BRIEF OF APPELLANT, JEREMY MOSELEY, ON APPEAL FROM THE HARRISON COUNTY CHANCERY COURT 1 st JUD. DIST.

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1 E-Filed Document Feb :57: CA Pages: 30 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI JEREMY MOSELEY APPELLANT VS. APPEAL NO.: 2013-CA TIFFINY MOSELEY SMITH APPELLEE BRIEF OF APPELLANT, JEREMY MOSELEY, ON APPEAL FROM THE HARRISON COUNTY CHANCERY COURT 1 st JUD. DIST. (ORAL ARGUMENT REQUESTED)

2 CERTIFICATE OF INTERESTED PERSONS Counsel certifies the following persons have an interest in the outcome of this case: 1. Jeremy Moseley, Appellant 2. Tiffiny Smith, Appellee 3. R. Hayes Johnson, Jr., Attorney for Appellant 4. Thomas Payne, Attorney for Appellee 5. Trustmark National Bank, judgment creditor of Appellee So certified this, the 14 th Day of February, JEREMY MOSELEY By: JOHNSON LAW PRACTICE, PLLC s/r. Hayes Johnson, Jr. R. Hayes Johnson, Jr. (MSB #10697) i

3 IN THE SUPREME COURT OF THE STATE OF MISSISSIPPI JEREMY MOSELEY VS. TIFFINY MOSELEY SMITH APPELLANT APPEAL NO.: 2013-CA APPELLEE I. TABLE OF CONTENTS CERTIFICATE OF INTERESTED PERSONS i I. TABLE OF CONTENTS ii II. III. TABLE OF AUTHORITIES iii, iv STATEMENT OF THE ISSUES v IV. STATEMENT OF THE CASE V. STATEMENT OF RELEVANT FACTS VI. SUMMARY OF THE ARGUMENT VII. STANDARD OF REVIEW VIII. ARGUMENT IX. CONCLUSION CERTIFICATE OF SERVICE APPENDIX A ii

4 II. TABLE OF AUTHORITIES CASES: Asberry v. Asberry (In re Asberry), 2006 Bankr. LEXIS 2159, 2006 WL (Bankr. E.D. Va. Sept. 1, 2006) Burns v. Burns, 164 S.W.3d 99 (Mo. Ct. App. 2005) Carite v. Carite, 841 So. 2d 1148 (Miss. Ct. App. 2002) D Avignon v. D Avignon, 945 So.2d 401 (Miss. Ct. App. 2006) , 9 Douglas v. Douglas (In re Douglas), 369 B.R. 462 (Bankr. E.D. Ark. 2007) East v. East, 493 So.2d 927 (Miss. 1986) Garcino v. Noel, 100 So. 3d 470 (Miss. Ct. App. 2012) , 20 In re Estate of Hodges, 807 So.2d 297 (Miss. 2002) In re LaFleur, 11 B.R. 26 (Bankr.D.Mass.1981) In re Moyer, 2010 Bankr. Lexis 3890 (Bankr. S.D. Miss. 2010) , 15 In re Reines, 142 F.3d 970 (7th Cir. 1998) In re Sheffield, 349 B.R. 484 (N.D. Miss. 2006) Nicholas v. Nicholas, 841 So. 2d 1208 (Miss. Ct. App. 2003) Perkins v. Perkins, 787 So. 2d 1256 (Miss. 2001) West v. West, 891 So. 2d 203 (Miss. 2004) , 8 Williams v. Duckett (In re Duckett), 991 So. 2d 1165 (Miss. 2008) Yelverton v. Yelverton, 26 So. 3d 1053 (Miss. 2010) iii

5 STATUTES AND RULES: Miss. Code Ann (as amended) Miss. Code Ann (as amended) Miss. Code Ann (as amended) , 10, 11 Miss. R. App. P. 10(e) U.S.C. 523 (2000) , 18, U.S.C. 523 (2006) Fed. R. Bankr. P iv

6 III. STATEMENT OF THE ISSUES I. WHETHER A SEVEN-YEAR STATUTE OF LIMITATIONS ON ENFORCEMENT OF JUDGMENTS APPLIES TO THIS CONTEMPT ACTION, AND WHETHER THE LIMITATIONS PERIOD SHOULD BE MEASURED FROM THE ENTRY OF THE CHANCERY COURT S JUDGMENT AGAINST THE APPELLANT IN 2000, OR FROM ENTRY OF AN UNRELATED JUDGMENT AGAINST THE APPELLEE IN 2007? II. WHETHER A FEDERAL BANKRUPTCY COURT S 2001 DISCHARGE OF A DEBT OWED BY THE APPELLANT BARRED THE APPELLEE FROM SEEKING ENFORCEMENT OF THAT DEBT IN A CONTEMPT ACTION FILED IN 2011 IN CHANCERY COURT? III. WHETHER THE CHANCELLOR ERRED IN AWARDING THE APPELLEE $36,036.18, WHERE NO EVIDENCE OF THE AMOUNT OF DAMAGES, INTEREST OR ATTORNEY FEES WERE OFFERED AT TRIAL? v

