Nancy G. Endsley
Eric J. Benner
ATTORNEY FOR APPELLEE
Nancy G. Endsley
Eric J. Benner
and was subsequently discharged. We hold that the dissolution court may enforce duties to
sell and divide property imposed by the dissolution decree through contempt without
violating the bankruptcy injunction. The court may also award damages based on actions
taken after the husband's bankruptcy was converted to Chapter 7. Finally, some payments
under the decree may be nondischargeable because they were in the nature of maintenance
or support. We remand to the trial court to determine when the contemptuous actions took
place and whether certain amounts awarded in the decree were in the nature of maintenance
proceeding. The 1996 decree provided that if Cowart failed to pay these amounts they would
be reimbursed from his share of the proceeds of the sale of the two pieces of property.
Eight days after the 1996 decree was entered, Cowart filed in bankruptcy. His Chapter 13 petition was converted to Chapter 7 on November 5, 1996. Both White and her attorney were listed as creditors on Cowart's bankruptcy schedule but neither filed a complaint with the bankruptcy court. The record is silent on their reasoning in foregoing the opportunity to challenge Cowart's discharge of these debts. See, e.g., 11 U.S.C. § 523(a)(15) (1994 & Supp. 1996). The bankruptcy court granted Cowart a discharge on February 14, 1997.
On April 9, 1997, White filed a petition in the dissolution court to modify the 1996 decree and also requested that the court find Cowart in contempt of the 1996 decree. Cowart responded with a request that the court find White in contempt. After a hearing, the trial court issued a written order (the 1997 order) denying White's motion to modify but finding Cowart in contempt for failure to abide by the Orders of this Court and for willfully and recklessly causing the real estate in this case to fall into a state of disrepair resulting in severe economic hardship to [White]. To compensate White for Cowart's contempt, the court ordered that the marital residence be given to White and also entered judgment against Cowart for an additional $36,270, representing the sum of attorney fees for both the dissolution and the contempt proceeding, the unreimbursed appraisal fees from both proceedings, back taxes, and the loss in property value caused by Cowart's contemptuous acts to the extent that the loss was not compensated by transfer of the marital residence.
the trial court was within its discretion in holding Cowart in contempt for post-bankruptcy
actions. We affirm the trial court's award of attorney fees and appraisal fee for the contempt
proceedings but remand for a calculation of the damages resulting from Cowart's contempt.
court's 1996 decree awarded White a property right in the proceeds that could not be
disturbed by Cowart's bankruptcy. This is a corollary of the general proposition that a
discharge in bankruptcy does not divest nondebtors of their property rights. Henry J.
Sommer & Margaret Dee McGarity, Collier Family Law and the Bankruptcy Code
¶ 6.02 (1998). Although other obligations found in the 1996 decree may constitute debts
that were dischargeable in bankruptcy, the obligation to divide the sale proceeds was not a
debt discharged by Cowart's bankruptcy.
B. Cowart's Remaining Obligations under the 1996 Decree
The Bankruptcy Code explicitly excepts some of a debtor's obligations from discharge. Section 523(a)(5) provides that no discharge applies to any debt to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child in connection with a separation agreement, divorce decree or other order of a court of record . . . . 11 U.S.C. § 523(a)(5) (1994 & Supp. 1996); see also 6 Goldstein et al., Collier on Bankruptcy ¶ 727.01 (15th ed. 1996) & 4 Goldstein et al., Collier on Bankruptcy ¶ 523.11 (15th ed. 1996).
Federal law governs what constitutes a nondischargeable maintenance or support obligation. In re Hart, 130 B.R. 817, 835 (Bankr. N.D. Ind. 1991); Sommer & McGarity, supra, at ¶ 6.03. State courts nonetheless have concurrent jurisdiction to make that determination. 4 Goldstein, supra, at ¶ 523.03. The trial court found that the obligation[s] of the Petitioner herein are not dischargeable in bankruptcy because all obligations owed to [White] are in the nature of support and maintenance.
earning power of the parties when it awarded attorney fees. A court may order a former
spouse to pay rehabilitative maintenance for a period of up to three years after considering:
the education level of each spouse, whether an interruption in training or employment was
a result of homemaking or child care responsibilities, the earning capacity of each spouse and
the time and expense necessary for the spouse to acquire sufficient education and training
to find appropriate employment. See Ind. Code § 31-15-7-2(3) (1998). Although the trial
court clearly had discretion to award the attorney fees as maintenance, we are unable to
conclude whether the fees were awarded as maintenance or support. Because, as explained
below, a remand is necessary for other reasons, we leave it to the trial court to resolve
whether the award of attorney fees was designed to provide White with resources to assist
her in maintaining her lifestyle after dissolution or, in other words, maintenance. If so,
Cowart's obligation to pay those fees survived his bankruptcy and Trial Rule 69 is available
to enforce this obligation under the 1996 decree against Cowart.
