Will v. Miller & Saxton, P.C. (In Re Will)

116 B.R. 254, 1990 U.S. Dist. LEXIS 8592, 1990 WL 98728
CourtDistrict Court, D. Colorado
DecidedJuly 12, 1990
DocketBankruptcy Nos. 89-K-1875, 89 B 3208, Adv. No. 89 E 0693
StatusPublished
Cited by7 cases

This text of 116 B.R. 254 (Will v. Miller & Saxton, P.C. (In Re Will)) is published on Counsel Stack Legal Research, covering District Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Will v. Miller & Saxton, P.C. (In Re Will), 116 B.R. 254, 1990 U.S. Dist. LEXIS 8592, 1990 WL 98728 (D. Colo. 1990).

Opinion

MEMORANDUM OPINION AND ORDER

KANE, Senior District Judge.

Richard Albert Will appeals a bankruptcy court ruling which held nondischargeable his debt to his former wife for the attorney fees she incurred during their marriage dissolution proceedings. Will raises three issues in this appeal: (1) whether his wife’s attorneys, Miller & Sax-ton, P.C., had standing to challenge the dischargeability of Will’s debt to his former wife, (2) whether the debt was in the nature of alimony, maintenance or support so as to be nondischargeable, and (3) whether the nondischargeability of this debt constitutes a modification of the support award mandating arbitration under the parties’ settlement agreement. I affirm.

I. Facts.

The facts are undisputed. Richard and Martha Will were divorced on September 28, 1988. A separation agreement was incorporated into their divorce decree. Section VI of the agreement provided in relevant part that Will was to “pay directly to Wife’s attorney the full amount of her attorney’s (sic) fees incurred herein to date in the amount of $4,080.10, payable at the rate of $200.00 per month_”

On March 14, 1989, Will filed for bankruptcy under Chapter 7 of the Code, seeking to discharge this debt. On June 22, 1989, Miller & Saxton, P.C. filed its complaint objecting to the discharge of the debt under § 523(a)(5) of the Bankruptcy Code. Both parties moved for judgment on the pleadings. Will claimed the complaint should be dismissed because Miller & Sax-ton, P.C. had no standing and that a debt to his wife’s attorneys did not meet the requirements of § 523(a)(5). Miller & Sax-ton, P.C. argued that Will’s obligation to pay attorney fees was one for maintenance, since the fees incurred in the dissolution action were almost entirely based on the maintenance claim. On- October 18, 1989, the bankruptcy court entered its judgment in favor of Miller & Saxton, P.C.

II. Merits.

A. Standing.

Will’s first argument is that Miller & Saxton, P.C. has no standing to challenge the dischargeability of his debt to his former wife for attorney fees. His argument is without merit. In Pauley v. Spong (In re Spong), the court stated,

We view appellee’s undertaking to pay his wife’s legal fees as a paradigmatic third party beneficiary contract, which is not, and should not be confused with, an assignment. In a third party beneficiary contract, benefits flow to both the prom-isee and the third party, and either may sue to enforce the contract. If appellee fails to satisfy his obligation to appellant, the third party beneficiary will, at the same time, fail to satisfy his obligation to his wife, the promisee. If appellee satisfies his obligation to appellant, appellee will by the same act satisfy his obligation to his wife.

661 F.2d 6, 10-11 (2d Cir.1981) (citations omitted). Since Spong, numerous courts have held, explicitly or implicitly, that the former spouse’s attorney has standing as a third party beneficiary to bring an action contesting the dischargeability of a debt for attorney fees incurred in a dissolution action. See, e.g., Miskovsky v. Skinner, 88 B.R. 360 (W.D.Okla.1987); Wadleigh v. Wadleigh (In re Wadleigh), 68 B.R. 499, 501 (Bankr.D.Vt.1986); Hill v. Snider (In re Snider), 62 B.R. 382 (Bankr.S.D.Tex.1986); Seymour Ostrow, P.C. v. Schwartz (In re Schwartz), 53 B.R. 407 (Bankr.S.D.N.Y.1985); Snider v. Tessler (In re Tessler), 44 B.R. 786 (Bankr.S.D.Cal.1984); Mainelli v. Whitman (In re Whitman), 29 B.R. 362, 363 (Bankr.D.R.1.1983). Nor does it make any difference that the debt is payable directly to the law firm, and not to Will’s former wife. Spong, 661 F.2d at 9-11. Miller & Saxton, P.C. had standing to object to the discharge of this debt.

B. Debt for Attorney Fees as Maintenance.

Will’s second argument is the bankruptcy court erred in determining that his obli *256 gation to pay attorney fees under the separation agreement was one for maintenance or support and is therefore nondischargeable under 11 U.S.C. § 523(a)(5). Will further asserts this determination should have been made in accordance with state law, and not federal bankruptcy law. Will’s assertions again have no merit.

Section 523(a)(5) of the Code excepts from discharge a debt to a spouse [or] former spouse ... for alimony to, maintenance for, or support of such spouse ... in connection with a separation agreement ... but not to the extent that ... such 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). In Sylvester v. Sylvester, the Tenth Circuit stated, “The determination of whether an obligation arising out of a divorce settlement is in the nature of alimony, maintenance or support is a matter of federal bankruptcy law.” 865 F.2d 1164, 1166 (10th Cir.1989). The bankruptcy court’s findings regarding the nature of the obligation .can be set aside only if clearly erroneous. Goin v. Rives (In re Goin), 808 F.2d 1391, 1393 (10th Cir.1987).

Will asserts that the Tenth Circuit, and arguably other circuits, err by blindly adhering to the proposition that federal bankruptcy law controls the determination of whether an obligation is in the nature of maintenance or support. This position, he argues, creates two distinct bundles of rights: “bankruptcy maintenance” (an expansion of state law rights) and state law “maintenance.” See Will’s Appeal Brief at 15-17. As explained in Yeates v. Yeates (In re Yeates), however, such an expansion of state law rights does not occur:

“The bankruptcy law determination as to whether an agreement to pay is support or a property settlement will involve some of the same considerations as the state law determination as to whether alimony will be awarded. The focus, however, is quite different. A state court judge decides if a legal obligation to pay alimony should arise. A bankruptcy court judge is faced with a different situation, since in his case a legal obligation already exists. He must determine whether that already existing obligation is support or alimony.”

807 F.2d 874, 878 (10th Cir.1986) (quoting with approval lower court decision at 44 B.R. 575, 578-79 (D.Utah 1984)).

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Cite This Page — Counsel Stack

Bluebook (online)
116 B.R. 254, 1990 U.S. Dist. LEXIS 8592, 1990 WL 98728, Counsel Stack Legal Research, https://law.counselstack.com/opinion/will-v-miller-saxton-pc-in-re-will-cod-1990.