7 BRIEF IN SUPPORT OF JEREMY MOSELEY S APPEAL COMES NOW YOUR APPELLANT, Jeremy Moseley, through counsel, who submits this Brief in Support of the Appeal: IV. STATEMENT OF THE CASE 1. This is an appeal from the Harrison County Chancery Court, First Judicial District, of an Agreed Order Dismissing Motion to Alter or Amend, R.E. 63, 1 and the incorporated Final Order entered on May 21, 2013, R.E The instant matter began on Feb. 25, 2011, when Tiffiny Smith 2 filed a Complaint for Contempt of Final Judgment of Divorce. R.E On July 19, 2011, Jeremy Moseley filed a Motion to Dismiss Complaint for Contempt, and a supporting Memorandum, R.E Mr. Moseley cited statutes of limitation, and the protection of a bankruptcy discharge, as reasons why the contempt action should be dismissed. 4. Tiffiny Smith responded in opposition to Jeremy Moseley s motion, R.E On Sept. 6, 2012, the Chancery Court, Hon. Sanford Steckler, denied Jeremy Moseley s motion to dismiss, R.E Jeremy Moseley filed a Motion to Reconsider, R.E , and Tiffiny Smith 1 The attached record excerpts are in the format R.E. 13, meaning the page where the clerk has inserted the number 13" in the bottom middle of the page. Separately, references to the official transcript, also attached, are in the format T12:22, meaning page 12, line She filed the Complaint under the name Tiffiny Moseley Smith, but will be referred to herein as Tiffiny Smith. 1

8 responded, R.E A hearing was held on March 21, 2013, (transcript is attached), after which the Court issued a Final Order on May 21, R.E Jeremy Moseley filed a Motion to Alter or Amend Final Order, R.E ; the parties then negotiated an Agreed Order Dismissing Miss. R. Civ. P. 59 Motion to Alter or Amend, R.E. 63, which set the time for appeal. Id. 9. Jeremy Moseley filed a Notice of Appeal on July 15, 2013, R.E Appellant s deadline for filing a brief is Feb. 14, This brief is accompanied by the following exhibits, all of which are attached collectively as Appendix A : a. Clerk s papers containing: i. A Table of Contents; ii. The Chancery Court docket; iii. Record excerpts, pages 1-79; b. Supplemental record excerpts, 3 including: 3 Undersigned counsel has identified two pleadings that are cited in documents contained in the appellate record, and quoted in part by the Chancery Court, but which are missing from the certified record. Specifically, the underlying divorce decree and property settlement agreement, collectively designated as Exhibit A to the Complaint for Contempt, cited at R.E. 3; and a judgment against Appellee by the Jackson County County Court, designated as Exhibit C to the Complaint for Contempt, and cited at R.E. 3-4, are not actually attached to the official copy of the Complaint for Contempt and do not appear elsewhere in the record. See R.E Since these documents are the judgments around which this matter revolves, they must be cited in the brief. Counsel has communicated with court staff, and opposite counsel, and expects that appropriate amendments will be made to the record. Counsel 2

9 i. Exhibit A : Judgment of Divorce, dated Sept. 7, 2000, and an incorporated Property Settlement Agreement, dated July 28, 2000; ii. Exhibit B : Order Overruling Defendant s Motion to Dismiss and Granting Plaintiff s Motion for Judgment on Pleadings, dated Oct. 4, 2007; c. Transcript of Motion Hearing Held March 21, 2013, pages V. STATEMENT OF RELEVANT FACTS 12. Jeremy and Tiffiny Moseley were granted a divorce by the Harrison County Chancery Court on Sept. 7, Ex. A, pp Incorporated into the divorce decree was a Property Settlement agreement, dated July 28, Ex. A, pp Among the terms in the Agreement was allocation to Jeremy Moseley of an automobile loan with Trustmark National Bank. Mr. Moseley was to possess the 1998 Camaro financed by both spouses, and pay the loan. He also was to hold the Wife harmless for any debt associated with said vehicle. Ex. A, p On March 12, 2001, Mr. Moseley filed a Chapter 7 bankruptcy in the United States filed a Miss. R. App. P. 10(e) motion, requesting either that the trial court order amendment of the record, or that opposite counsel stipulate to the inclusion of the documents. However, at this writing, no order or stipulation has been secured, so the Appellant s Brief will be submitted with references to the these documents cited as Exhibits A and B to this brief. If necessary, counsel requests the right to amend this brief with references to the official record, once it is properly amended to include the missing documents. 3

