Chamberlain v. Chamberlain

• Court: Court of Appeals for the Tenth Circuit
• Decided: February 20, 2018
• Docket: 17-1121
• Status: Unpublished

Opinion

FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit

FOR THE TENTH CIRCUIT February 20, 2018 _________________________________ Elisabeth A. Shumaker Clerk of Court In re: STEPHEN D. CHAMBERLAIN,

Debtor.

------------------------------ No. 17-1121 STEPHEN D. CHAMBERLAIN, (D.C. No. 1:16-CV-01123-PAB) (D. Colo.) Appellant,

v.

JUDITH C. CHAMBERLAIN; DOUGLAS B. KIEL, as Chapter 13 Trustee,

Appellees. _________________________________

ORDER AND JUDGMENT * _________________________________

Before LUCERO, BACHARACH, and MORITZ, Circuit Judges. _________________________________

* The parties do not request oral argument, and it would not materially help us to decide this appeal. As a result, we decide the appeal based on the briefs. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).

This order and judgment does not constitute binding precedent except under the doctrines of law of the case, res judicata, and collateral estoppel. But the order and judgment may be cited for its persuasive value under Fed. R. App. P. 32.1(a) and 10th Cir. R. 32.1(A). Mr. Stephen Chamberlain agreed to pay his children’s college

expenses as part of a divorce proceeding. When he failed to comply with

this obligation, the bankruptcy court allowed a priority claim by his

ex-wife, Ms. Judith Chamberlain, to enforce this obligation on behalf of

their children. Stephen 1 challenges this order, and we affirm.

I. Background

Stephen and Judith Chamberlain were divorced in 2009 after a

21-year marriage. During their marriage, Stephen worked for Southwest

Airlines and his wife stayed home to care for their three children, Sarah,

Kate, and John.

The divorce decree incorporated a marital settlement agreement

signed by Stephen and Judith. This agreement included a “College

Education” provision, which stated that following exhaustion of their

college savings accounts, “Husband shall pay the costs of tuition, room and

board, books, registration fees, and reasonable application fees incident to

providing each Child with an undergraduate college education for four

consecutive years of college.” R. Vol. II, at 70.

Stephen did not meet his obligations under the college education

provision, which led Judith to file a motion in Maryland state court to

enforce the marital settlement agreement. This motion was resolved in

1 Because the parties have the same last name, we will refer to them as Stephen and Judith. 2 2011 through a consent order. In the order, Stephen reaffirmed his

obligation to pay his children’s college expenses under the marital

settlement agreement, including repayment of student loans to the two

oldest children.

Stephen later failed to pay John’s college expenses, and Judith filed

another action in state court to enforce the marital settlement agreement

and the 2011 consent order. This action was resolved by a second consent

order. There Stephen agreed to contribute up to $14,000 per academic year

toward John’s college expenses. After Stephen again failed to comply, the

state court found him in contempt and awarded judgment to Judith for

$14,000 (Stephen’s share of the first year of John’s college tuition) and the

attorney fees incurred by Judith to enforce the marital settlement

agreement. When Judith initiated collection efforts, Stephen filed

bankruptcy.

Judith filed a proof of claim, which included

 the amounts still owed on Sarah and Kate’s undergraduate student loans and

 the amount that Stephen had agreed to pay toward John’s college expenses.

According to Judith, these amounts constituted “domestic support

obligations” under 11 U.S.C. § 101(14A), creating priority claims that

must be fully repaid. See 11 U.S.C. § 1322(a) (requiring full payment of

priority claims). Stephen objected, arguing that 3  his obligation to pay the children’s college expenses did not constitute a domestic support obligation and

 Judith’s claim was invalid because she was not a proper party and had not proven the amounts claimed.

After an evidentiary hearing, the bankruptcy court

 sustained Stephen’s objection to $8,632.85 of the amount claimed by Judith and

 found that $108,085.08 of the debt constituted a domestic support obligation and created a priority claim.

