Opinion
Case No. 8:15-bk-11693-RCT
10-05-2016
In re: Jacqueline Newman Teipen, Debtor.
Chapter 13 ORDER DENYING IN PART AND GRANTING IN PART MOTION FOR TURNOVER OF PERSONAL PROPERTY OR ALTERNATIVELY FOR RELIEF FROM THE AUTOMATIC STAY
THIS CASE came before the court on the Motion for Turnover of Personal Property or, in the Alternative, to Lift Stay, filed by Debtor's former spouse, Eric W. Teipen (the "Motion") (Doc. 45). The Motion is opposed by both the Debtor (Doc. 48) and the Chapter 13 Trustee (Doc. 47). The Motion seeks turnover of items of personal property awarded to Debtor's former spouse in a final judgment of dissolution of marriage. For the reasons set forth below, the Court concludes that the items of property awarded to Debtor's former spouse are not property of the bankruptcy estate and, therefore, not subject to the turnover provisions of the Bankruptcy Code. However, the Court will modify the automatic stay to permit Debtor's former spouse to seek recovery of the personal property in state court.
Background
On October 19, 2015, the Circuit Court of Polk County Florida entered a Final Judgment of Dissolution of Marriage, which dissolved the Debtor's marriage to Eric W. Teipen ("Former Husband") and effected an equitable distribution of property. Debtor and Former Husband had no children and no alimony was awarded. On October 28, 2015, Former Husband filed a motion for rehearing in the Circuit Court, alleging that he had discovered additional assets. Debtor filed her Chapter 13 petition on November 19, 2015, a few days before the hearing scheduled on the Former Husband's motion.
This Bankruptcy Court granted Former Husband relief from the automatic stay to have the motion for rehearing heard by the Circuit Court. (Doc. No. 32). Thereafter, on July 1, 2016, the Circuit Court entered an Amended Final Judgement of Dissolution of Marriage ("Amended Judgment"). As part of equitable distribution pursuant to FLA. STAT. § 61.075, Former Husband was awarded the following "marital assets":
1. Ford Explorer valued at $9,300.00 as of August 2, 2013.(the "Husband's Awarded Property").
2. Sapphire necklace valued at $25,000.00 as of August 2, 2013 (in Wife's possession).
3. Sapphire earrings valued at $7,500.00 as of August 2, 2013 (in Wife's possession).
4. Second set of Sapphire earrings valued at $12,500.00 as of August 2, 2013 (in Wife's possession).
5. 18 karat heart pendant valued at $5,760.00 as of August 2, 2013 (in Wife's possession).
6. Blue topaz ring valued at $3,000.00 as of August 2, 2013 (in Wife's possession).
7. Cocktail ring valued at $800.00 as of August 2, 2013 (in Wife's possession).
8. Rolex watch valued at $2,500.00 as of August 2, 2013 (in Wife's possession).
9. LG frontload washer and dryer valued at $1,000.00 as of August 2, 2013 (in Wife's possession).
10. Stove valued at $300.00 as of August 2, 2013.
11. Vizio 3D television valued at $275.00 as of August 2, 2013 (in Wife's possession).
The Amended Judgment added the "Sapphire necklace" and the "Second set of Sapphire earrings" to the Husband's Awarded Property. Otherwise, the provisions of the Amended Judgment are identical to the original. --------
In the Motion, Former Husband seeks turnover of the Husband's Awarded Property or, alternatively, relief from the automatic stay to recover such property. Debtor and the Chapter 13 Trustee respond that the Amended Judgment created a debt for equitable distribution that is subject to discharge in Chapter 13.
Discussion
Whether a debtor has an interest in property sufficient to bring it within the ambit of property of the estate is determined by state or other applicable non-bankruptcy law. Butner v. United States, 440 U.S. 48, 55 (1979). Florida law dictates that, once the Amended Judgment was entered, the Husband's Awarded Property was no longer marital property in which Debtor retained any interest (other than possessory); rather, it became the sole property of the Former Husband. See Golden v. Jones, 194 So. 3d 1060, 1063 (Fla. Dist. Ct. App. 2016); DeSantis v. DeSantis, 714 So. 2d 637, 638 (Fla. Dist. Ct. App. 1998); see also Petty v. Petty (In re Petty), 333 B.R. 472, 477-78 (Bankr. M.D. Fla. 2005). Accordingly, the Husband's Awarded Property is not property of Debtor's bankruptcy estate.
To the extent that the Motion seeks turnover of the Husband's Awarded Property, it is improper. The turnover provisions of the Bankruptcy Code are designed to effect the turnover of a debtor's assets. See 11 U.S.C. §§ 542, 543. Accordingly, the Court will grant the alternative relief sought and lift the automatic stay to permit the Former Husband to recover the Husband's Awarded Property in the state court.
Debtor and the Chapter 13 Trustee are correct that, if the Amended Judgment created a debt in the nature of a property settlement, Debtor would be able to discharge the obligation to pay that debt. See In re Gaetaniello, 496 B.R. 238, 241 (Bankr. M.D. Fla. 2013) ("Debts in the nature of property settlements are not within the scope of § 523(a)(5) and are not excepted from discharge in Chapter 13."); see also 11 U.S.C. § 1328(a)(2). The Amended Judgment, however, did not create a debt based upon equitable distribution. Instead, the state court awarded specific items of personal property to the Former Husband, divesting Debtor of her interest in them. See FLA. STAT. § 61.075(8); Golden, 194 So. 3d at 1063.
Consistent with the foregoing, it is ORDERED and ADJUDGED:
1. The Husband's Awarded Property is not property of the bankruptcy estate.
2. To the extent that the Motion seeks turnover of the Husband's Awarded Property, it is DENIED, without prejudice.
3. To the extent the Motion seeks relief from the automatic stay, it is GRANTED. The automatic stay is modified for the sole purpose of permitting the Debtor's former spouse to seek recovery of the Husband's Awarded Property in state court.
ORDERED. Dated: October 05, 2016
/s/_________
Roberta A. Colton
United States Bankruptcy Judge Attorney Keith P. Merritt is directed to serve a copy of this order on interested parties and file proof of service within 3 days of entry of this order.