10 Bankruptcy Court of Arizona. Within the schedules filed in the bankruptcy matter, Mr. Moseley listed the debt for the 1998 Chevrolet Camaro with Trustmark National Bank as a debt he intended to surrender and have discharged. On July 3, 2001, Mr. Moseley received a discharge order from the United States Bankruptcy Court of Arizona. 15. Included in his discharge was the debt owed to Trustmark National Bank. 16. On or about September 19, 2003, Trustmark National Bank filed suit against Tiffiny Smith for the debt owed on the 1998 Chevrolet Camaro. On or about Oct. 4, 2007, the Jackson County County Court issued an order granting a judgment on the pleadings, and ordering the Plaintiff to pay $15,262.96, plus interest, from Sept. 19, 2003, forward. Ex. B. 17. On Feb. 25, 2011, Tiffiny Smith filed a Complaint for Contempt, seeking to enforce the Property Settlement Agreement against the Defendant, and requesting that the Defendant be held in contempt of the Chancery Court s divorce decree. 18. As noted above, Jeremy Moseley sought to have the matter dismissed, but the Chancery Court denied the motions. 19. Although never affirmatively stating that Jeremy Moseley was in contempt, the court ordered Mr. Moseley to pay $36, in damages, interest and attorney fees. 20. This appeal seeks to have the Chancery Court s order reversed and rendered; or alternatively to have it remanded for proper application of the law. 4

11 VI. SUMMARY OF THE ARGUMENT 21. Statute of limitations bars the relief granted by the Chancery Court: 22. Property settlement agreements entered by parties prior to divorce are contracts. In fact, the Chancery Court analyzed the instant matter as a contract, and described a three-tiered approach to the interpretation of contracts when rendering its decision. R.E Here, assuming Jeremy Moseley breached the contract by failing to pay the automobile loan prior to his bankruptcy in 2001, the statute of limitations began to run not later than the date of the bankruptcy The general statute of limitations for contracts is three years. Since Tiffiny Smith did not file the contempt action until 2011, the statute of limitations should have barred the action by several years. 25. Alternatively, the seven-year statute of limitations for enforcement of judgments should apply. This entire matter was filed by the Appellee as an alleged willful contempt of the Final Judgment of Divorce, R.E. 3, which obviously refers to the Chancery Court s decree from In fact, a copy of the divorce decree and property agreement were attached to the Complaint. Ex. A. 26. Therefore, a seven-year statute should have run no later than 2007 years before the contempt action was filed. 4 The breach began with his first missed payment on the automobile loan, but the record does not contain information to determine when that occurred. It happened not later than the bankruptcy petition, when he listed the debt and had it discharged. 5

12 27. Contrary to the contents of Appellee s own Complaint, however, the Chancery Court stated in the Final Order that the contempt action is based upon the Oct. 4, 2007, Jackson County Judgment against Tiffiny Smith. R.E. 45. In effect, the court held Jeremy Moseley in contempt for violating another court s order that did not name Jeremy Moseley as a party. 28. Properly applied to the Chancery Court judgment from 2000, the statute of limitations for enforcement of judgments should bar this matter as untimely. 29. Debt was discharged under bankruptcy law, and not opposed by Appellee: 30. At the time Jeremy Moseley filed bankruptcy, debtors could discharge domestic obligations that were not in the nature of alimony, maintenance or support. Automobile loans would not be considered alimony, maintenance or support. 31. Discharge could be prevented if a creditor e.g., Tiffiny Smith objected in timely fashion and as provided by bankruptcy rules. In light of an objection, a bankruptcy court would conduct an analysis to determine 1) whether a debt was alimony, maintenance or support; and 2) if no, then whether the debt could be discharged after conducting a balancing test. 32. However, if no creditor objected, then the bankruptcy analysis would not occur. 33. Here, Tiffiny Smith apparently did not object. 34. The bankruptcy court discharged Jeremy Moseley s debt to Trustmark in 2001, and Tiffiny Smith should not be allowed to revive the debt 10 years later in Chancery Court. 6

13 35. No evidence supports $36, awarded by Chancery Court: 36. The court record does not include evidence to support the amounts of money awarded in the Final Order, R.E. 60, including: a. Calculation of the $36, total, including the amount of the underlying judgment previously paid by Tiffiny (Moseley) Smith through a garnishment on her wages...; b. Attorney fees of $4,000.00; c. Travel/lodging expenses of $1, R.E As a result, the record does not support the calculation of money damages contained in the Final Order. VII. STANDARD OF REVIEW 38. The Court applies a limited standard of review for appeals involving domestic relations matters. We will not disturb the findings of a chancellor unless the chancellor was manifestly wrong, clearly erroneous, or an erroneous legal standard was applied, West v. West, 891 So. 2d 203, 209 (Miss. 2004) (quoting Perkins v. Perkins, 787 So. 2d 1256, 1260 (Miss. 2001)). Questions of law are reviewed de novo. Yelverton v. Yelverton, 26 So. 3d 1053, 1056 (Miss. 2010). VIII. ARGUMENT 39. A Property Settlement Agreement is a contract, thus a three-year statute of limitations should apply. 7

