In re Brooks

• Decision Date: 19 July 2007
• Docket Number: Bankruptcy No. 07-40133-DML-7.,Adversary No. 07-04040-DML.
• Citation: 371 B.R. 761
• Court: U.S. Bankruptcy Court — Northern District of Texas
• Parties: In re James Gregory BROOKS, Debtor. Loe, Warren, Rosenfield, Katcher, Hibbs, & Windsor, P.C., Plaintiff, v. James Gregory Brooks, Sr., Defendant.

371 B.R. 761

In re James Gregory BROOKS, Debtor Loe, Warren, Rosenfield, Katcher, Hibbs, & Windsor, P.C., Plaintiff, v. James Gregory Brooks, Sr., Defendant.

Bankruptcy No. 07-40133-DML-7.

Adversary No. 07-04040-DML.

United States Bankruptcy Court, N.D. Texas, Fort Worth Division.

July 19, 2007.

William M. Warren, Loe, Warren, Rosenfield, et al., Ft. Worth, TX, for Plaintiff.

Behrooz P. Vida, The Vida Law Firm, PLLC, Bedford, TX, for Defendant.

MEMORANDUM OPINION

D. MICHAEL LYNN, Bankruptcy Judge.

Before the court is the "Complaint to Determine Dischargeability of Debt [sic] Section 523(a)(5) and Section 523(a)(15) Debt for Attorney's Fees for Alimony or Support of Child" (the "Complaint") filed by Loe, Warren, Rosenfield, Katcher, Hibbs & Windsor, P.C. (the "Firm") pursuant to 11 U.S.C. § 523. Also before the court is the "Rule 12(B)(6) [sic] Motion to Dismiss" (the "Motion") filed by James Gregory Brooks (the "Debtor") pursuant to Fed.R.Civ.P. 12(b)(6). The court exercises core jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(a) and 157(b)(2)(I). This memorandum opinion embodies the court's findings of fact and conclusions of law. Fed. R. Bankr.P. 7052.

I. Background

The facts of this case may be summarized as follows: the Firm represented Susan Murphy Brooks (the "Former Spouse") in a state court proceeding (the "Divorce Proceeding") between the Former Spouse and Debtor, styled Cause # 231-329106-02, 231st Judicial District Court, Tarrant County, Texas. As a result of the Firm's representation, the Former Spouse incurred attorneys' fees (the "Fees"). In order to obtain payment of the Fees, the Firm intervened in the Divorce Proceeding and sued its own client, the Former Spouse, and Debtor. The Firm obtained a judgment (the "Final Judgment"), signed April 5th, 2006, against Debtor and the Former Spouse for "[attorneys'] fees associated with obtaining and enforcing temporary spousal support and temporary enforcement of the disposition of property pending divorce ..." Complaint, Exhibit A ¶ 2 (emphasis added). In the Final Judgment the Court awarded the Firm $23,923.00, recoverable from Debtor with post-judgment interest at 7.5% per annum. The Firm also received a separate award in the Final Judgment for $11,133.98, recoverable from the Former Spouse with post-judgment interest at 7.5% per annum. Notably, Debtor is not liable (either to the Firm or to the Former Spouse) for the latter amount nor is the Former Spouse liable for the $23,923.00 awarded against Debtor. During all relevant times, Debtor has been the custodial parent for Richard Daniel Brooks (the "Child"), and Debtor has had no obligation to pay any spousal support to the Former Spouse.

The Firm attempted to collect on the Final Judgment to no avail. On January 5, 2007 Debtor filed for relief under Chapter 7 of the Bankruptcy Code (11 U.S.C. § 101, et seq., hereinafter referred to as the "Bankruptcy Code"). Subject to the outcome of this adversary proceeding, Debtor was discharged of his debts on April 14, 2007. The Firm now claims the Fees are non-dischargeable, as to Debtor, under 11 U.S.C. § 523(a)(5) or (15). Debtor contends that the Firm lacks standing to assert a claim under section 523(a)(5) or (15) and, further, that the Firm has failed to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6).

