659 B.R. 354
Bankr. E.D. Ark.2024Background
- Todd Armstrong (Debtor) and Hayley Keeton (ex-wife) were involved in a highly contentious divorce and child custody case in Arkansas state court, leading to multiple judgments against Armstrong for attorney’s fees and costs incurred by Keeton.
- Keeton filed a $72,002.11 proof of claim in Armstrong’s Chapter 13 bankruptcy, claiming these sums as a domestic support obligation (DSO) entitled to priority under 11 U.S.C. § 507(a).
- The claim encompassed five distinct fee awards arising from various aspects of the divorce and related litigation, including the defense of a protective order, contempt motions enforcing support, and an additional $1,000 alleged attorney fee.
- Armstrong objected, arguing the amounts stemmed from property division litigation, not true domestic support obligations, and thus should be general unsecured claims, not priority DSOs.
- The bankruptcy court analyzed the nature and purpose of each award, considering whether each was "in the nature of support" as defined by Section 101(14A) of the Bankruptcy Code.
Issues
| Issue | Keeton's Argument | Armstrong's Argument | Held |
|---|---|---|---|
| Are the fee/cost awards domestic support obligations? | Fees were incurred enforcing/supporting child/alimony support. | Awards were for property division; not true support obligations. | Awards 1-4 are DSOs; entitled to priority as support. |
| Is Award 5 (for protection order defense) a DSO? | No specific claim; relied on general support nature. | Not in nature of support; unrelated to child or spousal support. | Not a DSO; general unsecured claim. |
| Is the $1,000 extra fee a DSO and valid claim? | Amount allegedly for bankruptcy counsel; should be allowed. | Not a debt actually owed by Armstrong or established by order. | Not proven to be owed or for support; claim disallowed. |
| Classification for bankruptcy purposes | All amounts are priority DSOs and not dischargeable. | They are general unsecured, thus dischargeable. | Only Awards 1-4 ($69,002.11) are priority DSOs; others not. |
Key Cases Cited
- Williams v. Williams, 703 F.2d 1055 (8th Cir. 1983) (federal law governs whether a debt is a support obligation or property settlement)
- Adams v. Zentz, 963 F.2d 197 (8th Cir. 1992) (function of the award is key to its classification as support)
- Boyle v. Donovan, 724 F.2d 681 (8th Cir. 1984) (support vs. property settlement turns on function served)
- Phegley v. Phegley (In re Phegley), 443 B.R. 154 (B.A.P. 8th Cir. 2011) (DSO test focuses on intent and actual function of the debt)
- Kline v. Holliday (In re Kline), 65 F.3d 749 (8th Cir. 1995) (fees incurred in support litigation qualify as DSOs)