14 40. This contempt action was brought to enforce a clause in the property settlement agreed to by the parties in September of Ex. A, p. 5. In this agreement, a contractual obligation was created when Mr. Moseley agreed to assume the responsibility for the debt on the 1998 Chevrolet Camaro. Id. 41. In West v. West, 891 So. 2d 203 (Miss. 2004), the Mississippi Supreme Court, while discussing property settlement agreements, stated as follows: [P]roperty settlement agreements are contractual obligations. In re Estate of Hodges, 807 So.2d 297 (Miss. 2002). The provisions of a property settlement agreement executed prior to the dissolution of marriage must be interpreted by courts as any other contract. Id. at 445. In East v. East, 493 So.2d 927, (Miss. 1986), we held [a] true and genuine property settlement agreement is no different from any other contract, and the mere fact that it is between a divorcing husband and wife, and incorporated in a divorce decree, does not change its character. Id. at 210. The Court makes it clear that a property settlement agreement is no different from a contract. 42. In D Avignon v. D Avignon, 945 So.2d 401 (Miss. Ct. App. 2006), the Mississippi Court of Appeals applied the language of West. The court was reviewing a Chancellor s finding that a husband failed to perform under the terms of an escalation clause within a property settlement agreement. D Avignon, 945 So. 2d at 408. The Court of Appeals found that the Chancellor did not err in applying the three-year statute of limitations to a property settlement agreement. Id. 43. The three-year statute of limitations is contained in Miss. Code Ann The issue in the instant matter is similar to the issue addressed in D Avignon. The 8

15 obligation within the property settlement agreement is nothing more than a contractual obligation between Mr. Moseley and his ex-wife. Since Mr. Moseley s obligation to pay for the automobile loan arose in 2000, Ex. A, and was breached not later than 2001, R.E. 32, then a Complaint filed in 2011 is simply too late. 45. Alternatively, Defendant s claim is barred by the seven-year applicable statute of limitations for the enforcement of divorce decrees. 46. There is case law indicating that contempt actions on domestic judgments may be governed by the seven-year statute of limitations for enforcement of judgments. D'Avignon v. D'Avignon, 945 So. 2d 401, 408 (Miss. Ct. App. 2006); Nicholas v. Nicholas, 841 So. 2d 1208 (Miss. Ct. App. 2003). 47. Here, the Chancery Court never expressly held Jeremy Moseley in contempt; instead, the court only denied Mr. Moseley s motions to dismiss and to reconsider. Doc ; Doc However, the net effect of those denials coupled with the order to pay damages and attorney fees appeared to be a finding of contempt. 48. Miss. Code Ann governs enforcement of judgments: All actions founded on any judgment or decree rendered by any court of record in this state, shall be brought within seven (7) years next after the rendition of such judgment or decree, or last renewal of judgment or decree, whichever is later. 5 In its Final Order, Doc. 60, the Chancery Court stated that the parties had previously entered an Agreed Order that would lead to a Judgment in favor of the prevailing party... As discused infra, Jeremy Moseley does not agree that the Agreed Order, Doc , leads to confession of contempt. Instead, the Agreed Order only allowed that attorney fees and travel expenses related to a previously set hearing would be allocated against Jeremy Moseley if the court denied the motion. 9

16 Miss. Code Ann A chancery decree is afforded the same force, operation and effect as a judgment of law from a Circuit Court. Miss. Code Ann If a chancery decree gives a party affirmative relief upon which he could execute or make him a judgment creditor, then the seven-year statute of limitations might apply. See Williams v. Duckett (In re Duckett), 991 So. 2d 1165, (Miss. 2008) (party did not have such standing, so seven-year statute did not apply). 51. The statute of limitations on a right to compel a monetary judgment in a domestic action begins to run on the date on which the payment is due and payable, Carite v. Carite, 841 So. 2d 1148, 1151 (Miss. Ct. App. 2002). 52. In the Moseley divorce, Ex. A, Jeremy Moseley s obligation to pay the automobile loan began immediately. No later than July, 2001, when the debt was discharged, Mr. Moseley stopped paying the debt. The seven-year statute ran long before Tiffiny Smith sued for contempt in Although Tiffiny Smith alleged contempt based on the 2000 divorce decree, R.E. 3, IX, the Chancery Court held that Jeremy Moseley was in contempt of an unrelated Jackson County judgment entered against Tiffiny Smith in (The Jackson County judgment is attached hereto as Ex. B. ) 54. In the Order Denying Motion to Dismiss, R.E , the Chancery Court stated: 6 Ostensibly, the Appellee could have re-enrolled the judgment within seven years. However, she apparently did not do so. 10