3. Appraisal Fees
The trial court ordered Cowart to reimburse White for real estate appraisal fees in the amount of $400 for the dissolution proceeding and $400 for the contempt proceeding. The fee for the contempt appraisal was incurred after Cowart converted to Chapter 7, so his discharge does not affect that debt. However, the fee incurred as part of the dissolution was a prebankruptcy debt that was discharged unless it was in the nature of maintenance or support. The appraisal fee was to be paid to White in a lump sum and was reimbursement for a specific transaction. As such it did not provide for White's daily needs. Unlike
attorney fees, the trial court was not required to consider the economic condition of the
parties in ordering Cowart to pay this cost. Accordingly, the appraisal fee incurred in the
dissolution proceeding was not in the nature of maintenance or support and was discharged
by Cowart's bankruptcy.
In sum, with respect to the monetary obligations under the 1996 decree, we conclude that Cowart's obligations to pay property taxes, the Visa bill and the appraisal fee for the dissolution were discharged in bankruptcy. We remand for a determination whether the attorney fees were in the nature of maintenance or support. In addition, other obligations Cowart incurred after November 5, 1996, including the real estate appraisal fee for the contempt proceeding, were not discharged.
was ordered by the court.
Contempt is for the benefit of the party who has been injured or damaged by the failure of another to conform to a court order issued for the private benefit of the aggrieved party. Duemling v. Fort Wayne Community Concerts, Inc., 243 Ind. 521, 524-25, 188 N.E.2d 274, 276 (1963); see also 17 C.J.S. Contempt § 6 (1963) (civil contempt is failing to do something ordered to be done by a Court in a civil action for the benefit of an opposing party).See footnote 3 Whether a party is in contempt is a matter left to the discretion of the trial court. Crowl v. Berryhill, 678 N.E.2d 828, 830 (Ind. Ct. App. 1997); State ex rel. Prosser v. Indiana Waste Sys. Inc., 603 N.E.2d 181, 185 (Ind. Ct. App. 1992). We reverse a trial court's finding of contempt only if there is no evidence or inferences drawn therefrom that support it. Shively v. Shively, 680 N.E.2d 877, 882 (Ind. Ct. App. 1997); Meade v. Levett, 671 N.E.2d 1172, 1181 (Ind. Ct. App. 1996).
Cowart, citing Pettit v. Pettit, 626 N.E.2d 444 (Ind. 1993), argues that money judgments may not be enforced through contempt proceedings. Pettit held that child support obligations may be enforced through contempt. Many cases state that contempt may not be used to enforce a decree ordering one party to pay the other a fixed sum of money. See, e.g., State ex rel. Shaunki v. Endsley, 266 Ind. 267, 362 N.E.2d 153 (1977) (alimony judgment); Bahre v. Bahre, 248 Ind. 656, 230 N.E.2d 411 (1967) (attorney fees). However, in each case
the issue was not whether contempt was available as a sanction for failing to pay a fixed
amount. Rather, they deal with the constitutional prohibition against imprisonment for
debt. Civil sanctions, including additional civil damages, are not prohibited by Article I, §
22 of the Indiana Constitution. Nonetheless, because parties may enforce obligations to pay
a fixed sum of money through execution as provided in Trial Rule 69, all forms of contempt
are generally unavailable to enforce an obligation to pay money. Pettit, 626 N.E.2d at 447;
Marsh v. Marsh, 162 Ind. 210, 212, 70 N.E. 154, 155 (1904) (fact that a judgment may be
enforced by execution creates strong implication against more drastic remedy of contempt).
More importantly to this case, contempt may be used to enforce a court's decree that a party transfer property to the other. State ex rel. Dale v Superior Court of Boone County, 260 Ind. 661, 299 N.E.2d 611 (1973) (court may enforce decree ordering transfer of property by contempt). Indiana Code § 31-15-7-10 explicitly provides that Notwithstanding any other law, all orders and awards contained in a dissolution of marriage decree . . . may be enforced by: contempt . . . . This statute is certainly subject to the constitutional prohibition on imprisonment for debt. But Cowart points to no other bar, and we find none, to a court's use of contempt to enforce an order that requires performance instead of payment or to the use of sanctions other than imprisonment. The 1996 decree's directive to sell and divide property is therefore enforceable by contempt. As explained further below, the trial court's finding of contempt was based on Cowart's actions and failures to act resulting in lost property value, not on his failure to pay financial obligations. Accordingly, the trial court's use of contempt power to compensate White for Cowart's actions was not prohibited.
conclude that the terms of the decree included taking reasonable steps to preserve the value
of the property to adequately compensate both parties, and certainly precluded willful acts
to devalue the property. Moreover, Cowart's post-decree actions created an obligation to
preserve the value of the property. When Cowart prevented White from caring for the
properties herself, he assumed complete control and a corresponding duty to maintain the
property on her behalf. A tenant in common may be liable to his cotenant for waste.
