-wife. Essentially, the debtor argued that absent an express indemnity provision in the Judgment, the debtor had no direct obligation to pay his ex-wife. The Bankruptcy Court, as well as the BAP, disagreed. The BAP found that implied indemnity obligations may be enforced as a matter of equity. (“[A] duty to indemnify has been implied from the obligation of the contracting parties to perform their promises, the reasoning being that a promise to perform includes an implied promise to perform properly.”) Concluding that the debtor had a debt (as defined under §101(12)) owing to his ex-wife, and finding that the §523(a)(15) requisites elements were satisfied, the BAP affirmed the Bankruptcy Court’s judgment in favor of the ex-wife.
Judge(s):
DUNN, KIRSCHER and JURY, Bankruptcy Judges

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