636 B.R. 889
6th Cir. BAP2022Background
- Debtor Michelle Dougherty‑Kelsay filed Chapter 13 on January 25, 2018 while a family‑court contempt proceeding (Contempt Motion No. 2) and a scheduled hearing (Feb. 19, 2018) were pending. She initially omitted Creditor Michael Kelsay from her schedules and later filed a Suggestion of Bankruptcy in family court.
- A pre‑petition family‑court child support order allocated medical, dental, pharmacy, and extracurricular costs 68% to Kelsay and 32% to Dougherty‑Kelsay and imposed a 30/30 invoice/objection rule for reimbursement.
- At the Feb. 19, 2018 post‑petition hearing the family court (1) found Dougherty‑Kelsay owed $1,270.66 in arrears (including a $112 ER copay), (2) ordered a $50 immediate payment to the visitation supervisor and increases to wage garnishment, and (3) made contempt findings. Tax refunds were later intercepted and partially applied to arrears.
- Debtor moved in bankruptcy for sanctions, arguing the family court’s post‑petition hearing and collection efforts violated the automatic stay. Creditor argued the actions were excepted from the stay as domestic support obligations (DSOs) or other Code exceptions.
- The bankruptcy court held most family‑court actions (establishing the $1,270.66 DSO, amending garnishment, and the tax intercepts) were excepted from the stay, but that the direct $50 payment, certain contempt enforcement, and post‑petition collection efforts (including Contempt Motion No. 3) violated the stay.
- The bankruptcy court awarded Debtor $4,313.75 in attorneys’ fees as actual damages and $1,000 in punitive damages for willful stay violations; the BAP affirmed.
Issues
| Issue | Plaintiff's Argument (Dougherty‑Kelsay) | Defendant's Argument (Kelsay) | Held |
|---|---|---|---|
| Whether the family‑court post‑petition hearing/judgment established a domestic support obligation (DSO) and was therefore excepted from the automatic stay under 11 U.S.C. § 362(b)(2)(A)(ii) | The hearing and judgment were enforcement of pre‑petition obligations and thus stayed | The hearing established/modified a DSO and was excepted from the stay | Held: Judgment establishing $1,270.66 was a DSO and excepted from the stay |
| Whether the $50 immediate payment (to visitation supervisor) was excepted from the stay or barred because it could be collected from estate property | The $50 payment enforcement violated the stay because it targeted estate property | The order’s payment scheme reflected a DSO and thus could be enforced | Held: The $50 immediate payment violated the stay because it was not limited to non‑estate property |
| Whether the $112 medical expense was a post‑petition obligation (so excepted) or a pre‑petition claim subject to the stay | Medical expense arose pre‑petition; invoice timing doesn’t change claim date | Invoice was sent post‑petition under the 30/30 rule, so expense accrued post‑petition | Held: Medical expense was a pre‑petition claim; post‑petition collection attempts violated the stay |
| Whether tax‑refund intercepts and creditor’s retention/distribution violated the stay | Intercepts applied to pre‑petition arrears and thus stayed | Interception/distribution of tax refunds to collect support is excepted under § 362(b)(2)(F) | Held: Intercepts and payment to creditor were excepted from the stay |
Key Cases Cited
- Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S. Ct. 582 (2020) (finality of discrete bankruptcy orders for appeal)
- Bullard v. Blue Hills Bank, 575 U.S. 496 (2015) (finality principle in bankruptcy proceedings)
- Dominic's Restaurant of Dayton, Inc. v. Mantia, 683 F.3d 757 (6th Cir. 2012) (court where proceeding is pending may decide stay applicability)
- Wohleber v. Skurko (In re Wohleber), 596 B.R. 554 (B.A.P. 6th Cir. 2019) (framework for determining stay application and exceptions)
- Stewart Foods, Inc. v. Broecker (In re Stewart Foods, Inc.), 64 F.3d 141 (4th Cir. 1995) (a claim exists when right to payment arises, regardless of invoice timing)
- Barlow v. M.J. Waterman & Assocs., Inc., 227 F.3d 604 (6th Cir. 2000) (abuse‑of‑discretion standard explained)
- Grine v. Chambers (In re Grine), 439 B.R. 461 (Bankr. N.D. Ohio 2010) (proximate causation requirement for § 362(k) damages)
- Yeschick v. Mineta, 675 F.3d 622 (6th Cir. 2012) (deference in abuse‑of‑discretion review)
- Proctor v. Northern Lakes Cmty. Mental Health, [citation="560 F. App'x 453"] (6th Cir. 2014) (standard for reviewing discretionary awards)