Opinion
CASE NO. 01-11 293-AJM-7, ADVERSARY PROCEEDING NO. 01-473
February 13, 2002
Joseph Hammes, for Plaintiff
Dan Clayton, for Debtor
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter came to be heard upon the Complaint to Determine the Dischargeability of Debt pursuant to 11 U.S.C. § 523(a)(5) or, in the alternative 11 U.S.C. § 523(a)(15) which was filed by Judith Tyrrell and the law firm of Tabbert Hahn Earnest Weddle, LLP., against Stephen A. Shanklin, (the "Debtor") the Defendant. Plaintiffs seek to have the court determine that an order pursuant to a divorce decree that the Debtor/Husband pay $8000.00 to the Plaintiffs for his former Wife's attorney's fees is nondischargeable in this bankruptcy action. A trial was held on January 31, 2002. Plaintiffs appeared pro se and by counsel, Joseph Hammes. Defendant appeared in person and by counsel, Dan Clayton. The Court now makes the following Findings of Fact and Conclusions of Law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure:
FINDINGS OF FACT
1. The Debtor and his former wife, Shannon Wildenradt (formerly Shanklin), were married on August 26, 1996.
2. They were divorced on May 19, 2000, at which time the Marion County Superior Court entered a Summary Decree of Dissolution, approving, entering, and incorporating their Marital Settlement Agreement.
3. At the time of the dissolution, Shannon Wildenradt was represented by Plaintiffs.
4. Pursuant to the Marital Settlement Agreement on page 6 at paragraph 10, the parties agreed that the Debtor/husband would pay to Plaintiffs "the sum of Eight Thousand Dollars ($8000.00) for the Wife's attorney's fees" within thirty (30) days after the entry of a final decree of dissolution. That paragraph further provides that "The Husband acknowledges that this obligation is in the nature of support and maintenance to the Wife, and that it shall not be dischargeable in bankruptcy."
5. There were two children of the Shanklin marriage, Chelsey, born October 1, 1990, and Jackson, born July 19, 1996, both of whom have been in the custody of their mother since the parties separated.
6. The dissolution involved the support of the minor children.
7. There was very little property of the marriage, and most of the time spent on the dissolution involved the negotiation, settlement, and hearings on the issues of child support, custody, and visitation.
8. The parties filed their verified Child Support Obligation with the Court on April 24, 2000, approximately one week before they entered into their Marital Settlement Agreement. Pursuant to the Child Support Obligation Worksheet, the Debtor had a weekly income of $1000.00, and the Wife had a weekly income of $588.00 per week.
CONCLUSIONS OF LAW
1. Plaintiffs allege first that the order to pay the attorney's fees is nondischargeable under 11 U.S.C. § 523(a)(5). Whether this debt is dischargeable depends primarily upon the intent of the award or agreement in light of the circumstances at the time it occurred. The Plaintiffs have the burden to prove by a preponderance of the evidence that the debt is a "debt 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." So long as such an award has not been assigned to any governmental entity, and provided that the order is "actually in the nature of alimony, maintenance, or support," it is nondischargeable, and the court need not consider evidence under 11 U.S.C. § 523(a)(15), which allows for the dischargeability of certain debts arising out of a divorce decree or marital settlement agreement which are not in the nature of alimony, maintenance, or support.
Grogan v. Garner, 498 U.S. 279 (1991).
2. An order to pay a spouse's attorney's fees is in the nature of support if it addresses a financial necessity of the nondebtor spouse to enable her to sue or defend the dissolution action. In re Hart. 130 B.R. 817, 829-30 (Bankr. N.D. Ind. 1991).
3. The label placed upon the debt in the Marital Settlement Agreement, while not determinative, is indicative that the parties intended and desired to treat this obligation as support. The court may examine the language of the parties in a written agreement, and it is not precluded from considering it as persuasive evidence of intent. Hart. 130 B.R. at 834.
4. In the context of a voluntarily executed marital agreement, the proper test lies in whether the parties intended that the payment be for support rather than a property settlement. Hart.
5. The court must also look at the parties' relative financial conditions at the time of the dissolution, and not the "present needs" of the Plaintiff or financial wherewithal of the Defendant at the time of the trial of this Adversary Proceeding. The court has no authority to consideralleged changed circumstances in determining dischargeability under 11 U.S.C. § 523(a)(5). Hart. 130 B.R. at 837-38.
6. The court finds that the language of the agreement unambiguously demonstrates that the parties intended the award of attorney's fees to be "in the nature of support and maintenance." Where the language of the agreement is unambiguous as to the intent of the parties, parol evidence is not admissible to expand, vary, or explain that intent. Hart. 130 B.R. at 848-49.
7. The court finds further that Wife's attorney's fees were inextricably intertwined with proceedings affecting the welfare of the children, including custody, visitation, and child support. Since the underlying character of the litigation involved the welfare of the children, the Wife's attorney's fees are actually in the nature of support. In re Ray. 143 B.R. 937 (D. Colo. 1992) (followed in Burrell v. Lewis. 743 N.E.2d 1207 (Ind.Ct.App. 2001).
8. The court concludes that the Plaintiffs have met their burden in proving by a preponderance of the evidence that the debtor's agreement to pay his wife's attorney's fees is actually in the nature of support, and is nondischargeable pursuant to 11 U.S.C. § 523(a)(5). In re Rav. 143 B.R. 937 (D.Colo. 1992; In re Hart. 130 B.R. 817, 825 (Bankr. N.D.Ind. 1991.)
9. The court further concludes that based upon this ruling, it need not consider evidence related to 11 U.S.C. § 523(a)(15), which applies only to property-related debts incurred pursuant to a dissolution decree or marital settlement agreement.
10. However, even under 11 U.S.C. § 523(a)(15), the debtor failed to meet his burden of proof. The court finds that the debtor has the ability to pay the debt, and that a the benefit of a discharge to him would not outweigh the detriment to the wife.
11. For all the above reasons, the court finds that the $8000.00 debt to Judy Tyrrell and the law firm of Tabbert Hahn Earnest Weddle is nondischargeable. The appropriate judgment entry follows.