ARLENE M BERRYMAN V DOUGLAS C SUTPHIN
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STATE OF MICHIGAN
COURT OF APPEALS
ARLENE M. BERRYMAN,
UNPUBLISHED
April 8, 2010
Plaintiff-Appellee,
v
No. 289228
Oakland Circuit Court
LC No. 2002-667616-DM
DOUGLAS C. SUTPHIN,
Defendant-Appellant.
Before: Jansen, P.J., and Murray and Gleicher, JJ.
PER CURIAM.
In this postdivorce effort by plaintiff Arlene M. Berryman to recover attorney fees from
defendant Douglas C. Sutphin, her former spouse, defendant appeals as of right a portion of a
November 2008 circuit court order requiring that he reimburse plaintiff for $23,468.73 in
attorney fees by January 2009. We affirm.
The parties agreed to a consent judgment of divorce, which the circuit court entered in
January 2003. Plaintiff initially sought an award of about $22,000 in attorney fees in May 2007,
asserting that she had incurred this amount because of defendant’s “failure . . . to pay the sums
required under the Judgment of Divorce and” subsequent orders. Defendant responded by urging
the circuit court to hold a hearing to address the propriety of plaintiff’s attorney fee
reimbursement claim, and characterizing as procedurally improper her submissions of an
itemized list of attorney fees purportedly incurred. After holding an evidentiary hearing, the
circuit court in September 2007 ordered that defendant “shall pay [plaintiff] the sum of
$23,468.73 as the net attorney fees and costs that she incurred in enforcing the terms and
provisions of the Judgment of Divorce through the July 7, 2007 billings which sum shall be paid
in equal monthly installments beginning October 19, 2007.” At some point in 2007, plaintiff
sought Chapter 13 bankruptcy protection, but in July 2007 plaintiff converted her Chapter 13
filing into a Chapter 7 proceeding. On October 2, 2007, the bankruptcy court entered a Chapter
7 discharge of plaintiff’s debts.
In March 2008, plaintiff filed a “motion to enforce order for payment of attorney fees,”
contending that defendant had made no payments in conformity with the circuit court’s
September 2007 order. In response, defendant did not dispute that he had neglected to pay any
court-ordered attorney fees; he generally asserted that some unspecified attorney fees were
improperly awarded and maintained that the court should extinguish the attorney fee award in
light of various other expenses that defendant had paid for plaintiff. In May 2008, the circuit
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court referred to a mediator the parties’ attorney fee payment dispute. After mediation proved
unsuccessful, plaintiff filed a renewed motion to enforce the circuit court’s attorney fee award in
August 2008. Defendant responded that “[a]ny outstanding fees Plaintiff owed her attorney . . .
were automatically discharged in her voluntary petition to convert her Chapter 13 to a Chapter 7
bankruptcy,” and that the circuit court thus could not order defendant to pay the previously
awarded attorney fees and should set aside the September 2007 attorney fee order. On
November 12, 2008, the circuit court entered an order that, in relevant part, instructed defendant
to “comply with this court’s order of September 27, 2007 ordering his [sic] to pay attorney fees
of $23,468.73 by paying $7,822.91, which is one-third of that amount by November 26, 2008;
$7,822.91 by December 26, 2008 . . . and the remaining $7,822.91 by January 25, 2009.”
I. Dischargeability of Defendant’s Attorney Fee Obligation
Defendant challenges on appeal the circuit court’s November 2008 attorney fee order.
According to defendant, “the $23,468.73 attorney fee Plaintiff owed her attorney . . . was
discharged in Plaintiff’s July 2, 2007 Chapter 7 Bankruptcy case,” and “Defendant no longer
owes . . . [plaintiff’s counsel] $23,468.73 because said debt had been previously discharged and
is no longer due.” We generally review for an abuse of discretion a circuit court’s award of
divorce-related attorney fees. Unthank v Wolfe, 282 Mich App 40, 66; 763 NW2d 287 (2008),
rev’d in part on other grounds 483 Mich 964 (2009). However, to the extent that defendant’s
appeal involves legal questions, including the applicability of bankruptcy law provisions, we
consider de novo these questions of law. Id.