17 This contempt action is based upon the October 4, 2007, Jackson County Judgment entered against Tiffiny for the outstanding loan on the Camaro. Tiffiny had seven (7) years, or until October, 2014, within which to file her action. R.E Mr. Moseley filed a Motion to Reconsider, based in part on this apparent misapplication of the seven-year statute to an unrelated judgment. In the Motion to Reconsider, R.E , Appellant argued: R.E Ms. Smith is seeking to hold her former husband in contempt for violation of a domestic order of this Court, not to enforce against him or sue him for indemnification or otherwise on the Trustmark judgment entered in As such, the date of entry of the Trustmark judgment should have no bearing on the alleged contempt The point was reiterated by undersigned counsel at oral argument: MR. JOHNSON: [Y]ou stated that the time line was measured from the entry of a judgment against Mr. Payne s client. And so, in effect, that the contempt would be this Court, arguably, enforcing contempt of another court s order.... T. 8. * * *... I request that the Court reconsider whether its application of a Jackson County Court s judgment against the defendant that you re being asked to find my client in contempt of, that that order didn t reach my client; he s not a defendant in that [judgment]; he s not named, and wouldn t properly be so... T. 9. * * * 7 Although undersigned counsel discussed the concept of a discovery rule in the trial court pleadings and oral argument, counsel has not found any legal authority for application of a discovery rule to extend the seven-year limitations period in Miss. Code Ann

18 T [T]he enforcement action that s being brought to this Court is about your own order, not another court s order, and... that s what should trigger the time measurement for purposes of the statute of limitations. T Although the Chancery Court acknowledged the potential problem, it did not alter its previous decision: THE COURT:... Now, when did the debt finally manifest itself against her... I think it all manifested itself when a judgment was taken against her in Jackson County.... [I]t may be that you are correct in that the statute of limitations has run because the debt was out there and she knew about it, and he hadn t been holding her harmless, but he could have at any time. T. 15. * * * [O]n the statute of limitations, this is a court of equity. In equitable matters, it s a seven-year statute, and so I don t think I made a mistake. Now, we may be plowing some new ground here; I don t know.... It just seems to make sense to me, this being a Court of equity and fairness.... T As noted by the Chancery Court, the debt was out there and she knew about it. T Even though Appellant agrees that the seven-year statute might apply to this contempt matter, the limitations period should be measured from entry of the divorce decree not an unrelated judgment in another court. 60. Tiffiny Smith had seven years after 2000 during which to seek enforcement of that debt obligation against Jeremy Moseley. Instead, she waited 11 years to do so. When she finally took action, it was too late. 61. Appellant requests that the Chancery Court decision be reversed and rendered, 12

19 because a contempt action brought in 2011 was not timely filed. 62. Jeremy Moseley s obligation on the underlying debt was terminated with the discharge of his bankruptcy in July of Past the statutes of limitation, this matter involves a clash of federal and state law. The question is whether Mr. Moseley s agreement in 2000 to assume the debt for the Chevrolet Camaro and hold the defendant harmless somehow outweighed and survived the subsequent discharge of that debt in bankruptcy. 64. Specifically: Did the Arizona bankruptcy court s discharge of the Trustmark National Bank debt in 2001 bar the Chancery Court from holding Mr. Moseley liable for Tiffiny Smith s unpaid obligations to Trustmark in 2013? 65. The answer puts the Chancery and bankruptcy courts in potentially conflicting positions. In an irreconcilable differences divorce, the duties of a chancery court in Mississippi are to divide marital property equitably and award alimony, if appropriate. In re Moyer, 2010 Bankr. Lexis 3890, *17-18 (Bankr. S.D. Miss. 2010) (citations omitted). In a chapter 7 case, the bankruptcy court s function is to oversee the marshaling, liquidation, and equitable distribution of the assets of the bankruptcy estate, and to enforce the discharge injunction.... Protecting a debtor s fresh start requires balancing bankruptcy law against the competing interests of family law when the debts in question arise out of a divorce. Id. 66. Bankruptcy law as it existed in 2001 barred a Chapter 7 debtor from discharging debts considered to be in the nature of alimony, maintenance or support. However, other 13

