Opinion
Case No. 02-16784DWS, Adversary No. 02-0702
February 3, 2003
MEMORANDUM OPINION
Before the Court is a Motion for Summary Judgment filed by plaintiff Bethann Millman ("Plaintiff') in connection with her Complaint seeking a determination that the Debtor's court-ordered obligation to pay $3,672.50 (the "Claim") arising from a divorce action between the parties be deemed nondischargeable pursuant to 11 U.S.C. § 523(a)(5) and (15). For the reasons that follow, judgment will be granted in Plaintiff's favor and the full amount of the Claim will be excepted from the Debtor's discharge.
Though the Debtor correctly states that the attorney may not be the appropriate party to seek nondischargeability, see In re Delillo, 5 B.R. 692 (Bankr. D. Mass. 1980), as the Debtor's ex-wife, not her attorney, brought this action, that issue is not presented here.
The plaintiff's Motion actually seeks judgment that the debt should be declared nondischargeable under § 523(a)(17) rather than (a)(15).See Plaintiff's Motion for Summary Judgment ¶ 7. Plaintiff's counsel corrected the error at the November 19 hearing. However, upon review of the record in support of summary judgment, I found that Plaintiff failed to submit evidence permitting me to balance the parties' relative abilities to pay, an exercise that is required if judgment under § 523(a)(15) is to be secured. Denying summary judgment on that count, I took under advisement the claim under § 523(a)(5) which is the subject of this Memorandum Opinion. As I grant judgment in favor of Plaintiff, it will not be necessary to address the alternate theory.
BACKGROUND
As agreed by the parties, the Claim consists of three components. First, upon motion of the Plaintiff to the state court administering her divorce action for interim counsel fees, expenses and costs (the "Fee Motion"), Exhibit B to Motion, Debtor was ordered to pay interim counsel fees and costs of Plaintiff's matrimonial attorneys Green Simon ("Simon") in the amount of $1,500 (the "Intial Fee Payment") to the Plaintiff. Exhibit C to Motion, Order of Judge Kozay dated April 8, 1996 (the "4/8/96 Order"), Court of Common Pleas, Philadelphia County, Family Court Division, November Term 1993, No. 8691 ("Family Court Action"). The 4/8/96 Order made no findings of fact but noted that it was based on the "testimony of the parties, oral argument and submission of Memorandum." Id. The Fee Motion which gave rise to the 4/8/96 Order averred the nature of the action, the fees that had been incurred to date, the expectation of considerable further attorney services and the fact that Plaintiff (contrary to Debtor) was unemployed and financially unable to pay her attorney's fees, expenses and costs of suit. Attached to the Affidavit of Mayer Simon, Esquire ("Simon Affidavit") in support of this Motion are four statements of services provided in connection with the Family Court Action. Two of them relate to a period after the Fee Motion was filed and thus are irrelevant to evidence the basis for the 4/8/96 Order. The remaining two allocate the time into two general categories: divorce ($1,232) and "APL" i.e., alimony pendente lite)($1,452). These same fee schedules along with certain other statements from the relevant period for work done in other categories:i.e., custody ($2,189) and prevention from abuse ($902) were appended to the Fee Motion in support of the recovery of fees in excess of $5,000. Exhibit B to Motion.
The Complaint initiating the Family Court Action seeks divorce, equitable distribution, alimony, custody, alimony pendente lite and counsel fees, child support, exclusive possession of the marital residence and the provision of life, medical, automobile and homeowners insurance.
The matrimonial proceedings involved divorce, support and equitable distribution. The Court did not allocate the $1,500 award to any category of the bill, simply stating that "[w]ife may raise the issue of the balance of the counsel fees costs at the time of [the] equitable distribution hearing."