The statute authorizing a Chapter 7 bankruptcy discharge, 11 USC 727, reads, in
pertinent part:
(a)
The court shall grant the debtor a discharge, . . .
***
(b)
Except as provided in section 523 of this title, a discharge under
subsection (a) of this section discharges the debtor from all debts that arose before
the date of the order for relief under this chapter, . . . whether or not a proof of
claim based on any such debt or liability is filed under section 501 of this title . . .
.
As relevant to this case, the discharge exceptions in 11 USC 523 include the following:
(a)
A discharge under section 727 . . . of this title does not discharge
an individual debtor from any debt—
***
(5)
for a domestic support obligation;
***
(15) to a spouse, former spouse, or child of the debtor and not of the
kind described in paragraph (5) that is incurred by the debtor in the course of a
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divorce or separation or in connection with a separation agreement, divorce
decree or other order of a court of record, or a determination made in accordance
with State or territorial law by a governmental unit . . . .
As defined in 11 USC 101(14a),
The term “domestic support obligation” means a debt that accrues before,
on, or after the date of the order for relief in a case under this title . . . that is—
(A)
owed to or recoverable by—
(i)
a spouse, former spouse, or child of the debtor or such child’s
parent, legal guardian, or responsible relative; or
***
(B)
in the nature of alimony, maintenance, or support (including
assistance provided by a governmental unit) of such spouse, former spouse, or
child of the debtor or such child’s parent, without regard to whether such debt is
expressly so designated;
(C)
established or subject to establishment before, on, or after the date
of the order for relief in a case under this title, by reason of applicable provisions
of—
(i)
agreement;
(ii)
a separation agreement, divorce decree, or property settlement
an order of a court of record; or
(iii) a determination made in accordance
nonbankruptcy law by a governmental unit; and
with
applicable
(D)
not assigned to a nongovernmental entity, unless that obligation is
assigned voluntarily by the spouse, former spouse, child of the debtor, or such
child’s parent, legal guardian, or responsible relative for the purpose of collecting
the debt.
Plaintiff undisputedly obtained debt relief in the form of a discharge under 11 USC 727.
Defendant insists that plaintiff’s Chapter 7 discharge eliminated any debt plaintiff owed to her
divorce attorney arising from the postdivorce proceedings. We note that the record supplied this
Court remains unclear whether plaintiff’s debt to her divorce attorney was discharged in her
Chapter 7 proceeding. Billing statements of plaintiff’s divorce attorney reflect that as of July
2007, the same month that plaintiff made her Chapter 7 filing, plaintiff owed her divorce
attorney a balance of approximately $18,900. Defendant asserts that plaintiff’s Chapter 7
discharge eliminated any debt she owed her divorce attorney, despite that she did not list the debt
to her divorce attorney on her schedule of creditors. However, whether a Chapter 7 discharge of
plaintiff’s debt to her divorce attorney occurred depends on whether her divorce attorney had
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notice of plaintiff’s Chapter 7 proceeding.
discharge does not discharge a debt
According to 11 USC 523(a)(3), a Chapter 7
neither listed nor scheduled under section 521(1) of this title, with the name, if
known to the debtor, of the creditor to whom such debt is owed, in time to
permit—
(A)
. . . timely filing of a proof of claim, unless such creditor had
notice or actual knowledge of the case in time for such timely filing . . . .
Defendant has presented no evidence substantiating (1) that plaintiff listed or scheduled her
divorce attorney debt, or (2) the extent of plaintiff’s divorce attorney’s notice or knowledge of
the right to assert a claim in plaintiff’s Chapter 7 case.
