CourtListener opinion 11141213

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UNITED STATES BANKRUPTCY COURT 
 EASTERN DISTRICT OF PENNSYLVANIA 

IN RE : Chapter 13 
 : 
LARRY CHRISTOPHER SPRECHER, : 
 : Bankruptcy No. 22-12228-AMC 
 DEBTOR : 
____________________________________: 
 : 
KATHERINE KIRKLIN, : 
 : 
 PLAINTIFF : 
 : Adv. Proc. No. 23-00098-AMC 
 V. : 
 : 
LARRY CHRISTOPHER SPRECHER, : 
 : 
 : 
 DEFENDANT : 
____________________________________: 
 Ashely M. Chan, United States Bankruptcy Judge 
 OPINION 
I. INTRODUCTION 
 In this chapter 13 case, Larry Sprecher ("Debtor") objects to the proof of claim filed by 
his ex-wife, Katherine Kirklin ("Ms. Kirklin"), which was characterized as a priority unsecured 
claim in the amount of $76,872.11 pursuant to § 507(a)(1) of the Bankruptcy Code, based upon 
her belief that the claim constituted a domestic support obligation, and countered that Ms. 
Kirklin's claim only qualifies as a non-priority equitable distribution claim. 
 Simultaneously, the Debtor moves pursuant to Federal Rule of Civil Procedure 12(b)(6) 
("Rule 12(b)(6)") to dismiss the adversary proceeding commenced by Ms. Kirklin seeking a 
declaration of nondischargeability for her claim pursuant to § 523(a)(5) as a domestic support 
obligation and/or § 523(a)(3) as a claim which Debtor did not schedule in time for her to file a 
proof of claim by the claims bar date. Debtor argues that Ms. Kirklin fails to state a claim for 
relief because her claim does not constitute a domestic support obligation, rendering § 523(a)(5) 
inapplicable, and because Debtor consented to the Court deeming Ms. Kirklin's proof of claim 
timely filed, rendering § 523(a)(3) inapplicable. 
 Ultimately, as explained below, because Ms. Kirklin's claim stems from an obligation 

which more closely resembles an equitable distribution claim than a domestic support obligation 
and because the Court effectively extended the deadline for Ms. Kirklin to file a timely proof of 
claim entitling her to distribution from the estate, neither § 523(a)(5) nor § 523(a)(3) applies to 
her claim. Therefore, the Court will sustain the Debtor's claim objection and dismiss the 
adversary proceeding. 
II. FACTUAL BACKGROUND 
 On March 4, 2013, the Debtor and Ms. Kirklin were married. Case No. 22-98 ECF 1 
("Compl.") ¶ 11; ECF 4 ("Mot. to Dismiss") ¶ 6; Case No. 22-12228 POC 11 ("POC 11") Ex. A 
¶ 3; ECF 126 Hrg. Tr., Aug. 26, 2024 ("Tr.") 49:3-5; Hrg. Ex. D-2. During the marriage, Ms. 

Kirklin and Debtor purchased real property located at 15531 Bushy Tail Run, Woodbine, MD 
("Property") for $730,000 to serve as their marital residence. Tr. 49:21-23 (address of marital 
home), 57:23-58:3, Hrg. Ex. D-2. While the parties resided at the Property, they obtained a line 
of credit from Tower Federal Credit Union in the amount of $150,000 secured by a mortgage 
encumbering the Property ("HELOC"). See Hrg. Ex. D-2; Tr. 106:1, 18-19. Debtor used funds 
from the HELOC to purchase an investment property ("Investment Property").1 Tr. 59:9-60:9. 
 On or around June 21, 2018, Ms. Kirklin and Debtor separated. Compl. ¶ 12; POC 11 Ex. 
A ¶ 4. They had no children together. Case No. 23-00098 ECF 4 Mot. to Dismiss Ex. 1; Hrg. Ex. 

