In re Hutchison

Decision Date07 December 2001
Docket NumberBankruptcy No. 00-32321. Adversary No. 01-3026.
Citation270 BR 429
PartiesIn re Keith HUTCHISON, Debtor. Keith Hutchison, Plaintiff, v. Melissa Birmingham, Defendant.
CourtU.S. Bankruptcy Court — Eastern District of Michigan

COPYRIGHT MATERIAL OMITTED

Francis A. Krcmarik, Flint, MI, for Plaintiff.

Barry Wolf, Flint, MI, for Defendant.

OPINION REGARDING CROSS-MOTIONS FOR SUMMARY JUDGMENT

ARTHUR J. SPECTOR, Chief Judge.

Introduction

In this case, the Court holds that a debt for child support arises upon the birth of the child and that the fact that no court had yet ordered the debtor to support the child does not take the debt outside the scope of 11 U.S.C. § 523(a)(5).

In the latter half of 1998, Melissa Birmingham filed a complaint in Genesee County Circuit Court against Keith Hutchison, alleging that she was Hutchison's "illegitimate" child. Exhibit 1 of Defendant's Response at ¶ 13 (This is a copy of the complaint, which will hereafter be referred to as the "Paternity Complaint.") Birmingham, who was born on April 26, 1980, see id. at ¶ 9, asked the court to "find that Hutchison . . . is her father and that . . . he breached his common law duty to financially support and care for" her. Id. at p. 3. She also asked that she be "awarded . . . an amount in excess of . . . $25,000.00," id., a sum which she characterized as representing the "damages" that she incurred "as a direct and proximate result of Hutchison's . . . breach." Id. at ¶ 18.

On February 25, 1999, the Genesee County Circuit Court entered an order declaring that Hutchison is Birmingham's "biological father." Stipulated Order of Filiation (Exhibit 1 of Plaintiff's Brief). Hutchison filed for chapter 7 bankruptcy relief on November 30th of the following year. He did not schedule Birmingham as a creditor, although he did list as "pending" the suit that she had commenced against him.

The Debtor was granted a discharge on March 16, 2001. A few days before, on March 12, 2001, he commenced this adversary proceeding against Birmingham. The Plaintiff alleges "that the Defendant has claimed a common law right to child support in excess of . . . $25,000.00." Complaint at ¶ 5. He seeks a determination that this "claim . . . is . . . discharged." Id. at p. 2.

In responding to the Debtor's complaint, the Defendant indicated that in the state-court action she had been seeking an "award of damages in the form of unpaid child support," and asserted "that any future judgment in such action . . . would not be dischargeable." Defendant's Corrected Response at ¶¶ 2 & 8. Accordingly, she asked that the Court "lift the stay" so that she can continue litigation in state court. Id. at p. 2.

The Court ordered the parties to "submit their briefs on cross-motions for summary judgment." Scheduling Order (A.P. Docket # 13). They have done so and, for the reasons which follow, the Defendant's motion will be granted.

Discussion

Section 523(a) of the Bankruptcy Code enumerates those debts which are outside the scope of a debtor's discharge. The Defendant relies on sub-paragraph (5) thereof, which states in pertinent part:

A discharge . . . does not discharge an individual debtor from any debt . . . to a . . . child of the debtor, for . . . support of such . . . child, in connection with an . . . order of a court of record1 . . ., but not to the extent that
. . .
(B) such debt includes a liability designated as . . . support, unless such liability is actually in the nature of . . . support.

11 U.S.C. § 523(a)(5). Mindful of this provision, one issue raised by the present dispute is whether the claim asserted by the Defendant — even if ultimately vindicated in state court — would in fact be "in the nature of support." A second question concerns the timing of any relief afforded the Defendant in state court — specifically, whether such relief had to have been obtained prepetition or prior to entry of the Plaintiff's discharge. We will address these issues in reverse order.

(i) Timing of a Support Order

Section 523(a)(5) clearly requires that the support obligation be established by court order. Less clear is whether the absence of such an order dictates a finding that the debt is outside the statute's scope. For reasons to be explained, we conclude that it does not.

