In re Owsley

• Decision Date: 29 May 2013
• Docket Number: No. 05–37361.,05–37361.
• Parties: In re Lawrence Allen OWSLEY, Robin Ann Owsley, Debtors.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

494 B.R. 321

In re Lawrence Allen OWSLEY, Robin Ann Owsley, Debtors.

No. 05–37361.

United States Bankruptcy Court,

E.D. Tennessee.

May 29, 2013.

John P. Newton, Jr., Esq., Richard M. Mayer, Esq., Mayer & Newton, Knoxville, TN, for Debtors.

Laura J. Straley, Esq., State of West Virginia, Danville, WV, for West Virginia Bureau for Child Support Enforcement.

MEMORANDUM ON DEBTORS' EMERGENCY MOTION TO REOPEN BANKRUPTCY CASE

RICHARD STAIR, JR., Bankruptcy Judge.

Before the court is the Motion by Debtors to Reopen Chapter 13 Case (Motion to Reopen) filed by the Debtors on November 1, 2012, asking the court to reopen their Chapter 13 bankruptcy case to allow them to file a motion for contempt against the Boone County Bureau of Child Support Enforcement and/or the West Virginia Department of Health & Human Services for violation of the discharge injunction of 11 U.S.C. § 524(a)(2) (2004).¹ On November 21, 2012, the State of West Virginia, Bureau for Child Support Enforcement (Bureau for Child Support Enforcement), filed its Response to Motion by Debtors to Reopen Chapter 13 Case (Response), arguing that the case should not be reopened because the debt owed to it and/or Leona White is child support and not dischargeable under the Bankruptcy Code. Following a hearing and pursuant to an Amended Order entered on November 29, 2012, the parties agreed that an evidentiary hearing was not required and that all matters in controversy could be resolved upon stipulations and briefs.

The record before the court consists of the following: (1) a Notice of Additional Documents filed by the Debtor on December 7, 2012, attaching a letter to the Debtor from the Social Security Administration dated October 26, 2012, advising him of a deduction for child support; (2) BCSE's Proposed Stipulations filed by the Bureau of Child Support Enforcement on December 10, 2012; (3) BCSE's Proposed Points of Judicial Notice filed by the Bureau of Child Support Enforcement on December 10, 2012, attaching (A) an Arrearage Certification Statement; (B) West Virginia Department of Health and Human Resources Bureau Child Support Enforcement—Arrearage Computation Sheet through November 30, 2012; (C) an Order for Income Deduction entered July 30, 1993, by the Circuit Court for the Eighteenth Judicial Circuit in and for Brevard County, Florida, in Leona Roberts v. Lawrence A. Owsley, Case No. 937814; (D) Florida Code Title VI, Chapter 61, Subsection 29; (E) Florida Code Title VI, Chapter 61, Subsection 30; (F) West Virginia Code § 48–18–110; (G) West Virginia Code § 48–13–101; (H) West Virginia Code § 48–13–102; and (I) West Virginia Code § 48–13–201; (4) Addendum to BCSE's Proposed Points of Judicial Notice filed by the Bureau of Child Support Enforcement on December 10, 2012, attaching a notarized statement of Leona White; ² (5) the Debtors' Brief filed by the Debtors on December 26, 2012, attaching the Proof of Claim in the amount of $22,431.43 filed on April 14, 2006, by Leona Gail White and Boone Co. BCSE; and (6) the Brief of the West Virginia Bureau for Child Support Enforcement in Response to Debtors' Motion to Reopen filed on January 18, 2013, by the Bureau of Child Support Enforcement. Additionally, as set forth in the Amended Order entered on November 29, 2012, the court takes judicial notice, pursuant to Rule 201 of the Federal Rules of Evidence, of a number of material undisputed facts of record in the Debtors' case file.

This is a core proceeding. 28 U.S.C. § 157(b)(2)(A) and (O) (2006).

I

The Debtors filed the Voluntary Petition commencing their Chapter 13 bankruptcy case on October 14, 2005, prior to the October 17, 2005, effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The Debtors also filed their Chapter 13 Plan on October 14, 2005, and on October 15, 2005, the clerk issued the Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, & Deadlines, which was served, along with a Proof of Claim form, on the Bureau of Child Support Enforcement. As reflected within the Notice, the Debtors' meeting of creditors was scheduled for January 5, 2006. On December 2, 2005, the Debtors filed an Amended Plan which was served on the Bureau of Child Support Enforcement via certified and first-class mail. Neither the Bureau of Child Support Enforcement nor Leona Gail White objected to confirmation, and the Amended Plan was confirmed pursuant to an Order Confirming Chapter 13 Plan (Confirmed Plan) entered on January 10, 2006. The Confirmed Plan provides for weekly payments of $50.00, payment of all tax refunds, and a dividend to unsecured creditors of less than 5%. Additionally, the Confirmed Plan states “13. Special Provisions: State of WVA—back child support—paid as unsecured.”

