Matter of Painter, Bankruptcy No. 81-51129

• Decision Date: 15 July 1982
• Docket Number: Adv. No. 81-5267.,Bankruptcy No. 81-51129
• Citation: 21 BR 846
• Parties: In the Matter of Everette Darrell PAINTER, Debtor. WESTMORELAND, PATTERSON AND MOSELEY, A Partnership, Plaintiff, v. Everette Darrell PAINTER, Defendant.
• Court: U.S. Bankruptcy Court — Middle District of Georgia

21 B.R. 846 (1982)

In the Matter of Everette Darrell PAINTER, Debtor WESTMORELAND, PATTERSON AND MOSELEY, A Partnership, Plaintiff, v. Everette Darrell PAINTER, Defendant.

Bankruptcy No. 81-51129, Adv. No. 81-5267.

United States Bankruptcy Court, M.D. Georgia, Macon Division.

July 15, 1982.

J. Wayne Moseley, Westmoreland, Patterson & Moseley, Macon, Ga., for plaintiff.

Carl A. Veline, Jr., Warner Robins, Ga., for defendant.

ROBERT F. HERSHNER, Jr., Bankruptcy Judge.

STATEMENT OF THE CASE

Defendant Everette Darrell Painter filed his petition with this Court under Chapter 7 of Title 11 of the United States Code on October 15, 1981. On December 11, 1981, Plaintiff Westmoreland, Patterson and Moseley (a partnership) filed a complaint to determine the dischargeability of a debt owed to it by Defendant.

After reviewing the evidence and considering the arguments and briefs of counsel, the Court is of the opinion that the debt owed by Defendant to Plaintiff is nondischargeable in bankruptcy. In support of its opinion, the Court attaches the following findings of fact and conclusions of law.

FINDINGS OF FACT

Defendant obtained a divorce from his wife on May 4, 1981. His wife, Hazel Painter, had engaged the law firm of Westmoreland, Patterson and Moseley (Plaintiff) to represent her in the divorce proceedings. The contract between Plaintiff and Ms. Painter required her to pay $440 to Plaintiff, a sum which was paid by Ms. Painter's stepfather. The contract further provided that "in the event any hearings are held or an agreement reached, my husband must pay a fee to Westmoreland, Patterson & Moseley in addition to the fee . . . to be paid by me."

The interlocutory order entered by the state court in the divorce proceeding required Defendant to pay $100 to Plaintiff as attorney's fees. The final order entered by the state court granting a divorce to Ms. Painter and Defendant further required Defendant to pay $500 to Plaintiff as attorney's fees. Of the total award, Defendant has paid $30 to Plaintiff, leaving a balance of $570. Wayne Moseley, a partner in Plaintiff and acting as Plaintiff's attorney, stated in his place that Ms. Painter was not obligated to pay the award of the state court and that Plaintiff considered Defendant to be solely liable to pay the award.

At the time of the divorce, Ms. Painter was employed as a production worker and earned approximately $95 a week. She was renting a house for $110 a month and was supporting both herself and her infant daughter. Her expenses each month were roughly equivalent to her earnings.

Plaintiff seeks to have the debt owed to it by Defendant, which arose out of the state court divorce proceeding, declared nondischargeable in bankruptcy, asserting that the debt is for nondischargeable alimony or maintenance. 11 U.S.C.A. § 523(a)(5) (West 1979).

CONCLUSIONS OF LAW

Section 523(a)(5) of the Bankruptcy Code provides that:

(a) A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt —

. . . .

(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree, or property settlement agreement, but not to the extent that —

(A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise; or

(B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support;

11 U.S.C.A. § 523(a)(5) (West 1979).

The legislative history of the Bankruptcy Code states that whether a debt is a dischargeable property settlement or nondischargeable alimony is to be determined by bankruptcy law. H.R.Rep.No.595, 95th Cong., 1st Sess. 364 (1977), reprinted in 1978 U.S.Code Cong. & Ad.News 5787, 5963, 6320. However, state law may be a guide in determining the true nature of an award by a state court. See Thompson v. Thompson (In re Thompson), No. RE-81-50973, Adv.Pro. 82-5127 (Bkrtcy.M.D.Ga.1982). In this case, both federal and state law lead to the conclusion that the debt represents nondischargeable alimony.

The leading federal case on the question of whether an award of attorney's fees constitutes alimony is Pauley v. Spong (In re Spong), 661 F.2d 6 (2d Cir. 1981). In that case, the majority first summarized the state of the law under the former Bankruptcy Act and concluded that an award of attorney's fees pursuant to a husband's support obligations was generally found to be nondischargeable alimony under the Bankruptcy Act. The majority went on to hold that, similarly, an award of attorney's fees under the Bankruptcy Code constitutes nondischargeable alimony. The court supported its conclusion by stating that alimony is designed to provide a spouse with the necessities of life and that an award of attorney's fees is a necessity because it enables the spouse to sue or defend a matrimonial action. Id. at 9.

The court in Pauley v. Spong rejected the argument that the award of attorney's fees was dischargeable under section 523(a)(5)(A) because it was payable directly to the attorney. The court deemed the husband's obligation to pay his former wife's attorney's fees as a third party beneficiary contract and not as a dischargeable assignment and pointed out that "dischargeability must be determined by the substance of the liability rather than its form." Id. at 9.

The Ninth Circuit has found statutorily awarded attorney's fees in a postdivorce child custody proceeding to be nondischargeable alimony. Marks v. Catlow (In re Catlow), 663 F.2d 960 (9th Cir. 1981) (Act case). In Marks v. Catlow, the state statute authorized attorney's fees only after a showing of financial necessity and required the court to consider the needs and income of each spouse. Ariz.Rev.Stat.Ann. § 25-324 (1976). The Ninth Circuit found an award under the statute to be an adjudication of the spouse's need for support and therefore nondischargeable alimony.

Marks v. Catlow was decided under the former Bankruptcy Act, section 17(a)(7), 11 U.S.C.A. § 35(a)(7) (West 1968) (repealed 1979). The Ninth Circuit specifically reserved the question of "whether attorney's fees awarded to a bankrupt's former spouse or the spouse's attorney in a divorce or post-divorce action is dischargeable under section 523(a)(5) of the new Bankruptcy Act." 663 F.2d at 961 n. 1. The court did, however,...