Wheeler & Another v. Me-shing-go-me-sia, 30 Ind. 402, 405 (1868). Cowart's actions
amount to permissive waste which results from negligence or omission to do that which
would prevent injury. See Finley v. Chain, 176 Ind. App. 66, 82, 374 N.E.2d 67, 79 (1978).
In sum, Cowart's actions violated both the spirit and the letter of the dissolution
decree and the trial court was within its discretion in finding Cowart in contempt.
Once a party has been found in contempt, monetary damages may be awarded to compensate the other party for injuries incurred as a result of the contempt. Thomas v. Woollen, 255 Ind. 612, 266 N.E.2d 20 (1971); Hancz v. City of South Bend, 691 N.E.2d 1322 (Ind. Ct. App. 1998). In determining an amount of damages [t]he inconvenience and frustration suffered by the aggrieved party are to be taken into account. Thomas, 255 Ind. at 616, 266 N.E.2d at 22. The trial court's contempt remedy was aimed at compensating White both for the loss in value of the properties and for other debts she paid that Cowart was ordered to pay in the 1996 decree.
The trial court found that the properties had been so devalued by Cowart's actions that
there was not enough equity to provide White with the amount she would have received from
the 1996 decree. The trial court then ordered Cowart to quitclaim the former marital home
to White as a remedy for its contempt finding. The court also ordered Cowart to pay
$21,162.60 to White for the balance of the property settlement due to her.
As already noted, and as Cowart concedes, the property division set out in the 1996 decree is still valid. At the time the properties are sold, White will receive the first $35,000 and 60% of the remaining proceeds. In addition, Cowart can be held liable for the loss in value to the property.
However, because Cowart's bankruptcy discharged all pre-petition debts, only Cowart's actions after the conversion date of November 5, 1996, are grounds for contempt damages. It is unclear from the record whether all of Cowart's actions that led to the reduced property value occurred after this date and thus we cannot conclude that the entire difference in value of the property from the time of the conversion to Chapter 7 to the contempt hearing is attributable to Cowart's post-petition behavior. Accordingly, we remand to the trial court for a factual determination on this issue. Once the trial court determines when Cowart's actions took place, it can calculate contempt damages based on the difference between the proceeds White would have received at the time of the conversion to Chapter 7 and those she will receive from the current value of the properties.
Although we appreciate the trial court's frustration with Cowart and the court's
ongoing struggle to obtain compliance with its orders,See footnote
the proper remedy for Cowart's
contempt is a judgment for damages rather than an award of the marital property to White.
See Thompson v. Thompson, 458 N.E.2d 298, 300-301 (Ind. Ct. App. 1984) (court's shifting
of property to compensate for contempt was improper, court should have ordered payment
of fixed sum to compensate wife for loss caused by husband's failure to comply). White is
of course free to pursue her remedies under Trial Rule 69 to enforce a money judgment
against the property in Cowart's hands.
The trial court also ordered Cowart to pay the appraisal fee incurred in the contempt proceeding. This fee was necessary because Cowart failed to maintain the property and is properly considered as part of White's special damages. See Clark v. Atkins, 489 N.E.2d 90, 98 (Ind. Ct. App. 1986) (damages based on unnecessary expenses occasioned by action of party in contempt were proper); 6 I.L.E. Contempt § 8 (1958) (fine is proper in civil contempt so long as it compensates the complainant). The trial court did not abuse its discretion in ordering Cowart to reimburse White for this fee.
In sum, we affirm the trial court's finding of contempt. We reverse the trial court's contempt damages award to the extent it includes the property taxes and the dissolution proceeding appraisal fee. We affirm the trial court's contempt damage award of the appraisal fee for the contempt proceeding. We remand for a determination of whether Cowart's actions took place after his conversion to Chapter 7, reconsideration of damages based on
Cowart's actions that led to a devaluation of the property and a money judgment for the total
SHEPARD, C.J., and DICKSON, SULLIVAN and SELBY, JJ., concur.
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