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FOR PUBLICATION

ATTORNEY FOR APPELLANT: MICHAEL G. MOORE Indianapolis, Indiana

ATTORNEY FOR APPELLEE: KRISTINA KEENER YEAGER Indianapolis, Indiana

FILED
IN THE COURT OF APPEALS OF INDIANA
IN RE: THE MARRIAGE OF HAROLD E. BEAN, JR., Appellant-Respondent, vs. CAROL A. BEAN, Appellee-Petitioner. ) ) ) ) ) ) ) ) ) ) )
Feb 11 2009, 9:05 am
of the supreme court, court of appeals and tax court

CLERK

No. 49A05-0807-CV-390

APPEAL FROM THE MARION SUPERIOR COURT The Honorable Deborah J. Shook, Master Commissioner Cause No. S586000377

February 11, 2009

OPINION - FOR PUBLICATION

BROWN, Judge

Harold E. Bean, Jr., appeals the trial court`s grant of Carol A. Bean`s petition for additional relief for funds owed to her by Harold. Harold raises five issues, which we consolidate and restate as: I. Whether the trial court properly adjudicated certain of Harold`s dissolution debts to be nondischargeable for the purpose of federal bankruptcy proceedings; Whether the trial court erred when it ordered Harold to pay half of their children`s college expenses; and Whether the trial court abused its discretion in ordering Harold to pay Carol`s attorney fees.

II.

III.

We reverse and remand for further proceedings consistent with this opinion. The relevant facts follow. Harold and Carol`s marriage was dissolved in

December of 1988. The parties` settlement agreement, which was incorporated in the divorce decree, provided in part: III. PROPERTY SETTLEMENT A. REAL ESTATE ***** [Harold] shall assume and pay the second mortgage debt on the Marital Residence in favor of Indiana National Bank (the Second Mortgage), perform all the terms and provisions of the Second Mortgage to be performed by the mortgagor, and hold [Carol] harmless from any liability, damages, costs or loss including attorney fees, arising out of or connected with the Second Mortgage. As payment for [Harold`s] equity interest in the Marital Residence, [Carol] hereby grants to [Harold] a judgment in the amount of Thirty Thousand Dollars ($30,000) which shall be a lien against the Marital Residence.

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IV. CUSTODY AND SUPPORT A. Custody The parties have agreed that they shall have joint legal custody of the minor children of the marriage, Ann Elizabeth Bean, born March 20, 1979[,] and Andrew Blain Bean, born November 16, 1982, and that [Carol] shall have the primary physical custody of the children. ***** C. Support [Harold] shall pay to [Carol], through the Clerk of Marion County, the total sum of Six Hundred Dollars ($600.00) per month for the support and maintenance of the two (2) minor children . . . . D. Medical Expenses [Carol] shall continue, so long as it is available, to carry medical insurance through her employment which provides coverage for the children. Any medical, dental, prescription, optical and other such expense(s) not paid by [Carol`s] insurance shall be paid on the basis of [Harold] and [Carol] each paying Fifty Percent (50%) therefor. E. Educational Expenses The educational expenses of the children, including Andrew`s kindergarten and pre-school, shall be paid on the basis of [Harold] and [Carol] each paying Fifty Percent (50%) therefor. ***** V. MISCELLANEOUS PROVISIONS ***** B. TAX RETURNS [Harold] and [Carol] shall file a joint income tax return for the years ending December 31, 1986 and December 31, 1987. [Harold] shall be responsible for the entire tax liability for the taxable years 1986 and 1987 3

and shall hold [Carol] harmless thereon, including principal, interest, penalties, costs and attorney`s fees. . . . Appellant`s Appendix at 45-50. On November 27, 1990, Harold filed a Chapter 7 bankruptcy. Harold listed Carol, the Internal Revenue Service, and Indiana National Bank (INB) as creditors on his bankruptcy schedule, but Carol, though given notice, did not file a complaint with the bankruptcy court. On December 13, 1990, Harold entered into an agreement with INB reaffirming the second mortgage on the marital residence because, otherwise, INB was going to foreclose on the residence. On May 1, 1991, Harold and Carol signed a promissory note concerning Harold`s reaffirmation agreement with INB. remaining debts were discharged in 1994. From 1988 to 1995, Harold made only intermittent child support payments. In 1996, he was placed under a child support income withholding order. Around that time, Carol discovered that the IRS had levied her salary and held a tax lien on the marital residence because of Harold`s failure to pay their joint tax liability for 1986 and 1987. Harold had also failed to pay off the second mortgage, and INB was threatening to foreclose on the residence. Carol therefore refinanced the residence, and, on October 29, 1996, she paid off the tax liability and second mortgage. To aid Carol in refinancing the residence, Harold filed a pleading with the court permitting her to close on the loan without having to compensate him for his $30,000 lien on the residence. The parties` two children later attended and graduated from college. Harold paid for some of Ann`s college expenses. The children were emancipated on April 12, 2006. 4 Harold`s

On July 26, 2006, Carol filed a verified petition for contempt citation for nonpayment of support obligations and for additional relief for funds owed by Harold. After a hearing held on December 20, 2006, the parties settled the child support, medical and dental, and primary educational expenses owed by Harold to Carol, and, at a hearing on February 22, 2007, Carol withdrew her request to find Harold in contempt. On August 9, 2007, the parties held a final hearing on Carol`s remaining petition for additional relief for funds owed by Harold, after which the trial court granted Carol`s request for relief. The trial court found that the tax liability and second mortgage directly impacted on [Carol`s] ability to maintain a residence for her and the parties` minor children, and were nondischargeable in bankruptcy proceedings. Appellant`s Appendix at 36. The trial court ordered that Carol be reimbursed in the sum of $128,142.33 for the tax liability and second mortgage, a sum which includes a $30,000 credit for Harold`s lien on the residence.1 The trial court found that the parties intended to split the costs of their children`s college expenses and awarded Carol $16,838.34. Pursuant to the parties` partial settlement agreement, the trial court also awarded Carol $4,744.00 in child support arrearage and $2,914.45 for medical expenses. Thus, the trial court awarded Carol a total amount of $152,639.12, and, in addition to this amount, also awarded Carol $5,055.18 in attorney fees.

Harold claims that the trial court erred in not calculating the $30,000 credit [representing his lien on the residence] to any amounts due and owing from Harold to Carol. Appellant`s Brief at 16. However, the trial court`s order specifically credits Harold with $30,000 in its calculation of the tax liability and mortgage loan, which otherwise would have amounted to $158,142.33. See Appellee`s Appendix at 27, 35. The trial court also noted that this sum had not been disclosed to the bankruptcy court. See id. at 26.
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I. The first issue is whether the trial court properly adjudicated certain of Harold`s dissolution debts, specifically, the second mortgage and tax liability, to be nondischargeable for the purpose of federal bankruptcy proceedings.2 A bankruptcy discharge voids judgments based on the personal liability of the debtor. Cowart v. White, 711 N.E.2d 523, 528 (Ind. 1999), clarified on reh`g, 716 N.E.2d 401 (Ind. 1999). However, the Bankruptcy Code explicitly excepts obligations for any debt to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child in connection with a separation agreement, divorce decree or other order of a court of record.3 Id. (quoting then 11 U.S.C.

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