1 It is disputed, but not material, whether Ms. Kirklin used funds from the HELOC for her business, Potomac Medi 
Spa, LLC. Tr. 59:9-60:9, 106:22-107:5. 
D-2 at 1; Tr. 103:16-18. On the same day, they entered into a Marital Settlement Agreement 
("Divorce Agreement") which served to "settle all questions relating to their property rights, the 
maintenance and support of each of the Parties by the other…" Hrg. Ex. D-2 at 1. Pursuant to the 
Divorce Agreement, the Property was to be listed for sale no later than July 1, 2018, and in the 
event that proceeds from the sale were insufficient to satisfy the liens against the Property, each 

party would be responsible for 50% of such deficiency and/or balance due. Hrg. Ex. D-2 at 2-3. 
Pending sale of the Property, the Divorce Agreement provided that: 
 Wife may continue to reside in the [Property] until August 15, 2018, but 
 thereafter, she must vacate the [Property]. Until August 15, 2018, or the 
 date of settlement on the sale of the [Property] (whichever occurs first) 
 Wife shall be responsible for all expenses thereof, except $3,000 toward 
 the mortgage, including but not limited to the HELOC payments, water 
 and utility bills, real property taxes, telephone bills, insurance premiums 
 on the [Property] and contents, and the cost of pest control. Wife's 
 obligations shall be without claim of contribution from Husband. After 
 August 15, 2018, and through the date of settlement on the sale of the 
 [Property], Husband shall take over all payments, except, Wife shall 
 continue to pay a minimum of $1,400.00 toward the home equity line of 
 credit (HELOC). The parties shall divide equally (50/50) the cost of any 
 repairs which are recommended by the realtor for the sale of the 
 [Property]. 

Id. at 2. 

The Divorce Agreement further stated with regard to the sale of the Property that: 
 [u]pon the settlement of the sale of the [Property], the net proceeds of sale 
 shall be divided equally (50/50) between the parties, including any refund 
 to the parties from the mortgage escrow account. The net proceeds of sale 
 shall mean such sum as remains after deducting from the gross sales price 
 (a) Husband receiving the first $26,520.41 off of the top as a 
 reimbursement for his retirement loan that the parties used toward the 
 down payment for the marital home; (b) broker's commission, and/or 
 attorney's fees incurred in connection with the sale; (c) all expenses of 
 sale and closing costs; (d) the principal, accrued interest and any 
 prepayment penalty due on the mortgage and the HELOC; and (e) the 
 outstanding balance with consideration of interest upon the loan between 
 the parties and Richard and Jean Kirklin. If the proceeds from the 
 [Property] do not satisfy either the mortgage or the home equity line of 
 credit deficit or both deficit or a portion of either deficit, each party shall 
 be responsible and liable for fifty percent (50%) of such deficiency and/or 
 balance due. If the proceeds from the sale of the [Property] do not satisfy 
 the loan to Richard and Jean Kirklin than [sic] Wife shall be solely liable 
 for any outstanding balance less than $39,863.35. If there is a balance 
 upon the loan to Richard and Jean Kirklin greater than $39,863.35 than 
 [sic] the parties shall be equally liable (50/50) for the deficit above 
 $39,863.35 up to a maximum of $65,000. 

Id. at 2-3. 

