In re Foster, 02-15524-8W3.

• Decision Date: 28 April 2003
• Docket Number: No. 02-15524-8W3.,02-15524-8W3.
• Citation: 292 B.R. 221
• Parties: In re Malcolm C. FOSTER, Debtor.
• Court: U.S. Bankruptcy Court — Middle District of Florida

292 B.R. 221

In re Malcolm C. FOSTER, Debtor.

No. 02-15524-8W3.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

April 28, 2003.

Malka Isaak, Tampa, FL, for debtor.

Mark A. Spence, New Port Richey, FL, for Eloise Taylor.

Terry E. Smith, Bradenton, FL, Chapter 13 Trustee.

MEMORANDUM DECISION AND ORDER OVERRULING DEBTOR'S OBJECTION TO CLAIM NO. 14 OF ELOISE TAYLOR

MICHAEL G. WILLIAMSON, Bankruptcy Judge.

THIS CASE came on for consideration on March 31, 2003 ("Hearing"), on the Debtor's Objection to Claim No. 14 (Doc. No. 18) ("Objection"). The Debtor objected to Claim No. 14 ("Claim") on the basis that it was filed as a priority claim under Bankruptcy Code section 507(a)(7) rather than as a general unsecured claim. The claimant, Eloise Taylor ("Claimant"), was the attorney for the Debtor's ex-spouse, Aynee R. Foster ("Wife"), and had rendered the Wife services in connection with the dissolution of the Debtor's marriage with the Wife. For the reasons set forth below, the Objection is overruled, and the Claim is allowed in its entirety as an unsecured priority claim under section 507(a)(7).

Findings of Fact

The facts relating to the Objection are simple and undisputed. The state court entered a final judgment of dissolution of the marriage between the Wife and the Debtor on October 31, 2001 ("Final Judgment"). The Final Judgment provided that the "Wife is entitled to some payment of her attorney's fees from the Husband and he is in a better position to pay them...." ¶ 40, Final Judgment. Subsequently, on May 14, 2002, the state court entered an order awarding attorney's fees and costs ("Order on Fees") to the Claimant in the total amount of $61,018.50.¹

The Debtor filed this chapter 7 case on August 9, 2002. Pursuant to the chapter 13 plan (Doc. No. 2) ("Plan") filed by the Debtor, Claimant will be paid $40,000, approximately 65 percent of her claim, through the Plan at $1,000 per month for the first 20 months, then at $500 per month for the next 40 months. The Plan also proposes that the "[b]alance of the debt will be paid to the Wife after the confirmation of this plan consistent with State Court order."

Conclusions of Law

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b), 157(b)(1), 157(b)(2)(B), and 157(b)(2)(I). This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(B) and 157(b)(2)(I).

Congress, in 1994, created a new priority claim status — elevating maintenance and support obligations arising from marital dissolutions to seventh priority. Priority claims must be paid in full under a debtor's chapter 13 plan pursuant to Bankruptcy Code section 1322(a)(2). The provision of the Bankruptcy Code relevant to the Wife's Claim is section 507(a)(7) which provides priority status for:

Allowed claims for debts to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that such debt —

(A) is assigned to another entity, voluntarily, by operation of law, or otherwise; or

(B) 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. § 507(a)(7).

