In re Boller, 08-10782.

• Decision Date: 27 June 2008
• Docket Number: No. 08-10782.,08-10782.
• Citation: 393 B.R. 569
• Parties: In re David Russell BOLLER, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Tennessee

Page 569

393 B.R. 569

In re David Russell BOLLER, Debtor.

No. 08-10782.

United States Bankruptcy Court, E.D. Tennessee, Southern Division.

June 27, 2008.

COPYRIGHT MATERIAL OMITTED

Kenneth C. Rannick, Kenneth C. Rannick, P.C., Chattanooga, TN, for Debtor.

MEMORANDUM

R. THOMAS STINNETT, Bankruptcy Judge.

This contested matter is before the court on the objection by Jill Boller, the debtor's former spouse, to confirmation of the debtor's chapter 13 plan for failure to provide for payment in full of a domestic support obligation. Although the parties were provided an opportunity to present evidence, they submitted that the only evidence necessary for the court to consider was the divorce decree which incorporated a Compromise Agreement signed by the parties. The affidavit of Ms. Boller's divorce attorney is attached to the brief filed on her behalf in this matter, to which no objection was raised by the debtor. Otherwise, the parties submitted no additional evidence for the court to consider. The court took the matter under advisement and the parties submitted briefs. Upon review of the record as a whole and the parties' briefs, and for the reasons set forth herein, the court will overrule the objection and confirm the plan.

This is a core proceeding. 28 U.S.C. § 157(b)(2)(A) and (L).

FACTS

The parties married on September 20, 2003. On December 19, 2007, they obtained a divorce in the Superior Court for Catoosa County, Georgia, on the grounds that the marriage was irretrievably broken. Both parties were represented by attorneys during the divorce proceeding. The parties signed a Temporary Order on September 12, 2007, providing for allocation of debt payments and child support. Without making specific findings of fact or conclusions of law, the final divorce decree of December 19, 2007, incorporated a Compromise Agreement signed by the parties on December 13, 2007.¹ The Compromise Agreement states that the parties intend "... to make a complete and final settlement of all claims that each party may have against the other party and to finalize their agreement as to the division of the real and personal property owned by them jointly or either of them individually, and to make adequate and sufficient provision by written agreement for the equitable settlement of any property rights between the parties." The Compromise Agreement provides considerable detail with respect to support of the parties' minor child, including a lump-sum child support payment by the debtor to Ms. Boller in the amount of $1,227.91 for December 2007, and for continued payment of daycare expenses. The Compromise Agreement acknowledges a substantial reduction in the debtor's income in January 2008, necessitating a reduction in the amount of monthly child support to $927.87 beginning January 2008 until the minor child attains eighteen years of age or graduates from high school, whichever is later.

The only direct reference to support for Ms. Boller occurs in Article V which provides that "Husband shall pay no alimony to Wife, and Wife expressly releases her claim for alimony against the Husband."

Article VI provides that title to the real estate jointly owned by the parties is to be divested from Ms. Boller to the debtor who will be solely responsible for all mortgage payments, taxes, insurance and upkeep. Furthermore, the Compromise Agreement requires the debtor to make all reasonable efforts to refinance the home and to remove Ms. Boller's name from the mortgage within 120 days of the entry of the final decree. Ms. Boller released her equity in the home and agreed to sign a quitclaim deed when presented by the debtor.

In Article VI, which addresses personal property, each party agreed to retain his or her own vehicle, to maintain payments, and to hold the other party harmless from any payments for the vehicle in his or her possession.

