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Winegarden v. Winegarden

November 06, 1998

ROBERTA WINEGARDEN, PLAINTIFF-RESPONDENT,
v.
ROBERT WINEGARDEN, DEFENDANT-APPELLANT.



Before Judges Stern, Landau and Braithwaite.

The opinion of the court was delivered by: The opinion of the court was delivered by Braithwaite, J.A.D.

[9]    Argued: October 1, 1998

On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Middlesex County.

This is an appeal by defendant former husband, Robert Winegarden, from that part of a post-judgment order requiring him to resume alimony payments to plaintiff in the amount of $750 per month and determining that defendant's obligation to indemnify and hold plaintiff harmless for marital debts and to pay her counsel fees of $7,500, in accordance with the judgment of divorce, were "in the nature of alimony, maintenance or support" and therefore not dischargeable in bankruptcy. 11 U.S.C.A. § 523 (a)(5)(B).

The parties' settlement agreement, incorporated into the judgment of divorce, provides that defendant would pay $7,500 for plaintiff's counsel fees and assume all marital debt, including credit card debt, of "approximately $100,000." The agreement further provides a hold harmless clause where defendant agreed to "indemnify and hold plaintiff harmless, including [future] counsel fees, in the event plaintiff is called upon to pay any of the aforesaid debts." An "essential" component of the agreement was defendant's representation that he intended to file for personal bankruptcy to discharge the debts as to himself. Defendant acknowledged, at the time of divorce, that although some of the debts were incurred in plaintiff's name, all the debts were for the benefit of defendant.

As contemplated, defendant filed for personal bankruptcy under Chapter 7 of the United States Bankruptcy Code. He listed plaintiff as a creditor claiming a debt of $1.00. The bankruptcy petition requires the debtor to explain the "nature" and purpose for which the debt was incurred. Defendant did not explain the nature or purpose of this debt and left that portion of the petition blank. He also listed the fees owed to plaintiff's prior counsel. There, defendant identified the creditor as a law firm, with the use of the abbreviation "Esqs." Defendant described the purpose of the debt with the word "service." Neither plaintiff nor her prior counsel responded to defendant's bankruptcy petition, and he received a discharge from all "dischargeable debts" on July 5, 1996.

Thereafter, plaintiff was sued by one of the creditors that defendant assumed responsibility for paying and to which the hold harmless agreement applied. The creditor obtained a judgment against plaintiff and received a wage execution to satisfy its judgment. Subsequently, plaintiff moved to enforce her rights under the judgment of divorce seeking, among other things, to enforce the hold harmless agreement, the payment of her alimony of $750 per month, *fn1 and the payment of her prior counsel's fees of $7,500. Defendant cross-moved seeking a ruling that the hold harmless agreement and counsel fees had been discharged in bankruptcy, relying on 11 U.S.C.A. § 523(a)(15) ("Section 15").

Following oral argument the motion Judge determined that the hold harmless agreement and counsel fees were not dischargeable pursuant to 11 U.S.C.A. § 523(a)(5)(B) ("Section 5"). Thus, the issue we need to address is the dischargeability of the hold harmless agreement and counsel fees. Our review of the record convinces us that the motion Judge correctly determined that the counsel fees and hold harmless agreement were "in the nature of alimony, maintenance or support and therefore not dischargeable." *fn2 Ibid. Accordingly, we affirm.

I.

The parties were married for twenty-three years before the court entered the judgment of divorce on September 27, 1995. They had one son, Alan, who was fifteen years old when the judgment was entered. At that time, defendant, a self employed dentist, earned approximately $84,000 per year and plaintiff, a part-time teacher earned $29,000 per year. The relevant portions of the settlement agreement provide as follows: (1) defendant would pay $1,500 per month in child support and $750 per month in alimony; (2) alimony terminated on plaintiff's death or remarriage, with defendant having the right to move to reduce alimony if plaintiff cohabitated with another man; (3) defendant received title to the marital home subject to two existing mortgages having a combined payment of $2,600 per month; (4) defendant retained sole possession of his dental practice; (5) defendant assumed responsibility for all debts incurred during the marriage and would hold plaintiff harmless, including attorney's fees, for all of the debts; and (6) defendant would pay plaintiff's counsel fees of $7,500.

As noted, supra, the assumption of debt by defendant was in contemplation of his filing for personal bankruptcy. The hold harmless clause was to insure that the debts would not revisit plaintiff, following defendant's bankruptcy. Further, defendant acknowledged that the debts were incurred by him and for his personal benefit. Plaintiff testified as part of her uncontested grounds for divorce that "defendant incurred nearly $100,000 in debt without her knowledge."

II.

The Bankruptcy Code provides exceptions to a Chapter 7 discharge making certain debts not dischargeable. Here, the two relevant exceptions under 11 U.S.C.A. ยง ...


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