Court Opinion

ID: 9840452
Source: CourtListenerOpinion
Date Created: 2023-09-18 17:00:49.171746+00
Date Added: 2024-06-11T10:46:30.858413
License: Public Domain

NOT FOR PUBLICATION                          FILED
                      UNITED STATES COURT OF APPEALS                       SEP 18 2023
                                                                       MOLLY C. DWYER, CLERK
                                                                        U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

In re: ALAN J. COUTURE,                           No.   22-35479

             Debtor,                              D.C. No. 2:21-cv-00002-BMM
______________________________

CRYSTAL MOORE,                                    MEMORANDUM*

                  Plaintiff-Appellant,

    v.

ALAN J. COUTURE,

                  Defendant-Appellee.

                     Appeal from the United States District Court
                             for the District of Montana
                      Brian M. Morris, District Judge, Presiding

                          Argued and Submitted June 5, 2023
                          Submission Vacated June 14, 2023
                           Resubmitted September 18, 2023
                                 Seattle, Washington

Before: SCHROEDER, HAWKINS, and CALLAHAN, Circuit Judges.

         Plaintiff-Appellant Crystal Moore (Moore) appeals the district court’s order

affirming the Montana Bankruptcy Court’s order granting Defendant-Appellee

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.

-
Alan Couture’s (Couture) Federal Rule of Civil Procedure 60(b)(6) motion and

vacating its prior order finding certain obligations of Couture non-dischargeable in

his 2012 bankruptcy. We affirm.

      Moore and Couture divorced in 2002 and signed a Decree of Dissolution of

Marriage (Divorce Decree) outlining monetary obligations of Couture related to

alimony, mortgage payments, child support, and a marital tort judgment. In 2004,

Couture filed for bankruptcy in Indiana. Moore was listed as a creditor, and

although the two signed a reaffirmation agreement intending to preserve the

marital tort judgment in the Divorce Decree, the agreement was not approved by

the bankruptcy judge. Moore did not file any other documents related to the

dischargeability of the marital tort judgment and the bankruptcy judge did not

make any findings as to dischargeability.

      Couture filed a second bankruptcy in Montana in 2012, in which Moore did

file a dischargeability complaint and the bankruptcy judge found the marital tort

judgment to be non-dischargeable. In 2017, Couture filed a motion to reopen the

Montana bankruptcy and a subsequent Rule 60(b) motion to vacate the Montana

bankruptcy judge’s prior finding of non-dischargeability on the basis that the

marital tort judgment had previously been discharged in the 2004 Indiana

bankruptcy. The Montana Bankruptcy Court granted the Rule 60(b)(6) motion and

vacated its prior order holding the debt to be non-dischargeable. Moore appealed

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to the district court, which affirmed the decision of the bankruptcy judge, and then

timely appealed to this court.

      We review a bankruptcy court’s conclusions of law de novo. In re The

Mortgage Store, Inc., 773 F.3d 990, 994 (9th Cir. 2014). We review an order

granting or denying a motion to vacate under Rule 60(b)(6) for abuse of discretion.

Casey v. Albertson’s Inc., 362 F.3d 1254, 1257 (9th Cir. 2004). A bankruptcy

court abuses its discretion if it does not apply the correct law or if its decision rests

on a clearly erroneous finding of fact. Id. We review the bankruptcy court’s

decision without deference to the district court’s conclusions. In re Weisman, 5

F.3d 417, 419 (9th Cir. 1993).

      1.     Under Rule 60(b)(6), “a court may relieve a party . . . from a final

judgment, order, or proceeding . . . for any other reason that justifies relief.” Fed.

R. Civ. Pro. 60(b)(6). An error of law is an “extraordinary circumstance” that

supports the grant of a Rule 60(b)(6) motion. See Zurich Am. Ins. Co. v. Int’l

Fibercom, Inc., 503 F.3d 933, 940-41 (9th Cir. 2007). A Rule 60(b)(6) motion

must be filed in a reasonable time, which is evaluated in terms of possible

prejudice and justification for failing to act sooner, and depends on the facts of a

particular case. Fed. R. Civ. Pro. 60(c)(1); In re Pacific Far East Lines, Inc., 889

F.2d 242, 249 (9th Cir. 1989).

