In Re Poffenbarger
- Reporters:
- , ,
- Before:
- Mahoney
ORDER GRANTING DEBTOR’S MOTION TO DETERMINE OWNERSHIP OF FUNDS, DENYING DEBTOR’S ATTORNEY’S MOTION FOR ADDITIONAL ATTORNEYS FEES OUT OF PAST DUE ALIMONY, DENYING MOTION TO CLAIM AS EXEMPT PAST DUE ALIMONY, MOOTING MOTION TO CLAIM AS EXEMPT PAST DUE AND FUTURE CHILD SUPPORT, AND GRANTING IN PART AND DENYING IN PART TRUSTEE’S MOTION FOR TURNOVER
MARGARET A. MAHONEY, Chief Judge.
This case is before the Court on the motion of the debtor to determine ownership, exemption and distribution of postpe-tition collection of pre- and postpetition child support, and for the allowance of additional attorneys fees for debtor’s attorney, and on the motion of the chapter 7 trustee for an order compelling the debtor and her attorney to turn over all funds at issue to the Trustee. This Court has jurisdiction to hear these matters pursuant to
FACTS AND PROCEDURAL HISTORY
The debtor, Vera Arlene Poffenbarger, filed this chapter 7 bankruptcy proceeding on November 30, 1991. 1 On Schedule B, “Personal Property,” the debtor listed “alimony” and “back .child support” under paragraph 16 entitled “[a]limony, maintenance, support, and property settlements to which the debtor is or may be entitled.” Under the words “alimony” and “back child support” on Schedule B, the debtor lists “Kenneth M. Poffenbarger.” Kenneth Poffenbarger is the debtor’s ex-husband (see, e.g., Exhibits 2, 5) and is the person who owes child support and alimony to the debtor. As to the alimony, Schedule B lists “5200” in the column entitled “current market value of debtor’s interest in property without secured claim or exemption.” As to the back child support, debtor lists “5816” in this column. Thus, the debtor apparently claims a total due of $11,016 for back child support and alimony. The debtor’s Statement of Financial Affairs shows “income” in the years 2000 and 2001 for alimony and child support as follows:
AMOUNT SOURCE
$ 1,800.00 2001 alimony net of 2000 atty fees paid
$ 7,194.00 2000 alimony
$ 3,921.00 2001 child support of 9900 due
$10,254.00 2000 child support of 10800 due
(Statement of Financial Affairs, p. 1, ¶ 2). The debtor’s Statement of Financial Affairs and Amended Statement of Financial Affairs (the Amendment was filed December 10, 2001) lists the prepetition divorce action (i.e., Poffenbarger v. Poffenbarger) and shows the nature of the proceeding as “collect cs/alimony.”
On January 31, 2002, the debtor filed a Motion to Determine Ownership, Exemp
Debtor’s former husband caused to be issued through the State of Alabama a check to the debtor in the amount of $6,862.75 dated January 22, 2002. That check is being held by the debtor’s attorney for the convenience of the parties until otherwise directed.
(Motion, ¶ 3). The motion also alleges that the debtor is entitled to a total of $11,016 in prepetition past due child support and alimony. (Motion, ¶ 1). The debtor asks the Court to determine ownership of the funds received and requests that debtor’s counsel be awarded reasonable attorneys fees out of these funds. (Motion, ¶¶ 4, 5).
The Bankruptcy Administrator (“BA”) filed a response to the debtor’s motion on February 5, 2002. The BA’s position is that “the funds being held by debtor’s attorney represent a prepetition, nonexempt receivable, and should be turned over to the trustee pursuant to
The Court held a hearing on the motions on March 5, 2002. The debtor, Vera Poffenbarger, testified at the hearing and several exhibits were introduced. The evidence establishes the following facts pertinent to the motions before the Court:
The debtor married Kenneth Poffenbar-ger in 1993. They have two children who now live with the debtor. They were divorced in 1999. The debtor’s ex-husband was ordered to pay child support of $900 per month, which is due on the 1st of each month; he made some payments, but then stopped. According to debtor, approximately $5,000 of back child support was due at the time her bankruptcy petition was filed.