The Divorce Agreement further provided Debtor would pay Ms. Kirklin $39,763.35 within 90 
days of the sale of the Property ("Divorce Agreement Obligation"). Compl. ¶ 15; Hrg. Ex. D-2 at 
6. Specifically, the section of the Divorce Agreement entitled "Monetary Award" provides that: 
 [w]ithin ninety (90) days after the settlement of the sale of the former 
 marital home, [Debtor] shall pay to [Ms. Kirklin] as a monetary award in 
 the amount of Thirty Nine Thousand Seven Hundred Sixty Three Dollars 
 and Thirty Five Center [sic] ($39,763.35). Said payment is meant to 
 reimburse [Ms. Kirklin] for funds that were paid from the home equity 
 line of credit associated with the former marital home. Therefore, said 
 amount will be reduced if the amount owed on the HELOC, as of the date 
 of settlement on the sale of the former marital Home, is less than 
 $247,899.36. For each dollar ($1.00) that the amount owed, as of the date 
 of settlement on the sale of the former marital Home is less than 
 $247,899.36, [Debtor's] monetary award obligation shall be reduced by 
 fifty cents ($0.50), which represents [Ms. Kirklin] getting her fair and 
 equal share. At no point shall [Debtor's] monetary award owed ever be 
 more than $39,763.35. Said monetary award is a one-time, non-modifiable 
 monetary award, except as modifiable downward, as specifically provided 
 for in this section, above. 

Hrg. Ex. D-2 at 6. 
 Pursuant to the Divorce Agreement, Ms. Kirklin would retain her interest in two non-
marital retirement accounts and Debtor would "[v]ia a Qualified Domestic Relations Order 
(‘QDRO')" transfer to an account of Ms. Kirklin's choice a flat amount of $74,305.39. Id. at 3-4. 
Furthermore, Debtor waived any interest in Ms. Kirklin's business, Potomac Medi Spa, LLC, 
and Ms. Kirklin waived any interest in Debtor's business, S&S Real Estate Consultants, LLC. Id. 
at 5. Finally, the Divorce Agreement also provided under a section entitled "Alimony" that 
"[w]ithin thirty (30) days after the settlement on the sale of the former marital home, Husband 
shall pay to Wife a one-time, non-modifiable alimony payment of Fifty Thousand Dollars and 
Zero Cents ($50,000.00)" and that: 
 [e]xcept for the one-time, non-modifiable Fifty Thousand Dollars and 
 Zero Cents ($50,000) alimony payment mentioned in Section, A, Wife 
 releases and discharges Husband, absolutely and forever, for the rest of 
 her life from any and all claim or right to receive from Husband 
 temporary, rehabilitative, definite, or indefinite alimony, support, or 
 maintenance for the past, present or future. Wife understands and 
 recognizes that, by the execution of this Agreement, she cannot at any 
 time in the future make any claim against Husband for alimony, support, 
 or maintenance. 

Id. at 7. 
Notably, the Divorce Agreement provides that in the event of any alleged breach of the Divorce 
Agreement, the prevailing party shall be awarded any and all costs and expenses, including all 
attorneys' fees incurred by that party in prosecution of the alleged breach or in defense against 
the alleged breach. Id. at 10. 
 On June 25, 2018, a "Judgment of Absolute Divorce" was entered terminating the 
parties' marriage. Compl. Ex. A; Tr. 129:2-6. In 2018, the year the parties separated and 
divorced, the Debtor's gross compensation from his employment totaled $409,398.00. Hrg. Ex. 
P-11; Tr. 81:3-5. During the parties' marriage, Ms. Kirklin, working as a registered nurse, 
received approximately $15-$25/hour and child support from her ex-husband for her two 
children from her first marriage in the amount of $5,800/month. Tr. 63:14-18, 123:9-124:3. 
 Although Ms. Kirklin had moved out of the Property by August 15, 2018, the settlement 
date for the sale of the Property occurred on or about February 22, 2019, with the Property 
selling for $690,000. Mot. to Dismiss Ex. 2; Tr. 129:11-13; Hrg. Ex. D-13. The sale price did not 
satisfy all obligations against the Property and the parties were required to bring $15,570.88 to 
closing. Tr. 55:5-23; Hrg. Ex. D-13. 
 When the Debtor did not timely pay the Divorce Agreement Obligation, Ms. Kirklin 
sought to enforce the Divorce Agreement ("Enforcement Action") in the Circuit Court for 
Howard County, Maryland ("Circuit Court"). See Compl. Ex. A. Meanwhile, Debtor filed a 

