163 F.3d 397 (6th Cir. 1998), 97-6335, In re Sorah

Docket Nº97-6335.
Citation163 F.3d 397
Party NameIn re Perle Albert SORAH, Jr., Debtor. Karren L. SORAH, Appellant, v. Perle Albert Sorah, Jr., Appellee.
Case DateDecember 22, 1998
CourtUnited States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 397

163 F.3d 397 (6th Cir. 1998)

In re Perle Albert SORAH, Jr., Debtor.

Karren L. SORAH, Appellant,

v.

Perle Albert Sorah, Jr., Appellee.

No. 97-6335.

United States Court of Appeals, Sixth Circuit

December 22, 1998

Argued Oct. 30, 1998.

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[Copyrighted Material Omitted]

Page 399

James W. Gardner (argued and briefed), Henry, Watz, Gardner & Sellars, Lexington, Kentucky, for Appellant.

Guy M. Graves (argued and briefed), Elizabeth S. Hughes and Samuel G. Carneal (briefed), Gess, Mattingly & Atchison, Lexington, Kentucky, for Appellee.

Before: NELSON, CLAY, and GILMAN, Circuit Judges.

GILMAN, Circuit Judge.

The United States Bankruptcy Court for the Eastern District of Kentucky discharged Karren L. Sorah's former husband, Perle Albert Sorah, from an obligation to pay her $750 per month pursuant to a state court divorce decree. The bankruptcy court found that the payments, though decreed as "maintenance" by the state court, were not actually in the nature of maintenance, and were therefore dischargeable in bankruptcy pursuant to 11 U.S.C. § 523(a)(5)(B). The district court affirmed. Because we find that both the bankruptcy court and the district court incorrectly applied § 523 to the facts of this case, we REVERSE the district court's decision and REMAND for entry of an order consistent with this opinion.

I. BACKGROUND

Mr. and Mrs. Sorah were married in 1973. In 1993, Mr. Sorah was employed as an x-ray technician. He was forty-two years old and earned over $35,000 per year. Mrs. Sorah was then fifty years old and employed as a teacher's aide, earning approximately $8,000 per year. She also had rental income from property inherited from her mother. Mrs. Sorah suffers from varicose veins and thrombophlebitis that could limit the amount of work she will be able to undertake in the future.

In March of 1992, Mr. Sorah petitioned for divorce. In May of 1993, he filed a Chapter 7 bankruptcy petition. The Bell Circuit Court in Kentucky granted the divorce in November of 1993 and entered a Decree of Dissolution of Marriage. It awarded Mrs. Sorah direct payments that it designated as "maintenance" and that are structured to cease upon Mrs. Sorah's death, remarriage, or 62nd birthday, whichever first occurs. Mr. Sorah appealed the maintenance award to the Kentucky Court of Appeals, which upheld the award in 1995.

As part of his bankruptcy proceeding, Mr. Sorah then sought a ruling that his obligation to pay the $750 monthly "maintenance" payments was dischargeable in bankruptcy pursuant to 11 U.S.C. § 523(a)(5)(B). This section of the Bankruptcy Code discharges debts to spouses even though designated alimony, support, or maintenance, unless they are actually in the nature of alimony, support, or maintenance.

The bankruptcy court reviewed the state court record without hearing any additional proof. Based upon this review, it determined that the payments were not in fact in the

Page 400

nature of maintenance, but rather were intended to punish Mr. Sorah for his alleged marital infidelity. The bankruptcy court apparently reached this conclusion based upon the following language contained in the divorce decree:

The separation of the parties and the breakup of the marriage involved infidelity on [the] part of the Petitioner while he "frivolates", "cajoles", "Bevis and Buttheads" around in financial freedom as a result of his bankruptcy, searching for another victim....

The bankruptcy court further found that the Bell Circuit Court's findings of fact regarding the parties' respective incomes and Mrs. Sorah's rental income from the inherited property were without support in the record. The bankruptcy court, however, likewise failed to provide any backup for its own findings of fact.

After concluding that the $750 monthly payments to Mrs. Sorah were actually property distributions intended to punish Mr. Sorah, the bankruptcy court discharged the obligation. Mrs. Sorah then appealed the bankruptcy court's decision to the United States District Court for the Eastern District of Kentucky. The district court found that the bankruptcy court had properly conducted an independent inquiry into whether the payments actually constituted maintenance or were, instead, a division of marital property dischargeable in bankruptcy. It thus affirmed the bankruptcy court's determination that the payments were dischargeable. Mrs. Sorah now appeals the district court's decision.

II. ANALYSIS

A. Standard of Review

We review the factual determination of whether an obligation constitutes nondischargeable support under the "clearly erroneous" standard. See In re Perlin, 30 F.3d 39, 40 (6th Cir.1994). On the other hand, the interpretation of § 523 is a legal issue that we review de novo. See In re Calhoun, 715 F.2d 1103, 1111 (6th Cir.1983) (stating that the application of the wrong legal standard, and the district court's misallocation of the burdens of proof, would be reviewed de novo ).

