548 B.R. 39
Bankr. S.D.N.Y.2016Background
- James Romano filed chapter 13 on May 11, 2010, completed his plan, and received a full compliance discharge on December 7, 2015.
- Linda Romano (wife) and James executed a Separation and Property Settlement Agreement (May 18, 2009) providing: $100/week maintenance until sale of the marital home (or until wife receives Tier II pension benefit), and husband to pay mortgage, taxes, insurance, and capped utility expenses during wife's exclusive occupancy.
- Linda alleges James ceased payments (maintenance and housing-related expenses) beginning in 2011 and seeks declarations that those debts are non-dischargeable under 11 U.S.C. § 523(a)(5) (domestic support) and § 523(a)(6) (willful and malicious injury).
- James moved for summary judgment arguing the debts were discharged (or at least treated as general unsecured claims under the confirmed plan) and that § 523(a)(6) claims are untimely and unsupported.
- Court found: (1) the Settlement Agreement obligations are "in the nature of" support and therefore non-dischargeable under § 523(a)(5); (2) § 523(a)(6) inapplicable because the debtor received a full compliance discharge in chapter 13, which discharges willful and malicious injury debts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Settlement Agreement obligations are domestic support obligations under § 523(a)(5) | The payments (weekly $100, mortgage, taxes, insurance, utilities caps) are ongoing support and were intended to support Linda during exclusive occupancy and until pension or sale provide alternate support | The Agreement is a property settlement; plan treatment and confirmation/classification as unsecured shows parties treated it as non-DSO | Held: Obligations are domestic support obligations under § 523(a)(5) and non-dischargeable |
| Whether the mortgage/other obligations are non-dischargeable as willful and malicious injury under § 523(a)(6) | James willfully refused to pay, and discharge should be denied as willful/malicious | § 523(a)(6) claims are moot/untimely because debtor obtained a chapter 13 full compliance discharge; such debts are discharged | Held: § 523(a)(6) inapplicable; defendant's motion granted on this cause because full compliance discharge discharged willful/malicious debts |
| Timeliness of objection to dischargeability | Plaintiff sought tolling and equitable relief for late objection due to lack of notice and disability | Debtor contends objections were untimely and claim treatment under plan is binding | Held: Objection under § 523(a)(5) is timely (Rule 4007(b) allows reopening). § 523(a)(6) timing irrelevant because full discharge occurred |
| Effect of chapter 13 plan/confirmation and debtor-filed claim for wife | Plaintiff argues plan reserved maintenance and did not discharge DSO; she was omitted from initial notice and classification error occurred | Debtor argues confirmed plan and claim treatment bind plaintiff; confirmation res judicata | Held: Plan expressly preserved maintenance obligations; confirmation does not alter nondischargeability of DSO under § 523(a)(5) |
Key Cases Cited
- Handeen v. LeMaire, 898 F.2d 1346 (8th Cir.) (chapter 13 full compliance discharge covers debts for willful and malicious injury)
- Myrvang v. Graves, 232 F.3d 1116 (9th Cir.) (same principle that full chapter 13 discharge covers § 523(a)(6) debts)
- Solomon v. Cosby, 67 F.3d 1128 (4th Cir.) (full chapter 13 discharge effects on § 523(a)(6))
- Brody v. Brody, 3 F.3d 35 (2d Cir.) (evidence of parties' intent governs whether obligation is "in the nature of support")
- Spong v. Pauley (In re Spong), 661 F.2d 6 (2d Cir.) (federal law governs characterization of obligations as domestic support)
- Biggs v. Biggs (In re Biggs), 907 F.2d 503 (5th Cir.) (bankruptcy court not bound by state-law labels when determining dischargeability)