451 B.R. 918
Bankr. D. Or.2011Background
- Odess objects to plan confirming, claiming the mortgage hold-harmless obligation is a domestic support obligation (DSO) priority debt under §507(a)(1)(A).
- Dissolution judgment (May 15, 2008) divided property: debtor retained the house and agreed to assume/pay the mortgage and to hold Odess harmless.
- Judgment includes a waiver of spousal support and a provision that debts assumed are in the nature of support, non-dischargeable in bankruptcy, but other provisions are ambiguous.
- There was no equity in the house; debtor earned about $25,000 at divorce; Odess planned to move/remarry and had no current income claimed at divorce.
- Property money award provisions totaled $2,250 payable as installments, but the judgment’s explicit support language is unclear; the case proceeded as a Chapter 13 plan treating the mortgage obligation as general unsecured.
- Court must determine whether the hold-harmless mortgage obligation is in the nature of support and thus a priority DSO under §507(a)(1)(A).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the hold-harmless mortgage obligation is a DSO under §507(a)(1)(A) | Odess argues the obligation is support and priority. | Nelson contends the obligation is part of property division, not support. | Not a DSO; obligation is not in the nature of support. |
| Whether the stipulation judgment clearly shows intent to create support | Plaintiff relies on 7.e and other language to show support intent. | Judgment contains contradictory/ambiguous provisions that obscure intent. | Ambiguity undermines a finding of support intent. |
| Whether plan treatment as a general unsecured claim complies with 507 priority | If the obligation were a DSO, it would be priority and paid in full during plan. | If not a DSO, priority does not apply and unsecured treatment is proper. | Plan may confirm; obligation not a priority claim. |
Key Cases Cited
- In re Sternberg, 85 F.3d 1400 (9th Cir. 1996) (defines DSO determination as a federal-law inquiry into nature of obligation)
- In re Bammer, 131 F.3d 788 (9th Cir. 1997) (further analyses DSO in context of dischargeability)
- In re Chang, 163 F.3d 1138 (9th Cir. 1998) (treats DSO analysis consistent with dischargeability cases)
- Shaver v. Shaver, 736 F.2d 1314 (9th Cir. 1984) (examines intent and nature of support in dissolution agreements)
- Maitlen, 658 F.2d 466 (7th Cir. 1981) (mortgage obligations in settlements can be treated as support under some facts)
- Bush v. Taylor, 893 F.2d 962 (8th Cir. 1990) (considered nature of support in dissolution contexts)