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634 B.R. 784
Bankr. E.D. Ark.
2021
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Background

  • Debtor (John A. Little, III) had a state-court Agreed Judgment (7/2/2019) awarding an adjudicated past-due child‑support judgment of $15,478 and an additional $960 of unadjudicated arrears incurred prepetition; the Agreed Judgment called for monthly payments of $350 current support + $70 toward the judgment ($420 total).
  • Debtor filed Chapter 13 on March 4, 2020; confirmed plan (8/10/2020) proposed trustee payments of $420/month and listed an estimated $960 arrearage, but used form language stating the filed proof‑of‑claim amount controls over the plan’s estimated arrearage.
  • OCSE filed Claim No. 15‑2 (12/18/2020) for $13,595.41 as an allowed priority prepetition domestic‑support obligation (Adjudicated + Unadjudicated arrears net of postpetition garnishments).
  • OCSE also filed Claim No. 16‑1 (12/18/2020) for $21,000 representing the postpetition ongoing $350/month support for 60 months; Debtor objected to both claims limitedly.
  • Debtor asked the court to limit payment on Claim 15‑2 to the $960 unadjudicated arrearage plus $70/month on the adjudicated arrearage; he also argued Claim 16‑1 was untimely and improper. The court overruled the objection as to Claim 15‑2 (allowing it in full) and sustained the objection as to Claim 16‑1 (disallowing it).

Issues

Issue Debtor's Argument OCSE's Argument Held
Whether Claim No. 15‑2 includes unmatured postpetition DSO subject to §502(b)(5) (i.e., should be disallowed or limited) Adjudicated arrearage payment schedule in state Agreed Judgment and the confirmed plan mean only $960 + $70/mo should be paid in the plan Claim 15‑2 is a prepetition DSO (adjudicated + unadjudicated arrears) and as a §507(a)(1) priority claim must be paid in full; plan language defers to filed claim amount Held: Claim 15‑2 is a prepetition debt, not unmatured; allowed as a priority claim and payable in full under the confirmed plan
Whether collateral estoppel prevents OCSE from enforcing more than $70/mo on the adjudicated arrearage The state Agreed Judgment fixed payment at $70/mo toward the judgment and thus precludes collection in bankruptcy beyond that rate OCSE: state order did not preclude filing/collecting the full prepetition arrearage in bankruptcy; plan and federal law control treatment Held: Collateral estoppel not established (Debtor failed to prove issues were identical/essential); doctrine does not bar OCSE from filing Claim 15‑2 as filed
Whether Claim No. 16‑1 (postpetition ongoing support claim) is allowable Untimely and creates confusion; postpetition support should be handled as ongoing payments, not by a new proof of claim OCSE said claim was filed to clarify trustee confusion but offered no substantive justification Held: Claim 16‑1 is disallowed as untimely under §502(b)(9) and, in any event, improper as a proof of claim for postpetition domestic support (unmatured) under §502(b)(5)

Key Cases Cited

  • Burnett v. Burnett, 646 F.3d 575 (8th Cir. 2011) (postpetition domestic support obligations are unmatured and not includable as proofs of claim)
  • Sears v. Sears, 863 F.3d 973 (8th Cir. 2017) (Section 502(b) enumerates exclusive grounds for disallowing a claim)
  • Dove‑Nation v. eCast Settlement Corp., 318 B.R. 147 (B.A.P. 8th Cir. 2004) (proof of claim is prima facie evidence; burden shifts to objector)
  • Russell v. Transport Funding LLC (In re Russell), 386 B.R. 229 (B.A.P. 8th Cir. 2008) (confirmed plan is res judicata and binding on creditors)
  • In re Muller, 479 B.R. 508 (Bankr. W.D. Ark. 2012) (proof of claim as evidence and allocation of burdens when claim lacks prima facie validity)
  • Young v. Young (In re Young), 497 B.R. 904 (Bankr. W.D. Ark. 2013) (distinguishing prepetition DSO (priority) from postpetition DSO (unmatured))
  • Johnson v. Union Pac. R.R., 104 S.W.3d 745 (Ark. 2003) (Arkansas elements for collateral estoppel)
  • In re Ramey, 301 B.R. 534 (Bankr. E.D. Ark. 2003) (creditor must receive adequate notice of plan treatment; due process limits res judicata effect of plan)
Read the full case

Case Details

Case Name: John A. Little, III
Court Name: United States Bankruptcy Court, E.D. Arkansas
Date Published: Oct 1, 2021
Citations: 634 B.R. 784; 4:20-bk-11199
Docket Number: 4:20-bk-11199
Court Abbreviation: Bankr. E.D. Ark.
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