McCloskey v. McCloskey (In Re McCloskey)
659 F. App'x 196
| 5th Cir. | 2016Background
- Christopher McCloskey and Anne McCloskey divorced after 1998 proceedings; Texas trial court in 2001 awarded Anne $50,398 in attorneys’ fees (later adjusted to fees for conservatorship/child matters).
- Christopher filed for bankruptcy in January 2005; appellees (Anne and her attorney Michael Craig) sought to prevent discharge of that fee award under 11 U.S.C. § 523(a)(5).
- State courts remanded and refined the fee award; a 2009 Texas appellate decision held the fees were for conservatorship (not child support). A separate state garnishment of Christopher’s exempted Fidelity IRA was authorized and later affirmed.
- Bankruptcy court granted appellees summary judgment (fees non-dischargeable as support); district court affirmed; Fifth Circuit vacated and remanded in 2009 for reconsideration consistent with the state appellate decision; bankruptcy court again ruled the fees non-dischargeable in 2015 and district court affirmed.
- On appeal, Christopher argued lack of standing, that the fees are not "support," that state actions violated the automatic stay, and that appellees are judicially estopped from asserting the fees are support-related.
- The Fifth Circuit affirmed: appellees had standing, the fees qualified as non-dischargeable support under federal bankruptcy law, automatic-stay exceptions or relief orders permitted state actions, and judicial estoppel did not bar appellees from arguing the support characterization in bankruptcy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to contest dischargeability | Christopher: appellees lack standing in bankruptcy | Anne/Craig: filed written objections, motions, adversary proceeding; informal proof of claim suffices | Appellees had standing under In re Nikoloutsos informal-proof-of-claim test |
| Whether attorneys' fees are nondischargeable support under § 523(a)(5) | Christopher: state courts deemed fees not child-support; Texas limitations mean fees not "support" | Anne/Craig: § 523(a)(5) is governed by federal law; fees for conservatorship can be support | Fees qualify as non-dischargeable support under federal bankruptcy law |
| Whether state-court post-bankruptcy actions violated the automatic stay | Christopher: subsequent garnishment and orders violated stay | Anne/Craig: bankruptcy court granted relief from stay; exceptions permit establishment/collection of support; IRA exempted | State actions were permitted by relief orders and stay exceptions; Rooker–Feldman/res judicata bar relitigation |
| Judicial estoppel from asserting support characterization | Christopher: Anne previously characterized fees as property-division related | Anne/Craig: bankruptcy courts examine substance over labels; may advance different characterization in bankruptcy | Judicial estoppel does not bar appellees from arguing fees are support in bankruptcy |
Key Cases Cited
- Nikoloutsos v. Nikoloutsos (In re Nikoloutsos), 199 F.3d 233 (5th Cir.) (informal proof-of-claim recognizes creditor standing in bankruptcy)
- Hudson v. Raggio & Raggio, Inc. (In re Hudson), 107 F.3d 355 (5th Cir.) (whether debt is support is governed by federal bankruptcy law)
- Biggs v. Biggs (In re Biggs), 907 F.2d 503 (5th Cir.) (section 523(a)(5) dischargeability does not turn on state support law)
- Browning v. Navarro, 887 F.2d 553 (5th Cir.) (bankruptcy courts sometimes must disregard res judicata to effect congressional mandate)
- Benich v. Benich (In re Benich), 811 F.2d 943 (5th Cir.) (court may characterize property-settlement obligations as non-dischargeable support)
