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McCloskey v. McCloskey (In Re McCloskey)
659 F. App'x 196
| 5th Cir. | 2016
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Background

  • 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)
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Case Details

Case Name: McCloskey v. McCloskey (In Re McCloskey)
Court Name: Court of Appeals for the Fifth Circuit
Date Published: Oct 31, 2016
Citation: 659 F. App'x 196
Docket Number: 16-20079
Court Abbreviation: 5th Cir.