20 types of domestic obligations might be discharged, based on additional analysis. 67. However, before a dispute over discharge could even arise, some creditor opposing discharge was required to object to the discharge in bankruptcy court. 68. The Mississippi Court of Appeals provided a succinct overview of the appropriate bankruptcy procedures in Garcino v. Noel, 100 So. 3d 470 (Miss. Ct. App. 2012), a case where the appeals court held that a bankruptcy discharge of a domestic obligation acted as res judicata to bar collection of the subject debt in Chancery Court: Prior to 2005, a creditor ex-spouse... was required to bring an adversary proceeding within sixty days of the meeting of creditors to prevent a propertysettlement debt from being discharged. Asberry v. Asberry (In re Asberry), No SSM, 2006 Bankr. LEXIS 2159, 2006 WL , at *1 (Bankr. E.D. Va. Sept. 1, 2006) (citing former 11 U.S.C. 523(a)(15), (c) (2000); Fed. R. Bankr. P. 4007(c)). The Bankruptcy Code distinguishes between debts for alimony and support and debts for property-settlement awards. Compare 11 U.S.C. 523(a)(5) (2006), with 11 U.S.C. 523(a)(15) (2006). Under the pre-2005 Bankruptcy Code, all debts owed to a spouse, former spouse, or child "in the nature of alimony, maintenance, or support"-- which the Code refers to as "domestic support obligations" --were nondischargeable. But debts owed to a spouse, former spouse, or child due to a separation agreement, divorce decree, or court order that were not domestic support obligations--i.e. property-settlement debts--were only conditionally non-dischargeable. This is because former section 523(a)(15) allowed the debtor to bring "affirmative defenses" to the creditor ex-spouses's claim that propertysettlement debt owed him was non-dischargeable. Douglas v. Douglas (In re Douglas), 369 B.R. 462, 464 (Bankr. E.D. Ark. 2007) (quoting Hon. William Houston Brown, Bankruptcy and Domestic Relations Manual 1:3 (2006)). Unless the creditor ex-spouse filed a timely adversary proceeding with the bankruptcy court and proved that the affirmative defenses did not apply and that non-support debt was indeed non-dischargeable, the domestic non-support debt was discharged. In re Asberry, 2006 Bankr. LEXIS 2159, 2006 WL , at *1 (citing former 11 U.S.C. 523(a)(15), (c) (2000); Fed. R. Bankr. P. 4007(c)). 14

21 Garcino v. Noel, 100 So. 3d 470, (Miss. Ct. App. 2012) (some internal citations omitted; emphasis in original) None of the procedural steps described herein can even begin, however, if dischargeability is never contested in bankruptcy court. [I]f the issue is not resolved in a timely manner during the debtor s bankruptcy case, a general order of discharge at the close of the bankruptcy case discharges the debtor from all property settlement obligations arising in a divorce, and the issue is permanently waived. In re Moyer, 2010 Bankr. LEXIS 3890, *23 (Bankr. S.D. Miss. 2010). 70. Here, there is no evidence that Tiffiny Smith filed any timely objection or adversary proceeding in the Arizona bankruptcy court. 9 Accordingly, the Trustmark debt was discharged as to Jeremy Moseley without opposition in R.E In Garcino, supra, the Mississippi Court of Appeals noted that discharge of a debtor ex-spouse s debts in that case equated to res judicata, and prevented the creditor exspouse from enforcing the debt in Chancery Court. While there are similarities to the instant case, a difference is that Tiffiny Smith apparently never asserted her objection in bankruptcy court, whereas the creditor spouse in Garcino filed, then dismissed, a 8 Garcino goes on to explain that the dischargeability of non-support domestic obligations was prevented after passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which eliminated the affirmative defenses and made all property settlement obligations nondischargeable. Id. at 474. BAPCPA did not affect the Moseley bankruptcy, which was filed in 2001, R.E This issue is never directly addressed in the record. Tiffiny Smith s attorney stated in a responsive pleading that Ms. Smith did not know about the bankruptcy, R.E. 56, but no evidence supports that contention. 15

22 bankruptcy adversary proceeding. The Garcino court held that dismissal of the bankruptcy proceeding served as a final judgment, which could not later be re-argued in state court. Because Tiffiny Smith did not appear in bankruptcy court, the identity of parties between the two Moseley actions a required element of res judicata may be missing. 72. However, Garcino involved a post-2005 bankruptcy, where creditor spouses no longer were required to file objections; having filed one anyway, the creditor spouse in that case was bound by the outcome (discharge of the domestic debt). 73. Since Moseley was a pre-2005 bankruptcy, and creditors such as Tiffiny Smith were required to object in bankruptcy court, then the absence of objection and the eventual discharge should bind Tiffiny Smith in the same way that Garcino did to the creditor in that case. 74. Appellant suggests that if for no other reason, Jeremy Moseley is protected from the obligation to Tiffiny Smith because the debt was discharged by a bankruptcy court, and Ms. Smith did not object as required by federal law. 75. Even if Appellee had properly objected, the property settlement debt could have been deemed dischargeable after the bankruptcy court analyzed various factors related to the parties and the debt. These factors range from the relative income of the parties, to the potential for a finding of contempt in state court. 76. In In re Sheffield, 349 B.R. 484 (N.D. Miss. 2006), a creditor ex-spouse challenged the potential discharge of a credit card debt that had been allocated to a debtor ex- 16

