On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Mercer County, Docket No. FM-11-621-95B.
Before Judges Skillman, Collester and Parrillo.*fn1
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
In this appeal from a post-judgment matrimonial order, the primary issue is whether defendant's obligation to indemnify plaintiff for any liability she might incur under a mortgage on the former marital home was discharged by his bankruptcy even though he only listed plaintiff as a codebtor, and not as a creditor, in his bankruptcy petition. We conclude that defendant's bankruptcy petition did not give plaintiff reasonable notice that his indemnification obligation could be discharged in the bankruptcy proceeding. Therefore, she may enforce that obligation notwithstanding defendant's bankruptcy.
The parties were married on February 17, 1989 and divorced on April 12, 1995. Three children were born of the marriage, who are currently 15, 14 and 12.
The judgment of divorce incorporated a property settlement agreement. This agreement provided that the children would continue to reside in the marital home with defendant, and that he would provide for their support. It also provided that plaintiff's mother would continue to reside in the marital home and that defendant would provide her with"room, board and meals" in exchange for child care services. The agreement further provided that plaintiff would have no obligation for child support as long as her mother continued to provide those services and that neither party would have any obligation for the payment of alimony.
Regarding the marital home, the agreement stated:
Recognizing the current real estate market conditions, the existence of a first mortgage in the amount of approximately One Hundred Twenty Two Thousand ($122,000.00) Dollars, the Husband and Wife acknowledge there would be little net equity after closing costs should the marital premises at 2357 Holly Hill Road, Manchester, New Jersey be sold at this time. The Wife desires to be free from the obligation for the repayment of the outstanding loans secured by the marital residence. Toward that end, the Husband and Wife hereby agree that the Wife shall execute a Quit Claim Deed transferring all of her right, title and interest in and to the aforesaid marital premises to the Husband. The Husband agrees to save and hold harmless and otherwise indemnify the Wife against any and all claims arising out of the loans against the marital premises as referenced herein above. In 1998, plaintiff moved to Maine with the children. Subsequent to this move, the holder of the mortgage on the marital home, Citicorp Mortgage, Inc. (Citicorp), brought a foreclosure action that resulted both in foreclosure of the home and the entry of a deficiency judgment against defendant.
In 2000, defendant filed a petition for bankruptcy in the United States Bankruptcy Court. The primary creditor listed in defendant's petition was Citicorp. The petition did not identify plaintiff as a creditor, but it did identify her as a codebtor on the obligation to Citicorp. The bankruptcy proceeding resulted in a judgment, entered on July 18, 2000, which discharged defendant from his debts.
After defendant's discharge in bankruptcy, Citicorp pursued an action against plaintiff for the balance due on the deficiency judgment, which resulted in the entry of a judgment against her for $27,118.22 plus interest thereon.
In late 2001, plaintiff filed a motion to impose a child support obligation upon defendant. As a result, an order was entered on December 7, 2001, which required defendant to pay $45 per week in child support, effective April 10, 2001, plus $10 per week in arrearages. The order also obligated defendant to pay $2400 for private school tuition for the parties' two older children. The order noted that in establishing defendant's child support obligation:"Allowance has been made for extraordinary visitation expenses (based on average expense of $500/month)."
In June 2003, plaintiff filed a motion seeking, among other things, a judgment against defendant for the amount of the judgment Citicorp had obtained against her. In support of this claim, plaintiff relied upon the part of the parties' property settlement agreement that obligated defendant"to save and hold [plaintiff] harmless and otherwise indemnify [plaintiff] against any and all claims arising out of the loans against the marital premises." Defendant opposed this part of plaintiff's motion on the ground that plaintiff's claim had been discharged by the judgment of the bankruptcy court. Plaintiff's motion also sought an increase in defendant's child support obligation and an order requiring him to obtain life insurance to secure that obligation.
After hearing argument, the trial court issued an oral opinion which concluded that defendant's obligation to indemnify plaintiff for any claim arising out of the mortgage on the marital home was"in the nature of alimony" and therefore, under 11 U.S.C.A. § 523(a)(5), non-dischargeable in bankruptcy. Accordingly, the court entered judgment against defendant for $27,118.22 plus interest to reimburse plaintiff for the judgment Citicorp had obtained against her. The judgment requires defendant to pay plaintiff $750 per month to discharge this obligation. The court also increased defendant's child support obligation to $243 per week and ordered him to obtain $100,000 of ...