Burnett v. Burnett (In Re Burnett)
646 F.3d 575
| 8th Cir. | 2011Background
- Mr. Burnett reopened Chapter 13 and sought contempt against Ms. Burnett and BCSE for exceeding the plan's $300 monthly payment by pursuing arrears collection.
- The bankruptcy court denied contempt but reduced the family-court withholding; the BAP reversed and reinstated the withholdings, leading to appellate review.
- A 1983 separation agreement had $750 monthly for child support and alimony with no clear split, later arrears accumulated; a 2001 order set arrears, and a 2004 agreed order modified the plan to pay $300 monthly toward $57,402.70 with rights to litigate accrued interest post-bankruptcy.
- The 2004 plan language added child-support emphasis and preserved a right to litigate accrued interest in state court; Ms. Burnett did not object to the plan, which the court confirmed in 2004.
- In 2007–2008, BCSE obtained a WV family-court judgment treating the entire $750 monthly obligation as child support with post-1989 spousal support, and implemented income withholding.
- Mr. Burnett moved to reopen bankruptcy for contempt; the bankruptcy court found the family-court withholding inconsistent with the plan, but the BAP later held that post-petition interest and post-petition obligations were not limited by the plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1322(a)(2) limits recovery to pre-petition child-support interest | Burnett: plan expressly limited to child-support interest under §1322(a)(2). | Burnett: plan modified to restrict how interest could be pursued; §1322(a)(2) governs treatment. | Not controlling post-confirmation; §1327(a) governs and binds creditors, restricting this issue. |
| Whether §1327(a) precludes Ms. Burnett from seeking post-petition interest on spousal support | Burnett: confirmed plan bars expanding relief beyond the plan's terms. | Burnett: plan can be relied on to limit remedies; state court interest is not re-litigated. | §1327(a) affords res judicata effect; post-petition interest remains outside the plan's bargained-for scope. |
| Whether post-petition interest on child and spousal support may be collected via incomeWithholding notwithstanding the plan | Burnett: withholding cannot exceed the plan's $300 monthly amount for pre-petition obligations. | Burnett: post-petition interest and post-petition obligations are not discharged by the plan and may be collected. | Post-petition interest and post-petition obligations survive and may be collected beyond $300 if permitted by doctrine and code. |
| Whether the family court’s allocation of the $750 monthly obligation between child and spousal support was correct | Burnett: plan reserved only child-support interest; state court allocation was inconsistent with plan. | Burnett: family court allocation aligns with the underlying obligation and post-petition items. | Not fully resolved; remanded to address the portion attributable to pre-petition spousal interest. |
| Whether post-petition interest on nondischargeable obligations is disallowed as a claim under §502(b)(5) | Burnett: post-petition interest is enforceable separate from dischargeable plan. | Burnett: interest on nondischargeable obligations may be pursued as post-petition debt. | Post-petition domestic-support interest remains recoverable via withholding and is not discharged. |
Key Cases Cited
- In re Northrup, 141 B.R. 171 (N.D. Iowa 1991) (pre-confirmation plan review; express consent required for §1322(a)(2))
- In re Mammel, 221 B.R. 238 (Bankr.N.D. Iowa 1998) (bankruptcy court's independent duty to ensure plan compliance; pre-confirmation review)
- Foster v. Bradbury (In re Foster), 319 F.3d 495 (9th Cir. 2003) (post-petition interest on nondischargeable child support survives; unsecured treatment not discharged)
- Harmon v. United States ex rel. Farmers Home Admin., 101 F.3d 574 (8th Cir. 1996) (res judicata in bankruptcy context; plan-confirmation binding effect)
- Espinosa v. United Student Aid Funds, Inc., 130 S. Ct. 1367 (2010) (finality and binding effect of confirmed plan; bankruptcy court's jurisdictional reach)
- Travelers Indem. Co. v. Bailey, 129 S. Ct. 2195 (2009) (finality of confirmed judgments; post-confirmation effects when incorporated into plan)
- In re Pitt, n/a (n/a) ( cited for treatment of post-petition interest and nondischargeable debt)