608 B.R. 514
Bankr. D. Ariz.2019Background:
- Wilson and Maureen Wilson divorced after lengthy litigation; the state court awarded spousal and child support and ordered Wilson to pay Maureen’s attorney, Cozart, attorneys’ fees characterized as "non‑taxable spousal support."
- The state court entered multiple fee orders (totaling judgments and later an earnings assignment); parties agreed to installment plans; Wilson made some payments (claimed ~$29,243.58 between 2000–2008) and stopped paying in October 2008.
- An earnings assignment for $19,068.21 was entered in 2009; Maureen’s later refund motion was denied in 2011. The exact remaining balance is disputed.
- Wilson filed Chapter 7 on July 30, 2018; Cozart sued (Nov. 14, 2018) to except the fee debt from discharge under 11 U.S.C. §§ 523(a)(5) and (a)(15).
- Wilson moved to dismiss, which the Court converted to a motion for summary judgment; Wilson’s statement of facts was accepted (plaintiff’s controverting SOF was stricken as untimely). The Court denied summary judgment, finding material legal disputes as to nondischargeability.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the attorneys’ fee debt is a domestic support obligation under §523(a)(5) (identity of payee) | Cozart: Debt is spousal support ordered by the state court and thus nondischargeable even though payable to attorney | Wilson: Debt is owed to a third‑party (attorney), not a spouse/former spouse, so not a §523(a)(5) DSO | Court: Payee identity is not dispositive — benefit flowed to former spouse, so §523(a)(5) cannot be rejected as a matter of law |
| Whether the fee award is "in the nature of support" for §523(a)(5) purposes | Cozart: State court labeled fees as non‑taxable spousal support and awarded spousal/child support, showing need and intent | Wilson: Current circumstances and statute‑of‑limitations issues show former spouse won’t benefit now; thus not support | Court: State court’s label and findings of disparity support the award being in the nature of support; cannot find otherwise as a matter of law |
| Whether the debt falls within §523(a)(15) (divorce‑related debt not covered by §523(a)(5)) | Cozart: Even if payable to an attorney, the debt was incurred in the divorce and benefited the former spouse, so it fits §523(a)(15) | Wilson: Similar identity/benefit arguments asserting dischargeability | Court: Debt was incurred in divorce and benefited the former spouse; §523(a)(15) exclusion cannot be rejected as a matter of law |
| Appropriateness of summary judgment (Motion to dismiss converted to summary judgment) | Cozart: Disputed amount and factual issues preclude summary judgment for debtor | Wilson: Movant sought judgment that debt is dischargeable as matter of law | Court: Denied Wilson’s motion — genuine disputes of material fact and unresolved legal questions remain |
Key Cases Cited
- Tolan v. Cotton, 572 U.S. 650 (2014) (summary judgment standard; view facts in favor of nonmoving party)
- Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201 (9th Cir. 2008) (summary judgment standard in Ninth Circuit)
- In re Chang, 163 F.3d 1138 (9th Cir. 1998) (third‑party payee fees can be nondischargeable if benefit flows to spouse/child)
- In re Catlow, 663 F.2d 960 (9th Cir. 1981) (support‑nature analysis for third‑party payments)
- In re Gunness, 505 B.R. 1 (B.A.P. 9th Cir. 2014) (distinguishable: court considered lack of familial nexus/benefit to enumerated payee)
- In re Gionis, 170 B.R. 675 (B.A.P. 9th Cir. 1994) (factors for determining whether award is in nature of support)
- Kawaauhau v. Geiger, 523 U.S. 57 (1998) (policy favoring enforcement of familial obligations; limits on nondischargeability)
- Shaver v. Shaver, 736 F.2d 1314 (9th Cir. 1984) (state court intent and recipient need weigh in support analysis)
- In re Francis, 505 B.R. 914 (B.A.P. 9th Cir. 2014) (§523(a)(15) can apply to debts payable to non‑spouse payees when benefit flowed to ex‑spouse)