      Because the marital tort judgment was discharged in the 2004 Indiana

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bankruptcy, the later ruling of the Montana bankruptcy judge finding the marital

tort judgment to be non-dischargeable was a legal error. The Montana Bankruptcy

Court correctly determined the marital tort judgment as a non-support obligation

under 11 U.S.C. § 523(a)(15). Under the Bankruptcy Code as it existed during the

2004 Indiana bankruptcy, Moore was required to file a dischargeability complaint

under 11 U.S.C. § 523(c)(1) in order for the debt to survive the bankruptcy.

      Although Couture’s Rule 60 motion was filed three years after the

dischargeability ruling from the Montana Bankruptcy Court, the bankruptcy court

did not err in finding Moore had not suffered substantial prejudice due to the delay.

Based on the accounting from the Indiana state courts, Moore received at least

some amount of payments that counted towards the marital tort judgment even

though she was not legally entitled to those payments after the 2004 Indiana

bankruptcy. Furthermore, this situation arose in part from Moore’s failure to make

the appropriate filings during the 2004 Indiana bankruptcy.

      Therefore, given the Montana Bankruptcy Court initially erred as a matter of

law in finding non-dischargeable a debt that had been discharged in a previous

bankruptcy proceeding, the subsequent grant of the Rule 60(b)(6) motion was

within its sound discretion.

      2.     Moore argues that Couture is judicially estopped from now claiming

the marital tort judgment was discharged. “[J]udicial estoppel is an equitable

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doctrine invoked by a court at its discretion.” New Hampshire v. Maine, 532 U.S.

742, 750 (2001) (internal quotation marks and citation omitted). We review the

availability of judicial estoppel de novo as a question of law, and if available, the

decision to apply it for an abuse of discretion. In re Gurrola, 328 B.R. 158, 162

(B.A.P. 9th Cir. 2005); see also Hamilton v. State Farm Fire & Cas. Co., 270 F.3d

778, 782 (9th Cir. 2001). The Ninth Circuit Bankruptcy Appellate Panel has held

that in light of the strong anti-waiver provisions of 11 U.S.C. § 524(a), which

states that a discharge “voids any judgment at any time obtained . . . whether or not

such discharge is waived,” equitable exceptions cannot prevent a debtor from

relying on a bankruptcy discharge (i.e., judicial estoppel would not apply). See In

re Gurrola, 328 B.R. at 160, 163 (describing a discharge in bankruptcy as an

“absolute, nonwaivable defense,”); In re Kimmel, 378 B.R. 630, 638 (B.A.P. 9th

Cir. 2007) (“First, the chapter 7 discharge is absolute and, in light of the anti-

waiver provisions of § 524(a), does not admit of an equitable exception that would

permit it to be waived by postdischarge conduct.”). Accordingly, Moore may not

raise judicial estoppel in challenging the bankruptcy court’s Rule 60 order. And,

even if judicial estoppel were available, Couture’s conduct appears to be the result

of a misunderstanding of the law. See New Hampshire, 532 U.S. at 753 (noting “it

may be appropriate to resist application of judicial estoppel when a party’s prior

position was based on an inadvertence or mistake.” (internal quotation marks and

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citation omitted)). In sum, Moore has not shown the Montana Bankruptcy Court

erred in declining to apply judicial estoppel.

      3.     The Montana Bankruptcy Court owed no deference to the 2020

Indiana Court of Appeals ruling characterizing the debt as related to a willful and

malicious injury. Bankruptcy courts have exclusive jurisdiction to determine the

dischargeability of debts under 11 U.S.C. § 523(a)(6). In re Aldrich, 34 B.R. 776,

781 (B.A.P. 9th Cir. 1983). Even if the Montana Bankruptcy Court had agreed

with the Indiana Court of Appeals’ characterization of the debt, the outcome

remains the same—just as with a non-support obligation, a debt related to a willful

and malicious injury only survives bankruptcy if there is a dischargeability

complaint filed under 8 U.S.C. § 523(c), and Moore failed to file any such

complaint in the 2004 Indiana bankruptcy.

      We recognize the difficult situation presented by this case, but cannot find

any abuse of discretion by the Montana Bankruptcy Court. Therefore, the ruling is

AFFIRMED.

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