Menu    5 ABR 102

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

In re KIMBERLY MAY BROMMELS, aka
Kimberly May Stagner,
aka Kimberly May Mitchell,                               Debtor(s) 		      Case No. A96-01171-HAR
      In Chapter 7
NORWEST FINANCIAL ALASKA, INC.,
                                 Plaintiff(s)

v.

KIMBERLY MAY BROMMELS,
                              Defendants(s) 		      ADV PROC NO A96-01171-001-HAR
      (BANCAP No. 97-3023)



MEMORANDUM DECISION GRANTING SUMMARY JUDGMENT TO DEBTOR

Kimberly May Brommels, the debtor, and her exhusband, bought a whirlpool spa from a vendor for a house they had constructed. The sale was financed by the plaintiff, Norwest Financial Alaska, Inc. (Norwest). They still owe about $4,300.

Brommels and her exhusband had a falling out and this created financial problems. They could not pay for the spa or the house. The spa had been installed in the newly constructed house.

Brommels tried to negotiate with the builder to allow the spa removed so she could return it, or sell it and pay the spa vendor or Norwest. In a supplemental affidavit made with her reply brief, she alleges she did not understand the significance of the security interest to begin with. For the purposes of this memorandum decision, I will assume that she knew there was a security interest.

The builder would not allow the spa to be removed. The builder said it had become a fixture. They tried to get the builder to take over the payments on the spa, but he refused to do that and refused to allow the spa to be removed.

The builder was going to foreclose on the real property (i.e., the newly constructed home), but Brommels and her exhusband negotiated to give the builder a deed in lieu of foreclosure instead. She left the spa in the house. The deed-in-lieu transferred title to the real estate back to the builder, but did not specifically purport to transfer title to the spa.

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Brommels made some payments on the spa, even after the house was returned to the vendor, but could not keep up with the payment schedule.

Brommels filed a chapter 7 petition after giving the deed-in-lieu to the builder. There has been a suit filed in state court between Norwest and the builder regarding who has the best lien on the spa. Norwest filed this dischargeability proceeding based on 11 USC § 523(a)(6).

On these facts, it cannot reasonably be said that Brommels acted willfully and maliciously to injure the property of Norwest as required by § 523(a)(6) to support an exception to discharge. At best, there is a brief breach of contract. The debtor showed reasonably good faith in attempting to resolve the problem and did not come anywhere near the type of unfair or objectionable behavior that would give rise to a denial of discharge under the willful and malicious standard. In re Riso, 978 F2d 1151, 1154 (9th Cir 1992).

The debtor did not attempt to convert Norwest's collateral. See, 5 Collier on Bankruptcy, ¶ 523.12ΐ] (Matthew Bender 1997) for a list of the types of injuries, including conversion, which are normally within the scope of § 523(a)(6). She just lost control of the collateral (the spa) in a dispute between Norwest and the builder of whose lien is primary. The fact that she did not notify Norwest of the deed-in-lieu is not so egregious as to justify nondischargeability.

In addition, the prosecution of this dischargeability proceeding appears to be substantially unjustified based on these facts. Attorney fees are appropriate. The court will award $500 attorney fees against Norwest. 11 USC § 523(d).

A separate judgment will be entered dismissing plaintiff's complaint, awarding $500 attorney fees to the debtor, and allowing defendant whatever costs are taxed by the Clerk, if the debtor files a tax bill.

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    DATED:    October 10, 1997

              ______________________________
              HERBERT A. ROSS
              U.S. Bankruptcy Judge