Stephen appealed in district court, which affirmed. He now appeals to our

court. 2

II. Standard of Review

In an appeal from a final decision of a bankruptcy court, “we

independently review the bankruptcy court’s decision, applying the same

standard as the . . . district court.” Aviva Life & Annuity Co. v. White (In re

Millennium Multiple Emp’r Welfare Benefit Plan), 772 F.3d 634, 638

(10th Cir. 2014) (internal quotation marks and brackets omitted). In

applying this standard, we conduct de novo review of the bankruptcy

court’s legal conclusions and clear-error review of the court’s factual

findings. Id. at 639. In conducting this review, we do not defer to the

district court’s analysis, though it informs our review. Paul v. Iglehart (In

re Paul), 534 F.3d 1303, 1310 (10th Cir. 2008). 2 Because Stephen is appearing pro se, we construe his filings liberally but do not act as his advocate. See Yang v. Archuleta, 525 F.3d 925, 927 n.1 (10th Cir. 2008). 4 III. Domestic Support Obligation

The primary question is whether Stephen’s obligation to pay his

children’s college expenses qualifies as a “domestic support obligation.”

The bankruptcy court answered “yes,” and we uphold this determination.

The requirements of a domestic support obligation. A debt

constitutes a “domestic support obligation” if it meets four requirements:

1. It is “owed to or recoverable by . . . a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative” or a governmental unit.

2. It is “in the nature of alimony, maintenance, or support . . . 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.”

3. It arises from “a separation agreement, divorce decree, or property settlement agreement,” “an order of a court of record,” or a lawful determination by a governmental unit.

4. It has not been assigned to a nongovernmental entity unless for collection purposes.

11 U.S.C. § 101(14A); see Taylor v. Taylor (In re Taylor), 737 F.3d 670,

678 (10th Cir. 2013). As the party challenging discharge, Judith bore the

burden of proving that the debt entailed a domestic support obligation. See

Taylor, 737 F.3d at 677.

The arguments in bankruptcy court and the court’s finding. In

bankruptcy court, Stephen argued that his obligation to pay his children’s

college expenses did not constitute a domestic support obligation because

it was not “in the nature of alimony, maintenance, or support” (the second

5 requirement). 11 U.S.C. § 101(14A)(B). This argument involves a factual

question subject to the clear-error standard of review. Taylor, 737 F.3d

at 674. Under this standard, we must affirm the bankruptcy court’s factual

finding unless it lacks “factual support in the record or if, after reviewing

all of the evidence, we are left with the definite and firm conviction that a

mistake has been made.” 3 Gillman v. Ford (In re Ford), 492 F.3d 1148,

1153 (10th Cir. 2007) (internal quotation marks omitted).

The bankruptcy court disagreed with Stephen, finding that his

obligation comprised domestic support. We conclude that the bankruptcy

court did not commit clear error. The court properly conducted a dual

inquiry to determine whether these obligations involved support, “looking

first to the intent of the parties at the time they entered into their

agreement, and then to the substance of the obligation.” Taylor, 737 F.3d

at 676.

Intent of the parties when entering into the agreement. With respect

to the initial issue of intent, the court appropriately considered

 the language and structure of the college expense obligation in the marital settlement agreement and

3 In bankruptcy court, Stephen also argued that Congress had intended the term “support” to cover only what was necessary to provide for the family’s daily living expenses. The bankruptcy court rejected this argument, and Stephen has not challenged this aspect of the court’s ruling.

6  the parties’ testimony regarding surrounding circumstances, including the disparity in Stephen and Judith’s financial circumstances at the time of the divorce.

See Sampson v. Sampson (In re Sampson), 997 F.2d 717, 723, 725

(10th Cir. 1993). 4

The bankruptcy court found that the parties had intended Stephen’s

college expense obligation to constitute support because

 this obligation was located in the part of the marital settlement agreement that addressed child support, alimony, and related matters,

 the evidence established that Stephen and Judith had viewed a college education as an important part of their children’s upbringing,

 the couple had long intended to provide for the children’s education, and

 this intent could not be carried out at the time of the divorce, given the couple’s relative financial capabilities, without Stephen assuming this obligation.

