Goss v. Goss, 80-2094
| Decision Date | 05 December 1983 |
| Docket Number | No. 80-2094,80-2094 |
| Citation | 722 F.2d 599,12 B.C.D. 75 |
| Parties | , Bankr. L. Rep. P 69,523 Betty Janell GOSS, Plaintiff-Appellant, v. Lloyd Wayne GOSS, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Dean Peterson, Ada, Okl. (Austin R. Deaton, Jr., of Deaton, Gassaway & Davison, Inc., Ada, Okl., was on the brief), for plaintiff-appellant.
James T. Branam, Dennis & Branam, Antlers, Okl., for defendant-appellee.
Before HOLLOWAY, McWILLIAMS and SEYMOUR, Circuit Judges.
This case concerns the effect to be given in federal court to a prior state court determination of nondischargeability of maintenance and support obligations under former Bankruptcy Act Sec. 17a(7), 11 U.S.C. Sec. 35(a)(7) (1976). The District Court of Pontotoc County, Oklahoma, held in a garnishment proceeding involving the parties to this appeal that certain obligations embodied in a divorce decree were in the nature of maintenance and support and thus were not dischargeable in bankruptcy. In a subsequent proceeding, the Bankruptcy Court for the Eastern District of Oklahoma held that it was not bound by the prior state court judgment; the bankruptcy court concluded that the debts were not in the nature of maintenance and support and thus were dischargeable. The District Court for the Eastern District of Oklahoma affirmed the judgment of the bankruptcy court.
We hold that the doctrine of collateral estoppel should have been applied in the federal bankruptcy proceedings. The prior state court determination that the obligations were in the nature of maintenance and support and therefore were nondischargeable should have been held binding in this bankruptcy case. Accordingly we must reverse.
The parties were divorced on October 10, 1978. In the divorce decree, Judge Jones of the District Court of Pontotoc County, Oklahoma, awarded plaintiff "alimony to be paid out of the real and personal property of the defendant." II R. 28, Exhibit 1, at 1. The judge ordered that "the real and personal property presently owned by the parties ... be divided between them as follows:"
Plaintiff shall have a judgment against the defendant in the sum of Twenty-Five Thousand Dollars ($25,000), in lieu of a further specific division of property rights .... The defendant shall also pay to the plaintiff the additional sum of Nineteen Thousand Eight Hundred Dollars ($19,800) as alimony, which shall be payable in monthly installments of Two Hundred Seventy-Five Dollars ($275), the first of which shall become due and payable on or before November 1, 1978, and which is hereby declared to be in further division of the parties' property rights.
II R. 28, Exhibit 1, at 2. The court concluded that "[t]he money and alimony judgments awarded the Plaintiff herein shall constitute liens upon the real and personal property awarded the Defendant in this decree." II R. 28, Exhibit 1, at 3. After a subsequent hearing, the court ordered that defendant pay plaintiff's attorney $5,000 in fees for services rendered in the divorce proceeding. II R. 29, Exhibit 2. 1
On March 6, 1979, the judge held a hearing on defendant's failure to meet his financial obligations under the divorce decree. The judge found that defendant was "able to make monthly payments on the Plaintiff's judgment in this cause." II R. 34, Exhibit 7. The judge ordered that defendant pay plaintiff $500 per month. Id.
On March 22, 1979, defendant filed a bankruptcy petition in the Bankruptcy Court for the Eastern District of Oklahoma. In the petition, defendant named plaintiff as the sole creditor and listed as debts the $25,000 property settlement, the $19,800 "alimony" and the $5,000 attorneys' fees. 2 Plaintiff did not object to the proposed general discharge. 3 The bankruptcy court issued a general discharge to defendant on June 27, 1979. I R. 1.
Plaintiff began garnishment proceedings in the District Court of Pontotoc County on October 10, 1979 to collect on the divorce judgment for $19,800 "alimony" and $5,000 attorneys' fees. Defendant objected on the ground that the debts had been discharged. After a hearing, Judge Jones held on December 7, 1979, that "neither of the judgments were dischargeable in bankruptcy." II R. 35, Exhibit 8. The judge stated that:
the judgment of Nineteen Thousand Eight Hundred Dollars ($19,800) granted the Plaintiff in the decree of divorce of October 10, 1978, in this case was alimony awarded the Plaintiff for her support and maintenance and ... that the attorneys' fee of Five Thousand Dollars ($5,000) awarded the plaintiff's attorneys' in this cause was also in the nature of a support and maintenance allowance for the plaintiff.
