In Re: Michael Davis, Debtor. STATE OF FLORIDA, DEPARTMENT OF REVENUE, Child Support Enforcement, Plaintiff - Appellee, versus MICHAEL DAVIS, Defendant - Appellant.
No. 11-15040
United States Court of Appeals, Eleventh Circuit
June 6, 2012
[DO NOT PUBLISH] Non-Argument Calendar. D.C. Docket Nos. 8:10-cv-02216-VMC ; 8:08-bk-04348-MGW. Appeal from the United States District Court for the Middle District of Florida.
PER CURIAM:
Michael Davis appeals the district court‘s reversal of an order entered by the bankruptcy court. The bankruptcy court had enjoined the Florida Department of Revenue from attempting to collect from Mr. Davis past due child support that had been disallowed in the bankruptcy proceeding. The district court reversed the bankruptcy court, holding that, in light of this court‘s intervening decision in In re Diaz, 647 F.3d 1073 (11th Cir. 2011), the Department of Revenue could not be barred from pursuing post-confirmation collection of Mr. Davis’ non-dischargeable child support obligations. Mr. Davis contends that In re Diaz does not control, and maintains that the issue of liability for the child support obligation has been decided by the bankruptcy court. Any further enforcement, he says, is precluded by collateral estoppel and res judicata. We disagree, and concur with the district court that In re Diaz is dispositive.
I
Mr. Davis and Maryanne Davis were divorced in Illinois in February of 1997. Pursuant to the terms of the divorce, Mr. Davis was obligated to make child support payments to Ms. Davis. In October of 2003, the Illinois court transferred venue of the
On March 17, 2008, an involuntary Chapter 11 bankruptcy case was filed against Mr. Davis in the Middle District of Florida. The bankruptcy court established September 29, 2008, as the claims bar date. Section 6.2 of the bankruptcy plan provided that the failure to submit a claim by the claims bar date would constitute an adjudication, on the merits, of the debtor‘s liability.
Both Ms. Davis and the Department of Revenue were notified of the bankruptcy proceeding and the deadline for filing claims. Even though she did not sign the petition, Ms. Davis was initially listed as a petitioning creditor, and therefore received notice of all documents filed in the case. In his bankruptcy schedules and statement of financial affairs, Mr. Davis listed the Department as creditor for a disputed claim in the amount of $180,000.00 for child support.
Mr. Davis filed his Chapter 11 plan on October 3, 2008, and submitted an amended Chapter 11 plan on March 24, 2009. The bankruptcy court confirmed the plan and issued a discharge on May 20, 2009. Neither Ms. Davis nor the Department participated in the bankruptcy case or filed proofs of claim with the bankruptcy court prior to the claims bar date or the confirmation of the plan.
On June 1, 2009, after the plan was confirmed, the Department filed a proof of claim in the bankruptcy court against Mr. Davis in the amount of $180,000.00 for past due child support payments.1 Mr. Davis objected to the claim. After briefing by the parties and oral argument, the bankruptcy court disallowed the claim under the confirmed plan as untimely and concluded that Mr. Davis had no liability for the claim.
Despite the bankruptcy court‘s ruling, the Department again attempted to collect Mr. Davis’ past due child support, this time in state court. Mr. Davis filed a motion for injunctive relief with the bankruptcy court, seeking to enjoin the Department from enforcing the child support obligations in light of the bankruptcy court‘s ruling that he had no liability.
After again having the parties brief the issues and hearing oral argument, the bankruptcy court determined that, even though child support obligations were non-dischargeable under the Bankruptcy Code, its prior determination that Mr. Davis had no liability for the past due child support was “res judicata as to any other court.” The bankruptcy court determined that it was a violation of the confirmation order and the discharge injunction for the Department to enforce the debt and essentially relitigate
The Department appealed the bankruptcy court‘s order to the district court. While that appeal was pending, we issued our decision in In re Diaz, 647 F.3d 1073 (11th Cir. 2011). In light of In re Diaz, the district court reversed the decision of the bankruptcy court. Mr. Davis filed this appeal.