complaint against Ms. Kirklin in the Circuit Court for malicious prosecution ("Malicious 
Prosecution Action"). Compl. ¶ 24; Hrg. Ex. D-4, Ex. P-9. Later, Ms. Kirklin sought attorney's 
fees based on bad faith in the Malicious Prosecution Action ("Bad Faith Motion"). See POC 11 
Ex. B. 
 On September 19, 2021, after a two-day hearing on a "Petition for Contempt of Court and 
Show Cause Order" before the Circuit Court in the Enforcement Action, the Circuit Court 
entered an order finding Debtor "to be in willful contempt of Court for violation of the Judgment 
of Absolute Divorce entered June 25, 2018, for his failure to pay to…Katherine Kirklin, the 
monetary award of Thirty Nine Thousand Seven Hundred Sixty Three Dollars and Thirty Five 

Cents ($39,763.35) and for his failure in signing the proposed QDRO in a timely manner…" 
("Contempt Order"). POC 11 Ex. A. The Contempt Order further provided that "said [Debtor] 
may purge himself of the aforesaid contempt by paying the [Divorce Agreement Obligation] 
within sixty (60) days of entry of this Order for Contempt; further provided, that if it is not paid 
within the 60 days, it shall be reduced to a judgment…" Id. Finally, the Contempt Order directed 
Debtor to pay to Ms. Kirklin $3,500 for attorneys' fees within 60 days of the entry of the 
Contempt Order ("Attorney Fee Award"). Id. On November 21, 2021, the Divorce Agreement 
Obligation and Attorney Fee Award were reduced to judgment ("Kirklin Judgment"). Hrg. Ex. P-
5. 
 On April 10, 2022, Debtor emailed bankruptcy counsel he had retained, Anthony Frigo, 
Esq. ("Attorney Frigo"), a spreadsheet disclosing all his debts over the past year, including to 
Ms. Kirklin. Tr. 34:2-10, 40:23-41:4; Hrg. Ex. D-15. In June 2022, Debtor sent an email to 
Attorney Frigo to inform him of the case numbers for the Enforcement Action and the Malicious 
Prosecution Action. Hrg. Ex. D-4; Tr. 38:8-16. 

 On August 25, 2022, the Debtor, unbeknownst to Ms. Kirklin, filed a voluntary petition 
under chapter 13 of the Bankruptcy Code. Case No. 22-12228 ECF 1; Compl. ¶ 38. Ms. Kirklin 
was not included on the list of creditors attached to the petition despite Debtor having clearly 
informed Attorney Frigo of the litigation involving Ms. Kirklin and his obligations to Ms. 
Kirklin. See Case No. 22-12228 ECF 1. 
 The next day, the Circuit Court, also unaware of the bankruptcy, entered an order 
("Malicious Prosecution Order") in the Malicious Prosecution Action dismissing the action with 
prejudice; granting the Bad Faith Motion and awarding Ms. Kirklin $30,313.63 for all costs and 
expenses incurred in connection with defending herself in the Malicious Prosecution Action 

("Bad Faith Fee Award," collectively with Divorce Agreement Obligation and Attorney Fee 
Award, "Kirklin Debt"); and directing Debtor to pay the Bad Faith Fee Award within 30 days of 
the entry of the Malicious Prosecution Order or else judgment would enter against the Debtor 
with interest accruing upon the judgment. POC 11 Ex. B. 
 On September 26, 2022, Debtor filed his schedules and statement of financial affairs. 
Case No. 22-12228 ECF 12. The Debtor's schedules did not identify Ms. Kirklin as a creditor 
and did not reference any of the Kirklin Debt. See id. Debtor's statement of financial affairs did 
not reference the Malicious Prosecution Action or the Enforcement Action. See id. Although 
Debtor signed the schedules and statement of financial affairs, he did not review the documents 
closely enough prior to filing them to realize that they did not include any of the Kirklin Debt. 
Tr. 46:15-47:10. 
 On September 27, 2022, Debtor sent another email to Attorney Frigo with the case 
number for the Enforcement Action and details regarding the Kirklin Judgment. Tr. 41:8-42:2; 
Hrg. Ex. D-15. The same day, the deadline for filing non-governmental proofs of claim was set 

