Court Opinion

ID: 62031
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:21:33+00
Date Added: 2024-06-11T17:20:01.902021
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                             FOR THE ELEVENTH CIRCUIT            FILED
                               ________________________ U.S. COURT OF APPEALS
                                                                          ELEVENTH CIRCUIT
                                                                             MAY 21, 2008
                                      No. 07-14445
                                                                           THOMAS K. KAHN
                                  Non-Argument Calendar
                                                                               CLERK
                                ________________________

             D. C. Docket Nos. 06-01896-CV-ORL-19 & 05-00321-BCK

IN RE: ALMA JEANNE SLIZYK,

                                                             Debtor.

------------------------------------------------------------------------------

ALMA JEANNE SLIZYK,

                                                             Plaintiff-Appellant,

                                             versus

STEVEN A. SMILACK,

                                                             Defendant-Appellee.

                                ________________________

                       Appeal from the United States District Court
                           for the Middle District of Florida
                            _________________________

                                        (May 21, 2008)

Before TJOFLAT, BLACK and MARCUS, Circuit Judges.
PER CURIAM:

      Alma Slizyk appeals pro se from the district court’s order affirming the

bankruptcy court’s order determining that $62,072.68 of Slizyk’s debt to Steven

Smilack, her ex-husband, was not dischargeable under 11 U.S.C. § 523(a)(15) in

her Chapter 7 bankruptcy proceeding.      Slizyk argues that the bankruptcy court

erred in finding that the debt was not dischargeable because she does not have the

ability to pay the debt and because the bankruptcy court did not consider how

much discharging the debt would harm Smilack.              Slizyk also claims that

$38,146.16 of the debt should be discharged because, although Smilack was

awarded that amount in a divorce decree to pay a debt to his mother, he never

actually paid the debt. After thorough review, we affirm in part, and reverse and

remand in part.

      In appeals from bankruptcy proceedings, “we review determinations of law

made by either the district or bankruptcy court de novo, while reviewing the

bankruptcy court’s findings of fact for clear error.” In re Int’l Pharmacy & Disc.

II, Inc., 443 F.3d 767, 770 (11th Cir. 2005). “Equitable determinations by the

Bankruptcy Court are subject to review under an abuse of discretion standard. In

reviewing for abuse of discretion, we . . . must affirm unless we find that the court

has made a clear error of judgment, or has applied the wrong legal standard.” In re

                                         2
Kingsley, 518 F.3d 874, 877 (11th Cir. 2008) (citations, quotations and alteration

omitted). We review the bankruptcy court’s order independently of the district

court. Int’l Pharmacy, 443 F.3d at 770.

       Chapter 7 bankruptcy generally discharges a debtor from all debts that arose

before she filed the bankruptcy petition. 11 U.S.C. § 727(b). However, a debt

incurred “in connection with a . . . divorce decree” is not dischargeable unless (A)

“the debtor does not have the ability to pay such debt from income or property of

the debtor not reasonably necessary to be expended for the maintenance or support

of the debtor,” or (B) “discharging such debt would result in a benefit to the debtor

that outweighs the detrimental consequences to a . . . former spouse . . . of the

debtor.” 11 U.S.C. § 523(a)(15) (2005).1 An objecting creditor first bears the

burden of proving, by a preponderance of the evidence, that the debt should be

exempted from discharge, and then the burden shifts to the debtor to establish the

debt is dischargeable under either subsection (A) or (B). In re Bowers, 357 B.R.
663, 667-68 (Bankr. M.D. Fla. 2006). When determining whether a debt should be

discharged under § 523(a)(15), courts may consider the totality of the

circumstances, including the parties’ incomes, assets, liabilities, health, job skills,

       1
         Congress amended the applicable statute to remove subsections (A) and (B) from
Section 523(a)(15), but the amendment is inapplicable to cases filed before the effective date of
the amendment, and Slizyck’s petition was filed before this date. See Pub. L. 109-8 §§ 215(c),
1501(a).