On April 14, 2006, Leona Gail White and the Bureau of Child Support Enforcement filed an unsecured priority claim in the amount of $22,431.43, which was amended on July 17, 2006, to the amount of $22,253.75, attaching as exhibits thereto arrearage computations, an Acknowledgment of Automatic Assignment of Support Rights and of Cooperation Requirement executed by Leona Roberts on August 9, 1989, and a Final Judgment on Report and Recommendation of the Hearing Officer entered on July 21, 1993, establishing paternity and child support in the amount of $154.00 monthly. As established by the Acknowledgment of Automatic Assignment of Support Rights and of Cooperation Requirement, Leona Gail White, then Leona Roberts, assigned future child support payments owed by the Debtor Lawrence Allen Owsley to the Bureau of Child Support Enforcement pursuant to the West Virginia Code, Chapter 9, Article 3, Section 4.

On December 18, 2009, the Chapter 13 Trustee filed the Objection by Chapter 13 Trustee to Proof of Claim Filed by Boone Co. BCSE (Objection to Claim), objecting to the allowance of the amended Proof of Claim as a priority claim and moving the court for an order allowing the claim as a nonpriority unsecured claim pursuant to the terms of the Confirmed Plan. The Objection to Claim was served on the Bureau of Child Support Enforcement and Leona Gail White, neither of whom filed a response within the 30–day objection period set forth in the passive notice legend, and on January 22, 2010, the court entered the Order Resolving Chapter 13 Trustee Objection to Proof of Claim Filed by Boone Co. BCSE, sustaining the Trustee's Objection to Claim and directing that the priority claim filed by the Bureau of Child Support Enforcement in the amount of $22,253.75 would be paid as a general unsecured claim. The court entered the Discharge of Debtors After Completion of Chapter 13 Plan on February 4, 2010, and on April 22, 2010, the Chapter 13 Trustee filed the Chapter 13 Standing Trustee's Final Report and Account, reflecting that the Debtors had fulfilled all of their obligations under the Confirmed Plan and that the Bureau of Child Support Enforcement had been paid $6,196.90 on its allowed unsecured claim of $22,253.75. Thereafter, on January 7, 2011, the Debtors' bankruptcy case was closed, and a final decree was issued discharging the Chapter 13 Trustee.

Following the receipt of a letter dated October 26, 2012, from the Social Security Administration Retirement, Survivors and Disability Insurance Division, advising the Debtor Lawrence Allen Owsley that it would be withholding $192.50 from his payment each month for child support, the Debtors filed the Motion to Reopen on November 1, 2012, to which the Bureau of Child Support Enforcement filed its Response on November 21, 2012. As set forth in the Arrearage Certification Statement executed by Jodi A. Little, Representative for the Bureau of Child Support Enforcement, on December 7, 2012, the total child support arrears owed by the Debtor, through November 30, 2012, was $9,778.51, representing $854.00 owed to the State of West Virginia and $8,924.51 owed to Leona Gail White.

Pursuant to the Joint Statement of Issues filed by the parties on December 5, 2012, the court is asked to resolve the following issues as defined by the parties: (1) whether the domestic support obligation exception to discharge under the Bankruptcy Code pre-BAPCPA applied to the Proof of Claim filed by the Bureau of Child Support Enforcement and/or Leona White; (2) whether the Debtors' completion of payments required by the Confirmed Plan and their subsequent discharge resulted in a discharge of Lawrence Allen Owsley's obligations to the Bureau of Child Support Enforcement and/or Leona White; (3) whether the claim of the Bureau of Child Support Enforcement and/or Leona White was identified as child support; (4) whether the January 21, 2010 Order changed the characterization of the Proof of Claim from child support to something dischargeable; (5) whether the pre-BAPCPA exception to discharge found in 11 U.S.C. § 523(a)(5) (2006) applies to the debt owed to the Bureau of Child Support Enforcement and/or Leona White; (6) whether amendments to 42 U.S.C. § 656(b) (2006) apply to child support in this case; (7) whether the Debtors objected to the designation of the claim as child support; (8) whether the discharge referenced that the claim for child support was dischargeable; (9) what impact would assigned versus unassigned child support have in this case; and (10) if the debt was discharged, whether the court should grant the Motion to Reopen.

II

The authority to reopen a closed bankruptcy case is derived from § 350(b) of the Bankruptcy Code, which provides that “[a] case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.” 11 U.S.C. § 350(b) (2006). Because “cause” is not statutorily defined, motions to reopen are determined on a case-by-case basis after the underlying equities are weighed, In re Jenkins, 330 B.R. 625, 628 (Bankr.E.D.Tenn.2005), and the decision to reopen a case is within the sound discretion of the bankruptcy judge....