Meanwhile, on October 29, 1979, plaintiff filed a petition in bankruptcy court to revoke defendant's discharge in bankruptcy on the ground that defendant had fraudulently concealed his assets. 4 Plaintiff later waived this complaint because she "was unable to prove any allegation of fraudulent conduct." I R. 10. Then, "for the benefit of the parties," the bankruptcy court on April 4, 1980 (four months after the state court decision) decided to "go forward and lay at rest the dischargeability question of the judgments in the divorce action." Id.
The court noted that "[u]nder Section 17 of the Bankruptcy Act, the dischargeability of any debt must be determined by the Bankruptcy Court." Id. The court stated that the judgments awarded in the divorce decree constituted a property settlement, and not alimony, under Oklahoma law. The court held that because:
[a]t the time of the filing of the bankruptcy, the judgments in the Divorce Decree at Pontotoc County were for property settlement, ... we do not believe after the bankruptcy was filed, and after the discharge was granted, that the District Court of Pontotoc County had the authority to attempt to revise the Divorce Decree as the rights of the Bankrupt were fixed at the time of the filing of the Bankruptcy Petition on March 22, 1979.
Id. After noting that "apparently the District Court of Pontotoc County does not desire to follow the Federal Statutes dealing with dischargeability of debts," the bankruptcy court held that "the two judgments in the divorce action in Pontotoc County were for property settlement and, therefore DISCHARGED in bankruptcy, and this includes the attorney fee for the [plaintiff]." Id. at 2-3.
The district court on September 19, 1980 affirmed the bankruptcy court's decision.
Plaintiff argues that the bankruptcy court should not have redetermined the dischargeability of the $19,800 "alimony" and $5,000 attorneys' fees awards. We agree that the doctrine of collateral estoppel barred the relitigation in the bankruptcy proceedings of the determination of nondischargeability of the debts under Sec. 17a(7) of the former Bankruptcy Act, 11 U.S.C. Sec. 35(a)(7) (1976). 5
Section 17a listed eight classes of debts which are not dischargeable in bankruptcy. One class of nondischargeable debts was Sec. 17a(7), which included debts for "alimony due or to become due, or for maintenance or support of wife or child." 11 U.S.C. Sec. 35(a)(7) (1976).
Section 17c(2) granted exclusive jurisdiction to bankruptcy courts to determine whether particular debts were nondischargeable under Secs. 17a(2), 6 (4) 7 or (8). 8 However, with respect to the other classes of debts under Sec. 17a, including debts for alimony or maintenance and support under Sec. 17a(7), state courts possessed jurisdiction concurrent with that of the bankruptcy court to determine dischargeability. Hence the District Court of Pontotoc County had jurisdiction to decide whether the $19,800 "alimony" and $5,000 attorneys' fees awarded in the divorce decree were nondischargeable under Sec. 17a(7). We must decide whether the bankruptcy court was bound by this prior state court determination that the debts were nondischargeable.
Although the doctrines of res judicata (or claim preclusion) and collateral estoppel (or issue preclusion) are related, this case concerns the application of the latter. As the Supreme Court has stated, "[w]hereas res judicata forecloses all that which might have been litigated previously, collateral estoppel treats as final only those questions actually and necessarily decided in a prior suit." Brown v. Felsen, 442 U.S. 127, 139 n. 10, 99 S.Ct. 2205, 2213 n. 10, 60 L.Ed.2d 767 (1979). See also Kremer v. Chemical Construction Corp., 456 U.S. 461, 466 n. 6, 102 S.Ct. 1883, 1889 n. 6, 72 L.Ed.2d 262 (1982); Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 973-74, 59 L.Ed.2d 210 (1979); Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 649 n. 5, 58 L.Ed.2d 552 (1979); Lujan v. United States Department of the Interior, 673 F.2d 1165, 1168 n. 4 (10th Cir.1982). We conclude that here the doctrine of collateral estoppel barred the bankruptcy court from making a redetermination on nondischargeability under Sec. 17a(7). 9
In Brown v. Felsen, 442 U.S. 127, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979), the Supreme Court held that res judicata does not prevent a bankruptcy court from going beyond the judgment and record in a prior state court proceeding in determining the dischargeability of debts under Secs. 17a(2) and (4) of the former Bankruptcy Act. We believe, however, that the decision does not indicate that collateral estoppel would not apply here for two reasons.
First, Brown v. Felsen dealt with the dischargeability of debts under the exclusive jurisdiction of the bankruptcy court. The Court noted that before 1970, res judicata claims concerning dischargeability
were seldom heard in federal court. Traditionally, the bankruptcy court determined whether the debtor merited a discharge under Sec. 14, but left the dischargeability under Sec. 17 of a particular debt to the court in which the creditor sued, after bankruptcy, to enforce his prior judgment. Typically, that court was a state court.
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