Article VII addresses the parties' debts. The debtor assumed the parties' joint debts described in the September 12, 2007, Temporary Order, except for an obligation to Dell Computer which Ms. Boller assumed. Also, Ms. Boller agreed to continue paying other debts that she was ordered to pay in the Temporary Order, including the obligations to Goody's, Old Navy, Anesthesiology Consultants, Memorial Hospital, and FSG Bank. The record contains no evidence of the amounts of these debts. Debts for which the debtor was responsible in the Temporary Order and which were included by reference in the Compromise Agreement and the Final Decree included AOL, Bank of America, Capital One # 1, Capital One # 2, American Express, Erlanger, Home Depot, Household Credit, HSBC, JC Penney, MBNA, Providian, Rooms-To-Go, Shell, Target, Bank of America #2, CitiBank, Anesthesia Associates, and Verizon. The Compromise Agreement also provides that the debtor will reimburse $3,166.87 to Ms. Boller for certain unspecified "marital debts" that she paid which the debtor was ordered in the Temporary Order to pay during the interim period between the issuance of the Temporary Order and the Compromise Agreement. The debtor agreed to pay monthly installments of $50 with the balance to be fully paid within three years of the entry of the Final Decree of divorce. Certain fees awarded to Ms. Boller at a Temporary Hearing also were to be paid by the debtor by December 15, 2007, and unpaid medical expenses in the amount of $80.50 incurred on behalf of the parties' minor child were due and payable by the debtor during the first week of December 2007. Any and all debt incurred by the parties in their individual names after separation would be the responsibility of that party who would indemnify and hold harmless the other party. Article X provides that each party would bear responsibility for his or her own attorney's fees and expenses. Article XV provides that there are no agreements or understandings between the parties except those expressly mentioned in the Compromise Agreement, and no representations or warranties were made by or on behalf of either party to the other besides what is expressly mentioned in the Compromise Agreement.

The debtor filed his chapter 13 petition on February 18, 2008. Schedule E filed with the petition reflects no unsecured priority claims. Schedule F reflects the $3,166.87 claim owed to Ms. Boller as unsecured and classifies it as a § 523(a)(15) claim, which is an obligation to a former spouse or child of the debtor and not of the kind described in § 523(a)(5) that is incurred by the debtor in the course of a divorce or in connection with a divorce decree. Schedule F also includes various claims which the debtor states are Ms. Boller's, and which total $11,988.16.² The proposed plan provides for payments over 60 months of $765 bi-weekly, with non-priority unsecured claims to receive a pro-rata distribution. Ms. Boller objects to the proposed plan's failure to provide for obligations owed to her pursuant to the divorce decree, arguing that the obligations are in the nature of alimony, maintenance, or support, and are therefore domestic support obligations entitled to priority status and payable in full. The issue before the court is whether the disputed claims constitute domestic support obligations necessitating treatment as priority claims payable in full during the life of the plan. Alternatively, Ms. Boller argues that the claims are in the nature of support under11 U.S.C. § 523(a)(15) and that they must be paid in full over the life of the plan as non-dischargeable obligations.

Treatment of debts incurred by a chapter 13 debtor in connection with a judicial order to pay a domestic support obligation requires review of the interplay among three separate provisions of the Bankruptcy Code. The chapter 13 plan must "provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title, unless the holder of a particular claim agrees to a different treatment of such claim." 11 U.S.C. § 1322(a)(2).

11 U.S.C. § 507(a)(1) provides:

(a) The following expenses and claims have priority in the following order:

(1) First:

(A) Allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition in a case under this title, are owed to or recoverable by a spouse, former spouse, or child of the debtor, or such child's parent, legal guardian, or responsible relative without regard to whether the claim is filed by such person or is filed by a governmental unit on behalf of such person, on the condition that funds received under this paragraph by a governmental unit under this title after the date of the filing of the petition shall be applied and distributed in accordance with applicable nonbankruptcy law.

11 U.S.C. § 507(a)(1)(A)(2005).

"Domestic support obligations" are defined in 11 U.S.C. § 101(14A)(2005):

The term `domestic support obligation' means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—

(A) owed to or recoverable by—

(i) a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative; or

(ii) a government unit;

(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor such child's parent, without regard to whether such debt is expressly so designated;

(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—

(i) a separation agreement, divorce decree, or property settlement agreement;

(ii) an order of a court of record; or

(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and

(D) not assigned...