The second award arises from an order entered on December 7, 2000 wherein the Debtor was held to be in civil contempt of court and ordered again to pay the $1,500 Initial Fee Payment plus interest thereon from 4/97 to 12/00 at 7% plus any interest that may accrue until the debt is paid. Exhibit D to Motion, Order of Judge Matthews dated December 7, 2000, Court of Common Pleas, Family Division (the "12/7/00 Order"). The 12/7/00 Order quantified "without prejudice to exactitude" that interest charge at approximately $472.50 (the "Interest Payment"). Plaintiff claims the $472.50 without further calculation or accrual. The 12/7/00 Order also directed Debtor to pay reasonable attorney's fees to Simon upon submission of a fee application. There was no evidence presented that Simon filed a bill of costs or that any fee was awarded at that time.
The Order also fined the Debtor $1,000 for his failure to appear that day. Id. That provision is not implicated by this adversary proceeding.
The third component of the Claim arises from a third order granting a motion for sanctions, Exhibit E to Motion, and ordering the Debtor "to pay the previously ordered sum of $1,500.00 plus interest of $472,50, plus additional attorney's fees for prosecution of this case of $1,700.00" (the "Second Fee Payment"). Exhibit F to Motion, November 16, 2001 Order of Judge Matthews (the "11/16/01 Order"). Unlike the 12/7/00 Order contemplating the imposition of attorney's fees against Debtor for the civil contempt proceeding, the Court does not direct that payment be made directly to Simon or for that matter, Plaintiff.
Despite awarding continuing interest in his 12/7/00 Order, Judge Matthews did not recompute the additional interest accrued as of the 11/16/01 Order. The plaintiff herein similarly did not increase her request beyond the $472.50 ordered. The Order also further sanctioned the Debtor $400, an award not encompassed in this litigation.
While the sanctions motion was not produced, it is clear that the $1,700 award for "prosecution of this case" related to the continuing efforts of the Plaintiff to collect her award of attorney's fees and interest.
DISCUSSION
Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that no genuine issue of material fact exists and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c), incorporated by F.R.Bankr.P. 7056. Both parties agree that there are no disputed issues of fact and accordingly, this matter is ripe for disposition by summary judgment.
Section 523(a)(5) of the Bankruptcy Code provides an exception to the debtor's discharge for debts to a former spouse for alimony, maintenance, or support of such spouse in connection with a separation agreement, divorce decree or other order of a court of record, or property settlement agreement. Whether a debt is in the nature of alimony, maintenance or support has been the subject of extensive litigation in the domestic relations arena, including the issue of whether pre-petition attorney fee awards in favor of non-debtor spouses who find their claims before the bankruptcy court are dischargeable. Plaintiff relies on those cases that hold that attorney's fees awarded in the context of domestic relations proceedings are treated as part of the debt for support and are therefore non-dischargeable. Debtor, however, contends that these fees were not ordered as ancillary to an order for support and as such, are not governed by § 523(a)(5). Alternatively, he argues that even if the general exception of § 523(a)(5) applies, to the extent the fees were awarded directly to the attorney as opposed to the Debtor, they are nonetheless dischargeable pursuant to § 523(a)(5)(A), removing assigned debts for support from being held nondischargeable.
Section 523(a)(5) provides:
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —
(5) 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 or any 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;
11 U.S.C. § 523(a)(5). It is hornbook law that the party objecting to discharge carries the burden and must prove by a preponderance of the evidence that the debt is covered by the exception. F.R.Bankr.P. 4005;Grogan v. Garner, 498 U.S. 279, 286 (1991). Exceptions to discharge are construed strictly against the creditor and liberally in favor of the debtor to support the debtor's fresh start. Insurance Co. of America v. Cohn (In re Cohn), 54 F.3d 1108, 1113 (3d Cir. 1995).
In his Memorandum in support of his answer to the Motion, Debtor argued that the attorney's fees were incurred in connection with equitable distribution, pointing to the provision of the 4/8/96 Order which deferred until the equitable distribution hearing the Plaintiff's request for the balance of the fees. While I do not draw the same conclusion from that provision of the Order, it appears that Debtor has abandoned the contention that the Initial Fee Payment is non-dischargeable on the grounds that it is not related to support. This conclusion is based on a colloquy with counsel at the hearing. While I conceded Debtors's counsel's argument that Plaintiff's counsel had not made the clearest connection between the documentation detailing his fees and costs in the divorce matter and the Order awarding the fee, given the total amount of his fees ($5,000) and the partial award ($1,500), I noted Plaintiff's counsel proffer that he would be able to make that record at trial. Rather than go to trial on that issue, Debtor's counsel agreed to withdraw his position that Plaintiff had not established the nexus between the $1,500 award and fees for work done in connection with alimony and support. My subsequent examination of the fee application supporting the original motion for fees establishes that $1,492 was clearly attributable to services related to support.