The debtor (a nonlawyer) testified that she did not claim the back support and alimony as “exempt” because it was her understanding that the law does not allow her to “exempt” these items. Her bankruptcy filing was due at least in part to credit card charges that her husband ran up. The debtor was a co-signatory on these credit card accounts, and her husband had used these cards for a business that he started in 1998. According to the debtor, these cards had a zero balance at the time she parted from her ex-husband.
During the Poffenbarger’s marriage, the debtor was taking classes toward a nursing degree. However, after the divorce, with Mr. Poffenbarger’s failure to pay support, she has had to work. The debtor has worked as a school bus driver for Adams Middle School. She has also waited tables. She has not had time to study for the nursing certification exam because she is so busy with whatever jobs she can find to make ends meet. She has failed the nursing exam once. She receives food stamps and lives on a gross income of approximately $804 per month. She has not re
The debtor received a check in January 2002 from the State of Alabama in the amount of $6,862.75. The check is dated January 22, 2002. The debtor brought the check to her attorney, Franklin V. Anderson, who held the check. The debt- or was not sure how the State received the money represented by the check, but testified that her ex-husband said he paid the money to DHR (i.e., Department of Human Resources) since he knew that the debtor had “turned the matter over” to DHR.
Several exhibits were introduced into evidence at the March 5, 2002 hearing. Exhibit 3 is a letter dated May 21, 2001 to Ms. Poffenbarger from Ms. Poffenbarger’s divorce attorney, Frances Niccolai. According to this letter — which enclosed a copy of an order from the Mobile County Circuit Court in Ms. Poffenbarger’s divorce action — -“The back alimony is to be paid directly to you.” Exhibit 2 is a copy of a May 14, 2001 order from the Mobile County Circuit Court in Poffenbarger v. Poffenbarger, DR99-502738.10-B, which provides in pertinent part that Ms. Poffen-barger is awarded a judgment against Mr. Poffenbarger as follows: (1) $500 “representing the total child support arrearage as of May 7, 2001” to be satisfied at the rate of $100 per month payable through the Accounts Clerk of the Circuit Court; (2) $8,100 “representing unpaid alimony pursuant to the previous orders of the Court”; and (3) $157 “representing unpaid medical reimbursements as required by the previous orders of the Court.” (Exhibit 2.)
Exhibit 5 is a copy of an order of the Circuit Court of Mobile County in DR-99-502738.01-B dated October 5, 2001 which among other things: (1) awarded a judgment to Ms. Poffenbarger for $4,019.61, “said amount representing the total child support arrearage as of September 30, 2001, exclusive of interest”; (2) ordered that child support payments made under a wage withholding order to be paid to “Alabama Child Support Payment Center, P.O. Box 244015, Montgomery, Alabama 36124-4015, (phone: 1-877-774-9513). In the event either party has been assisted by the Department of Human Resources and/or Assistant Attorney General (State of Alabama attorney), then said payments are to be paid through the Alabama Child Support Payment Center, P.O. Box 244015, Montgomery, Alabama 36124-4015, (Phone: 1-877-774^9513)”; and, (3) ordered “[a]ll other child support payments shall be made payable through the Account’s Clerk Office, 205 Government Street, Mobile, Alabama 36644-2114.” (Exhibit 5.) 3
Exhibit 4 is a copy of a disbursement statement signed by the debtor dated October 25, 2001. It shows that Ms. Poffen-barger received a net amount of $3,024.73 after payment of attorneys fees and costs from garnishment of a Regions Bank account. The Mobile County Circuit Court’s October 5, 2001 order (i.e., Exhibit 5) ordered the Regions Bank funds condemned “in accordance with the Order Condemning and Disbursing Money dated September 4, 2001.” (Exhibit 5, ¶ 5).
Exhibit 1 is a copy of a computer printout from the State of Alabama Child Support Enforcement Division concerning the Poffenbarger divorce action that apparently shows an itemization of amounts due
After the March 5 hearing, the debtor’s attorney filed a motion to withdraw as counsel for the debtor and gave the $6,862.75 check to the Clerk of the Bankruptcy Court. It is the Court’s understanding that the check was then forwarded by the Clerk to Lionel Williams, the attorney for the Trustee, who is holding the check pending a ruling from this Court.
ISSUES
The primary issues are:
1. Are child support arrearages property of Ms. Poffenbarger’s chapter 7 bankruptcy estate under11 U.S.C. § 541 ?
2. If child support arrearages are not bankruptcy estate property, then may child support arrearages nevertheless be brought into the bankruptcy estate via the Trustee’s “strong-arm” powers under11 U.S.C. § 544(a) ?