23 spouse in a divorce proceeding. [W]hether or not the debt is a maintenance obligation is a matter of federal bankruptcy law, rather than state law. Sheffield, 349 B.R. at 488 (citing In re Reines, 142 F.3d 970 (7th Cir. 1998)). [P]roperty settlement obligations to a former spouse will be dischargeable in bankruptcy, while obligations to provide maintenance and support will not. Id. at 489. (citing In re LaFleur, 11 B.R. 26, 28-9 (Bankr.D.Mass.1981)). 77. In Sheffield, a Chapter 7 debtor s former husband filed a contempt petition in the Chancery Court of Pontotoc County for the wife s failure to pay an obligation owed to the Bank of Mississippi for a credit card debt. Sheffield, 349 B.R. at 487. The parties ended up in an adversary proceeding within the bankruptcy court. Id. The property settlement agreement provided that the wife would hold the husband harmless from any liability on several debts, including a $9, credit card debt with Bank of Mississippi Mastercard. Id. 78. The court in Sheffield distilled an eight-part test out of bankruptcy law to determine if an obligation is in the nature of alimony or support, and whether it could be discharged: Factors 1. Will the obligation terminate on the remarriage of the other spouse? 2. What are the relative earning capacities of the parties? Findings 1. The obligation to pay the credit card debt will not terminate on the remarriage of the plaintiff. this obligation was intended for the support of the plaintiff. 2. The earning capacities, at the time of the divorce, of both the defendant and the plaintiff were relatively comparable. 17

24 3. Are the payments being made directly to the other party? 3. The payments were to be made directly to the credit card issuer, not to the plaintiff. 4. Is the payment enforceable by contempt? 4. While the Chancery Court of Pontotoc County, Mississippi, did not have an opportunity to adjudicate the plaintiff's petition for contempt, this court doubts that the defendant would be cited for contempt because she does not have the financial wherewithal to pay this obligation. 5. How do the parties treat the obligation for tax purposes? 6. What are the reasonable and necessary living expenses of the receiving spouse? 7. Is the obligation subject to modification if economic circumstances change? 8. What was the nature of the property awarded to the other spouse, e.g., the wife was awarded an automobile with the husband to make payments thereon - was the automobile necessary for the wife's livelihood? The transportation of a dependent? 5. Since there were no payments made on the credit card obligation by the defendant, the court seriously doubts that either party addressed this factor on their respective income tax returns. 6. Since the plaintiff was called upon to make the payments to the Bank of Mississippi, the court would surmise that his living expenses were affected. 7. The court does not know whether the obligation would be modified by the Chancery Court, but would surmise that if a modification were, in fact, granted, because of the current financial circumstances of the parties, that the defendant would benefit by a reduction in this particular obligation. 8. The nature of the obligation was an agreement by the defendant to indemnify and hold harmless the plaintiff from any liability insofar as the Bank of Mississippi Mastercard indebtedness was concerned. Other than the parties agreement that this was in the nature of alimony, there is no credible evidence that this obligation was intended for the support of the plaintiff. In re Sheffield, 349 B.R. at ; Having looked at each of these factors, this court...cannot conclude that the obligations to pay the credit card debts were in the nature of alimony or support. Id. at After determining the credit card debt obligation was not alimony or support, the court then determined the dischargeability of the debt under Section 523(a)(15) of the 18

25 Bankruptcy Code. Id. at 492. Section 523(a)(15) provides a two-part test as follows: Id. 1. If the debtor can establish that he or she cannot pay the obligation from income or property not reasonably necessary to be expended for the maintenance or support of the debtor or dependants of the debtor, the inquiry ends and the debt is discharged. 2. However, if the debtor can afford to pay the obligation, the bankruptcy court is called upon to balance the interests of the parties. If the benefit of the bankruptcy discharge to the debtor outweighs the detriment to the non-debtor spouse, the debt will be discharged. Conversely, if the detriment to the non-debtor spouse outweighs the benefit of the debtor s discharge, the property settlement obligation will not be discharged. 81. The court determined that the debtor did not have sufficient income to meet her monthly expenses and was unable to pay the property settlement obligation because of certain hardships, including decreased income and caring for a handicapped child. Id. Further, the court found the debtor s benefit of a discharge, clearly outweighed the detriment to the ex-husband seeking contempt. Id. 82. The decision in Sheffield could have provided a framework for analysis in the instant matter if either Tiffiny Smith had objected to discharge, or the Chancery Court had agreed to conduct such an analysis. However, neither of those scenarios arose. 83. In ruling on Jeremy Moseley s motions, the Chancery Court expressly declined to consider the bankruptcy-related issues. The issue is whether Jeremy must hold Tiffiny harmless from any obligation to pay for the 1998 Chevrolet Camaro under any circumstances, including bankruptcy. The Court finds that he is. R.E

