Weisberg v. Abrams (In Re Weisberg)

218 B.R. 740, 1998 Bankr. LEXIS 267, 1998 WL 113056
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedMarch 12, 1998
Docket14-16189
StatusPublished
Cited by13 cases

This text of 218 B.R. 740 (Weisberg v. Abrams (In Re Weisberg)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Weisberg v. Abrams (In Re Weisberg), 218 B.R. 740, 1998 Bankr. LEXIS 267, 1998 WL 113056 (Pa. 1998).

Opinion

OPINION

DAVID A SCHOLL, Chief Judge.

A. INTRODUCTION (OR “LAWYERS NO LONGER IN LOVE”)

The instant two adversary proceedings and the motion for relief from the automatic stay in the Debtor’s main case (“the Motion”) provide us with an opportunity to bring to an end a grossly overblown domestic dispute between two lawyers, which has devolved into cross-litigation between the husband-lawyer, reduced to the status of a Chapter 7 debtor, and the wife-lawyer’s lawyers. We seize this opportunity by holding that whatever is due to the wife-lawyer’s lawyers under 11 U.S.C. § 523(a)(5) which remains non-dischargeable as to the husband-lawyer, may be set off against the 11 U.S.C. § 362(b) claims of the husband-lawyer and his lawyer against the wife-lawyer’s lawyers.

In this process, we principally are construing two statutes, 11 U.S.C. §§ 362(b)(2) and 523(a)(5). We hold that the exceptions to the automatic stay set forth in § 362(b)(2) are narrower than the scope of the obligations deemed nondischargeable by operation of § 523(a)(5). We therefore conclude that the Wife’s lawyers are clearly liable for damages and attorney’s fees for attempting to proceed with various state court actions aimed principally at collecting their fees from the Debtor. We also hold that the Wife’s particular circumstances, including the ultimate abandonment of her custody and support claims and her continuous substantial income and access to very substantial assets, diminish her counsel’s claim that a previous interim attorney’s fees award of $85,000 is nondischargeable as incurred in connection with support, to the extent that we find that it can and should be set off against the Debtor’s damages in his claims pursuant to 11 U.S.C. § 362(h). We also hold that no claims for further attorneys’ fees should be determined to be within the scope of § 523(a)(5) under these circumstances, although we reject the Debtor’s argument that such claims could not, under any circumstances, be ascertained and then declared nondischargeable by this court itself, *745 in the absence of a prior state court fee award. Since this disposition eliminates any reason to proceed further in state court on most of the issues raised in the Motion, and the remaining rather-minor issues appear better resolved through the claims process or elsewhere here, the Motion will be denied.

B. PROCEDURAL AND FACTUAL HISTORY

RICHARD C. WEISBERG (“the Debtor”) is a 45-year-old lawyer, the son of a “retired” Philadelphia lawyer, who filed the individual voluntary Chapter 7 bankruptcy case underlying the disputes before us on August 15, 1997. By the late 1980s the Debtor had become a partner in a New York City law firm, Simpson, Thatcher and Bartlett (“the Simpson Firm”). While approaching the height of his career, at which time his annual salary exceeded $1 million annually, he met and married, on March 14, 1990, MARIE-LAURE WEISBERG (“the Wife”), a French-born lawyer, the daughter of a French lawyer, who herself was earning and has continued to earn income in the $80,000 annual range as in-house counsel for the Chanel Company. The couple had two children, Maximilien, born shortly after the marriage on April 28, 1990, and Charlotte, bom October 20, 1991.

This marriage was short-lived. By August 11,1994, the Wife had filed for divorce in the Supreme Court of New York County in New York City, N.Y. (“the N.Y. Court”). In that action, the Wife sought a full panoply of relief, including custody of the children, equitable distribution of property, and child and spousal support.

As might be expected in a contest between second-generation lawyers with income sufficient to satisfy their inclination to hire more legal talent, the divorce proceeding was characterized by both parties’ unbridled zeal for litigation. The Wife hired the firm of FRANKLIN, WEINRIB, RUDELL & VAS-SALLO, P.C. (“FWRV”). The Debtor hired three different attorneys at various points and was also provided legal services by his father and himself. Each party appears to have opposed nearly every motion or application made by the other. Moreover, both party’s lawyers claim that the relationships between opposing counsel were the most rancorous in their memory. And, as noted infra, the lawyers billed accordingly.

The parties were residing together in a an expensive New York City apartment when the divorce began. Under pressure from the N.Y. Court, the Debtor eventually moved out of the marital residence, which at that time the Wife and the children continued to occupy. That action prompted the Wife to move for an order for pendente lite child and spousal support. Based on the parties’ lifestyle during the marriage, this request featured the Wife’s demands for the following monthly expenses: $800 for dining out, $1,400 for groceries, $4,000 for clothing, $433 for her therapy, $860 for a housekeeper, $500 for a weekend baby sitter, and $1,150 for the combination of yoga instruction, exercise classes, a health club membership, and a personal trainer.

Determining that the Wife possessed the ability to support herself, the N.Y. Court turned down her request of maintenance in the form of cash payments. The N.Y. Court did, however, award the Wife $20,000 interim attorneys’ fees out of a requested amount of $35,000 on October 13,1994. A year later, in an order dated October 25, 1995, the N.Y. Court granted to the Wife a substantial award of child support, requiring the Debtor to pay the apartment rent in the amount of $3,000 per month; all utility and insurance payments; $1,000 per week cash; maintain health insurance for the Wife and children; pay in full all of the Wife’s and the children’s unreimbursed health care costs; and pay the full cost for the children’s private schools. This order also awarded the Wife $25,000 out of a $50,000 request for additional interim attorneys’ fees. After the entry of the latter order, no apparent effort was made to modify its interim support terms, and it remained in place for the duration of the divorce action. The Debtor paid the $20,000 and $25,000 awards, plus a $2,000 award, in consideration of a request for $3,500, on March 28, 1996.

A significant aspect of the Debtor’s litigation strategy was to demonstrate that the Wife had access to substantial assets by inheritance from her family in France. The *746 purpose of this strategy was to support an argument that the Wife had the ability to make a substantial contribution to the children’s support and to show that the Wife had the ability to pay her own legal fees. To this end, the Debtor first sought and obtained letters rogatory requesting that the Wife’s father, Michael DuCamp, answer questions concerning the scope of the family’s wealth and the nature of the Wife’s interests therein. When the results of this inquiry proved inconclusive, the Debtor hired a French attorney, Kenneth M.

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Bluebook (online)
218 B.R. 740, 1998 Bankr. LEXIS 267, 1998 WL 113056, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weisberg-v-abrams-in-re-weisberg-paeb-1998.