3. Are alimony arrearages property of Ms. Poffenbarger’s chapter 7 estate under11 U.S.C. § 541 ?
4. Is there any “exemption” available for child support and alimony under11 U.S.C. § 522 ?
5.Are additional attorneys fees award-able to debtor’s counsel from the $6,826.75 check?
The Court will address the issues with respect to child support first. Then, the Court will address alimony. The debt- or bears the burden of proving that the funds are not property of the estate or are exempt under Alabama or federal law. In re Lemos, 243 B.R. 96, 98 (Bankr.D.Idaho 1999) (debtor has burden of proving property not estate property); In re Harrison, 216 B.R. 451, 453-54 (Bankr.S.D.Fla.1997) (debtor has burden of proving entitlement to exemption).
LAW
1. Are Child Support Arrearages Property of the Chapter 7 Bankruptcy Estate Under
A. Introduction and Governing Law
The threshold issue presented to the Court with respect to the portion of the funds determined by the Court to represent payment of past due child support is: Are child support arrearages property of the debtor’s chapter 7 bankruptcy estate?
4
The starting point here is
To summarize, then, while federal law creates the bankruptcy estate, [the United States Supreme Court’s decision in] But-ner and the cases following it establish that state law, absent a countervailing federal interest, determines whether a given property falls within this federal framework.
American Bankers Insurance Company of Florida v. Maness, 101 F.3d 358, 363 (4th Cir.1996). Accordingly, this Court must look to Alabama state law in order to determine what “property” interest, if any, the debtor has in the funds representing payment of court ordered child support in order to determine if the child support is estate property. See, e.g., Redwing, 94 F.3d at 1498; T & B Scottdale, 866 F.2d at 1376; In re Cannon, 277 F.3d 838, 849 (6th Cir.2002); In re Darby, 226 B.R. 126, 129 n. 11 (Bankr.M.D.Ala.1998); Anders, 151 B.R. at 545-46; In re Butler, 271 B.R. 867, 870 (Bankr.C.D.Cal.2002); In re Hambright, 762 N.E.2d 98, 100 (Ind.2002) (citing Barnhill v. Johnson, 503 U.S. 393, 398, 112 S.Ct. 1386, 118 L.Ed.2d 39 (1992)). 5
An examination of the Alabama law concerning the nature of child support and the law of “constructive trusts” reveals that the funds representing payment of past due child support obligations are not “property” of the debtor such that these funds become property of the debtor’s chapter 7 bankruptcy estate.
B. The Alabama Law re Nature of Child Support
The Court’s conclusion that the debtor has an insufficient “property” interest under state law in the child support funds for the child support to become estate property is based in part on the following principles found in the Alabama case law.
First, child support is a fundamental right for the benefit of the minor child, and not for the benefit or support of the custodial parent.
State Department of Human Resources v. Sullivan,
701 So.2d 16, 17 (Ala.Civ.App.1997);
State Department of Human Resources v. Nathan,
655 So.2d 1044, 1046 (Ala.Civ.App.1995);
Cunningham v. Cunningham,
480 So.2d 1238, 1242 (Ala.Civ.App.1985). Indeed, as the Court of Civil Appeals of Alabama has recognized, “it is well settled that minor children have a fundamental right to support from their parents until the minor children reach the age of majority . . . Even though child support is paid to the
Second, child support arrearages cannot be waived or forgiven by a custodial parent. Sullivan, 701 So.2d at 17; Nathan, 655 So.2d at 1046; Bentley, 666 So.2d at 518. “The custodial parent cannot agree to forgive the amount due under a child support arrearage, and the parent cannot waive child support due under a court order.” Sullivan, 701 So.2d at 17.
Third, the Alabama cases state that child support is for the benefit of the minor child even though paid to a custodian. State ex rel. Speer v. Haynes, 392 So.2d 1183, 1185 (Ala.Civ.App.1979), rev’d on other grounds, Ex Parte Haynes, 392 So.2d 1187 (Ala.1980); Binns v. Maddox, 327 So.2d 726, 728, 57 Ala.App. 230 (Ala.Civ.App.1976).