26 84. At oral argument on a motion to reconsider, the chancellor again declined to conduct the Sheffield-type analysis: I don t care if he goes down to the bankruptcy court and discharges his responsibility to pay for that car. His job is still to hold her harmless from anyone who claims against her. This is a Court of equity, not a bankruptcy court. T Appellant acknowledges that a Chancery Court has authority to consider matters properly before the court including issues related to debts discharged in bankruptcy. In Garcino v. Noel, 100 So. 3d at 475, the Mississippi Court of Appeals stated in dicta that: Although only the bankruptcy court can decide whether to grant a discharge in bankruptcy, the effect of such a discharge may be determined by any court in which the issue is properly raised. Id., quoting Burns v. Burns, 164 S.W.3d 99, 103 (Mo. Ct. App. 2005) (other citations omitted) (emphasis in original). 86. Such considerations, however, necessarily require the state court to apply federal bankruptcy law in making such decisions. Garcino, 100 So. 3d at 475, n. 5 (( Of course, federal bankruptcy law applies to the state court s determination. )(citation omitted)). 87. Since the Harrison County Chancery Court declined to even consider the application of bankruptcy law choosing instead only to apply principles of equity Appellant did not have the opportunity for the state court to make its decision on proper grounds. 88. Even if this Court does not hold that the domestic obligation was discharged in full 20

27 by the bankruptcy court, then Appellant requests that the matter be remanded so that a complete Sheffield-type analysis can be conducted by the Chancery Court. 89. No evidence in the record supports the damages and other amounts awarded by the court: 90. The proceedings in Harrison County Chancery Court focused mostly on Jeremy Moseley s objections to the contempt action, and his attempts to have the complaint dismissed under statutes of limitation or application of bankruptcy law. At no time did the Appellee, Tiffiny Smith, submit evidence to the Chancery Court supporting her claims for damages. 91. Appellee pled that a judgment had been entered against her in Jackson County, Ex. B, and cited the judgment, e.g., R.E. 3-4, 6. But she never submitted evidence of alleged garnishments of her paychecks, amounts of her attorney fees or any other evidence of damages. No such evidence exists in the record, R.E Nonetheless, the Final Order, R.E. 60, contains detailed amounts of damages owed by the Appellant, including: a total $36,036.18; amounts attributable to garnishment and interest; $4,000 in attorney fees; and $1, travel costs. Id. 93. On information and belief, these amounts were calculated by Appellee s counsel, and submitted directly to the Chancery Court in a draft order. The Court signed and entered the order, which appears at R.E Undersigned counsel had received a version of the draft order from opposite counsel, but expressed concerns to counsel because the order appeared to confess contempt. See n. 5, supra. Opposite counsel then sent the draft directly to the chancellor, 21

28 94. Because there is no support in the record for these amounts, Appellant requests that the Chancery Court be required to hold a damages hearing, and to issue its order based on amounts, if any, that can be proven at such hearing. 95. IX. CONCLUSION 96. WHEREFORE, PREMISES CONSIDERED, Appellant requests the court to enter an order reversing and rendering the decision of the Harrison County Chancery Court, on grounds that a contempt action against Jeremy Moseley was time-barred in 2011, or that the underlying debt was discharged completely in 2001; alternatively, Appellant seeks remand so that the Chancery Court may conduct an analysis under bankruptcy law to determine whether or not the subject debt remains enforceable in Chancery Court, and that any subsequent order on damages be based on evidence properly admitted by the Chancery Court and contained in the record. Appellant also requests general relief. Respectfully Submitted, this the 14 th Day of February, JEREMY MOSELEY By: JOHNSON LAW PRACTICE, PLLC s/r. Hayes Johnson, Jr. and the court signed the order. 22

29 CERTIFICATE OF SERVICE I, R. Hayes Johnson, Jr., do hereby certify that I have this date caused to be delivered, via facsimile and/or United States Mail, postage prepaid, and/or electronic filing and notification, a true and correct copy of the above and foregoing pleading to the following: Thomas E. Payne Tom Payne & Associates, PLLC 280 Rue Petit Bois Biloxi, MS I, further certify that I have this day caused to be delivered by electronic means, a copy of this Brief, along with the Appellant s Record Excerpts, to: Kathy Gillis, Clerk Mississippi Supreme Court P.O. Box 249 Jackson, MS CERTIFIED, this the 14 th day of February, s/r. Hayes Johnson, Jr. R. Hayes Johnson, Jr. (MSB #10697) P.O. Box 717 Long Beach, MS Telephone: (228) Facsimile: (228) rhayesj@aol.com 23

30 APPENDIX A