The automatic stay does not apply to "an action or proceeding for . . . the establishment or modification of an order for . . . support." 11 U.S.C. § 362(b)(2)(A)(ii). One authority implicitly assumed that this stay exception is limited to support orders that are prospective in application — i.e., that are designed only to meet the child's current and anticipated needs. See 3 Collier on Bankruptcy (15th ed. rev.2001), at ¶ 362.052 ("Since the support obligation established will be a postpetition claim that is not discharged, there is no reason to delay the nondebtor claimant from establishing or seeking modification of the claim."); see generally 11 U.S.C. § 727(b) ("A discharge . . . discharges the debtor from all debts that arose" prepetition.); 11 U.S.C. § 101(12) ("`Debt' means liability on a claim."); 11 U.S.C. § 101(5)(A) ("Claim' means . . . right to payment, whether or not such right is reduced to judgment or liquidated. . . . ").

The text of § 362(b)(2)(A), however, affords no basis for such a distinction. To the contrary, the fact this provision refers not only to the "commencement" of a support action, but to the "continuation" of such an action, 11 U.S.C. § 362(b)(2)(A)(ii) (emphasis added), strongly suggests that it contemplates support claims arising before the debtor filed for bankruptcy relief.

If the statute were construed as applying only to prospective support orders, moreover, it would be unnecessary: The automatic stay does not apply to judicial proceedings against the debtor which are based on postpetition claims. See 11 U.S.C. § 362(a)(1) (The stay applies to "the commencement or continuation . . . of a judicial . . . proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title."); see also, e.g., Taylor v. First Fed. Sav. & Loan Ass'n of Monessen, 843 F.2d 153, 154 (3d Cir.1988) ("The automatic stay is not intended to bar proceedings for post-petition claims that could not have been commenced before the bankruptcy petition was filed."). The better view, then, is that § 362(b)(2)(A)(ii) encompasses proceedings based on prepetition support claims. See In re Frosch, 261 B.R. 181, 187 n. 6 (Bankr.W.D.Pa.2001); In re Vargason, 260 B.R. 488, 492-93 (Bankr.D.N.D.2001); In re Lewis, 227 B.R. 886, 889 n. 5 (Bankr. W.D.Ark.1998).

Section 362(b)(2)(A) is significant for present purposes, of course, because it renders untenable the proposition that only prepetition support orders are excepted from discharge by § 523(a)(5). See generally United States v. Cleveland Indians Baseball Co., 532 U.S. 200, 121 S.Ct. 1433, 149 L.Ed.2d 401, 417 (2001) ("Statutory construction `is a holistic endeavor,' and . . . the meaning of a provision is `clarified by the remainder of the statutory scheme . . . when only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.'" (citation omitted)). It would be absurd, after all, for Congress to explicitly permit a party to engage in postpetition efforts to obtain a support order — the automatic stay notwithstanding — if such order would in any case be void. See generally 11 U.S.C. § 524(a)(1) ("A discharge . . . voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727. . . ."). The clear negative inference arising from § 362(b)(2)(A), then, is that a debt evidenced by a postpetition support order may be nondischargeable pursuant to § 523(a)(5).

Other statutory provisions point to the same conclusion. Consider the first subparagraph (18) of § 523(a), which states:

A discharge under section 727 . . . does not discharge an individual debtor from any debt . . . owed under State law to a State . . . that is . . .
(A) in the nature of support, and
(B) enforceable under part D of title sic — subchapter IV of the Social Security Act (42 U.S.C. § 601 et seq.).

11 U.S.C. § 523(a)(18). Cf. 42 U.S.C. § 656(b) ("A debt . . . owed under State law to a State. . . . that is in the nature of support and that is enforceable under this part is not released by a discharge in bankruptcy. . . . ").

By its own terms, this provision does not require that such a debt be reduced to judgment. Nor is any such requirement imposed in connection with part D of the Social Security Act before the state acquires a right of enforcement.2 Thus a state-owed debt is excepted from discharge regardless of whether it is evidenced by a court order. This being true, it strikes the Court as improbable that Congress intended dischargeability under § 523(a)(5) to turn on when the support order was entered.

The other pertinent statute is § 523(c)(1), which specifies that certain kinds of debts are discharged "unless, on request of the creditor to whom such debt is owed, . . . the court determines such debt to be excepted from discharge." 11 U.S.C. § 523(c)(1). The net effect of this statute, in conjunction with the corresponding Bankruptcy Rule, is to establish a deadline for the commencement of nondischargeability complaints based on the kinds of debts specified therein. See H.R. Rep. 95-595, 95th Cong., 1st Sess. (1977), at 365, U.S.Code Cong. & Admin.News 1978, pp. 5963, 6321 ("Subsection (c) requires a creditor who is owed a debt that may be expected sic-excepted from discharge under paragraph (2), (4), or (6) . . . to initiate proceedings in the bankruptcy court for an exception to discharge. If the creditor does not act, the debt...

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