Fourth, the principles espoused by the foregoing cases as well as the various Alabama Code provisions relating to child support, custody, and welfare — see, e.g.,
Other decisions of the Alabama courts underscore that protection of children is an important public policy of our state. See, e.g., McCall v. McCall, 596 So.2d 4, 5-6 (Ala.1992) (Alabama Supreme Court holding that workmen’s compensation benefits are not exempt from income withholding orders and/or garnishments for child support arrearages; Court noting that “[b]y basic morality and the laws of the State, a parent is bound to contribute to the support of his minor children” and that the exemption in the Worker’s Compensation Act “should not be used to relieve a person from an obligation to support his or her spouse or children.”)
Thus, under Alabama law: (1) child support is a fundamental right of the minor child; (2) child support is for the sole benefit of the minor child; (3) child support’ — even though payable to the custodial parent — is not for the parent’s benefit; (4) support arrearages and/or court ordered support due cannot be waived by a custodial parent; and, (5) it is the strong public policy of Alabama in support and custody matters to focus on what is best for the child. Taken together, these principles of the Alabama law lead to the conclusion that from an equitable standpoint child
C. The Alabama Law re Constructive Trusts 6
In Alabama, a “constructive trust” is defined and arises as follows:
A constructive trust is a creature of equity that operates to prevent unjust enrichment; such a trust will be imposed when a property interest has either been acquired by fraud or where, in the absence of fraud, it would be inequitable to allow the property interest to be retained by the person who holds it.
Sledge v. Sledge, 630 So.2d 461, 464 (Ala. Civ.App.1993) (emphasis added) (quoting Coupounas v. Morad, 380 So.2d 800, 803 (Ala.1980)); Holley v. Holley, 660 So.2d 608, 610 (Ala.Civ.App.1995).
In addition:
Equity may also impress a constructive trust on property in favor of one beneficially entitled thereto against a person, who, against the rules of equity and against good conscience, in any way either has obtained or holds and enjoins legal title to property that in justice that person ought not to hold and enjoy.
Sledge, 630 So.2d at 464 (quoting Brown v. Brown, 604 So.2d 365, 370 (Ala.1992)).
Under the Alabama law, it is unnecessary that there be the presence of fraud, wrongdoing, abuse of a confidential relationship, or other unconscionable conduct in order for a constructive trust to arise. Brown v. Brown, 604 So.2d 365, 369-370 (Ala.1992). Essentially, then, a constructive trust may arise “[w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest ....” Id. at 370. In such an instance, equity “converts” the holder of legal title into a “trustee.” Id.
Although the Court was unable to locate any reported appellate court decision in Alabama which upheld a trial court imposing a “constructive trust” on funds representing payment of court ordered child support, the Court believes that the Alabama law would allow a “constructive trust” to arise in favor of a minor child in this situation. The Alabama cases say that child support monies are for the sole benefit of the child, not the custodial parent. And, it is the minor child who holds the fundamental right to receive support, which cannot be “waived” by the parent. Considering the Alabama law on child support, it would clearly be inequitable for a custodial parent to retain and use these funds for the parent’s benefit because, under the Alabama law, it is not the parent who is the rightful or intended beneficiary of those funds. As the Wyoming Supreme Court has held, “[u]npaid child support is not an asset of the parent but is the chil
The Court’s conclusion that the Alabama law would allow imposition of a “constructive trust” with regard to child support funds is supported by several reported decisions of the Alabama appellate courts, although none of these cases involved funds representing payment of court ordered child support. See Herston v. Austin, 603 So.2d 976, 979 (Ala.1992) (proper to impose constructive trust on certificate of deposit and savings account that mother gave son even though transfer did not involve fraud, where money was intended to be used to take care of mom and it would therefore be unjust for son to keep the money); Sledge v. Sledge, 630 So.2d 461, 464 (Ala.Civ.App.1993) (trial court did not abuse its discretion in imposing a constructive trust on certificates of deposit established by children’s grandfather to be used for children’s educational expenses even where grandfather and mother were co-signatories on the certificates of deposit); Holley v. Holley, 660 So.2d 608, 610 (Ala.Civ.App.1995) (it was not error to impose a constructive trust on an insurance policy found to have been fraudulently conveyed to avoid a child support obligation); Brown v. Brown, 604 So.2d 365, 370 (Ala.1992) (summary judgment imposing constructive trust on proceeds of life insurance policies for benefit of child affirmed).
