Jason T Martin

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U.S. Bankruptey Court
District of Idaho

Filed: September 2, 2004
At: 11:00 a.m.

By: Sylvia Wirth 2"

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF IDAHO

In Re:
Bankruptcy Case
JASON T. MARTIN, No. 04-40572
Debtor.
MEMORANDUM OF DECISION
Appearances:

scott H. Hansen, BLASER, SORENSEN & HANSEN, Blackfoot,
Idaho, Attorney for Debtor,

Jared M, Harris, BAKER & HARRIS, Blackfoot, Idaho, Attorney for
Creditor Christina McCutcheon.

R. Sam Hopkins, Pocatello, Idaho, Chapter 7 Trustee.

MEMORANDUM OF DECISION - 1

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AUTHENTICATED \ j

U.S. GOVERNMENT
INFORMATION

GPO

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Background

Creditor Christina McCutcheon (“Creditor”), Chapter 7 Debtor Jason
Martin’s former spouse, seeks a determination that her attempts to enforce a
judgment entered in a divorce action are not subject to the automatic stay because
the judgment debt represents a support obligation. After considering the record,
including the testimony and evidence at the August 12, 2004, hearmy, the Court
i concludes that Creditor’s attempts to collect the judgment debt are not subject to
the automatic stay. What follows are the Court’s findings of fact and conclusions
of law. Fed. R. Bankr. P. 7052; 9014.

Facts

Debtor and Creditor were married for eight years and had three
children together. They were divorced under the terms of a Decree of Divorce
entered by the state court on March 12, 2001 (the “Decree”). Ex. A. At the time
of the parties’ divorce, Debtor, who was serving in the United States Navy, was
stationed in California, while Creditor continued to live in Idaho with the children.
Under the terms of the Decree, while both parties were to share custody of the
children, the parties agreed that the children would live with Creditor in Idaho and

that Debtor would have reasonable visitation with them. The Decree dictated that

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the travel costs for the visitation were to be split between the parties, with Debtor
responsible for 77% of the expenses and Creditor responsible for the remaining
23%. Ex. A at 3.

To care for the children, the Decree ordered Debtor to pay child
support in the amount of $671 per month. Ex. A at 5. He was also responsible for
a pro rata share of the children’s medical, dental, and child care expenses. As with
the transportation costs, the court ordered Debtor to pay 77% of these costs while
the children remained minors. Ex. A at 5.

The Decree also addressed the parties’ attorney fees and costs, with
each of the parties to be responsible for payment of their own attomey’s fees
incurred in the divorce proceedings. Ex. A al 9. However, the Decree provided
that if one of the parties later breached the agreement upon which the Decree was
based, the breaching party would pay all fees and costs incident to the breach that
the other party incurred in enforcing it. Ex. A at 10.

Debtor completed his service in the Navy and returned to Idaho in
2003 to pursue a degree at Idaho State University. He is currently working full-
time, and is enrolled in school. Since the fall of 2001, Creditor and the children

have resided in Florida. Neither party sought a change in the terms of the Decree

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until the fall of 2003, when Debtor filed a motion to reduce his child support
obligation and the parties each filed motions asking for reimbursement from the
other of various expenses. Ex. B. The state court conducted a hearing on
December 14, 2003, and as a result, it reduced Debtor’s child support obligation to
$400 per month. It also entered a money judgment against Debtor in Creditor’s
favor for $3,332.17. Exs. B, C.

The judgment debt was comprised of three distinct types of

inonetary awards. First, the parties agreed Debtor owed Creditor $640.15. Ex. B.
Debtor testified this amount was to reimburse Creditor for costs associated with
the children’s medical and dental expenses. The second component of the award
was $2,522.10 in transportation costs incurred in connection with visitation by the
children. The court split this amount according to the terms of the Decree,
ordering Debtor to pay 77%, or $1,942.02, Finally, the court ordered Debtor to
reimburse Creditor $750 for her attorney fees and costs, even though it believed
Creditor’s attomey fees were “likely much higher.” Ex. B at 2. The court did so
because it found that the “father’s actions, and non-actions, have been the source
of much conflict between the parties.” Ex. B at 2.

Debtor filed for bankruptcy under Chapter 7 of the Bankruptcy Code

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on March 23, 2004. Docket No. 1. Creditor wants to collect the judgment from
Debtor; she filed a motion for stay relief on June 18, 2004. Docket No. 7.'
Debtor objected to the motion. Docket No. 13. At the hearing on Creditor’s
motion, Debtor acknowledged that the $640.15 he owes Creditor for the children’s
medical expenses is a support debt, and that Creditor is not prevented from
collecting that debt by the automatic stay. See 1] U 5.C. § 362(b)(2)(B). He
offered to pay that amount to Creditor immediately, and the Court ordered him to
do so. The parties contest whether the $1,942.02 awarded in the judgment for the
children’s transportation costs and the $750 awarded to reimburse Creditor for her
attorney fees are in the nature of support.
Disposition

The automatic stay that arises upon the filing of a bankruptcy

petition to prevent debt collection by creditors “does not operate as a stay . . . of

the collection of alimony, maintenance, or support from property that is not

1 Creditor has also, in an abundance of caution, filed an adversary proceeding
against Debtor, arguing that the judgment debt is excepted from discharge by Debtor
under 11 U.S.C. § 523(a)(5). Adv. Proceeding No. 04-6139. Section 523(a)(5) excepts
from discharge debts 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 ofa court of record... .” Resolution of the
issues raised by Creditor’s motion will likely also resolve the similar issues posed in the
adversary proceeding.

