In re Little
| Decision Date | 01 October 2021 |
| Docket Number | Case No. 4:20-bk-11199J |
| Parties | IN RE: John A. LITTLE, III, Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Arkansas |
634 B.R. 784
IN RE: John A. LITTLE, III, Debtor.
Case No. 4:20-bk-11199J
United States Bankruptcy Court, E.D. Arkansas, CENTRAL DIVISION.
Signed October 1, 2021
Robert R. Danecki, Attorney at Law, Amanda R. Ray, Danecki Law Firm, PLC, Little Rock, AR, for Debtor.
MEMORANDUM OPINION AND ORDER OVERRULING IN PART AND SUSTAINING IN PART AMENDED LIMITED OBJECTION TO CLAIM
Phyllis M. Jones, United States Bankruptcy Judge
This matter involves a dispute between John A. Little, III (the "Debtor ") and the State of Arkansas Office of Child Support Enforcement ("OCSE ") concerning what amount the Debtor will be required to pay during the life of his confirmed plan on a prepetition judgment for child support arrearages. The dispute is before the Court on the Debtor's Amended Limited Objection to Claims #15-1, #15-2, and #16, filed by State of Arkansas OCSE, with Notice of Opportunity to Respond (the "Limited Objection ") (Doc. No. 107), filed on February 22, 2021, and OCSE's Response to Limited Objection to Claims (the "Response ") (Doc. No. 110), filed on March 15, 2021.
The Limited Objection and Response were set for telephonic hearing1 on April 21, 2021. Ms. Amanda R. Ray of the Danecki Law Firm, P.L.C., appeared on behalf of the Debtor. The Debtor also appeared and testified. Mr. Holt Niven Short appeared on behalf of OCSE. Ms. Kiesha Green, a representative of OCSE, also appeared and testified. At the close of the hearing the Court gave counsel an opportunity to submit post-hearing briefs. On May 14, 2021, OCSE filed a post-hearing brief in support of its position (Doc. No. 114). The Debtor elected to not file a brief, and the matter was taken under advisement. For the reasons stated below, the Court finds the Limited Objection is overruled in part and sustained in part.
I. Jurisdiction
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B). The following shall constitute the Court's findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052, made applicable to this contested matter by Federal Rule of Bankruptcy Procedure 9014.
II. Facts
Prepetition, on November 14, 2016, the Circuit Court of Pulaski County, Arkansas entered an Order of Paternity and Support (the "Paternity Order ") in the domestic relations case of Misty Price vs. John Little, III , Case No. 60DR2015-1147. Pursuant to the Paternity Order, the Debtor was ordered to pay $350.00 per month as child support for his minor child, and the Plaintiff, Misty Price, was awarded a judgment for retroactive child support in the amount of $12,158.00. The Debtor was ordered to pay the retroactive judgment at the rate of $70.00 per month, in addition to the $350.00 monthly child support obligation, for a total monthly payment of $420.00.
The Debtor became delinquent on his child support payments. OCSE intervened in the domestic relations case, and on July 2, 2019, the Circuit Court of Pulaski County, Arkansas entered an Agreed Judgment
and Order (the "Agreed Judgment "). Pursuant to the Agreed Judgment, Misty Price and OCSE were granted a judgment in the amount of $15,478.00, consisting of $12,018.00 owed on the prior child support judgment, plus unadjudicated arrears of $3,460.00 from November 14, 2016 through June 30, 2019. The Agreed Judgment provided that the Debtor "shall continue to pay $420.00 Monthly, which includes current child support of $350.00 Monthly plus an additional $70.00 Monthly toward the judgment." (Debtor's Ex. C, ¶ 4). The Agreed Judgment further provided that the child support obligation would terminate as provided in Ark. Code Ann. § 9-4-237, and that pursuant to Ark. Code Ann. § 9-14-218(a)(1) certain deductions could be made from the Debtor's wages, including a deduction for the full amount of past due support from any lump-sum payment, not to exceed fifty percent of the net lump-sum payment. (Debtor's Ex. C, ¶ 6–7). The parties referred to the $15,478.00 judgment awarded in the Agreed Judgment as the "Adjudicated Arrearage ," and this Court will do the same.
After the Agreed Judgment was entered, but before filing his bankruptcy petition, the Debtor again became delinquent on his child support payments in the amount of $960.00. The parties referred to the $960.00 arrearage as the "Unadjudicated Arrearage ," and this Court will do the same.
On March 4, 2020, the Debtor filed a voluntary petition for relief under the provisions of Chapter 13 of the United States Bankruptcy Code. The general deadline for filing proofs of claim was set for May 13, 2020, and the deadline for governmental units to file proofs of claim was set for August 31, 2020. The Debtor filed his original plan with his bankruptcy petition. He later amended his plan on May 13, 2020, following an objection by the Trustee.