The Herston, Sledge, Holley, and Brown cases support the Court’s conclusion that the Alabama law would allow a constructive trust to arise in favor of a minor child with regard to child support payments. Moreover, as the Indiana Supreme Court recognized in In re Ham-bright, “[viewing child support arrearages as an asset held in trust for the children is supported by larger policy concerns as well.” In re Hambright, 162 N.E.2d 98, 104 (Ind.2002). 7
The issue presented as to whether child support arrearages are property of a custodial parent’s chapter 7 bankruptcy estate is a question of first impression for the Alabama courts; there are no reported opinions in Alabama addressing this issue. There is a split of authority around the country on whether child support arrear-ages should be included as part of the custodial parent’s bankruptcy estate. In re Antkowiak, 95 Ohio App.3d 546, 551, 642 N.E.2d 1154, 1157 (Ohio Ct.App.1994) (recognizing split). The cases which hold that child support arrearages are not assets of the custodial parent’s bankruptcy estate are: In re Hambright, 762 N.E.2d 98, 104 (Ind.2002) (decided by looking to Indiana law on child support; court holding that In re Henady “does not reflect the current status of Indiana law”); Hurlbut v. Scarbrough, 957 P.2d 839, 842 (Wyo.1998) (applying Wyoming law); In re Anders, 151 B.R. 543, 546 (Bankr.D.Nev.1993) (applying Nevada law); In re Welch, 31 B.R. 537, 540 (Bankr.D.Kan.1983) (applying Kansas law); In re King, 233 B.R. 176 (Table), 1999 WL 83927 (10th Cir. BAP 1999) (applying Kansas law); In re Gardner, 243 F.Supp. 258, 260 (D.Or.1965) (applying Oregon law); affd sub nom Boston v. Gardner, 365 F.2d 242 (9th Cir.1966); and, Zimmerman v. Starnes, 35 B.R. 1018, 1020-22 (D.Colo.1984) (applying California and Colorado law). Although some of these cases arise in a slightly different procedural posture, the substantive holding on the child support issue in each of these cases is the same. 8
The reported cases which represent the contrary view — i.e., that child support ar-rearages are property of the custodial parent’s bankruptcy estate — are: In re Harbour, 227 B.R. 131, 132 (Bankr.S.D.Ohio 1998) (Ohio law); In re Davis, 167 B.R. 104, 106-07 (Bankr.S.D.Ohio 1994) (Ohio law); and, In re Henady, 165 B.R. 887, 893 (Bankr.N.D.Ind.1994) (Indiana law). 9
This Court has carefully considered and studied the two lines of authority on this issue and concludes that the weight of authority and more importantly, the better reasoned view, is represented by the
Ham-bright, Hurlbut, Anders, Welch, King, Gardner,
and
Zimmerman
line of cases. This Court agrees with the Court’s conclusion in
Hambright
that “[cjhild support arrearages are held by the custodial parents for the benefit of the children. As such, child support arrearages are not property of the custodial parent, and a trustee in bankruptcy has no interest in them.”
Hambright,
762 N.E.2d at 104. The Court’s conclusion is strengthened by the fact that the state laws at issue in
Hambright, Hurlbut, Anders, Welch, King, Gardner,
and
Zimmerman
are very similar in several respects to the Alabama law
E. Federal Bankruptcy Law is Supportive of Child Support Not Being Considered Bankruptcy Estate Property
Federal bankruptcy law also supports the Court’s conclusion that child support arrearages are not bankruptcy estate property. Although this Court is mindful that
In addition to the foregoing, numerous other courts across the country have stated that a bankruptcy estate should not contain property held in trust by the debt- or. See, e.g.,
In re Alamance Knit Fabrics,
251 B.R. 293, 295 (M.D.N.C.1999) (“bankruptcy estates should not contain funds entrusted to others”);
In re Foster,
Further support for this Court’s holding is found in Bankruptcy Code
Like a donee of a power of appointment, a custodial parent is charged with certain responsibilities, yet maintains wide discretion in distributing or selectively spending funds. But, like a power of appointment, a right to collect child support was created for and inures to the sole benefit of someone else.