B. The requirements of § 523

Section 523 of the Bankruptcy Code, titled "Exceptions to discharge," provides in relevant part that debts to a former spouse are discharged, "but not to the extent that ... such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support." 11 U.S.C. § 523(a)(5)(B). Thus, in order to be held nondischargeable in bankruptcy, an award in a divorce decree or settlement agreement must actually be in the nature of support. The inquiry that the bankruptcy court must undertake in making this determination depends upon the nature of the obligation and the language of the state court decree.

In Calhoun, this court held that the bankruptcy court should have engaged in an independent inquiry to determine whether a third-party debt assumption contained in a separation agreement was in the nature of support, or whether it was in actuality a division of marital property. See 715 F.2d at 1109. The court set out a three-part test that required the bankruptcy court to determine whether the award was intended as support, whether it had the effect of support in light of the recipient's present needs, and whether, even if in the nature of support, it was nonetheless unreasonable in amount. See id.

In In re Fitzgerald, 9 F.3d 517, 520 (6th Cir.1993), this court noted that the Calhoun standard had been too expansively applied by the bankruptcy courts, and held that the "present needs" of the non-debtor spouse should not be considered when the...

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125 practice notes
  • 358 B.R. 317 (6th Cir.BAP (Ohio) 2007), 06-8021, In re Condon
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • January 12, 2007
    ...United States v. Singer Mfg. Co., 374 U.S. 174, 193, 83 S.Ct. 1773, 1783, 10 L.Ed.2d 823 (1963)); see Sorah v. Sorah (In re Sorah), 163 F.3d 397, 400 (6th Cir.1998) (citing Long v. Calhoun (In re Calhoun), 715 F.2d 1103, 1111 (6th Cir.1983) (application of legal standards and allocation of ......
  • 435 B.R. 525 (Bkrtcy.W.D.Tenn. 2010), 10-24178-GWE, In re Village Green I, GP
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • July 30, 2010
    ...if something looks like a duck, walks like a duck, and quacks like a duck, then it is probably a duck." Sorah v. Sorah (In re Sorah), 163 F.3d 397, 401 (6th Cir.1998). In Tennessee, the similar principle is stated as " [e]quity looks to substance and not to form," Williams v.......
  • In re Lewis, 022410 MIWBC, GG 09-03818
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • February 24, 2010
    ...imposed was really "support" or something else, such as a property settlement. See, e.g., Sorah v. Sorah (In re Sorah), 163 F.3d 397 (6th Cir. 1998) (support); Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517 (6th Cir. 1993) (debt assumption by hold harmless); Long v. Calho......
  • 238 B.R. 697 (Bkrtcy.N.D.Ohio 1999), 98-3067, In re Luman
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • April 14, 1999
    ...the label a state court attaches to an obligation when it specifically designates the obligation as support. Sorah v. Sorah (In re Sorah), 163 F.3d 397 (6th Cir.1998); see also Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517, 521 (6th Cir.1993). For example, the Court in Sorah state......
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122 cases
  • 358 B.R. 317 (6th Cir.BAP (Ohio) 2007), 06-8021, In re Condon
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • January 12, 2007
    ...United States v. Singer Mfg. Co., 374 U.S. 174, 193, 83 S.Ct. 1773, 1783, 10 L.Ed.2d 823 (1963)); see Sorah v. Sorah (In re Sorah), 163 F.3d 397, 400 (6th Cir.1998) (citing Long v. Calhoun (In re Calhoun), 715 F.2d 1103, 1111 (6th Cir.1983) (application of legal standards and allocation of ......
  • 435 B.R. 525 (Bkrtcy.W.D.Tenn. 2010), 10-24178-GWE, In re Village Green I, GP
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • July 30, 2010
    ...if something looks like a duck, walks like a duck, and quacks like a duck, then it is probably a duck." Sorah v. Sorah (In re Sorah), 163 F.3d 397, 401 (6th Cir.1998). In Tennessee, the similar principle is stated as " [e]quity looks to substance and not to form," Williams v.......
  • In re Lewis, 022410 MIWBC, GG 09-03818
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • February 24, 2010
    ...imposed was really "support" or something else, such as a property settlement. See, e.g., Sorah v. Sorah (In re Sorah), 163 F.3d 397 (6th Cir. 1998) (support); Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517 (6th Cir. 1993) (debt assumption by hold harmless); Long v. Calho......
  • 238 B.R. 697 (Bkrtcy.N.D.Ohio 1999), 98-3067, In re Luman
    • United States
    • Federal Cases United States Bankruptcy Courts Sixth Circuit
    • April 14, 1999
    ...the label a state court attaches to an obligation when it specifically designates the obligation as support. Sorah v. Sorah (In re Sorah), 163 F.3d 397 (6th Cir.1998); see also Fitzgerald v. Fitzgerald (In re Fitzgerald), 9 F.3d 517, 521 (6th Cir.1993). For example, the Court in Sorah state......
  • Request a trial to view additional results
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