Taylor v. TaylorTaylor v. Taylor
Eloísa Taylor appeals from a decision of the Bankruptcy Appellate Panel of the Tenth Circuit (“BAP“) affirming a decision of the United States Bankruptcy Court for the District of New Mexico. The bank
I
In 1988, Eloísa and Matthew Taylor were married in Albuquerque, New Mexico. In 2005, they divorced and entered into a Marital Settlement Agreement (“MSA“). A circuit court in Fairfax County, Virginia entered a final decree of divorce on September 22, 2005, which incorporated the MSA. As part of the final decree, the Virginia circuit court ordered Matthew to pay $2,500 per month to Eloísa as spousal support, said payments to begin on August 1, 2005, and to continue until “the death of either party, or the remarriage of [Eloísa], or after” ten years of payments, “whichever event first ... occurred.” Aplt.App. at 43. The final decree also stated that the spousal support obligation was governed by
On April 21, 2009, Matthew moved to terminate spousal support in the Virginia circuit court, arguing that Eloísa had been living with a man for the past two years and that the two were in a marriage-like relationship. Matthew claimed that Eloísa‘s cohabitation should result in the termination of his spousal support obligation under the divorce decree pursuant to
On November 22, 2010, Eloísa filed for bankruptcy under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Mexico. On January 26, 2011, Matthew filed a complaint objecting to the dischargeability of the $50,660.59 judgment, and initiated an adversary proceeding.
Thereafter, both Matthew and Eloísa filed motions for summary judgment regarding the applicability of
Both parties appealed to the BAP. The BAP affirmed the bankruptcy court‘s ruling that the overpayment debt was not a “domestic support obligation” under
II
“Although this appeal is from a decision by the BAP, we review only thе Bankruptcy Court‘s decision.” Miller v. Deutsche Bank Nat‘l Trust Co. (In re Miller), 666 F.3d 1255, 1260 (10th Cir.2012) (quotation omitted). “We review matters of law de novo, and we review factual findings made by the bankruptcy court for clear error.” Id. (quotation omitted). In so doing, we “treat[] the BAP as a subordinate appellate tribunal whose rulings may be persuasive.” Cohen v. Borgman (In re Borgman), 698 F.3d 1255, 1259 (10th Cir.2012).
Ordinarily, “[w]hether an obligation to a former spouse is actually in the nature of support is a factual question subject to a clearly erroneous standard of review.” Sampson v. Sampson (In re Sampson), 997 F.2d 717, 721 (10th Cir.1993). Because the parties argue that the bankruptcy court erred in its interpretation of the
III
One of the principal purposes of the Bankruptcy Code is to grant insolvent debtors a “fresh start.” Grogan v. Garner, 498 U.S. 279, 286-87, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). However, by providing limited exceptions to discharge, the Bankruptcy Code recognizes that certain interests outweigh the “fresh start” for the debtor. Id. Two provisions of the Bankruptcy Code except from discharge debts arising out of obligations to the family:
A. Section 523(a)(5)
i) § 523(a)(5) Background
Before Congress amended the Bankruptcy Code in 2005,
to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that—
(A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise (other than debts assigned pursuant to
section 408(a)(3) of the Social Security Act , or any such debt which has been assigned to the Federal Government or to a State orany political subdivision of such State); or (B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support.
Effective October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA“) amended
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child‘s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child‘s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement аgreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child‘s parent, legal guardian, or responsible relative for the purpose of collecting the debt.
When determining whether an obligation is in the nature of alimony, maintenance, or support, this court conducts a “dual inquiry” looking first to the intent of the parties at the time they entered into their agreement, and then to the substance оf the obligation. See Sampson, 997 F.2d at 723; Sylvester v. Sylvester, 865 F.2d 1164, 1165 (10th Cir.1989).4 The na
ii) Bankruptcy Court‘s and BAP‘s rulings
The bankruptcy court determined that Matthew‘s complaint failed to allege any facts that supported a conclusion that the debt was actually in the nature of support as to him, and the BAP agreed. The bankruptcy court concluded that
The BAP agreed that the debt was not in the nature of support. The BAP, however, concluded that the debt arose at the time the state court entered the overpayment judgment.5 Aplt.App. at 114 (rejecting Matthew‘s assertion that he alleged sufficient facts because such facts only supported a conclusion that Eloísa no longer needed support, not that the debt was in the nature of support for Matthew). Accordingly, the BAP affirmed the bank
iii) Matthew‘s argument on cross appeal
The crux of Matthew‘s argument in his cross appeal of the bankruptcy court‘s dismissal of his
iv) Plain language of § 101(14A)
“Our primary task in construing statutes is to determine congressional intent, using traditional tools of statutory interpretation.” See N.M. Cattle Growers Ass‘n v. U.S. Fish & Wildlife Serv., 248 F.3d 1277, 1281 (10th Cir.2001). Supreme Court “precedents make clear that the starting point for [the] analysis is the statutory text. And where, as here, the words of the statute are unambiguous, the judicial inquiry is сomplete.” Desert Palace, Inc. v. Costa, 539 U.S. 90, 98, 123 S.Ct. 2148, 156 L.Ed.2d 84 (2003) (citation and quotation omitted); see also Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985) (“Statutory construction must begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.“).