I. A. Initial Fee Payment
It is generally accepted that attorney's fees awarded in a support action are nondischargeable, a proposition Debtor appears to acknowledge. Gunther v. Glabb (In re Glabb), 261 B.R. 170, 173 (Bankr. W.D. Pa. 2001); Freer v. Weinstein (In re Weinstein), 173 B.R. 258 (Bankr. E.D.N.Y. 1994); Schmiel v. Judge (In re Schmiel), 94 B.R. 373 (Bankr. E.D. Pa. 1988); In re Pollock, 90 B.R. 747, 759 (Bankr. E.D. Pa. 1988). The rationale supporting this conclusion takes several forms. First, to the extent the underlying liability is non-dischargeable, the attorney's fees awarded in connection therewith should likewise be non-dischargeable. In Weinstein, supra, the court dubbed this rationale the "status dependent theory," Weinstein, 173 B.R. at 273, citing inter alia, Jennen v. Hunter (In re Hunter), 771 F.2d 1126, 1131 (8th Cir. 1985); Klingman v. Levinson, 66 B.R. 548, 557-58 (Bankr. N.D. Ill. 1986), aff'd, 831 F.2d 1292 (7th Cir. 1987), and provided two explanations for the theory. Weinstein, 173 B.R. at 271. Reasoning that all liabilities springing from the nondischargeable one are also nondischargeable, the attorney's fees granted by the prior court are "`an actual damage incurred by the plaintiff from the defendant's actions.'"Id. at 272, quoting Doucette v. Kwiat (In re Kwiat), 62 B.R. 818, 823 (Bankr. D. Mass. 1986), vacated in part on other grounds, 81 B.R. 184 (D. Mass. 1987). Alternatively theorizing that the ancillary debt would not exist "but for" the original, nondischargeable support debt, it must be deemed nondischargeable too. "The attorneys' fees are "a direct consequence' of the debtor's improper actions and, as such, must also be determined nondischargeable." Id., quoting Safeco Ins. Co. v. Orrick (In re Orrick), 51 B.R. 92, 96 (Bankr. N.D. Okla. 1985).
To support the non-dischargeability of attorney's fees under the status dependent theory, they must be incurred in connection with a non-dischargeable debt i.e., in this case, one non-dischargeable under § 523(a)(5). Applying this analysis, my colleague Judge Twardowski held that attorney's fees were dischargeable where he was unable to conclude from the evidence presented that attorney's fees were "so intimately connected with the original order that they should be considered in the nature of alimony, maintenance and support." Pollock, 90 B.R. at 759. A contrary conclusion was reached in Schmiel, supra. While concurring with Pollack's requirement that there be some proof that the award of attorney's fee is indeed a support obligation, former Judge Scholl concluded that if the "spouse is able to show any nexus, even a "scant" one between maintenance and support and the Debtor's payment of the fee award, such an award may be non-dischargeable." 94 B.R. at 378. In Schmiel, the Court noted that the placement of the counsel fee in the divorce decree did not allow any conclusion to be drawn as to the court's intention regarding the nondebtor spouse's support. However, the fact that under Pennsylvania law, an allowance of attorney's fees in a matrimonial action is an aspect of alimony and is properly based upon financial need, compelled the Court to find the fee award alimony and therefore non-dischargeable. Id. citing 23 Pa.S. § 502; Hoover v. Hoover, 288 Pa. Super. 159, 431 A.2d 337 (1981). This view finds support in other cases. In Weinstein, the Court observed that attorney's fees awarded in a support action are in the nature of support themselves and on that basis would be nondischargeable. Weinstein, 173 B.R. at 273-74, citing Pauley v. Spong (In re Spong), 661 F.2d 6, 9 (2d Cir. 1981). See also Glabb supra, 261 B.R. at 173; In re Horton, 31 B.R. 464, 466 (Bankr. M.D. Pa. 1983).
