480 F. App'x 790
5th Cir.2012Background
- Raul Galaz and Lisa Ann Galaz divorced in 2002; Lisa Ann filed Chapter 13 bankruptcy in 2007; Lisa Ann failed to provide or share health insurance and medical costs for their children starting January 2008; Lisa Ann filed an Adversary Proceeding in March 2008; Raul moved for relief from stay in July 2009 and sought direct payment of a $9,727 medical/attorney’s fees amount; the bankruptcy court eventually held setoff applicable and the Adversary Proceeding judgment against Raul was entered at $500,000 in November 2010; the district court affirmed, concluding Raul waived some arguments by not raising them in the bankruptcy court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Raul waived mutuality arguments on appeal | Raul argued lack of mutuality raised in bankruptcy court | District court correctly found waiver for not raising in bankruptcy court | Waiver affirmed; mutuality issue not preserved for review. |
| Whether setoff against the Adversary Proceeding judgment was appropriate given priority claims | Raul argued child support priority precluded setoff | Setoff permitted under § 558, with priority not foreclosing setoff | Setoff affirmed; priority status does not defeat setoff in this context. |
| Whether the bankruptcy court abused its discretion by delaying payment pending unrelated litigation | Delay until the unrelated suit concluded was undue | Delay warranted to determine legitimacy and proceed with setoff | No abuse of discretion; continuance reasonable under the circumstances. |
Key Cases Cited
- Crosby v. Orthalliance New Image (In re OCA, Inc.), 552 F.3d 413 (5th Cir. 2008) (issues first raised on appeal not reviewable unless argued in bankruptcy court)
- In re Braniff Airways, Inc., 42 B.R. 443 (N.D. Tex. Bankr. 1984) (pre-petition vs post-petition debt in § 558 cases; mutuality concerns)
- Braniff Airways, Inc. v. Exxon Co., U.S.A., 814 F.2d 1030 (5th Cir. 1987) (mutuality requirement under setoff considerations under § 558)
- In re Papercraft Corp., 127 B.R. 346 (Bankr. W.D. Pa. 1991) (prepetition/postpetition distinction relevant in § 558)
- In re Fairchild Aircraft Corp., 6 F.3d 1119 (5th Cir. 1993) (waiver of arguments not pressed to trial court)