Reichurdt v. Cerbello (In Re Reichurdt)

27 B.R. 751, 1983 Bankr. LEXIS 6807
CourtUnited States Bankruptcy Court, W.D. Washington
DecidedFebruary 15, 1983
Docket18-14604
StatusPublished
Cited by2 cases

This text of 27 B.R. 751 (Reichurdt v. Cerbello (In Re Reichurdt)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reichurdt v. Cerbello (In Re Reichurdt), 27 B.R. 751, 1983 Bankr. LEXIS 6807 (Wash. 1983).

Opinion

DECISION ON DISCHARGEABILITY OF SUPPORT OBLIGATION AND PERMANENT INJUNCTION

ROBERT W. SKIDMORE, Bankruptcy J udge.

This matter came on regularly on debt- or’s Motion for Order to Show Cause for issuance of a Preliminary Injunction to enjoin the defendants’ Writ of Garnishment. Richard Paroutaud appeared on behalf of plaintiff/debtor and Joseph R. Burns appeared on behalf of defendants.

The plaintiff seeks a Permanent Injunction enjoining the defendants Linda Cerbel- *752 lo and Seattle Bonded, Inc. from making efforts to collect on a judgment for back child support entered in King County Superior Court. The parties have submitted this matter on facts admitted in their Pretrial Order and Memoranda of Authorities.

Plaintiff Konrad Reichurdt and defendant Linda Cerbello were divorced by a decree entered on May 18,1967 in King County Superior Court Cause No. 666-512. The terms of the decree provided that plaintiff was required to pay the defendant child support for the parties’ two minor children in the amount of $75.00 per child per month.

On October 23, 1979, defendant Linda Cerbello executed a document entitled “Assignment of Back Child Support” in favor of Seattle Bonded, Inc. The assignment provided:

. . . Linda Gionetto Cerbello does hereby assign and transfer together with all her right, title and interest therein in Back Child Support Judgment case No. [666-512] in the amount of $22,200.00 plus interest to Seattle Bonded, Inc. hereafter known as assignee. Assignee hereby is granted full power to collect, compromise, sue for and discharge same. . . . Costs, court costs and interest shall be retained by Assignee. The standard fee shall be 50%. The fee applies whether judgment debtor pays Assignor or Assignee. Should Assignor wish to cancel this assignment anytime after work has been performed to initiate collection, Assignor does hereby agree to pay Assignee $11,-100.00 for said cancellation. That said cancellation must be with approval of Assignee in writing. .. .

On February 9,1981, an agreed judgment in the amount of $11,000.00 was entered against plaintiff in favor of “Linda Gianet-to now Linda Cerbello and Seattle Bonded, Inc., assignee of Linda Cerbello.”

The plaintiff herein filed a Petition for Relief under Chapter 7 of the Bankruptcy Code on December 7, 1981. In his petition the plaintiff listed Linda Cerbello and Seattle Bonded, Inc. as creditors, indicating the $11,000.00 judgment as a debt. On April 15, 1982, Konrad Reichurdt was granted a discharge.

Subsequently a document entitled “Assignment” was filed in King County Superi- or Court cause No. 666-512 on June 8, 1982 which provided that Seattle Bonded, Inc. “. .. do[es] hereby assign to Linda Cerbello all right, title and interest in [the] above captioned case that Seattle Bonded, Inc. may have.”

The issue presented is whether defendant Linda Cerbello’s child support obligation was “... assigned to another entity voluntarily, by operation of law or otherwise ...” pursuant to 11 U.S.C. § 523(a)(5).

The legislative history of the discharge-ability of child support indicates that three definite changes in the statute have occurred in the last six years. On January 4, 1975, 42 U.S.C. 656(b) was adopted which provided that child support assigned to the states pursuant to federal statute was non-dischargeable in the same manner as direct payment of child support. Later this provision was repealed by the Bankruptcy Reform Act of 1978 on November 6, 1978. As originally enacted, 11 U.S.C. § 523(a)(5)(A) stated that child support would be dischargeable to the extent that it was “. . . assigned to another entity, voluntarily, by operation of law, or otherwise.”

Most recently 42 U.S.C. § 656(b) was readopted by § 2334 of P.L. 97-35, effective August 13, 1981. The new statute reads:

A debt which is a child support obligation to a state under Section 402(a)(26) is not released by a discharge in bankruptcy under Title 11, United States' Code.

In conjunction with the readoption of 42 U.S.C. § 656(b), 11 U.S.C. § 523(a)(5)(A) was amended to state:

(a) A discharge under section 727, 1141, 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 property settlement agreement, but not to the extent that—
*753 (A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise (other than debts assigned pursuant to section 402(a)(26) of the Social Security Act).

The public policy in favor of the debtor’s former spouse and children is only afforded where said parties derive a direct benefit from alimony, child support or maintenance.

Paragraph (5) of 11 U.S.C. § 523(a) excepts from discharge debts to a spouse, a former spouse or child of the debtor for alimony to, maintenance for, or support of the spouse or child. This language in combination with the repeal of § 456(b) of the Social Security Act (42 U.S.C.S. § 656(b)) by § 328 of the Act of November 6, 1978, will apply to make nondis-chargeable only alimony, maintenance or support owed directly to a spouse or dependent. The purpose of this limitation is to prevent persons other than the debt- or’s and children from obtaining this privileged status. 3 Bkr.L.Ed.Code Commentary and Analysis, § 22.34, p. 53.

See also H.Rep. No. 95-595, p. 364, U.S. Code Cong. & Admin.News 1978, pp. 5787, 6320, Bkr.L.Ed. Legislative History § 82.17.

This court previously held that a child support debt which has been assigned to the state for collection purposes only is not in the nature of a true assignment but “. . . merely facilitates the custodial parent’s enforcement of child support rights without transferring their beneficial right to receive child support. Matter of Beggin, 19 B.R. 759, 761 (Bkrtcy.1982).” Similarly, other courts have found payments directed through the Clerk of the Court, In Re Sturgell, 7 B.R. 59, CCH Bankruptcy Reporter ¶ 67,701 (Bkrtcy.1980), In Re Gilbert, 10 B.R. 462 (Bkrtcy.1981), and assignment of child support rights to a law firm for collection purposes, In Re Deblock, 11 B.R. 51 (Bkrtcy.1981) not to be in the nature of true assignment.

The prevailing definition of a true assignment is as follows:

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Bluebook (online)
27 B.R. 751, 1983 Bankr. LEXIS 6807, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reichurdt-v-cerbello-in-re-reichurdt-wawb-1983.