Weinstein refers to this as the "equivalent debt" theory, i.e., the obligation for attorney's fees are the "equivalent" of the alimony, maintenance or support award, or an integral portion thereof. Id.
Whether a debt is in the nature of support requires inquiry into the intent of the parties at the time the debt was created. Gianakas v. Gianakas (In re Gianakas), 917 F.2d 759, 762 (3rd Cir. 1990). Where, as here, the award is made by court order rather than agreement of the parties, inquiry is to the court's intent, not that of the plaintiff and debtor. Carlson v. Carlson (In re Carlson), 1994 WL 88994, *1 (Bankr. E.D. Pa. March 11, 1994); Schmiel, 94 B.R. at 378. And where as here and in Schmiel, the Court's intent is not stated, it may be necessary to infer that intent from extrinsic evidence. Gianakas, 917 F.2d at 762.
Compare Glabb, 261 B.R. at 173, n. 1 ("We are not convinced, that the analysis set forth in Gianakas must be applied when determining whether a debtor's ancillary obligation to pay legal fees incurred by a former spouse who litigated the issue of support also falls under § 523(a)(5).").
The Fee Order was precipitated by Plaintiff's motion for interim counsel fees, costs and expenses. It precedes the entry of the Divorce Decree dated 8/8/00 by four years, Exhibit G to Motion. The record is silent as to any alimony or support awarded by the Court, and no such debt is at issue in this adversary action. Rather it is clear from the Fee Motion that its objective was to secure interim fees to provide the Plaintiff, who verified under penalty of perjury the factual averment of the Fee Motion that she was unemployed, with financial support to pursue the matrimonial action. She owed her attorneys over $5,000 and was expecting to incur additional fees and costs, an expectation that was proven to be accurate as the litigation continued for at least another four years and Plaintiff's fees between March 30, 1995 and December 24, 2000 grew to $53,787.60. Simon Affidavit ¶ 6. While there is no document in this record that evidences the Debtor's earnings at the time of the Fee Motion and Order, the entry of the Fee Order was based on the testimony elicited at the hearing which would have by necessity included the parties' respective financial resources. There is no automatic award of attorney's fees in Pennsylvania; rather a spouse must exhibit actual need to justify an award. Litmans v. Litmans, 449 Pa. Super. 209, 226, 673 A.2d 382, 390 (1986); Hoover v. Hoover, 288 Pa. Super. 159, 161, 431 A.2d 337, 338 (1981). The purpose of the fee award is to "promote the administration of fair and impartial justice by placing the parties "on a pars in defending their rights," including allowing a dependent spouse to maintain or defend an action for divorce.Hoover, id. ( quoting Moore v. Moore, 198 Pa. Super. 349, 354, 181 A.2d 714, 716 (1962)). In Borzillo v. Borzillo, 130 B.R. 438, 445 (Bankr. E.D. Pa. 1991), the court reiterating its findings in Schmiel, stated that "the apportionment of a liability to pay a part of the counsel fees to the Husband is particularly indicative of an attempt to rely upon financial need in the allocation process." See also Simeone v. Simeone, 214 B.R. 537, 547 (Bankr. E.D. Pa. 1997).
The Plaintiff attached an incomplete (name and address missing), unsigned and undated copy of the Debtor's 1996 tax return to her Memorandum of Law. Even if this document had the indicia of reliability which it does not, documents attached to briefs are not evidence. In re MacDonald, 222 B.R. 69 (Bankr. E.D. Pa. 1998) (loan documents attached to brief as exhibits and not offered into evidence cannot be considered); In the Matter of Holly's, Inc., 190 B.R. 297, 301 (Bankr. W.D. Mich. 1995) (documents attached to brief not admitted into evidence will not be considered).
Under the Divorce Code, the court, on petition, may allow a spouse reasonable attorney's fees and expenses pendente lite. 23 Pa. C.S.A. § 3702.
