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Reed v. Reed

United States District Court, D. Maryland

October 30, 2014

STEVEN KENNETH REED, Appellant,
v.
DEBORAH A. REED, Appellee. Bankr. No. 12-21819-RAG Adversary No. 12-629.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

This case presents the second appeal arising out of Appellant Steven Kenneth Reed's ("Appellant") Chapter 7 bankruptcy proceeding; in this appeal, Appellant now challenges the United States Bankruptcy Court for the District of Maryland's order awarding attorneys' fees to Appellee Deborah A. Reed's ("Appellee").[1] Appellant argues that the Bankruptcy Court erred because Appellee is an unsecured creditor who is not entitled to attorneys' fees under Section 506 of the Bankruptcy Code and, alternatively, that the doctrine of merger bars recovery pursuant to Maryland law. Appellee has filed a Motion to Dismiss Appeal (ECF No. 3), arguing that Appellant's failure to timely file his brief and failure to file a transcript of the proceedings below merits dismissal.

This Court has jurisdiction over this matter pursuant to 28 U.S.C. ยง 158(a)(1), which extends jurisdiction to the United States District Courts to hear appeals from the final judgments, orders, and decrees of the United States Bankruptcy Courts. The parties' submissions have been reviewed, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2014); Fed. R. Bankr. Pro. 8012. For the reasons that follow, the Appellee's Motion to Dismiss Appeal (ECF No. 3) is DENIED. Additionally, the Bankruptcy Court's Order Awarding Attorneys' Fees and Entering Final Judgment (ECF No. 1-12) is AFFIRMED and Appellant's appeal is DENIED.

BACKGROUND

This Court recently summarized the facts of this case in the related case of Reed v. Reed, Civ. A. No. RDB-14-175, 2014 WL 4926187 (D. Md. Sept. 30, 2014). This Court draws from this Court's previous recitation of the facts in that appeal and supplements that recitation to the extent necessary for this separate appeal.

I. The Parties' Divorce and the Marital Settlement Agreement

Appellant and Appellee were previously married, and they jointly owned a home at 8280 Patapsco Avenue, Pasadena, Maryland 21122 (the "Property"). On September 7, 2006, Appellee filed a Complaint for Absolute Divorce. In May of 2007, Appellee and Appellant contracted to sell the Property to Robert and Madelaine Binner (the "buyers"). After signing the contact of sale but prior to settlement, the Appellant and Appellee entered a Marital Settlement Agreement. Notably, Paragraph 8.3 of that Agreement provided that:

Until the said property is sold and settled, [Appellant] shall be solely responsible for all expenses associated with either the ownership or occupancy of said [Subject] Property. He shall also be solely responsible for all costs and expenses associated with maintaining and/or improving the said [Subject] Property so that it can be sold and, upon the signing of this Agreement, any legal or financial responsibility that Wife [Deborah A. Reed] may have had with regard to any monies that are or may be due as a result of the ownership of the [Subject] Property shall be assumed by Husband [Steven K. Reed]. Husband shall indemnify and hold Wife harmless as to all such legal and financial responsibilities.

On September 6, 2007, the Circuit Court for Anne Arundel County, Maryland granted Appellee an absolute divorce. The Circuit Court specifically noted that the Marital Settlement Agreement was "incorporated, but not merged, " into its Judgment.

II. The Buyers' Suit Against the Parties

Sometime after the closing of the sale of the Property on July 6, 2007, the buyers became dissatisfied with their purchase and filed suit against the Appellant and Appellee.[2] According to the buyers' complaint, the claims against Appellee arose out of various work performed on the Property by Appellant prior to the sale of the Property. The Appellee filed a cross-claim against Appellant in that action, requesting indemnification and contribution against Appellant for any and all liability for damages that Appellee might have to the buyers. After settling the claims as they pertained to her, Appellee filed a motion for summary judgment against the Appellant with respect to her cross-claim. The Circuit Court for Anne Arundel County granted the motion for summary judgment and awarded Appellee $49, 352.53 in damages and $6, 500.00 in attorneys' fees.[3]

III. Appellant's Bankruptcy Proceeding

On June 25, 2012, Appellant filed for relief under Chapter 7 of the Bankruptcy Code. In his papers, Appellant listed Appellee as a judgment creditor holding an unsecured, nonpriority claim of $55, 000.00. Appellee filed an Adversary Complaint against Appellant on September 21, 2012; specifically, Appellee sought to except the state court's judgment from discharge under Section 523(a)(15) of the Bankruptcy Code.[4]

On December 11, 2013, the Bankruptcy Court found in favor of Appellee and granted summary judgment against Appellant. The order allowed Appellee fifteen (15) days to submit a request for additional attorneys' fees and costs arising from the proceeding, and further provided an additional fifteen (15) days for Appellant to respond. Appellee filed her "Verified Request for Attorney's Fees and Costs" on December 26, 2013, seeking an additional $17, 544.50 in attorneys' fees and $1, 756.58 in costs. Appellant filed an opposition in response.[5] The Bankruptcy Court held an initial hearing on February 18, 2014 and issued an oral ...


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