In re Gatliff
| Decision Date | 13 December 2000 |
| Docket Number | 99 A 01198.,No. 99 B 18109,99 B 18109 |
| Citation | 266 BR 381 |
| Parties | In re Dale GATLIFF, Debtor. Susan Gatliff, Plaintiff, v. Dale Gatliff, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
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Charles E. Antonietti, Antonietti and Associates, Calumet City, IL, for plaintiff.
Samuel A. Shelist, Edward L. Schuller & Associates, Chicago, IL, for defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Following trial held on Susan Gatliff's ("Plaintiff") complaint to determine the dischargeability of three debts owed to her by her ex-husband Dale Gatliff ("Defendant" or "Debtor") pursuant to their divorce decree, the following Findings of Fact and Conclusions of Law are made and entered. Pursuant thereto, reimbursement for the high school tuition of the parties' children owed to Plaintiff by Defendant/debtor will by separate judgment be held nondischargeable under 11 U.S.C § 523(a)(5), and her attorney's fees and the pro rata share of Debtor's tax refund each owed by him to her will be held nondischargeable under 11 U.S.C. § 523(a)(15)(A) and (B).
Defendant filed a Petition for Dissolution of Marriage from Plaintiff in the Circuit Court of Cook County, Illinois, Case No. 96 D 15119. The parties entered into a Custody and Parenting Order with regards to their two children who were both under the age of 18 when their marriage was dissolved. The parties also entered into a Marital Settlement Agreement which was incorporated into the Judgment for Dissolution of Marriage (jointly "Divorce Decree") entered by the Circuit Court of Cook County on March 8, 1999.
The Divorce Decree provided in pertinent part:
Debtor failed to perform fully his obligations under the provisions. He only paid a portion of Plaintiff's attorney's fees and still owes $3,650; he failed to pay Plaintiff $2,000 due toward past tuition for the parties' then minor children; and he failed to pay Plaintiff her pro rata share of the tax refund in the sum of $3,000. The foregoing debts owed to Plaintiff total $8,650.
Plaintiff contends that all the foregoing obligations were in the nature of support, and are nondischargeable under § 523(a)(5). When the parties entered into the Marital Settlement Agreement and their marriage was dissolved, there was a considerable disparity in their income. Plaintiff then earned approximately $24,000 per year while Debtor as a policeman earned about $43,000. Notwithstanding this disparity, Plaintiff waived maintenance in exchange for the Debtor agreeing to pay certain debts. As such Plaintiff contends that payment of the debts was intended as a form of support for herself and their children. She argues that reimbursement of the children's tuition was a form of child support and nondischargeable under § 523(a)(5), and also contends that the majority of attorney's fees and costs incurred in the divorce proceeding were related to custody proceedings and as such were also in the nature of child support.
Alternatively, Plaintiff contends that these debts are nondischargeable under § 523(a)(15)(A) and (B) because Debtor has the ability to pay and also because the benefit to Debtor of having the debt discharged does not outweigh the detriment that she would suffer if the burden is shifted to her to pay the financial obligations.
Debtor contends that the debts are not in the nature of support under § 523(a)(5), and he testified that it was not the parties' intent at the time of the Divorce Decree that these debts be considered support. As for the attorney's fees, Debtor asserts that the fees were not used for the support of the Plaintiff or their minor children but rather for the prosecution of the divorce case and for property division. Debtor argues that all of the debts were a property settlement and therefore must be considered only under § 523(a)(15). Debtor argues as to § 523(a)(15)(A) that he falls under one of the exceptions to nondischargeability because he does not have the ability to pay the debts.
Testimony concerning assets of the parties was elicited during trial from which the following is found:
Susan Gatliff received the family home in the divorce. The home is worth approximately $105,000 with $22,000 remaining on the mortgage. Thus, there is about $83,000 in equity in the home. Debtor retained his pension with the Policemen's Annuity and Benefit Fund City of Chicago and his deferred compensation benefits with the City of Chicago. Debtor's pension account contains over $72,000 in contributions and his deferred compensation plan had a value of approximately $10,300 as of March 1998.
On the date of the filing for bankruptcy and at the time of this trial, Debtor was employed full-time by the City of Chicago as a police officer. He has a gross income of $52,000 earning approximately $4,600 per month. On the date of the bankruptcy filing and at the time of trial, Plaintiff was employed full-time by Voss Equipment with a gross income of $26,000 earning approximately $2,200 per month.
Debtor has testified that while there is currently a disparity in the parties' income, he plans to retire soon and will then earn only between $25,000 and $30,000 per year. In fact, Debtor testified that he has already submitted his retirement papers to his supervisor. However, evidence did not show that any event or need compels his retirement and it is found that any retirement on his part, if indeed he goes through with it, will be entirely voluntary on his part.
In addition to owning her home, Plaintiff has several bank accounts both on her own and in conjunction with relatives. However, balances on those accounts at the end of each month are nominal because she lives from paycheck to paycheck.
The Debtor does not own his home and he leases his car.
Fact statements contained in the Conclusions of Law will stand as additional Findings of Fact.
Nondischargeability under §§ 523(a)(5) and (a)(15)(A) and (B)
In pertinent part, §§ 523(a)(5) and (a)(15) provide:
11 U.S.C. §§ 523(a)(5) and (a)(15)(A)(B).
Exceptions from discharge under § 523, are generally construed strictly against the objecting creditor and liberally in favor of the debtor in order to further the policy of providing the debtor with a fresh start. Kolodziej v. Reines (In re Reines), 142 F.3d 970, 972-73 (7th Cir. 1998). Consequently, the party alleging that a debt is nondischargeable bears the burden of proving the nondischargeability by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). "The policy of protecting and favoring the debtor is tempered, however, when the debt arises from a divorce or separation agreement." In re Crosswhite, 148 F.3d 879, 883 (7th Cir.1998).
Marital debt for alimony, maintenance or support of the debtor's spouse, former spouse or child is nondischargeable. § 523(a)(5). Any marital debt resulting from a division of marital assets may be nondischargeable under § 523(a)(15) provided the debtor does not fall within one of the two exceptions to nondischargeability. § 523(a)(15)(A) and (B). Crosswhite, 148 F.3d at 882.
The former spouse bears the initial burden of proving that she holds a § 523(a)(15) claim against the debtor. Id. To satisfy that burden the spouse must establish that she is owed a debt other than the type listed under ...
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