These considerations support the bankruptcy court’s finding that the

parties had intended Stephen’s college expense obligation to constitute

support. See, e.g., Boyle v. Donovan, 724 F.2d 681, 683 (8th Cir. 1984)

(affirming the bankruptcy court finding that the debtor’s obligation to fund

4 Congress amended the definition of “domestic support obligation” in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23. But both before and after this amendment, the definitions of “domestic support obligations” required that the debt be “in the nature of support.” As a result, we consider case law preceding the amendment when determining whether an obligation involves support. See Taylor, 737 F.3d at 676 n.4. 7 college and post-graduate education involved support based on the parties’

relative financial capabilities, the parties’ view that “[c]ollege and post

graduate education were part of the family pattern of life,” and the debtor’s

initiative to assume this obligation); Gianakas v. Gianakas (In re

Gianakas), 917 F.2d 759, 763-64 (3d Cir. 1990) (concluding that the

bankruptcy court had reasonably found an intent for the ex-husband’s

mortgage debt to constitute support based on evidence that the couple had

wanted to maintain the marital home for the former wife and children and

only the ex-husband had the financial ability to do so).

Stephen disputes the bankruptcy court’s conclusions, relying on his

testimony and consent to a modification of the marital settlement

agreement. This reliance is misguided. 5

The bankruptcy court considered Stephen’s testimony but “[did not]

give [it] much credence” in light of the other evidence of the parties’

intent at the time of the divorce. R. Vol. II, at 269. This assessment of

credibility fell within the bankruptcy court’s purview because the intent

determination “does not turn on one party’s post hoc explanation as to his

5 Stephen is also mistaken in claiming that few courts have previously found college expense obligations to be in the nature of support. See, e.g., Boyle, 724 F.2d at 683 (affirming the bankruptcy court’s finding that the debtor’s obligation to fund children’s college and post-graduate education was in the nature of support); Harrell v. Sharp (In re Harrell), 754 F.2d 902, 904-05 (11th Cir. 1985) (concluding that the debtor’s obligation to pay his son’s post-majority educational expenses was in the nature of support); In re Crosby, 229 B.R. 679, 681-82 (Bankr. E.D. Va. 1998) (same). 8 or her state of mind at the time of the agreement, even if uncontradicted.”

Sampson, 997 F.2d at 723.

Stephen also argues that his obligation originated in the 2011 and

2014 consent orders rather than the marital settlement agreement. For this

argument, Stephen points out that he consented to a modification of terms

between entry into the marital settlement agreement and the consent

orders. For example, in the consent orders, he agreed to pay Sarah and

Kate’s college loans and then cap his obligation to pay John’s college

expenses at $14,000 per year. As a result, Stephen argues, the bankruptcy

court should have assessed his intent at the time of the consent orders

rather than at the time of divorce.

We are not persuaded. Stephen’s obligation had already been

established by the college expense provision in the marital settlement

agreement, which was then included in the two consent orders. The

bankruptcy court therefore properly considered the parties’ intent as of

their entry into the marital settlement agreement.

The substance of the obligation. In determining whether Stephen’s

obligation involved support, the bankruptcy court also considered the

substance of Stephen’s obligation. “The critical question in determining

whether the obligation is, in substance, support is the function served by

the obligation at the time of the divorce.” Sampson, 997 F.2d at 725

(internal quotation marks omitted). In turn, the function of the obligation

9 is affected by the parties’ relative financial circumstances at the time of

the divorce. See id. at 726 & n.7.

Here, the bankruptcy court reasonably determined that Stephen was

the only parent financially able to pay for the children’s college education.

Thus, the court was justified in regarding Stephen’s obligation, in

substance, as support. 6

* * *

For the foregoing reasons, we affirm the bankruptcy court’s

conclusion that Stephen’s college expense obligation was “in the nature of

support” as required for a domestic support obligation under the

Bankruptcy Code.

