In re Packer
OPINION DENYING DEBTOR’S MOTION FOR RECONSIDERATION
•I. FACTS AND PROCEDURAL BACKGROUND.
This matter originally came before the Court on the Debtor’s Objection to Claim 7-1 filed by Sandra Dieter. Ms. Dieter is the Debtor’s ex-spouse. Prior to the filing of the Debtor’s chapter 13 case, the Ing-ham County Circuit Court — Family Division ordered the Debtor to pay Ms. Dieter $25,000 in attorney’s fees to compensate Ms. Dieter for expenses she incurred in litigating the parties’ on-going child custody and visitation disputes. In his objection to Ms. Dieter’s claim, the Debtor alleged that the claim improperly classified the attorney fee award as a domestic support obligation.
This Court held an evidentiary hearing on the Debtor’s objection to Ms. Dieter’s claim on August 10, 2016. Prior to the hearing, the parties filed a Stipulation of Facts. (Dkt. No. 46.) In accordance with the stipulation, no witnesses were called at the hearing, and six exhibits were admitted into evidence. (See Transcript of Evi-dentiary Hearing held on August 10, 2016, Dkt. No. 54; herein, the “Bankruptcy Court Transcript.”) The exhibits included:
1. The parties’ Judgment of Divorce dated August 7, 2007 (Debtor’s Exh. E);
2. The Uniform Child Support Order— Modification entered by the state court on October 30, 2015 (Creditor’s Exh. 5);
3. The Motion for Attorney Fees filed by Ms. Dieter in the state court (Creditor’s Exh. 2);
4. The Debtor’s response to the motion (Debtor’s Exh. C);
5. A transcript of the hearing on Ms. Dieter’s motion that was held before Judge Baird of'the Ingham County Circuit Court-Family Division on November 10, 2015 (Creditor’s Exh. 4; herein the “State Court Transcript”); and
6. The state court’s November 10, 2015, order awarding Ms. Dieter $25,000 in attorney fees (Creditor’s Exh. 1).
Counsel for the parties made argument at the hearing, and pointed the Court to those portions of the exhibits that were consistent with their respective legal positions. At the conclusion of the evidentiary heaxing, the Court took the matter under advisement.
On August 15, 2016, this Court issued a telephonic bench opinion. (See Transcript of Telephonic Bench Opinion, Dkt. No. 55.) For the reasons set forth on the record, the Court determined that Ms. Dieter’s claim would be allowed as a domestic support obligation. Accordingly, this Court entered an Order Overruling Debtor’s Objection to Claim 7-1 filed by Sandra Dieter. (Dkt. No. 50.)
On August 29, 2016, the Debtor filed his Motion for Reconsideration of the order overruling his objection to Ms. Dieter’s claim. The Debtor’s motion asks the Court
II. DISCUSSION.
In bankruptcy cases, motions for reconsideration of orders allowing or disallowing claims are governed by 11 U.S.C. § 502(j) and Bankruptcy Rule 3008.
Alteration or amendment of a judgment under Rule 59(e) is only justified in instances where there is a clear error of law, newly discovered evidence, an intervening change in controlling law, or to prevent manifest injustice. See GenCorp. Inc. v. American Int’l Underwriters,
The Debtor’s motion also asks this Court to make additional findings under Fed. R. Civ. P. 52. Rule 52(b) provides:
On a party’s motion filed no later than [14] days after the entry of judgment, the court may amend its findings — or make additional findings — and may amend the judgment accordingly. Themotion may accompany a motion for a new trial under Rule 59.
Fed. R. Civ. P. 52(b); see also Fed. R. Bankr. P. 7052 (stating that motions under Rule 52(b) must be filed no later than 14 days after entry of judgment in bankruptcy adversary proceedings, rather than 28 days as provided in Rule 52(b)); Fed. R. Bankr. P. 9014 (Bankruptcy Rule 7052 is applicable in contested matters).
The main purpose of Rule 52(b) is “to create a record upon which the appellate court may obtain the necessary understanding of the issues to be determined on appeal.” See In re St. Marie Development Corp. of Montana, Inc.,
In support of his requests to reconsider under Rule 59(e) and to make additional findings under Rule 52(b), the Debt- or argues that this Court committed clear or egregious errors of law by: (1) giving evidentiary weight to Creditor’s Exhibit 5, which was the Uniform Child Support Order — Modification entered in the underlying circuit court case on October 30, 2015, and (2) not accepting the Debtor’s arguments that he did not receive, but was entitled to, an evidentiary hearing in state court concerning attorney fees.