II
We review the legal determinations made by either the bankruptcy court or the district court de novo. See In re Club Assoc., 956 F.2d 1065, 1069 (11th Cir. 1992). The bankruptcy court‘s factual determinations are subject to review under the clearly erroneous standard. See In re Thomas, 883 F.2d 991, 994 (11th Cir. 1989). The issues raised in this appeal are largely of a legal nature.
III
Mr. Davis argues that the district court‘s decision should be reversed, and that the bankruptcy court‘s decision enjoining the Department from pursuing any past due child support obligations should be reinstated. In his view, the bankruptcy court correctly ruled that res judicata and collateral estoppel barred the Department from relitigating the issue of his liability for past due child support because the bankruptcy
The Department, in turn, contends that the district court correctly followed this court‘s precedent by applying In re Diaz and holding that collateral estoppel and res judicata cannot bar its post-bankruptcy collection of non-dischargeable child support obligations.
For the reasons which follow, we affirm the district court‘s order. The holding and rationale of In re Diaz, we conclude, apply squarely here.
In In re Diaz, the bankruptcy court found that the debtor was liable for the principal on a child support obligation but disallowed the pre-petition interest that was owed. See In re Diaz, 647 F.3d at 1080. When, post-bankruptcy, the Department of Revenue sought to recover the disallowed pre-petition interest and accrued post-petition interest, the bankruptcy court held the Department in contempt for violating the discharge injunction and numerous other orders, including the order confirming the bankruptcy plan. Id. at 1081-82. The district court affirmed the bankruptcy court‘s judgment, reasoning that, even though a child support obligation could not be discharged in bankruptcy, res judicata and collateral estoppel barred the Department from relitigating the debtor‘s liability for the interest on the child support obligation. We reversed the district court‘s decision. We held that, because domestic support
In re Diaz applies with equal force here. In the context of non-dischargeable obligations, the bankruptcy court‘s decision as to “liability” for a debt is really only a decision about whether the non-dischargeable debt will be paid by the bankruptcy estate as part of the bankruptcy plan. See id. at 1091 (“[T]he only issue before the bankruptcy court . . . was the amount of child support debt that would be paid by the bankruptcy estate through [the] . . . plan, not the total amount of the child-support debt.“) (emphasis in original). The bankruptcy court‘s decision, therefore, can only
There is a minor difference between the Department‘s posture in In re Diaz and its posture in this case. Here the bankruptcy court did not actually decide whether Mr. Davis in fact had a pre-existing child support obligation or the amount of the obligation. The bankruptcy court simply determined that, regardless of whether any amount was owed, Mr. Davis was not liable for the obligation because no timely claim had been filed. The scope of the bankruptcy court‘s review of the issue of liability for non-dischargeable obligations is limited to liability in the context of a bankruptcy plan. See In re Bell, 236 B.R. 426, 429 (N.D. Ala. 1999). As such, the bankruptcy court may disallow a claim during the proceeding, but neither the discharge injunction nor principles of preclusion bar the Department or another child support creditor from pursuing the debt post-bankruptcy.
Mr. Davis argues that In re Diaz can be distinguished in two ways. First, In re Diaz involved a proceeding under Chapter 13, while this case involved a discharge under Chapter 11. Second, In re Diaz concerned a violation of a discharge injunction, while here the violation of the discharge injunction was completely irrelevant to the ruling because the bankruptcy court‘s decision was based on violation of Section 6.2 the confirmed bankruptcy plan. Neither of these arguments is persuasive.
As an initial matter, we see no reason to apply a different rule to Chapter 11 cases than we do to Chapter 13 cases. Both Chapter 11 and Chapter 13 prohibit the discharge of domestic support obligations, see
Nor do we find persuasive the argument that this case is different from In re Diaz because the supplemental injunction was issued due to a violation of the plan. Even if Mr. Davis had always asserted that the Department‘s actions constituted a violation of the plan, and not of the discharge injunction, the ultimate legal issue before us would be the same, because the bankruptcy court based its ruling on its determination that the Department was precluded from enforcing the child support obligation due to collateral estoppel and res judicata.
IV
In re Diaz controls, and therefore collateral estoppel and res judicata do not preclude the Department from pursuing, post-bankruptcy, a claim for non-
AFFIRMED.