Matter of Olson

200 B.R. 40, 1996 Bankr. LEXIS 1104, 1996 WL 508815
CourtUnited States Bankruptcy Court, D. Nebraska
DecidedAugust 22, 1996
Docket19-80160
StatusPublished
Cited by5 cases

This text of 200 B.R. 40 (Matter of Olson) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Nebraska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Matter of Olson, 200 B.R. 40, 1996 Bankr. LEXIS 1104, 1996 WL 508815 (Neb. 1996).

Opinion

MEMORANDUM

TIMOTHY J. MAHONEY, Chief Judge.

Hearing was held on April 22, 1996, on the Second Amended Plan by debtor. This memorandum contains findings of fact and conclusions of law required by Fed.Bankr.R. 7052 and Fed.R.Civ.P. 52. This is a core proceeding as defined by 28 U.S.C. § 157(b)(2)(L).

Background

Daniel Olson, the debtor, and his ex-wife, Barbara Olson, were married on May 22, 1982. During the course of their marriage, Barbara Olson alleges that the debtor physically assaulted her on numerous occasions, and that she suffered physical injuries as a result. The Douglas County District Court entered a decree of dissolution of the marriage on September 28, 1990. In the decree, the court found that Barbara Olson had

sustained injuries during a physical altercation between the parties and while the parties were living together and [Barbara Olson] has incurred medical and related expenses as a result thereof and [Barbara Olson] will incur additional medical and related expenses as a result thereof; that [Daniel Olson] shall reimburse [Barbara Olson] for certain of said costs she has incurred already and also for certain of said costs that [Barbara Olson] shall incur in the future ...

(Ex. 2 p. 2). The court ordered the debtor to reimburse Barbara Olson for her past medical and related expenses and to pay one half of her future medical and related expenses as follows:

[Daniel Olson] shall pay to [Barbara Olson] through the Clerk of the Court the sum of $3,568.05 for medical and travel expenses incurred by [Barbara Olson] as a result of [her] injuries sustained as previously described herein and not otherwise covered by health insurance and, accordingly, judgment is entered against [Daniel Olson] and in favor of [Barbara Olson] for said amount
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... [Daniel Olson] shall pay one half of all medical and travel expenses to be incurred by [Barbara Olson] for her upcoming surgery in the State of Texas and not covered by insurance. This surgery is related to [Barbara Olson’s] medical condition resulting from injuries sustained as described previously herein ...

(Ex. 2 p. 4).

Barbara Olson maintains that the debtor has failed to pay any part of this judgment, and initiated collection efforts on July 28, 1995. However, the debtor had previously filed a petition in Chapter 7 on February 2, 1994, and obtained a discharge on October 6, 1995. The debtor did not list Barbara Olson’s debt on his schedules, and Barbara Olson claims that she did not have other notice of the debtor’s Chapter 7 petition. (Affidavit of Barbara Olson at ¶ 12).

On October 26, 1995, less than three weeks after receiving his discharge, the debtor filed a voluntary petition for Chapter 13. The following day, the debtor filed a Suggestion in Bankruptcy in the Douglas County District Court that referenced his Chapter 13 petition, and Barbara Olson ceased her collection efforts.

The debtor has listed Barbara Olson’s debt as an unsecured nonpriority claim in his Chapter 13 petition in the total amount of $9,500. The debtor lists a total amount of $21,150.00 as unsecured nonpriority claims, and Barbara Olson’s claim represents approximately 45% of that amount.

Decision

Barbara Olson’s claim is in the nature of alimony, maintenance, or support of a former spouse pursuant to 11 U.S.C. § 523(a)(5). Therefore, it was not discharged in the debt- or’s Chapter 7 case pursuant to that section of the Bankruptcy Code, and furthermore is entitled to priority status pursuant to 11 U.S.C. § 507(a)(7). Accordingly, Barbara Olson’s objection to Confirmation of the debt- or’s Chapter 13 Plan is sustained. The debt- or is granted 20 days in which to file an amended plan.

*42 Discussion

Section 523(a)(5) of the Bankruptcy Code provides in part:

(a) A discharge under section 727, 1141, 1228(b), or 1328(b) of this titled does not discharge an individual debtor from any debt—
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(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 ...

11 U.S.C. § 523(a)(5). Such a claim is entitled to priority pursuant to 11 U.S.C. § 507(a)(7). The debtor maintains that the debt to Barbara Olson is a property settlement and not alimony. In support, he cites to the divorce decree which provides that “neither party shall pay alimony to the other party.” (Ex. 2 p. 3). However, whether a particular debt is a support obligation or part of a property settlement is a question of federal bankruptcy law, not state law, and a bankruptcy court must make a determination independent of the label given the award by a state or in the decree. Williams v. Williams (In re Williams), 703 F.2d 1055 (8th Cir.1983); Telgmann v. Maune (In re Maune), 133 B.R. 1010 (E.D.Mo.1991). The crucial issue is the function the award was intended to serve, and the ultimate determination for the court is a factual one, to be decided in light of all the facts and circumstances relevant to the intention of the parties .. Williams, 703 F.2d at 1057-58.

In Draper v. Draper, 790 F.2d 52 (8th Cir.1986), the debtor had previously agreed to pay one-half of his children’s medical expenses not covered by insurance as part of a settlement agreement in a divorce decree. Approximately two years after the debtor was divorced, he filed a voluntary petition in bankruptcy under chapter 11, and filed a motion to reject the settlement agreement as an executory contract. The bankruptcy court denied the motion, finding that the medical expenses provision was in the nature of support, and thus nondischargeable. On appeal, the district court affirmed. The Eighth Circuit held the even if the settlement agreement was an executory contract, the obligation to pay one-half of his children’s medical expenses not covered by insurance was not dischargeable because it was a support obligation, and that the bankruptcy court’s finding that the obligation was in the nature of support was not clearly erroneous. Id. at 54.

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Cite This Page — Counsel Stack

Bluebook (online)
200 B.R. 40, 1996 Bankr. LEXIS 1104, 1996 WL 508815, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-olson-nebraskab-1996.