First, this Court gave great weight to the transcript of the state court proceeding concerning attorney fees. See Creditor’s Exh. 4. It is clear from the state court transcript that the court considered the income disparities between the parties, and the attorney fees incurred. The state court also found that Ms. Dieter’s attorney fees were incurred as a result of the Debt- or’s behavior. See State Court Transcript, at 25-26. It is also apparent from the transcript that the state court judge had great familiarity with the file. See State Court Transcript, at 24. The uniform child support order was admitted into evidence at the hearing on the Debtor’s objection to claim in this Court by stipulation of the parties, including the Debtor. See Bankruptcy Court Transcript, at 7-8. The uniform child support order was entered on October 30, 2015, just eleven days prior to the November 10, 2015, hearing on attorney fees. That order includes findings of income for both parties, which are not materially different from the income amounts set forth on the record during the November 10 hearing on attorney fees. Although the uniform child support order was not specifically referenced by the state court during the hearing, its admission here and its findings of income are certainly relevant to the question of what factors were considered by the state court when determining the attorney fee issue. This Court does not give great weight to the uniform child support order itself, but it does not take a huge leap to infer that the state court considered this order — entered
Second, the record before this Court established that the state court considered the income disparities between the parties, the attorney fees incurred, and its finding that the Debtor was at fault for Ms. Dieter incurring those fees when it awarded the fees to Ms. Dieter. In his motion, the Debtor argues that he was entitled to an evidentiary hearing before the state court made this determination, or at least, that the state court’s failure to hold an eviden-tiary hearing distinguishes this case from other instances in whieh DSO awards have been found to be reasonable. See Debtor’s Motion for Reconsideration, Dkt. No. 57 at 3 (“Based on the aforementioned lack of any kind of evidentiary hearing, Debtor in this case was given no opportunity for an evidentiary hearing, belying the Court’s reliance on Rugiero [v. DiNardo (In re Rugiero),
The standard for allowance of attorney fees under Michigan law has been stated by the Michigan Court of Appeals as follows:
It is within the discretion of the trial court to award attorney fees in domestic relations cases. Reed v. Reed,265 Mich. App. 131 , 164,693 N.W.2d 825 (2005), citing MCL 552.13; MCR 3.206(C). “A party to a divorce action may be ordered to pay the other party’s reasonable attorney fees if the record supports a finding that such financial assistance is necessary to enable the other party to defend or prosecute the action.” Stackhouse v. Stackhouse,193 Mich.App. 437 , 445,484 N.W.2d 723 (1992). An award of legal fees is also authorized where the party requesting the fees has been forced to incur them as a result of the other party’s unreasonable conduct. Id. The party requesting the attorney fees has the burden of showing facts sufficient to justify the award. MCR 3.206(C)(2); Reed, supra at 165-166,693 N.W.2d 825 .
Borowsky v. Borowsky,
The evidence before this Court establishes that, when the attorney fee issue was raised before the state court judge, Debtor’s counsel complained that Ms. Dieter’s counsel would not grant an adjournment of the hearing. The attorney who appeared at the hearing on the Debtor’s behalf also argued that he was not as familiar with the file as Debtor’s primary counsel, Attorney Jernigan. The state court judge was not persuaded by these arguments and made clear that she was not going to schedule another hearing on the motion. See State Court Transcript, p. 15-18. The state court judge obviously believed that Ms. Dieter had established facts sufficient to justify the attorney fee award, and that the record before the court supported her decision.
In this Court, it is the Debtor’s burden to show that the amount of the domestic support obligation (“DSO”) is unreasonable in light of the Debtor’s financial circumstances. Sorah v. Sorah (In re Sorah),
For the reasons set forth herein, the Debtor’s Motion for Reconsideration is DENIED under both Rule 59(e) and Rule 52(b). A separate order shall be entered accordingly.
IT IS SO ORDERED.
Notes
. To the extent the Debtor’s motion asks this court to reconsider the classification of Ms. Dieter's claim as a domestic support obligation, rather than its allowance or disallowance, there may be some question as to whether § 502(j) and Rule 3008 apply. See, e.g., Ruskin v. DaimlerChrysler Servs. North America, LLC (In re Adkins),