Based on Pennsylvania law and the logical inference to be drawn from the Fee Motion and Order, I conclude that the Fee Order was intended to provide Plaintiff with financial support to pursue her legal remedies in the matrimonial action. While the Fee Payment is not directly linked by the Court to services incurred in connection with alimony and support, it need not be since the billings for the alimony work equal the fee award and there is evidence that it was based on demonstrated financial need.See Weisberg, 218 B.R. at 755; In re Wooten, 1994 WL 369535 (Bankr. E.D. Pa. July 6, 1994). Thus even if the Debtor continued to press his objection to the $1500 Fee Order as unrelated to services provided in connection with the Debtor's alimony and support, the $1,492 of the total bill of $5,000 belies that conclusion.
B. Interest Payment
The 12/7/01 Order awards interest on the Fee Payment which I have found is a nondischargeable debt. As the Interest Payment is ancillary to the Payment, it too must be held non-dischargeable. Sullivan v. Clayton (in re Clayton), 195 B.R. 342, 350 (Bankr. E.D. Pa. 1996). "Consistent with this court's holding that the Plaintiff is entitled to nondischargeability of all sums liquidated as damages in connection with its nondischargeable fraud claim against the Debtor is the general rule that sums such as interest, which are ancillary to a nondischargeable debt, are also nondischargeable." Id. Clayton dealt with the question of the dischargeability of punitive damages awarded along with compensatory damages in connection with debtor's fraudulent conduct and presaged the Third Circuit Court of Appeals' decision in Cohen v. De La Cruz (In re Cohen), 106 F.3d 52 (3d Cir. 1997), aff'd, 523 U.S. 213 (1998), concluding that the punitive damages were not dischargeable. Although construing the language of § 523(a)(2), the Circuit Court's reasoning is instructive here. Recognizing the fixed link between compensatory and punitive damages and noting that a debt for fraud normally includes interest, costs of recovery and attorney fees as well as compensatory and punitive damages, the Court stated that "[t]o discharge an ancillary debt which would not exist but for a nondischargeable debt seems erroneous."Id. at 59, citing In re Roberti, 201 B.R. at 623, quoting In re Weinstein, 173 B.R. at 273-275. See also Jennen v. Hunter (In re Hunter), 771 F.2d 1126, 1131 (8th Cir. 1985) (while finding that the interest claim was not before the court on appeal, nonetheless noting that as interest may attach to the underlying indebtedness as an ancillary obligation, the creditor was permitted to seek such relief upon remand). As a debt ancillary to a nondischargeable debt, the $472.50 Interest Payment is thus also nondischargeable.
C. Second Fee Payment
The 11/16/01 Order ordering the $1,700 payment states that it represents "additional attorney's fees for prosecution of this case." As an order granting a motion for sanctions, it is fair to conclude that it responds to the Plaintiff's Motion for Sanctions dated October 8, 2001 which recites Debtor's failure to comply with the terms of the 12/6/00 Order and requests sanctions in the form of incarceration and an award of additional counsel fees to Simon for the "prosecution of this matter." Instead the Court reaffirmed the terms of the 12/6/00 Order, awarded the $1,700 in attorney's fees for "prosecution of this matter," and entered a monetary sanction of $400 against Debtor. While requiring the sanctions to be paid in sixty days, the Debtor was allowed one year to pay the other sums.
Unlike the First Fee Payment which was based on attorney's fees the Plaintiff had incurred as a result of her attorney's efforts to secure support and alimony for her, the Second Fee Payment was presumably based on fees Plaintiff incurred as a result of her attorney's efforts to collect the First Fee Payment. As noted in Section A above, attorney's fees incurred in connection with domestic relations proceedings have been held non-dischargeable on two theories. The first is that to the extent they are related to a non-dischargeable debt, they are ancillary to that debt and non-dischargeable themselves. I found that the $1,500 First Fee Payment met that test as the Plaintiff established fees related to services of that nature in such amount. The second which is based on Pennsylvania state law, dictates that interim attorney's fees awarded for prosecution of a spouse's rights under state domestic relations law are in the nature of support themselves. The Fee Payment also qualifies as support under that theory, and both theories support the non-dischargeability of the Second Fee Payment.