II. Standard for Granting the Motion to Dismiss

A motion to dismiss under Fed.R.Civ.P. 12(b)(6) (made applicable herein by Fed. R. Bankr.P. 7012(b)) should only be granted when "it appears `beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 387 (5th Cir.2001) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "The question therefore is whether in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief." Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir.1997) (quoting 5 CHARLES A. WRITING & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357 (1st ed.1969)). "A motion to dismiss an action for failure to state a claim admits the facts alleged in the complaint, but challenges the plaintiffs rights to relief based upon those facts." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (quoting Tel-Phonic Servs., Inc. v. TBS Ina, Inc., 975 F.2d 1134, 1137 (5th Cir.1992)). Dismissal under Rule 12(b)(6) "is viewed with disfavor and is rarely granted." Lowrey, 117 F.3d at 247 (quoting Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir.1982)).

III. Discussion

The issue before the court is whether a complaint filed by a law firm asserting that attorneys' fees are non-dischargeable — either as a "domestic support obligation" under section 523(a)(5) or a divorce-related debt under section 523(a)(15) — states a claim upon which relief can be granted. Pursuant to 11 U.S.C. § 523,

(a) A discharge under section 727 ... of this title does not discharge an individual debtor from any debt —

. . .

(5) for a domestic support obligation;¹

. . .

or;

. . .

(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;²

(emphasis added). The Firm argues that the Fees are so intertwined with support that they constitute a "domestic support obligation" and are therefore non-dischargeable under section 523(a)(5). The Firm alternatively argues that the Fees are a non-dischargeable divorce-related debt under section 523(a)(15), since the Fees were incurred in connection with the Divorce Proceeding.

In the absence of binding precedent to the contrary, a bankruptcy court should adopt and apply the plain meaning of the Bankruptcy Code unless to do so would lead to an absurd result. See Lamie v. United States Tr., 540 U.S. 526, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004); United States v. Ron Pair Enters., Inc., 489 U.S. 235, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). Accordingly, this court looks to the plain meaning of section 523 in determining whether the Fees are dischargeable.

To ascertain the meaning of "domestic support obligation" in section 523(a)(5), the court looks to the definition found in section 101(14A):³

(14A) The term "domestic support obligation" means a debt ... 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 governmental unit;

(B) in the nature of alimony, maintenance, or support ... of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated;

(C) established ... by reason of applicable provisions of —

. . .

(ii) an order of a court of record; ... and

. . .

(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child's parent, legal guardian, or responsible relative for the purpose of collecting the debt.

(emphasis added). Even assuming the Final Judgment is a debt "in the nature of alimony, maintenance, or support,"⁴ the Firm is not Debtor's spouse, Debtor's former spouse, or Debtor's child; nor Debtor's child's parent, legal guardian, or responsible relative; nor a governmental unit. As none of these, the Firm does not fall within the ambit of section 101(14A) and is not an entity to whom a "domestic support obligation" may be owed under section 523(a)(5). Similarly, only a debt "to a spouse, former spouse, or child of the debtor" is non-dischargeable under section 523(a)(15) (emphasis added). Thus, applying the plain meaning rule, the Firm is not an entity to which may be owed a non-dischargeable divorce-related debt.⁵

The court notes that section 101(14A) defines "domestic support obligations" to include debts "recoverable by" a spouse, former spouse, child of the debtor, etc. In the case at bar, these words do not aid the Firm since the Fees are not "recoverable by" any of those entities specified in the definition but rather can be recovered only by the Firm. Further, while one could read section 101(14A) to suggest that if the Former Spouse could recover the Fees owed the Firm, the Firm could assert the obligation to be non-dischargeable, Congress intended in section 523(a)(5) to ensure the support of a debtor's family, not to turn a debtor's family members into debt recovery associates. This is evidenced by the words of the defined term itself: "a domestic support obligation." (emphasis added). See also 11 U.S.C. § 101(14A)(B) ("in the nature of alimony, maintenance, or support ... of such spouse, former spouse, or child of the debtor or such child's parent ...;" (emphasis added)).

Moreover, BAPCPA added both the words "recoverable by" and the reference to "a governmental unit" in the language describing non-dischargeable debts under section 523(a)(5). In light of this contemporaneity, the court concludes that the reference to debts "recoverable by" under section 101(14A)(A) is intended to further the ability of "a governmental unit" described in section 101(14A)(A)(ii) to pursue "a domestic support obligation," not to broaden the category of entities that may assert that debts owed to them are non-dischargeable. The limitation of section 101(14A)(D), which excludes from the definition of "domestic support obligation," most obligations assigned other than to governmental units, supports the court's conclusion that Congress inserted the words "recoverable by" to aid governmental units.

This conclusion leads to...