Cummings v. Cummings

260 F.3d 1263
CourtCourt of Appeals for the Eleventh Circuit
DecidedMarch 20, 2001
DocketNo. 99-14609
StatusPublished

This text of 260 F.3d 1263 (Cummings v. Cummings) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cummings v. Cummings, 260 F.3d 1263 (11th Cir. 2001).

Opinion

KRAVITCH, Circuit Judge:

The appeal of this bankruptcy case requires us to decide whether the debt owed to Plaintiff-Appellee Susan Cummings by her ex-husband Defendant-Appellant Lawrence Cummings is “in the nature of support” and therefore nondischargeable under 11 U.S.C. § 523(a)(5). For the reasons stated below, we remand the case for a determination regarding which portion-if any-of the equitable distribution at issue was intended as support.

I. Background and Procedural History

The parties divorced in 1996. As part of its Final Judgment of Dissolution of Marriage (“the Divorce Judgment”), the divorce court ordered Lawrence Cummings to pay $5,150.00 per month in child support and fifteen months of rehabilitative alimony to Susan Cummings. The divorce court denied Susan Cummings’s request for permanent alimony. The court instead ordered Lawrence Cummings to pay her $6.3 million as an equitable distribution in the form of three lump sum payments of $2.1 million.

Shortly before the first payment came due, Lawrence Cummings filed for bankruptcy and sought discharge of the debt. Susan Cummings began an adversary proceeding, asking the bankruptcy court to [1265]*1265declare the obligation nondischargeable under 11 U.S.C. § 523(a)(5) because the obligation is in “the nature of support.” The bankruptcy court concluded that the debt was a property settlement, and therefore was not in the nature of support. The court went on to find the obligation dis-chargeable under 11 U.S.C. § 523(a)(15) because Lawrence Cummings was unable to pay the debt, and the benefit to him of discharging it outweighed the corresponding burden to Susan Cummings. The district court affirmed.

II. Discussion

We review the bankruptcy court’s factual findings for clear error and its legal conclusions de novo. In re St. Laurent, 991 F.2d 672, 675 (11th Cir.1993).

A debtor may obtain a general discharge under Chapter 7 of the Bankruptcy Code from “all debts that arose before the date of the order for relief.” 11 U.S.C. § 727(b). The Code, however, does not allow discharge of any 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, ... but not to the extent that—
....
(B) such a 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).

Pursuant to § 523(a)(5), “a given domestic obligation is not dischargeable if it is ‘actually in the nature of alimony, maintenance, or support.” In re Harrell, 754 F.2d 902, 904 (11th Cir.1985). Whether a given debt is in the nature of support is an issue of federal law. In re Strickland, 90 F.3d 444, 446 (11th Cir.1996). Although federal law controls, state law does “provide guidance in determining whether the obligation should be considered ‘support’ under § 523(a)(5).” Id. To make this determination a bankruptcy court should undertake “a simple inquiry as to whether the obligation can legitimately be characterized as support, that is, whether it is in the nature of support.” In re Harrell, 754 F.2d at 906.

In conducting this inquiry, a court cannot rely solely on the label used by the parties. As other courts have recognized, “ ‘it is likely that neither the parties nor the divorce court contemplated the effect of a subsequent bankruptcy when the obligation arose.’ ” In re Gianakas, 917 F.2d 759, 762 (3d Cir.1990) (citation omitted). The court must therefore look beyond the label to examine whether the debt actually is in the nature of support or alimony. Id. A debt is in the nature of support or alimony if at the time of its creation the parties intended the obligation to function as support or alimony. See In re Brody, 3 F.3d 35, 38 (2d Cir.1993); In re Sampson, 997 F.2d 717, 723-24 (10th Cir.1993); In re Davidson, 947 F.2d 1294, 1296-97 (5th Cir.1991); In re Gianakas, 917 F.2d at 762; Tilley v. lessee, 789 F.2d 1074, 1077 (4th Cir.1986); Shaver v. Shaver, 736 F.2d 1314, 1316 (9th Cir.1984); Williams v. Williams, 703 F.2d 1055, 1057-58 (8th Cir.1983). Thus, “the party seeking to hold the debt nondischargeable has the burden of proving by a preponderance of the evidence that the parties intended the obligation as support....” In re Sampson, 997 F.2d at 723.

The bankruptcy court concluded that the equitable distribution was not in the nature of support under § 523(a). The court listed several characteristics that the equitable distribution shared with a property settlement and which distinguished it from a support obligation: (1) the obligation is not subject to death or remarriage; (2) it is payable in three lump sums rather than installments; (3) it is non-modifiable; (4) it is not enforceable through contempt proceedings;1 (5) the divorce court derived it [1266]*1266by equally dividing the assets and liabilities of the couple; (6) the minor children were separately awarded support of $5,150 a month; and (7) the divorce court separately awarded rehabilitative alimony.

Although the factors considered by the bankruptcy court are relevant to our inquiry, the touchstone for discharge-ability under § 523(a)(5) is the intent of the parties. See In re Sampson, 997 F.2d at 723. In determining whether a particular obligation is in the nature of support, “[a]ll evidence, direct or circumstantial, which tends to illuminate the parties subjective intent is relevant.” In re Brody, 3 F.3d at 38. When the bankruptcy court determined that the equitable distribution was not in the nature of support, it failed to take into account the intent of the divorce court as reflected in the Divorce Judgment.

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260 F.3d 1263, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cummings-v-cummings-ca11-2001.