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property of the estate....” 11 U.S.C. § 362(b)(2)(B). This exception to the
automatic stay reflects a congressional policy to except the enforcement of child
support obligations from the effect of the bankruptcy stay. Jn re Cora, 96.1
.B.C.R. 25, 27 n.6 (Bankr. D. Idaho 1996). The bankruptcy estate does not
include an individual Chapter 7 debtor’s postpetition earnings. Jn re Burton, 85
LB.C.R. 282, 282 (Bankr. D. Idaho 1985). Provided the judgment debt represents
a support debt, Creditor may collect that debt from Debtor’s postpetition wages
under § 362(b)(2)(B).

Whether an obligation is alimony, maintenance, or support is a

question of federal law. Norris v. Norris (in re Norris), 94 1.B.C.R. 233, 234

(Bankr. D. Idaho 1994) (citing Shaver v. Shaver, 736 F.2d 1314, 1315-1316 co"
Cir, 1984)). In Shaver, the Ninth Circuit Court of Appeals set forth a list of
factors the Court must consider when determining whether an award is in the
nature of support:

In determining whether an obligation is intended for
support of a former spouse, the court must look beyond
the language of the decree to the intent of the parties
and to the substance of the obligation. . . . The courts
that have considered this issue have used several
factors to aid in the characterization of the debt. If an
agreement fails to provide explicitly for spousal
support, a court may presume that a so-called ‘property

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settlement’ is intended for support when the

circumstances of the case indicate that the recipient

spouse needs support... . Factors indicating that

support is necessary include the presence of minor

children and an imbalance in the relative income of the

parties... . Similarly, if an obligation terminates on the

death or remarriage of the recipient spouse, a court

may be inclined to classify the agreement as one for

support... . The court will look also to nature [sic] and

duration of the obligation to determine whether it is

intended as support. Support payments tend to mirror

the recipient spouse’s need for support.
Shaver, 736 F.2d at 1316-17 (internal citations omitted).

Here, the transportation costs the state court ordered Debtor to pay
Creditor are clearly in the nature of support. The Decree provides that Debtor is
required to pay the same pro rata share of the transportation costs for the children
as for the medical and day care costs. The transportation costs are necessary so
that the children can visit their father, Because these costs are directly related to
the care and well-being of the children, they are part of their support expenses.

Applying the Shaver analysis to determine whether the attorney fees
awarded constitute support is somewhat more difficult. In making its decision,
“the primary consideration [for the Court] is whether the award of fees was based
upon financial need.” Norris, 94 1.B.C.R. at 235 (citing Johns v. Tyson, 318 F.2d
678, 681 (9" Cir. 1975)). When an attorney fee award is rendered in a contested

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proceeding, another relevant fact is the intent of the state court. Gionis v. Wayne
(in re Gionis), 170 B.R. 675, 682 (B.A.P. 9" Cir, 1994) (citing Shaver, 736 F.2d at
1316); Hainline v. Neal (in re Neal), 179 B.R, 234, 240 (Bankr. D. Idaho 1995).
The Court may look to state law in determining whether the state court intended to
base the award on need. Gionis, 170 B.R. at 682; Kimball v. Kimball (in re
Kimball), 253 B.R. 920, 923-34 (Bankr. D. Idaho 2000). The Court should look to
the state court’s findings relating to the judgment as well as to the language in the
decree. Kimball, 253 B.R. at 923.

In post-divorce proceedings, an [daho court may, under Idaho Code
§ 32-704, make an award of costs and attorney fees. Idaho Code § 32-704(3);
Josephson v. Josephson, 772 P.2d 1236, 1245 (Idaho 1989), overruled on other
grounds by Bell v. Bell, 835 P.2d 1331, 1338 (Idaho 1992). The state court is
required to consider the “financial resources of both parties and the factors set
forth in scction 32-705, Idaho Code.” Idaho Code § 32-704(3); Kimball, 253 B.R.
at 923-24. Idaho Code § 32-705 instructs that:

1. Where a divorce is decreed, the court may grant a

maintenance order if it finds that the spouse secking

maintenance:

(a) Lacks sufficient property to provide for his or her

reasonable needs; and

(b) Is unable to support himself or herself through

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employment.