as November 3, 2022 ("Proof of Claim Bar Date"). Case No. 22-12228 ECF 15. Ms. Kirklin did 
not receive notice of the Proof of Claim Bar Date. See Tr. 69:12-71:18; Hrg. Ex. P-25. 
 On December 19, 2022, Debtor noticed during the 341 Meeting of Creditors that the 
schedules and statement of financial affairs did not reference any of the Kirklin Debt. Tr. 44:16-
23, 45:19-22; Case No. 22-12228 ECF 20. He immediately told Attorney Frigo, who responded 
that he would amend the schedules. Tr. 43:6-13, 44:16-24. 
 On May 16, 2023, an order was entered confirming the Debtor's proposed chapter 13 
plan ("Plan"). Case No. 22-12228 ECF 68. The Plan did not include any provision for payment 
of the Kirklin Debt. 

 On August 17, 2023, Debtor first learned that Ms. Kirklin had no knowledge of the 
bankruptcy when he received a notification that Ms. Kirklin had commenced collection action 
for the Kirklin Debt. Hrg. Ex. P-25; Tr. 68:16-18, 71:16-18. In a letter dated the same day, 
Attorney Frigo notified Ms. Kirklin's Maryland counsel of the bankruptcy ("Frigo Letter"). 
Compl. Ex. G; Mot. to Dismiss ¶ 19; Ex. P-25. Ms. Kirklin had no knowledge of Debtor's 
bankruptcy prior to her Maryland counsel receiving the Frigo Letter. Compl. ¶ 42. On August 31, 
2023, Ms. Kirklin filed a motion seeking relief from the automatic stay to validate entry of the 
Bad Faith Fee Award and to continue collection of the Kirklin Debt ("Kirklin Stay Relief 
Motion"). Case No. 22-12228 ECF 73. 
 Meanwhile, on October 9, 2023, Ms. Kirklin filed a proof of claim for a priority 
unsecured claim in the amount of $76,872.11 based on the Kirklin Judgment and Bad Faith Fee 
Award ("POC 11"), asserting the entirety of the claim constitutes a domestic support obligation 
under § 507(a)(1). Ms. Kirklin's claim is broken down as follows: 
 i. $39,763.35 – Divorce Agreement Obligation 

 ii. $3,500 – Attorney Fee Award 
 iii. $3,295.13 - interest accrued on Kirklin Judgment 
 iv. $30,313.63 – Bad Faith Fee Award 
See Case No. 22-12228 ECF 103 Obj. to POC 11 at 5. 
 On November 13, 2023, Debtor and Ms. Kirklin filed a joint stipulation ("Stipulation") 
providing that "Kirklin shall be permitted to have POC 11 deemed timely filed." Case No. 22-
12228 ECF 91. On November 14, 2023, the Court held a hearing on the Kirklin Stay Relief 
Motion ("Stay Relief Hearing"). Id. at ECF 92. At the Stay Relief Hearing, the Court indicated 
that, while the Kirklin Stay Relief Motion would be denied, "[Ms. Kirklin's] got a proof of 

claim, and as long as the proof of claim has the full amount there, I'm not really sure why I 
would disturb that – that proof of claim at all." Id. at ECF 102 Tr., Nov. 14, 2023, 9:12-16. On 
November 15, 2023, the Court entered an order approving the Stipulation. Id. at ECF 94. 
 On November 29, 2023, Ms. Kirklin initiated the instant adversary proceeding 
("Adversary Proceeding") by filing a complaint ("Complaint") against Debtor asserting that the 
Kirklin Debt is nondischargeable pursuant to § 523(a)(3)(A) (\Count I\")