United States District Court, W.D. Virginia, Harrisonburg Division
Elizabeth K. Dillon United States District Judge
Appellants Phillip and Cindy Guertler challenge the bankruptcy court’s decision that appellee DuPont Community Credit Union has a valid claim against both of them for a debt arising from a joint credit-card account. Before the Guertlers filed for bankruptcy, DuPont sued and obtained a judgment on the debt against Mr. Guertler, but not Mrs. Guertler. The bankruptcy court held that the judgment against Mr. Guertler did not extinguish Mrs. Guertler’s liability for the debt. The Guertlers contend that this holding was in error. This court disagrees and will therefore affirm the bankruptcy court’s decision.
The Guertlers do not challenge the bankruptcy court’s factual findings; thus, the facts recited below are taken largely from its memorandum opinion. (Bankr. Ct. Mem. Op. 2–7, Dkt. No. 1-2.)
Sometime in the 2000s, Mr. Guertler applied for a MasterCard credit card through DuPont. (Id. at 2, 4.) He wanted the credit card for his business, Alpha Omega Construction. (Id. at 4.) DuPont approved the application and issued the credit card in Alpha Omega Construction’s name. (Id.) Mr. and Mrs. Guertler both signed the credit-card agreement and thereby became jointly liable for all charges on the account. (Id. at 4, 10; MasterCard Credit Card Agreement 1–2, Dkt. No. 5.)
In 2011, Alpha Omega Construction defaulted on the MasterCard account, and so DuPont sued Mr. Guertler for the outstanding balance. (Bankr. Ct. Mem. Op. 4.) The General District Court of Waynesboro County, Virginia, found in DuPont’s favor and entered a judgment against Mr. Guertler for $7, 155.62. (Id.)
DuPont did not name Mrs. Guertler in the suit because its records did not show her as jointly liable on the MasterCard account until May 2014. (Id.) DuPont’s software program has space for just two names on each account. (Id.) Hence, the program listed only “Alpha Omega Construction” and “Phillip Guertler” on the MasterCard account. (Id.)
In April 2014, the Guertlers filed a voluntary petition for bankruptcy relief under Chapter 13 of the Bankruptcy Code. (Id. at 1.) The following month, DuPont filed a proof of claim, asserting that it has a secure claim against Mr. Guertler for the outstanding balance on the MasterCard account. (Id.) In July 2014, DuPont filed an amended proof of claim (Claim 4-2), declaring that it has an unsecured claim against both Mr. and Mrs. Guertler for the outstanding balance. (Id.)
The Guertlers objected to Claim 4-2, arguing that only Mr. Guertler is liable for the outstanding balance on the MasterCard account because (as relevant here) DuPont’s judgment against him extinguished Mrs. Guertler’s liability under the common-law doctrine of merger.(Id. at 1–2.) The bankruptcy court disagreed, concluding that Mrs. Guertler remains liable for the outstanding balance because Virginia has abolished the merger doctrine by statute-Virginia Code § 8.01-30-for actions on contracts made by several persons. (Id. at 11.) It thus overruled the Guertlers’ objection to Claim 4-2. (Id. at 12.)
This appeal followed.
A. Standard of Review
The Guertlers challenge only the bankruptcy court’s legal conclusions. (Appellants’ Br. 2–4, Dkt. No. 4.) This court therefore apples a de novo standard of review. In re Merry-Go-Round Enters., Inc., 400 F.3d 219, 224 (4th Cir. 2006).
B. The bankruptcy court did not err in concluding that DuPont’s judgment against Mr. Guertler did not extinguish Mrs. Guertler’s liability for the outstanding balance on the MasterCard account.
The Guertlers argue that the bankruptcy court erred in concluding that under Code § 8.01-30, DuPont’s judgment against Mr. Guertler did not extinguish Mrs. Guertler’s liability for the outstanding balance on the MasterCard account. This court finds no error.
1. Background of Code § 8.01-30
At common law, a creditor suing several debtors on a joint contract could not recover a judgment against only some of them; he had to have “a joint judgment against all, or he [could not] have it against any.” Bush v. Campbell, 67 Va. 403, 425 (1875); see also Charles E. Friend, Virginia Pleading & Practice § 5.04(4)(a) (2015). And if the contract was joint and several, the action had to be “against all the [debtors] jointly or against only one of them singly, and not against any intermediate number. If the [creditor] elect[ed] to proceed against ...