2. The maintenance order shall be in such amounts and
for such periods of time that the court deems just, afler
considering all relevant factors which may include:

(a) The financial resources of the spouse seeking
maintenance, including the marital property
apportioned to said spouse, and said spouse's ability to
meet his or her needs independently;

(b) The time necessary to acquire sufficient education
and training to enable the spouse seeking maintenance
to find employment;

(c) The duration of the marriage;

(d) The age and the physical and emotional condition
of the spouse seeking maintenance;

(e) The ability of the spouse from whom mamtenance
is sought to meet his or her needs while meeting those
of the spouse sceking maintenance;

(f) The tax consequences to each spouse;

(g) The fault of either party.

Idaho Code § 32-705.

Although the Decree states that in any proceeding to enforce its
terms the court will award the prevailing party all costs and fees, the state court
obviously did not feel bound by this provision. While Debtor successfully
lowered his monthly child support obligation, the court determined that all of the
transportation expenses claimed by both parties were legitimate. Debtor owed
Creditor a balance because the terms of the Decree required him to be responsible

for a disproportionate share of those expenses. Thus, while Debtor may have

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prevailed on the issue of child support, it is unclear from the judgment whether
either party really “prevailed” regarding the dispute over the children’s
transportation costs.’

While the state court did not cite Idaho Code § 32-704, it did
consider the factors specified in that statute in its decision. The state court
discussed the relative financial resources of both Debtor and Creditor, finding that
Debtor had the ability to earn more than Creditor while Creditor had the
responsibility of caring for the children 80% of the time. Debtor also enjoyed a
larger tax credit, as he was able to claim three children (one from another
marriage) for tax purposes while Creditor could only claim one. Even though
these factors were discussed in the paragraph concerning child support, the award
of attorney fees was discussed and made in the same decision. See Kimball, 253
B.R. at 924 (finding that the state court considered factors identical to Idaho Code
§ 32-705 even though the court did not specifically mention the statute, and it

discussed fees in relation to an award of support).

2 The same holds true with respect to the other $640.15 Debtor was ordered to
pay. The parties agreed, in that portion of the award, that Debtor owed Creditor
$1,973.97 and that Creditor owed Debtor $1,333.82 for reimbursement of medical and
child care expenses. The state court simply offset those amounts to come up with the
$640.15 awarded in favor of Creditor.

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The court also considered Debtor’s fault, one of the components of
Idaho Code § 32-705. See Gionis, 170 B.R. at 681-83 (finding that the lower
court’s decision to award fees premised upon an imbalance in the relative mcome
of the parties and the father’s conduct during litigation was in the nature of
support, and was not imposed as a sanction for the father’s conduct). Finally, the
I award was based upon a legal proceeding to enforce the support obligations in the
parties’ Decree. See id. at 683 n.11 (“As the [fee] award was based upon custody
battles in which an important issue is ordinarily the welfare of the child, it would
not be difficult to characterize it as child support.”); Jn re Clements, 86 1.B.C.R.
313, 313 (Bankr. D. Idaho 1986) (holding that attorney fees awarded in an action
against a debtor for his failure to pay child support and other related expenses
were a nondischargeable support obligation).

All things considered, the Court concludes, under a Shaver analysis,
that the state court awarded attomey fees to Creditor, at least in part, because of
the relative resources and needs of the parties. As such, the award was in the
nature of support.

Conclusion

The Court concludes that the transportation costs and attorney fees

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awarded by the state court in its judgment enforcing the terms of the parties’
divorce decree are in the nature of support. Under 11 U.S.C. § 362(b)(2)(B), the

automatic stay does not apply to prevent Creditor from garnishing Debtor’s wages

ille granted by separate order.

JIMD.PAPPAS ~~ YR

U.S. BANKRUPTCY JUDGE

to collect these amounts. Creditor’s motion,

DATED This 2nd day of Sépte

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CERTIFICATE OF SERVICE

I, the undersigned, hereby certify that I served by the method
indicated below, a true copy of the document to which this certificate is attached,
to the following named person(s) at the following address(es), on the date shown
below:

Office of the U.S. Trustee

jeff.g. howe@usdo). gov
gary. meclendon(@usdoj.g0v

Jared M. Harris, Esq.
bakerharris(@cableone.net

R. Sam Hopkins
sam hopkins(@if rmci.net

Via Email

Scott H. Hansen, Esq.
P. QO. Box 1047
Blackfoot, Idaho 83221

i Via U.S. Mail

Note re li-mail servicc: A “.pdf" version of the above decision/order was electronically transmitted to the
parties indicated above. Email service is provided as a courtesy only upon request ola party. To review
an electronic image of the original of this document, or to subscribe for email service of future
decisions/orders from the Bankruptcy Judges, please access the Court's Internet web site,

www,id uscourts. gov.

CASE NO.: 04-40572 CAMERON §. BURKE, CLERK
U.S4 BANKRUPTCY COURT
DATED: 9/2/04 sha | eputy Clerk

MEMORANDUM OF DECISION - 13

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