The Plaintiff and then the Court refer to fees awarded for prosecution of "this matter," a somewhat imprecise description. Moreover, the Plaintiff produced no evidence from which I could ascertain why the Court fixed the award at $1,700, and the Order provides no clue. I can only conclude based on the plain meaning of the words "this matter" that the Court refers to the motion before it i.e., the motion for sanctions. As such, there is no evidence that this award is in furtherance of the 12/6/00 order of reasonable fees to Simon. Yet even were that the case and prosecution of this matter related to both motions, the legal question is the same, i.e., are attorney's fees awarded to enforce an award of attorney's fees non-dischargeable if the underlying attorney's fees sought to be enforced are non-dischargeable themselves?
While not arising in connection with § 523(a)(5), the first principle is illustrated in Florida v. Ticor Title Ins. Co. (In re Florida), 164 B.R. 636, 639 (B.A.P. 9th Cir. 1994). In Florida, the court found that discovery sanctions and attorney's fees incurred in connection with the underlying litigation giving rise to the nondischargeable § 523(a)(6) debt and the appeal of the judgment were "ancillary to the underlying debt and partook of its character." Id. at 639. Relevant to the determination I must make regarding the Second Fee Payment is the following statement by that court:
It may be that the relationship of ancillary to primary obligations can become so attenuated that it would be unreasonable to characterize them as integral to the original willful and malicious injury. But Florida cannot logically contend that these ancillary debts do not have a direct and apparent genesis in the original claim. These debts are directly consequent to the setting of damages by the courts in the form of final judgments, and the costs or securing performance thereof.
Id. The limitation on the "ancillary debt" concept was noted in In re Chambers, 36 B.R. 42 (Bankr. W.D. Wis. 1984), where the Court recognized that ancillary obligations for attorney's fees incurred in a proceeding to enforce the primary obligation stand or fall with the characterization of the primary debt (i.e., dischargeable or non-dischargeable), "the only question being whether the ancillary proceeding is sufficiently related to or connected with the support obligation." Id. quoting In re Sposa, 31 B.R. 307 (Bankr. E.D. Va. 1983). In this case, the former wife had incurred a debt of $3,500 and attorney's fees to resolve litigation of a mortgage foreclosure action on a home awarded to her free and clear of mortgage in a divorce action. Noting that the plaintiff was seeking to discharge a debt incurred in pursuit of the obligation of her husband under the original divorce decree which the court had found was one for actual support, the court found that "the ancillary proceeding was sufficiently related to the primary obligation to render the award of attorney's fees equally nondischargeable." Id. In Sposa, upon which the Court relied, the Court found that attorney's fees incurred in a state court fraudulent conveyance action were nondischargeable because, without regard to the label placed on the ancillary proceeding, it was an attempt to enforce the debtor's spousal support obligation. Sposa, 31 B.R. at 311.
Compare Murabito v. Bryl (In re Bryl), 156 B.R. 5, 6 (Bankr. D. N.H. 1993). In Bryl, the plaintiff sought to except from discharge costs he incurred in locating his debtor ex-wife and children when his ex-wife fled the state with the children in violation of court orders relating to custody and visitation rights. The bankruptcy court held that the $14,000 awarded the debtor in his final divorce decree was intended" . . . as a "sanction' for violation of the divorce court's orders and to reimburse the plaintiff for his costs and expenses in tracking down the debtor and her children. . . ." It then determined that the $14,000 award was not intended as maintenance or support within the meaning of section 523(a)(5). Id.
Applying this reasoning to the obligation for the Second Fee Payment, I easily conclude that it is sufficiently related to the Initial Fee Payment that I have found is a nondischargeable debt to be non-dischargeable itself. It was incurred to enforce that nondischargeable debt and as such it must be treated likewise.
II.