Anders, 151 B.R. at 546 (quoting Welch, 31 B.R. at 540). 12
F. In re Darby, 212 B.R. 382 (Bankr.M.D.Ala.1997)
The Bankruptcy Administrator cites the Court to In re Darby, 212 B.R. 382 (Bankr.M.D.Ala.1997), as support for the BA’s position that the child support is not “exempted” from Ms. Poffenbarger’s chapter 7 estate. The Darby case is different. In fact, Darby supports this Court’s holding.
The issue in Darby was the debtor’s entitlement to exempt certain property from the estate pursuant to Aabama’s spendthrift trust provisions found in Aa-bama Code § 19-3-l(a) and a statute in the Aabama Insurance Code, § 27-14-32.
Darby,
212 B.R. at 383-84. There was no question in Darby that the property at issue was estate property under
For the above reasons, this Court finds and holds that any portion of the $6,862.75 check determined by the Court to be payment of prepetition child support arrearag-es is not property of Ms. Poffenbarger’s chapter 7 bankruptcy estate. It logically follows that since past due child support is not estate property, neither are future (i.e., postpetition) child support payments.
Anders,
151 B.R. at 546. Since this Court concludes that the child support is not estate property under
2. Is the Minor Children’s Equitable Interest in the Back Child Support Subject to the Trustee’s Avoidance Powers Under
Having concluded that child support ar-rearages are not property of Ms. Poffen-barger’s chapter 7 estate, the next issue is: Can the Trustee’s
The Eleventh Circuit has never resolved the recognized “tension” between
The second view of how
The Court need not decide the issue of how
The Court has been unable to locate any Alabama case which squarely addresses who would be entitled to priority in this situation. The Eleventh Circuit, however, applying Florida law has held as follows in the absence of any Florida precedent on this priority question:
We believe . . . that for purposes of priority in bankruptcy a constructive trustbeneficiary should have the same rights to the trust assets that a beneficiary of an express trust would have. An express trust beneficiary clearly has priority to trust assets over a judicial lien-holder or execution creditor.
Id. at 706 (footnote omitted). Thus, under General Coffee, the minor children have priority over the chapter 7 trustee to the child support monies. Id.; see also In re Darby, 226 B.R. at 130 (court holding that under Alabama law a hypothetical judicial hen creditor would not prevail over a minor children’s equitable interests in an express trust) and Abrass, 268 B.R. at 681 (court noting that in the Eleventh Circuit “[e]xpress trust beneficiaries have priority to trust assets over judicial lienholders or execution creditors”).
Consequently, the Court concludes as the Eleventh Circuit did in General Coffee that there is no need to decide which view to adopt on the “541(d) versus 544(a)” issue. See General Coffee, 828 F.2d at 705. The result here is the same regardless of which view is applied’ — the minor children win over the trustee.
3. Are Alimony Arrearages Property of the Estate Under
To the extent that any portion of the $6,826.75 check is determined by the Court to be payment of back alimony due (which was reduced to judgment prior to Ms. Poffenbarger’s bankruptcy filing), are unpaid judgment alimony arrearages property of the estate under
In the Storey case, the debtor filed a chapter 7 bankruptcy, and two days later the debtor’s ex-husband paid $10,000 to resolve a state court contempt proceeding which had been instituted for nonpayment of alimony. Storey, 172 B.R. at 873. Although the primary issue in Storey was the debtor’s right to exempt the alimony under Tennessee law (Tennessee is an “opt-out” state), the court held that the debtor’s interest in the unpaid alimony was bankruptcy estate property. Id. at 875. Under Storey, Ms. Poffenbarger’s interest in the unpaid judgment for alimony is property of her chapter 7 bankruptcy estate. Id. This is consistent with how the Alabama law treats unpaid alimony. In Alabama, “[p]ayments of alimony and child support constitute final judgments from the date that they become due.” Glenn v. Glenn, 626 So.2d 638, 640 (Ala.Civ.App.1993); Taylor v. Taylor, 640 So.2d 971, 975 (Ala.Civ.App.1994). Thus, any portion of the $6,862.75 check determined by the Court to be payment of the past due alimony is estate property. 15
The remaining alimony issue for determination is whether back alimony due may be exempted by Ms. Poffenbarger. The applicable law is clear that Ms. Poffenbar-■ger is not entitled to exempt the back alimony due.
