In re Grady, Bankruptcy No. 94-25778-A.
Decision Date | 20 April 1995 |
Docket Number | Bankruptcy No. 94-25778-A. |
Citation | 180 BR 461 |
Court | U.S. Bankruptcy Court — Eastern District of Virginia |
Parties | In re Andrew E. GRADY. |
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Dean W. Sword, Jr., Portsmouth, VA, for debtor.
Darell Sayer, Ferrell, Backus, Sayer & Nicolo, Portsmouth, VA, for Darell Sayer and Linda B. Todd.
This matter comes before the Court on the objections of Darell Sayer ("Sayer") and Linda B. Todd ("Todd") to the confirmation of the debtor's Chapter 13 Plan. The parties submitted respective briefs on the issue of whether the monies awarded Sayer and Todd in a state court divorce proceeding should be treated as priority claims and paid in full through the debtor's Plan. This Opinion and Order constitutes the Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052.
Linda B. Todd and Andrew Grady were divorced on November 7, 1994 by a Decree of Divorce entered in the Circuit Court of the City of Portsmouth, Virginia. That Decree, which is a part of the record before this Court, states in pertinent part:
Divorce Decree at 3. The circuit court judge denied Todd spousal support, and ordered Grady to pay the outstanding balance on the joint Visa account and other specified joint debts "in lieu of an award of spousal support". Divorce Decree at 5.
In his bankruptcy schedules, the debtor listed both Todd and Sayer as unsecured nonpriority creditors setting their claim amounts at "unknown" and "$2,000", respectively. See Schedule F. Grady's chapter 13 plan does not treat the debts due Todd or Sayer as priority claims.
The significance of the dispute at hand is whether the claims of Todd and Sayer are properly treated as unsecured under the plan or whether the plan must provide for the claims to be paid in full as a priority claims pursuant to § 1322(a)(2).1
Under the Bankruptcy Reform Act of 1994, Congress amended 11 U.S.C. § 507(a)(7), to provide a new priority for spousal support obligations. Section 507(a)(7) provides, in pertinent part.
11 U.S.C. 507(a)(7)(B) (1995) (emphasis added). This Court must therefore determine whether the provisions of the divorce decree fall within the aegis of being actually in the nature of alimony, maintenance or support.
With a few exceptions, the provisions of the Bankruptcy Reform Act of 1994 apply prospectively to cases filed after the effective date of October 22, 1994. 11 U.S.C.A. § 101 (Supp.1995) (Historical and Statutory Notes). This Circuit has not addressed the priority of claims under amended § 507(a)(7)(B), and the paucity of precedent nationwide is not surprising in light of the timeliness of this case. Although finding these types of awards priority claims under § 507(a)(7)(B) may be a case of first impression, determining whether such awards are in the nature of alimony, maintenance, or support is not.
According to general rules of statutory construction, identical words used in different parts of the same act are intended to have the same meaning. See Gustafson v. Alloyd Co., ___ U.S. ___, ___, 115 S.Ct. 1061, 1067, 131 L.Ed.2d 1 (1995) (citing Department of Revenue of Oregon v. ACF Industries, Inc., 510 U.S. ___, ___, 114 S.Ct. 843, 845, 127 L.Ed.2d 165 (1994)). It is logical, therefore, to assume that identical phrases used in different parts of the same act are intended to have the same meaning. The language of § 523(a)(5)(B), the provision governing which specific debts § 1328(b) excepts from discharge, is identical to that of amended § 507(a)(7)(B).
11 U.S.C. § 523(a)(5)(B) (1995) (emphasis added).2 Notwithstanding the fact that the issue was brought under § 507(a)(7)(B), the plethora of case law discussing whether debts are "actually in the nature of alimony, maintenance or support" under § 523(a)(5) is applicable and useful precedent in determining whether such debts should receive priority treatment.
Payment of support need not be paid directly to the spouse or ex-spouse to be considered a nondischargeable debt. Beaton v. Zerbe (In re Zerbe), 161 B.R. 939, 940 (E.D.Va.1994). The majority rule among Bankruptcy Courts is that an obligation to pay attorneys' fees is "so tied in with the obligation of support as to be in the nature of support or alimony and excepted from discharge." Romano v. Romano (In re Romano), 27 B.R. 36, 38 (Bankr.M.D.Fla.1983). Courts have excepted from discharge attorneys' fees, court costs, and fees due the commissioner in chancery for services rendered pursuant to a state court divorce proceeding as debts actually in the nature of alimony, maintenance, or support. See e.g., Silansky v. Brodsky, Greenblatt & Renehan (In re Silansky), 897 F.2d 743, 744 (4th Cir.1990) ( ); Foiles v. Foiles (In re Foiles), 1994 WL 282529, aff'd sub nom. Foiles v. Taylor, 174 B.R. 692 (E.D.Va.1994) ( ). In dischargeability actions, a court's determination turns on whether the underlying debt relating to the fees is dischargeable. Bulman v. Bulman (In re Bulman), 123 B.R. 24, 27 (Bankr. E.D.Va.1991).
Since the issue at bar arises out of a clause in the divorce decree entered by a state court, we must look to the intent of the trier or fact with respect to those obligations. Bangert v. McCauley (In re McCauley), 105 B.R. 315, 320 (E.D.Va.1989). The Court may look to a variety of factors to ascertain the intent of the circuit court judge including pleadings, orders, transcripts, and the language of the divorce decree itself. Id. at 319. In this case, the divorce decree is the only evidence we...
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