523 B.R. 93
Bankr. W.D. Mich.2014Background
- Debtors Robert J. Cummings and DCummings filed Chapter 13 bankruptcy on March 7, 2014 after garnishment actions by the Creditor.
- State court divorce proceedings yielded a Judgment of Divorce with non-modifiable spousal support of $850/month until $12,600 paid, and a later binding mediation award increasing spousal support and awarding fees.
- The Mediation Award found the Debtor liable for unreturned property and other misconduct, and modified spousal support to include an additional $652/month, plus $75,000 in attorney fees, paid until the award is satisfied.
- The State Court entered a Uniform Spousal Support Order incorporating the Mediation Award findings and directing ongoing monthly support of $1,394.50, plus continued support until the mediation judgment is paid, including fees.
- The Debtors’ Plan proposed to treat the Creditor’s claim as a general unsecured claim and to pay ongoing domestic support obligations directly; Creditor objected to confirmation and sought dismissal for good faith grounds.
- A consolidated evidentiary hearing was held, with testimony detailing alleged misconduct, mortgage arrangements, vehicle purchases, and the Debtors’ financial situation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Mediation Award and Support Order are domestic support obligations | Cummings contends the awards are property settlement. | Creditor argues they are non-dischargeable domestic support obligations under Sorah factors. | The court holds they are domestic support obligations. |
| Plan confirmation feasibility with respect to domestic support obligations | Creditor asserts the plan fails to provide full payment of priority claims. | Debtors contend feasible plan if obligations are dischargeable. | Plan not confirmable; Creditor’s domestic support priority cannot be discharged. |
| Whether the case was filed in good faith and whether dismissal is appropriate | Creditor argues lack of good faith given pre-bankruptcy conduct and assetspending. | Debtors argue good faith and need for relief. | Court dismisses the case for lack of good faith under 11 U.S.C. 1307(c). |
Key Cases Cited
- In re Sorah, 163 F.3d 397 (6th Cir. 1998) (Sorah factors determine if obligation is domestic support)
- In re Rugiero, 502 F. App’x 436 (6th Cir. 2012) (attorney-fee awards can be treated as support)
- In re Calhoun, 715 F.2d 1103 (6th Cir. 1983) (federal test for whether a debt is in the nature of support)
- In re Alt, 305 F.3d 419 (6th Cir. 2002) (good faith factors forChapter 13 dismissal)
- In re Barrett, 964 F.2d 588 (6th Cir. 1992) (totality of circumstances for good faith in plan)
- In re Mickler, 324 B.R. 305 (Bankr. W.D. Ky. 2005) (state-court support awards and reasonableness in bankruptcy)