On May 29, 2020, Mr. Short entered an appearance in the case on behalf of OCSE. That same day, OCSE filed a proof of claim, designated as Claim No. 15-1 on the Court's claims register, and objected to confirmation of the Debtor's amended plan.2 In its proof of claim, OCSE listed a total claim amount of $16,438.00, representing the Adjudicated Arrearage and Unadjudicated Arrearage. Of that amount, $1,475.00 was listed as secured, and the remaining $14,963.00 was listed as a priority unsecured claim under Section 507(a)(1) of the Bankruptcy Code. On June 16, 2020, the Debtor again amended his plan, modifying the treatment of OCSE's claim.
On June 25, 2020, the Debtor filed his fourth and final plan. In this plan, the Debtor provided treatment for OCSE's secured claim in the amount of $1,475.00, proposing to pay it in full during the sixty-month plan. In Section 4.1 of the plan, which governs the general treatment of priority claims, the plan provided that "Trustee's fees and all allowed priority claims, including domestic support obligations, will be paid in full without postpetition interest."3 (Debtor's Ex. D). Section 4.5 of the plan further provided as follows:
The name(s) and address(es) of the holder of any domestic support obligation are as follows. See 11 U.S.C. §§ 101(14A) and 1302(b)(6). ***If joint debtors, indicate
which debtor has a domestic support obligation. ***
| Name and address of holder | Paid to | Name of debtor obligated |
| Office of Child Support Enforcement Pre-Petition Non-adjudicated arrears. | ?Holder?Governmental unit, below | John A. Little, III |
| Office of Child Support Enforcement Pre-Petition adjudicated arrearage being paid with debtor's current obligation at the rate of $70.00 per month per Agreed Judgment and Order. | ?Holder?Governmental unit, below | John A. Little, III |
| Office of Child Support Enforcement Child Support – Current Obligation of $350/month plus $70/month to be applied to adjudicated arrears per Agreed Judgment and Order. | ?Holder?Governmental unit, below | John A. Little, III |
The following domestic support obligation claims are assigned to, owed to, or recoverable by a governmental unit.
| Name and address of the governmental unit | Holder of the domestic support obligation | Name of debtor obligated |
| -NONE- |
Continuing domestic support obligation payment.
? The regular monthly support payment shall be paid by the debtor(s) directly and is included on Schedules I or J.
? The regular domestic support obligation monthly payment of $ 420.00 shall be paid by the trustee as a continuing debt.
Domestic support obligation arrearage payment.
? The domestic support obligation arrearage claim will be paid by the trustee as listed below. Unless otherwise ordered by the court, the arrearage claim amount listed on the filed and allowed proof of claim will control over the total estimated arrearage amount listed below.
| Name and address of creditor | Total estimated arrearage amount | Monthly arrearage payment |
| Office of Child Support Enforcement Pre-Petition Non-adjudicated arrears. | 960.00 | 16.00 |
(Debtor's Ex. D). On July 21, 2020, OCSE withdrew its previous objection to confirmation of the Debtor's plan. On August 10, 2020, the Debtor's fourth plan was confirmed.
On November 10, 2020, the Debtor filed a limited objection to OCSE's Claim No. 15-1. The Debtor explained in his objection that OCSE garnished funds from the Debtor postpetition in the approximate amount of $3,216.00, and that the proof of claim should be reduced accordingly. OCSE responded to the objection, and the parties resolved their dispute by OCSE amending its claim and the Debtor withdrawing his objection.
OCSE's amended proof of claim was filed on December 18, 2020, and was designated as Claim No. 15-2 in the Court's claims register. In Claim No. 15-2, OCSE listed a reduced claim amount of $13,595.41, and designated the entire amount as a priority unsecured claim under Section 507(a)(1) of the Bankruptcy Code. The amount is comprised of both the Adjudicated Arrearage and Unadjudicated Arrearage, less funds received by OCSE through postpetition garnishment. The basis of the claim is listed as "Pre-Petition DSO arrears assigned by Misty Price." (Claim No. 15-2).
On December 18, 2020, OCSE also filed an additional claim, designated as Claim No. 16-1 in the Court's claims register. In Claim No. 16-1, OCSE listed a total claim amount of $21,000.00, representing the Debtor's ongoing, postpetition domestic support obligation payment in the amount of $350.00 per month for 60 months. It was filed as a priority unsecured claim under Section 507(a)(1) of the Bankruptcy Code.
On February 22, 2021, the Debtor filed his Limited Objection, objecting to OCSE's Claim No. 15-2 and Claim No. 16-1.4
III. Arguments
As it concerns Claim No. 15-2, the Debtor does not object to the amount of the claim or the classification of the claim as a priority unsecured claim. The parties do not dispute that the debt qualifies as a domestic...
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