Merrill v. Merrill, (10th Cir. 2001)

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UNITEDSTATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

In re:

STEPHEN J. MERRILL, doingbusiness as Merrill & Associatesand as Key Energy Resources, Inc.,formerly doing business as Merrill& Merrill and as Horizon Exploration,Inc.,

Debtor.

LORI ANN MERRILL, Individuallyand as Parent and Next Friend of AprilMichelle Merrill,

Plaintiff-Appellee,

v.

STEPHEN J. MERRILL,

Defendant-Appellant.No. 00-5201

(BAP No. 00-23)

(Bankr. No. 99-01456-M)

(Adv. No. 99-0132-M)

ORDER AND JUDGMENT(*)

Before SEYMOUR and McKAY, Circuit Judges, andBRORBY, Senior CircuitJudge.

After examining the appellant's brief and the appellate record, this panelhas determined unanimously to grant the parties' request for a decision on thebriefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument.

Debtor-defendant Stephen J. Merrill appeals from an order of theBankruptcy Appellate Panel (BAP) affirming the bankruptcy court's orderdenying discharge of debts owed to his former wife, plaintiff-appellee Lori AnnMerrill, in his Chapter 7 bankruptcy core proceeding. See Merrill v. Merrill(In re Merrill), 252 B.R. 497 (B.A.P. 10th Cir. 2000). Our jurisdiction arisesfrom 28 U.S.C. § 158(d) and we affirm.

The debts in dispute are of two kinds: (1) funds debtor was ordered to payto plaintiff in their state court divorce proceeding, including payments for twotypes of insurance, and (2) a $9,000 debt for amounts debtor withdrew froma trust account held in the name of the parties' daughter. The bankruptcy courtheld that the payments ordered by the divorce court, including the insurancepayments, were not subject to discharge in bankruptcy because they constitutedspousal support alimony, which is not dischargeable, pursuant to 11 U.S.C.§ 523(a)(5). Merrill v. Merrill (In re Merrill), 246 B.R. 906, 916-18(Bankr. N.D.Okla. 2000). The bankruptcy court further held that the trust funds were also notsubject to discharge, applying § 523(a)(4), which denies a discharge "for fraud ordefalcation while acting in a fiduciary capacity." Id. at 922. The BAP affirmedthose holdings.

On appeal, debtor argues that the funds for alimony support he was orderedto pay to the plaintiff were not for plaintiff's support, but rather, were for aproperty settlement, which is dischargeable. He also claims the debt for theinsurance policies is dischargeable because the policies were unnecessary, andtherefore did not contribute to plaintiff's support. As for the funds withdrawnfrom the daughter's trust account, debtor maintains that he acted appropriatelyand legally under the Oklahoma Uniform Transfers to Minors Act, Okla. Stat. tit.58, § 1201-1226, by investing those funds, even though the investment ultimatelyfailed and the funds were lost. Accordingly, debtor argues that he did not commitfraud or defalcation and the debt is dischargeable.

"In our review of BAP decisions, we independently review the bankruptcycourt decision." In re Albrecht, 233 F.3d 1258, 1260 (10th Cir. 2000). Legaldeterminations are reviewed de novo, Stewart v. United States Trustee (In reStewart), 175 F.3d 796, 803 (10th Cir. 1999), while findings of fact are reviewedfor clear error, Sampson v. Sampson (In re Sampson), 997 F.2d 717, 721(10th Cir. 1993).

We have carefully reviewed the record on appeal, as well as the briefsubmitted by debtor. Applying the standards set out above, we hold that thebankruptcy court correctly denied the discharges in bankruptcy and we thereforeaffirm the bankruptcy court's judgment for substantially the same reasons asthose stated in the BAP's September 1, 2000 opinion.

AFFIRMED.

Entered for the Court

Wade Brorby

Senior Circuit JudgeFOOTNOTES

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*. This order and judgment is not bindingprecedent, except under thedoctrines of law of the case, res judicata, and collateral estoppel. The courtgenerally disfavors the citation of orders and judgments; nevertheless, an orderand judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

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