IV. New Arguments on Appeal

In bankruptcy court, Stephen did not dispute satisfaction of the three

other statutory requirements for a domestic support obligation. R. Vol. II,

at 286 (bankruptcy court notes the lack of a dispute regarding three of the

four requirements); see Taylor, 737 F.3d at 678 (summarizing the four

statutory requirements). In district court and our court, however, Stephen

6 Stephen disputes this conclusion, arguing that Maryland law does not include post-secondary educational expenses in the definition of “child support.” This argument is immaterial because characterization of a debt as a domestic support obligation involves a matter of federal law. See Sampson, 997 F.2d at 721, 722; Gianakas, 917 F.2d at 762. As a result, a debt may be “in the nature of support . . . even though it would not legally qualify as alimony or support under state law.” Yeates v. Yeates (In re Yeates), 807 F.2d 874, 878 (10th Cir. 1986); accord Sampson, 997 F.2d at 722; Richardson v. Edwards, 127 F.3d 97, 100-01 (D.C. Cir. 1997). 10 challenges two of the other requirements, arguing that (1) Congress

intended the term “child” as used in 11 U.S.C. § 101(14A)(A) to refer only

to minor children, not children older than 18 (like his children during their

college years) and (2) this obligation was established by the consent orders

rather than “a separation agreement, divorce decree, or property settlement

agreement.” 11 U.S.C. § 101(14A)(C).

Because Stephen did not raise these arguments in bankruptcy court,

they are forfeited. Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1128

(10th Cir. 2011). For arguments that are forfeited, we ordinarily consider

reversal only upon a showing of plain error. 7 See id.; Fed. Deposit Ins.

Corp. v. Kan. Bankers Sur. Co., 840 F.3d 1167, 1171-72 (10th Cir. 2016).

But Stephen has not argued plain error. As a result, we decline to consider

the possibility of plain error on Stephen’s two new arguments. Richison,

634 F.3d at 1131.

V. Judith’s Right to Assert a Claim

Stephen concedes that Judith can enforce his college expense

obligations on behalf of their children. 8 See Kirby v. Kirby, 741 A.2d 528,

7 “To show plain error, a party must establish the presence of (1) error, (2) that is plain, which (3) affects substantial rights, and which (4) seriously affects the fairness, integrity or public reputation of judicial proceedings.” Fed. Deposit Ins. Corp., 840 F.3d at 1172. 8 Stephen and Judith are the only parties to the marital settlement agreement and the 2011 and 2014 consent orders. The judgment based on 11 529, 533 (Md. App. 1999) (allowing the mother to enforce a consent decree

that had required the father to pay the college expenses for the adult

children). Courts have uniformly held that the party with the right to

enforce a note or other agreement has standing to assert the related

bankruptcy claim. See, e.g., Allen v. US Bank, NA (In re Allen),

472 B.R. 559, 565 (B.A.P. 9th Cir. 2012); In re Walker, 466 B.R. 271, 281

(Bankr. E.D. Pa. 2012).

Stephen nonetheless argues that Judith cannot assert this claim

because the bankruptcy court’s order would allow her to receive the

payments without a corresponding obligation to apply these payments to

the children’s college loans or college expenses. We reject this argument

for two reasons.

First, Stephen has not presented any evidence suggesting that Judith

would fail to apply these funds to her children’s college loans and

expenses. In fact, Judith has already incurred repayment obligations to

finance John’s college expenses after Stephen had failed to pay them.

Second, the bankruptcy court awarded the educational expenses to

Judith “for the benefit of her children,” adding that “any recovery for such

amounts ultimately must be used only for the claimed educational

the 2014 consent order also lists Judith as the party entitled to collect the $14,000 that Stephen then owed for John’s college expenses. 12 expenses.” R. Vol. II, at 302. As a result, Stephen lacks any basis to fear

that Judith would improperly profit from the required payments.

For both reasons, we reject Stephen’s challenge to Judith’s right to

assert a claim.

VI. Kate’s Loan Amount

Stephen also argues that the bankruptcy court erred in finding that he

had owed $24,093.73 on Kate’s undergraduate loans. Judith presented loan

summaries obtained from the loan servicers in support of this amount, and

Stephen relied on his own testimony about his payments. The bankruptcy

court carefully examined this evidence and found the amount due on Kate’s

loans. This finding was not clearly erroneous.

Affirmed.

Entered for the Court

Robert E. Bacharach Circuit Judge