Matthew arguеs that the plain language of the statute requires some analysis, but not that the statutory language is ambiguous. Aplee. Br. at 15 (stating that his analysis is the “only approach that makes sense of Congress‘[s] addition of ‘a governmental unit’ to the class of entities who may be owed debts in the nature of support“). We agree with Matthew‘s contention that the nature of the debt owed to a governmental unit will not be “in the nature of support” to that governmental unit—in such circumstances the statutory language supports a conclusion that the debt retains its original supportive nature. But the same conclusion does not arise regarding debts owed tо spouses pursuant to the plain language of
B. Section 523(a)(15)
In 1994, Congress amended the bankruptcy law by adding
not of the kind described in paragraph (5) that [are] incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, a determination made in accordance with State or territorial law by a governmental unit unless—
(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably
necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtоr is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or (B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor[:]
Bankruptcy Reform Act of 1994, Pub.L. No. 103-394, § 304(e).
In 2005, Congress again amended this section by removing the two “defenses” to
[debts] to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that [are] incurred by the dеbtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit.
For reasons previously discussed, the overpayment debt here does not qualify as a “domestic support obligation” under
i) Plain Statutory Language
“[I]f an act is unambiguous, that ends the matter and resort should not be had to the statutory history.” Wyodak Res. Dev. Corp. v. United States, 637 F.3d 1127, 1135 (10th Cir.2011). Pursuant to
Eloísa recognizes that the overpayment debt falls within the plain language of the statute, so she instead asserts that application of the unambiguous language here would be contrary to Congress‘s purpose in enacting
ii) Absurdity Doctrine
In her brief, Eloísa cites two Supreme Court cases as support for her argument that the plain language of the statute should “yield to the legislative intent of the Bankruptcy Code drafters.” Id. at 8 (citing Ron Pair Enters., Inc., 489 U.S. at 242-43, 109 S.Ct. 1026; Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982)). Both cited cases deal with the absurdity doctrine.8 The absurdity doctrine applies to unambiguous statutes “as a means to avoid applying the unequivocal language of a statute. But the doctrine has been strictly limited.” Robbins v. Chronister, 435 F.3d 1238, 1241 (10th Cir.2006) (en banc). The absurdity doctrine applies “in only the most extreme оf circumstances,” when an interpretation of a statute “leads to results so gross as to shock the general moral or common sense,” which is a “formidable hurdle” to the application of this doctrine. United States v. Husted, 545 F.3d 1240, 1245 (10th Cir.2008); Robbins, 435 F.3d at 1241 (quotation omitted). It is not enough to show that Congress intended a different result from the one produced by the plain language of the statute. Robbins, 435 F.3d at 1241.
The problem with Eloísa‘s argument on this point is that application of
Despite Eloísa‘s assertion to the contrary, Congress‘s concern for the dependent spouse as the creditor when “hold harmless” agreements are in play does not equate to concern for the dependent spouse as the debtor when repayment is sought of wrongfully paid spousal support. Eloísa argues that Congress‘s protective purpose extends to the dependent spouse regardless of the nature of the debt, or to whom the debt is owed. But she cites no support for her contention that applying
In fact, the BAPCPA‘s deletion of the two defenses (former
Even if Congress only intended to protect marital debts owed to a dependent spouse, “the reality [is] that the reach of a statute often exceeds the precise evil to be eliminated.” Brogan v. United States, 522 U.S. 398, 403, 118 S.Ct. 805, 139 L.Ed.2d 830 (1998). And “[w]hatever Congress‘s motivation, we can apply the [absurdity] doctrine only when it would have been unthinkable for Congress to have intended the result commanded by thе words of the statute.” United States v. Brown, 529 F.3d 1260, 1266 (10th Cir.2008) (quotation omitted). “[W]e cannot reject an application of the plain meaning of the words in a statute on the ground that we are confident that Congress would have wanted a different result.” Robbins, 435 F.3d at 1241. It is not unthinkable that Congress would place importance on all marital obligations, regardless of whether the debt was owed to or by the dependent spouse—even above the need for the debtor‘s fresh start. Accordingly, Eloísa‘s citations to Ron Pair Enterprises, Inc. and Griffin as support for disregarding the plain language of the statute are not persuasive.9
C. Attorney Fees
Matthew also appeals the BAP‘s ruling that neither it, nor the bankruptcy court, had authority under the Taylors’ MSA to award Matthew attorney fees incurred pursuing the adversary proceeding. Upon review of the attorney fee provisions set forth in the MSA, the BAP‘s ruling on this issue is clearly correct.
IV
Accordingly, we AFFIRM the bankruptcy court‘s ruling that the debt arising from the overpayment of spousal support is nondischargeable under
Notes
Upon order of the court based upon clear and convincing evidence that the spouse receiving support has been habitually cohabiting with another person in a relationship analogous to a marriage for one year or more commencing on or after July 1, 1997, the court shall terminate spousal support and maintenance....
Aplt.App. at 84-85 (citation omitted). Neither party takes issue with the bankruptcy court‘s application of pre-BAPCPA case law. We agree that the pre-BAPCPA case law continues to have relevance post-BAPCPA because both versions of the statute require a determination that the debt be in the nature of support. See Wis. Dep‘t of Workforce Dev. v. Ratliff, 390 B.R. 607, 612 (E.D.Wis.2008) (“‘[D]omestic support obligation’ is a term derived from the definition of a nondischargeable debt for alimony, maintenance, and support contained in the former Section 523(a)(5); therefore, casе law construing the former Section 523(a)(5) is relevant and persuasive.” (quotation omitted)). Pre-BAPCPA[a]lthough the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA“) changed the language in
11 U.S.C. § 523(a)(5) to apply to “domestic support obligations” as defined in11 U.S.C. § 101(14A) , this change “did not change the standard for whether an obligation is in the nature of support.” Consequently, it is appropriate to continue to apply the sаme test for determining whether a debt is in the nature of support that was applicable under11 U.S.C. § 523(a)(5) prior to the enactment of BAPCPA.