“By virtue of the
Unfortunately for the debtor, this Court has been unable to locate any exemption in the Alabama law or any other applicable federal law (i.e., other than
5. Are Additional Attorneys Fees Award-able to Debtor’s Counsel From the $6,826.75 Check?
Because this Court concludes that the past due and future child support is not estate property under
CONCLUSION
For the above reasons, the Court is granting debtor’s motion to determine ownership of funds, is denying debtor’s attorney’s request for additional attorneys fees out of past due alimony, is denying debtor’s motion to claim as exempt funds representing past due alimony, is mooting debtor’s motion to claim as exempt funds representing past due and future child support, and is granting in part and denying in part trustee’s motion for turnover.
The record is unclear as to precisely what portion of the $6,826.75 check represents payment of past due and/or postpetition child support and what portion, if any, represents payment of past due alimony, necessitating that the Court hold a further hearing. Nevertheless, the Court can address and decide the legal issues presented.
For the foregoing reasons, IT IS ORDERED as follows:
1. The debtor’s motion to determine ownership of the $6,862.75 check is GRANTED as follows: Any portion of the $6,862.75 check determined by the Court to be payment of past due and/or future child support is to be paid to the debtor to be used for the benefit of her minor children. Any portion of the $6,862.75 check determined by the Court to be payment of back alimony due is to be paid over to the chapter 7 trustee.
2. The debtor’s motion to exempt that portion of the $6,826.75 check determined by the Court to be payment of past due and/or future child support is MOOT as said funds are not property of the chapter 7 bankruptcy estate. The debtor’s motion to exempt any portion of the $6,826.75 check determined by the Court to be payment of past due alimony is DENIED.
3. The debtor’s attorney’s motion for allowance of additional attorneys fees is
4. The Trustee’s motion for turnover is DENIED to the extent any portion of the $6,862.75 check is determined to be for payment of past due and/or future child support. The Trustee’s motion is GRANTED to the extent any portion of the $6,862.75 check is determined to be payment of past due alimony.
5. This matter is reset for hearing on April 16, 2002 at 8:30 a.m. at U.S. Bankruptcy Court, 201 St. Louis Street, Courtroom No. 2, Mobile, Alabama for the parties to try the issue of what portion of the $6,862.75 check being held by the attorney for the Trustee is for child support and what portion, if any, is for past due alimony.
Notes
. Lynn Harwell was appointed interim trustee.
. Lionel Williams was employed to represent the Trustee on February 22, 2002.
. The debtor testified that because she could no longer afford an attorney, she “turned over” the collection matter to DHR (i.e., the State of Alabama).
. The debtor listed the back child support due as an asset of the estate in Schedule B. The debtor‘s listing, however, is not determinative of whether this is indeed an asset of her chapter 7 estate. See, e.g., Zimmerman v. Starnes, 35 B.R. 1018, 1022 (D.Colo.1984).
. The appropriate state’s law to examine to determine this issue is Alabama. The debtor‘s Statement of Financial Affairs, Exhibits 1, 2, 3 and 5 introduced at the March 5, 2002 hearing, and debtor‘s testimony reflect that her divorce proceedings occurred in Alabama and the orders concerning past due support and/or alimony were entered in Alabama. And, the debtor is an Alabama resident. Moreover, no party objects to application of Alabama law.
. State law also determines when/whether property is held by a bankrupt debtor in “constructive trust” for another. In re Southmark Corporation, 49 F.3d 1111, 1118 (5th Cir.1995); In re General Coffee Corp., 828 F.2d 699, 701-04 (11th Cir.1987), cert. denied, 485 U.S. 1007, 108 S.Ct. 1470, 99 L.Ed.2d 699 (1988); In re Oster, 261 B.R. 599, 601-02 (Bankr.M.D.Pa.2000).