At the Hearing, the Debtor argued that attorney fees should not be placed in the same priority accorded alimony and support obligations since attorney fees are not specifically mentioned in section 507(a)(7). The Debtor acknowledged that there is a plethora of cases decided under section 523(a)(5) which hold that attorney fees generally are included within the non-dischargeable support or alimony claims. See, e.g., Strickland v. Shannon (In re Strickland), 90 F.3d 444 (11th Cir.1996)(attorney fee award arising from post-dissolution modification award constitutes "support" for former spouse, where award is based upon ability to pay); In re Stebbins By and Through Dahl, 105 B.R. 118 (S.D.Fla.1989)(attorney fees can be legitimately characterized as "support"); In re Vazquez, 92 B.R. 533 (S.D.Fla.1988)(debt to ex-spouse's attorney for fees was nondischargeable); In re Smith, 273 B.R. 669 (Bankr.N.D.Fla.2002)(ex-spouse's attorney fees were non-dischargeable because they were awarded based on relative need and ability to pay); In re Edwards, 261 B.R. 523 (Bankr.M.D.Fla.2001)(legal fees inextricably intertwined with alimony and child support would be excepted from discharge); In re Ackerman, 247 B.R. 336 (Bankr.M.D.Fla.2000)(attorney and accountant fees incurred by former spouse is in nature of alimony, maintenance or support); In re Hendricks, 248 B.R. 652 (Bankr.M.D.Fla.2000) (attorney fees incurred in unsuccessful post-dissolution attempt by former spouse and primary caretaker to modify custody was nondischargeable because it was based on determination that the debtor had greater ability to pay); In re Prater, 231 B.R. 819 (Bankr.M.D.Fla.1999)(ex-spouse's attorney fees nondischargeable as "support" since it was based on debtor's superior financial position); In re Lapsley, 230 B.R. 633 (Bankr.M.D.Fla.1999)(attorney fees for ex-spouse declared nondischargeable); In re Mobley, 238 B.R. 486 (Bankr.M.D.Fla.1998)(attorney fees for ex-spouse was "support" even though custodial-parent debtor was not ordered to pay support by state court); In re Finlayson, 217 B.R. 666 (Bankr.S.D.Fla.1998)(attorney fees properly characterized as "support" despite the fact that majority of the issues litigated in state court involved equitable distribution of assets); In re Konicki, 208 B.R. 572 (Bankr.M.D.Fla.1997) (attorney fees fell within "support" even though fees were incurred primarily for non-dissolution and support issues, where state court determined that ex-spouse had greater need and lesser ability to pay these fees); In re Smith, 207 B.R. 289 (Bankr.M.D.Fla.1997)(attorney fees nondischargeable); In re Thomasson, 199 B.R. 801 (Bankr.M.D.Fla.1996)(same); contra, In re Tarbox, 234 B.R. 832 (Bankr.S.D.Fla.1999)(attorney fee awarded to ex-spouse is dischargeable because it related to "property settlement"); In re Richards, 207 B.R. 266 (Bankr.M.D.Fla.1997) (attorney fees not "support" because no alimony or support was awarded and state court solely distributed property); In re Wester, 187 B.R. 358 (Bankr.M.D.Fla.1995)(attorney fees of ex-spouse are dischargeable because the state court awarded fees based on the unequal property settlement).

For example, in Vazquez, the court held that attorney fees incurred by an ex-spouse for services related to post-dissolution visitation issues were nondischargeable. The court opined that the "Debtor's construction of section 523(a)(5)(B) of not excepting from discharge attorney's fees ... merely because the statute does not specifically refer to those issues is unjustifiably restrictive and narrow. Neither public policy, the statutory language, nor the legislative history supports the view...." Vazquez, 92 B.R. at 535.

In response, the Debtor argues that these cases were decided under section 523(a)(5) and are not controlling on the interpretation of section 507(a)(7). In considering this argument, the Court must determine the extent to which cases that have interpreted section 523(a)(5) should be looked to in interpreting and applying section 507(a)(7). In this regard, the cases interpreting section 507(a)(7) to relate to section 523(a)(5) predominately focus on the similarity of the language.² The language in the two sections is identical, with the exception of the sentence in section 507(a)(7) that excludes from priority status claims that have been assigned to third parties. When the language is identical, the courts employ a general rule of statutory construction: "identical phrases used in different parts of [the] same act are intended to have the same meaning." In re Grady, 180 B.R. 461, 464 (Bankr.E.D.Va.1995) (citations omitted); Collier on Bankruptcy, ¶ 507.09[1] (also citing to Beaupied v. Chang (In re Chang), 163 F.3d 1138 (9th Cir.1998); Dewey v. Dewey (In re Dewey), 223 B.R. 559 (10th Cir. BAP 1998); Beaupied v. Doe (In re Doe), 193 B.R. 12 (Bankr.N.D.Cal.1996); In re Beverly, 196 B.R. 128 (Bankr.W.D.Mo.1996)). See also In re Cameron, 243 B.R. 117, 125-26 (M.D.Ala.1999); In re Miller, 284 B.R. 734, 738 (10th Cir. BAP 2002); In re Austin, 271 B.R. 97 (Bankr.E.D.Va.2001); In re Pearce, 245 B.R. 578, 582 (Bankr.S.D.Ill.2000); In re Polishuk, 243 B.R. 408, 416 (Bankr.N.D.Okla.1999); In re Costanza, 215 B.R. 588, 590 (Bankr.W.D.Mo.1997).

Not only is the language almost verbatim, but courts have also considered the similarity of the policies behind the two sections. Miller, 284 B.R. at 738; Dewey, 223 B.R. at 564. The legislative history of section 507(a)(7) reveals that Congress was concerned that the law existing then failed to provide priority status for support and maintenance obligations to spouses and children, even though these debts were clearly nondischargeable. As comments attributed to the Hon. Louise McIntosh Slaughter of New York (103rd Congress, Second Session, June 30, 1994; P.L. 103-394) illustrate:

While the current Code does not allow courts to forgive outstanding debts "in the nature of support," child support and alimony are given no priority when a debtor has assets and the proceeds are distributed. Thus, even while creditors can be paid, spouses and children who are entitled to support are not likely to be the beneficiaries. [The] legislation would elevate child support and alimony from their current status as general unsecured debts to formally prioritized debts, thereby ensuring that a spouse with dependent children will receive support payments without waiting for years. A & P 140 Cong. Record E1389.

These pre-1994 amendment problems were discussed in the case of In...