Having found the three debts to be nondischargeable, I turn now to Debtor's contention that the legal consequence of such finding is avoided because the exception to § 523(a)(5) for assigned debts is applicable to each component of the Claim. Debtor argues that the payee of the First Fee Payment and Interest Payment are not clear and the payee of the Second Fee payment is Simon. I find only the Second Fee Payment to raise the assignment issue since the 4/8/96 Order expressly states that the $1,500 Initial Fee Payment be made to Plaintiff. While the 12/7/00 Order is silent as to whom the Interest Payment would be made, it is linked to the Initial Fee Payment which had already been directed to Plaintiff. It logically follows that the interest on a debt would follow the debt to the same payee.
The 11/16/01 Order imposing the $1,700 Second Fee Payment does not state to whom it should be paid. Debtor assumes that because the 12/7/00 Order granted reasonable attorney's fees to Simon, that the $1,700 was implicitly ordered to him as well. As I have previously noted, the relationship between the 12/7/00 Order and the 11/16/01 Order regarding fees is anything but clear. Assuming arguendo that the Court's Orders read together allow the conclusion that the $1,700 was to be paid to Simon directly, I nonetheless conclude that there is no evidence of an assignment that would alter its otherwise nondischargeable character.
The numerous courts that have considered the applicability of the § 523(a)(5)(A) agree that direct payment to a third party, by itself, will not cause the debt to fall outside the § 523(a)(5) exception to discharge. Shearer v. St. Laurent (In re St. Laurent), 144 B.R. 932, 933 Bankr. S.D. Fla. 1992) (citing cases). See also MacDonald, 69 B.R. at 271-72 ("vast majority" of courts hold that there is no requirement that support be owed directly to the spouse, citing legislative history in support). Rather the party seeking to avail itself of the assignment exemption must prove that the non-debtor spouse no longer is entitled to receive direct payment of the award or no longer bears the obligation to repay the attorney. In re Horner, 125 B.R. 458, 465 (Bankr. W.D. Pa. 1991); Kloss 29 B.R. at 720. See also In re Spong, 661 F.2d 6, 11-12 (2d Cir. 1981) (undertaking to pay wife's legal fees viewed as "a paradigmatic third party contract, which is not, and should not be confused with, an assignment.")
The $1,700 Section Fee Payment was ordered for "prosecution of this case. The Plaintiff has established that she incurred total counsel fees of $53,787.50 from March 30, 1995 through December 24, 2000 in connection with the divorce action. Simon Affidavit ¶ 6. There is no evidence that absent payment by the Debtor, the Plaintiff would be relieved of $1,700 of those fees. More significantly, given the ambiguity in the Order as to payee, it is impossible to conclude that direct payment to Plaintiff would not satisfy the award. The assignment provision does not apply in this case.
The debtor relied on Monday v. Allen (In re Allen), 4 B.R. 617 (Bankr. E.D. Tenn. 1980), which found legislative intent to follow the result of a 1954 Utah case that held the obligation of the debtor to pay creditors holding claims against property now held by his ex-wife to be dischargeable. The Allen Court's conclusion has not been followed, one court stating that to the contrary, the apparent legislative intent of § 523(a)(5)(A) was only to make support-related liabilities owing to governmental entities dischargeable. Horner, 125 B.R. at 464. See also Romeo v. Romeo, 16 B.R. 531, 536 (Bankr. D. N.J. 1981) (discussing legislative history of § 523(a)(5) and concluding that debtor's position that direct payment to attorney renders debt dischargeable is without merit, apparently deriving from a misplaced reliance on the Senate Judiciary Committee report accompanying the Senate Bill.).
Plaintiff Bethann Millman's Motion for Summary Judgment is granted. An Order consistent with the foregoing Memorandum Opinion shall be entered.
ORDER AND NOW, this 3rd day of February 2003, upon consideration of the Motion for Summary Judgment ("Motion") filed by plaintiff Bethann Millman in connection with her Complaint seeking a determination that the Debtor's court-ordered obligation to pay $3,672.50 (the "Claim") arising from a divorce action between the parties be deemed nondischargeable pursuant to 11 U.S.C. § 523(a)(5) and (15), and after notice and hearing, and for the reasons stated in the accompanying Memorandum Opinion;
It is hereby ORDERED and DECREED that the Motion is GRANTED. The full amount of the Claim will be excepted from the Debtor's discharge.