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training, age, education, future earning capabilities, and long-term financial

prospects. Id. at 668; In re Daniel, 290 B.R. 914, 918 (Bankr. M.D. Ga. 2003).

Weighing the detrimental consequences to the parties under § 523(a)(15)(B)

“require[s] the bankruptcy court to reach an equitable conclusion rather than a

factual or legal one.” In re Myrvang, 232 F.3d 1116, 1121 (9th Cir. 2000); cf.

Matter of Crosswhite, 148 F.3d 879, 888 (7th Cir. 1998) (discussing the “equitable

balancing test” of § 523(a)(15)(B)); In re Henrie, 235 B.R. 113, 121 (Bkrtcy. M.D.

Fla. 1999) (“Section 523(a)(15)(B) requires the Court to exercise its pure equitable

powers” and “make a value judgment in deciding which party suffers the most.”)

(quotations omitted).    “[C]ourts generally construe the statutory exceptions to

discharge in bankruptcy liberally in favor of the debtor . . . .” In re Miller, 39 F.3d
301, 304 (11th Cir. 1994) (internal quotations omitted).

      As an initial matter, the bankruptcy court did not clearly err in determining

that, based on Slizyk’s future earning potential and employment opportunities, she

was able to pay the $62,072.68 debt to Smilack. Int’l Pharmacy, 443 F.3d at 770.

However, the bankruptcy court nonetheless abused its discretion in holding that the

debt was not dischargeable, because there is no indication in the record that the

court ever applied the correct legal test to determine whether discharging the debt

“would result in a benefit to the debtor that outweighs the detrimental

                                          4
consequences to a spouse, former spouse, or child of the debtor.” 11 U.S.C. §

523(a)(15)(B). Specifically, the bankruptcy court said that it was using this test,

but never actually discussed what, if any, harm discharging the debt would do to

Smilack. Moreover, during the hearings, the bankruptcy court indicated that it did

not understand why Slizyk or Smilack’s financial status was relevant. And when

Slizyk sought to enforce the bankruptcy court’s order that Smilack disclose various

financial records, the court said it did not think it would need those documents to

make a decision.    This record shows that the bankruptcy court plainly did not

assess Smilack’s financial condition.

      We are thus compelled to conclude that because the bankruptcy court did not

consider the detriment that discharging the debt would cause Smilack and whether

that detriment would outweigh the benefit to Slizyk, it did not apply the correct

legal standard, and in so doing, abused its discretion. Kingsley, 518 F.3d at 877.

Accordingly, we reverse the portion of the district court’s order affirming the

bankruptcy court’s ruling that the divorce decree debt of $62,072.68 was not

dischargeable, and instruct the district court to vacate this part of the bankruptcy

court’s order and remand to the bankruptcy court for further proceedings.

      We reject, however, Slizyk’s argument that the portion of the debt awarded

to Smilack in the divorce decree to pay a debt to his mother should be discharged.

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Under the Rooker-Feldman doctrine,2 the U.S. Supreme Court is the only federal

court that Congress has granted jurisdiction to adjudicate a claim seeking review of

a state court judgment. 28 U.S.C. § 1257; Exxon Mobil Corp. v. Saudi Basic

Indus. Corp., 544 U.S. 280, 284 (2005). The doctrine applies to claims actually

raised in state court and to claims that were not raised in state court but are

“inextricably intertwined” with the state court judgment, so long as the plaintiff

had a reasonable opportunity to raise the claim in state proceedings. Powell v.

Powell, 80 F.3d 464, 466-67 (11th Cir. 1996). Using this doctrine, the district

court correctly concluded that it could not review Slizyk’s challenge to this portion

of the divorce decree because it is “inextricably intertwined” with the state court

judgment, and Slizyk had a reasonable opportunity to raise it in state court. We

likewise decline to address this issue, and affirm the ruling of the district court.

       AFFIRMED IN PART, REVERSED AND REMANDED IN PART.

       2
        See District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482 (1983);
Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923).

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