. A prior, prebankruptcy judicial determination of “constructive trust” is not required in order for this Court to conclude that the child support monies are not bankruptcy estate property. See In re General Coffee Corporation, 828 F.2d 699, 701-04 (11th Cir.1987) (applying Florida law), cert. denied, 485 U.S. 1007, 108 S.Ct. 1470, 99 L.Ed.2d 699 (1988); Putnam v. Putnam, 274 Ala. 472, 150 So.2d 209, 213 (Alabama Supreme Court holding that a constructive trust “arises when the legal title to property is obtained by one in violation, express or implied, of some duty owed to one who is equitably entitled thereto, and when the property thus obtained is held in hostility to his beneficiary’s right of ownership“); In re Vermont Real Estate Investment Trust, 25 B.R. 813, 816-17 (Bankr.D.Vt.1982); In re Bengal Trading Corp., 12 B.R. 695, 696 (Bankr.S.D.Fla.1981); In re Unicom Computer Corporation, 13 F.3d 321 (9th Cir.1994). In fact, there is ample authority to support the conclusion that prior (i.e., prebankruptcy) judicial imposition of a trust is unnecessary. See In re Foos, 183 B.R. 149, 157 n. 6 (Bankr. N.D.Ill.1995). The Court notes that there are cases, however, which do require a prior judicial decision imposing a “constructive trust” on the property claimed to be nonestate property in order for the property to not be included in the bankruptcy estate. In re Omegas Group, 16 F.3d 1443, 1449-51 (6th Cir.1994); In re Lawrence, 219 B.R. 786, 802 (E.D.Tenn.1998) (follows Sixth Circuit’s decision in Omegas Group); In re Foos, 183 B.R. 149, 154-57 (Bankr.N.D.Ill.1995) (same); In re Baskett, 219 B.R. 754, 761 (6th Cir. BAP 1998). Under the facts of this case, the Court declines to follow the Omegas Group, Lawrence, Foos, and Baskett cases on this point of law. It bears noting, however, that after Omegas Group was decided, the Sixth Circuit decided In re McCafferty, 96 F.3d 192 (6th Cir.1996). In McCafferty, the Sixth Circuit distinguished its prior decision in Omegas Group and found that a prepetition divorce decree created a “constructive trust” as to certain funds in favor of the party claiming them even though the divorce order did not use the words “constructive trust.” Id. at 194 — 99. Even though this Court declines to follow Omegas Group, were the rule of Omegas Group applicable, it arguably would be met here since there were prepetition orders of the domestic relations court which entered judgments for child support arrearages due. (See Exhibits 2 and 5 to March 5, 2002 hearing.)
The Tenth Circuit has noted the holding of the Sixth Circuit in Omegas Group, but has not yet adopted it. See In re Foster, 275 F.3d 924, 927 n. 2 (10th Cir.2001).
. See also In re Prettyman, 117 B.R. 503, 505 (Bankr.W.D.Mo.1990) (under Missouri law child support not property of custodial parent’s probate estate).
. There are several unreported decisions of the Ohio bankruptcy courts which also hold that child support arrearages are bankruptcy estate property. See Antkowiak, 642 N.E.2d at 1157 (citing unreported Ohio cases).
. The Court recognizes the reality of the situation. Funds used for the benefit of the children often benefit the custodial parent as well. Housing, utilities, and transportation are also used by the parent for instance. This incidental benefit does not change the Court‘s conclusion.
. The “Historical and Statutory Notes” to
. The
Anders, Welch,
and
King
courts’ reading of
. Debtor’s counsel cites the Court to Press-nell v. Pressnell, 519 So.2d 536 (Ala.Civ.App.1987). Pressnell is of little assistance on the issues presented here as this Court has defined the issues. The issue in Pressnell was whether “alimony in gross” is dischargeable in bankruptcy. Pressnell, 519 So.2d at 537-38. There is no issue concerning discharge-ability before the Court. The Court acknowledges, however, that dicta in Pressnell supports the Court’s ruling that future child support payments are not an asset of Ms. Poffenbarger’s chapter 7 estate. See Press- nell, id. (quoting Annot., 10 A.L.R. Fed. 881, 891, 1972 WL 31786 (1972)).
. “If a trustee is successful in bringing an action under
.
. The Trustee‘s attorney cites the Court to
In re Edwards,
255 B.R. 726 (Bankr.S.D.Ohio 2000);
In re Harbour,
227 B.R. 131 (Bankr.S.D.Ohio 1998); and,
In re Ellertson,
252 B.R. 831 (Bankr.S.D.Fla.2000). All of these cases involved construction of state law exemptions for alimony and child support similar (and in one case identical) to the exemption found in
Alabama has “opted-out” of the federal bankruptcy exemption scheme and, unlike Ohio and Florida, Alabama has not adopted any statutory exemptions for alimony or child support. Consequently, the cases cited by the Trustee are of little value in determining whether there is an Alabama state law exemption for unpaid alimony.