Hebel v. Georgi (In Re Georgi)
459 B.R. 716
Bankr. E.D. Wis.2011Background
- Debtor Michelle Georgi filed Chapter 7 on February 11, 2011 and listed ex-spouse Richard Hebel as an unsecured, nonpriority creditor on Schedule F.
- Divorce decree allocated marital debts to Georgi, including debts to Summit Credit Union and Capital One, with Georgi obligated to pay.
- Judgments obtained against Hebel for the debts: Summit Credit Union $4,299.35 (April 29, 2011) and Capital One Bank $3,325.53 (September 13, 2010).
- Hebel commenced an adversary proceeding seeking nondischargeability of those debts as to him under 11 U.S.C. § 523(a)(5) and (a)(15).
- Georgi moved to dismiss under Rule 12(b)(6); the court is faced with whether the complaint states a cognizable claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 523(a)(5)/(a)(15) nondischargeability applies to divorce-decree debts owed to a co-obligor spouse. | Hebel argues debts allocated in the divorce are nondischargeable against Georgi under 523(a)(5)/(a)(15). | Georgi contends no hold-harmless/indemnity provision and no DSOs; thus no nondischargeable claim against her. | Complaint states a claim; 523(a)(5)/(a)(15) can apply to divorce-related obligations to a co-obligor. |
| Whether lack of a hold harmless clause defeats the nondischargeability claim. | Hebel need not plead hold harmless; debts were marital and assigned to Georgi. | Absent hold harmless language, no obligation to reimburse; thus no nondischargeable claim. | Lack of express hold harmless is not fatal; courts recognize equivalent hold-harmless effect through divorce obligations. |
| Whether the debt can be nondischargeable as to the nondebtor spouse under 523(a)(5)/(a)(15) absent DSOs. | Debt to a spouse or recoverable by a spouse under a divorce decree can be nondischargeable. | No DSOs; treat as division-of-property debt; not dischargeable against the nondebtor only if supported by law. | Debts arising from divorce/property division can be nondischargeable against the nondebtor spouse; the claim survives a 12(b)(6) challenge. |
| Whether the complaint plausibly asserts an indemnity/recoupment basis for relief. | Indemnity may arise if the nondebtor was compelled to pay and faced judgments. | Indemnity theory not required to be pled; lack of explicit hold harmless could bar relief. | Indemnity theory may be read into the contract in this context; the complaint pleads enough for relief. |
Key Cases Cited
- In re Forgette, 379 B.R. 621 (Bankr.W.D.Va. 2007) (indemnity/hold-harmless concepts discussed in related context)
- In re Forgette, 379 B.R. 623 (Bankr.W.D.Va. 2007) (same source discussing indemnity; distinguishability noted)
- In re Burckhalter, 389 B.R. 185 (Bankr.D.Colo. 2008) (enforcement of assignment and equivalent to contempt under divorce decree court orders)
- In re Burckhalter, 389 B.R. 190 (Bankr.D.Colo. 2008) (contempt/enforcement and indemnity concepts in divorce context)
- In re Ginzl, 430 B.R. 702 (Bankr.M.D.Fla. 2010) (BCPPA aims to negate distinction between support and property division; nondischargeability)
- In re Gibson, 219 B.R. 195 (Bankr. E.D. Mich. 1998) (order to pay joint marital debt may be nondischargeable under 523(a)(15) even without hold harmless)
- In re Schmitt, 197 B.R. 312 (Bankr. W.D. Ark. 1996) (court found hold harmless inferred from payment obligation to third party)
- In re Speaks, 193 B.R. 436 (Bankr. E.D. Va. 1995) (hold harmless inferred from debtor's obligation to third party)