But we need not ascertain the status of plaintiff’s debt to her divorce attorney at the time
plaintiff received her Chapter 7 discharge. Even were we to assume for the sake of argument
that plaintiff’s Chapter 7 discharge eliminated the debt she owed to her divorce attorney,
defendant ignores that plaintiff’s discharge has no legal impact on the distinct attorney fee debt
that defendant owed to plaintiff, arising from the circuit court’s September 2007 and November
2008 orders. See, e.g., In re Perlin, 30 F3d 39, 41-42 (CA 6, 1994) (distinguishing between
obligations to a divorcing party and the divorcing party’s counsel, the court noted, “The divorce
decree affects only the relations between the debtor and his former spouse,” and that “[t]he
judgment ordering [the debtor] to pay his former spouse’s attorney fees was rendered in her
name, not [the former spouse’s divorce counsel].”); In re Calhoun, 715 F2d 1103, 1006 n 4 (CA
6, 1983) (“There are two distinct obligations involved in an agreement to assume former joint
marital debts—the underlying debt owed to the mutual creditor and the obligation owed directly
to the former spouse to hold the spouse harmless on that underlying debt.”).
In circumstances nearly identical to the circumstances of this case, in a case addressing a
husband’s argument about the effect of his former wife’s bankruptcy filing identical to
defendant’s argument here, the Ohio Court of Appeals in Mallin v Mallin, 102 Ohio App 3d 717,
721; 657 NE2d 856 (1995), observed the following:
The husband first argues that enforcement of the order requiring him to
pay $15,000 for his wife’s attorney fees constitutes an invalid contribution since
the wife’s bankruptcy removed any obligation to pay those fees. He maintains
that the wife’s discharge of attorney fees in bankruptcy also constitutes a
discharge of his obligation to pay those fees under the divorce decree. The
referee rejected this argument because the order to pay the wife’s attorney fees
was intended as support alimony. Since alimony is a nondischargeable debt under
the Bankruptcy Code, the referee would not allow the husband to escape paying
an obligation that he himself could not discharge had he been in the wife’s
position.
The trial court made the following order in the divorce decree:
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“11. As further alimony, (husband) shall pay to (wife) the sum of
$15,000.00 as and for his contribution to her attorney fees, for which judgment is
rendered and execution may issue.”
***
. . . The referee correctly stated that the judgment relating to attorney fees
was intended as alimony. Hence, the husband’s debt to the wife is separate and
distinct from the debt the wife owed to her attorney. The husband’s obligation to
pay alimony continues to exist regardless of whether the wife’s debt to her
attorney is discharged in bankruptcy. Consequently, his debt to the wife has not
been discharged . . . . [Emphasis added.]
Concerning the nature of the attorney fee obligation the circuit court imposed on
defendant, the court in its September 2007 order for payment of attorney fees found that plaintiff
had incurred “$23,468.73 . . . in enforcing the terms and provisions of the Judgment of Divorce,”
but the court took “under advisement the issue of whether the attorney fees incurred are in the
nature of support and the determination of if they are non-dischargeable in bankruptcy.”1 The
circuit court in neither the September 2007 nor November 2008 order specifically invoked MCL
552.13(1) or MCR 3.206(C)(2), but both the statute and court rule authorize an award of attorney
fees “when a party needs financial assistance to prosecute or defend the suit. That is, a party
should not be required to invade assets to satisfy attorney fees when the party is relying on the
same assets for support.” Smith v Smith, 278 Mich App 198, 207; 748 NW2d 258 (2008)
(internal quotation omitted). Given the need-based focus of the Michigan rule and statute
permitting awards of divorce-related attorney fees, the circuit court’s order that defendant pay
plaintiff $23,468.73 in attorney fees may amount to a “domestic support obligation”
nondischargeable under 11 USC 523(a)(5).
Although some uncertainty exists with respect to whether the circuit court’s attorney fee
order amounts to a domestic support obligation “in the nature of alimony, assistance, or support,”
11 USC 101(14a)(B), it remains beyond dispute that the current bankruptcy code prohibits the
Chapter 7 discharge of a divorce-related attorney fee obligation. Depending on the underlying
circumstances and the precise language of a divorce court’s attorney fee award, federal courts
deem a divorcing party’s attorney fee debt as nondischargeable in a Chapter 7 bankruptcy under
either 11 USC 523(a)(5) or (15). See In re Goans, 271 BR 528, 534 (ED Mich, 2001) (finding
nondischargeable under § 523(a)(5), as “in the nature of support,” a husband’s obligation in a
divorce judgment to pay $4,000 of his former wife’s attorney fees); In re LaCasse, 1998 Bankr
Lexis 1643, *6-8 (WD Mich, 1998) (finding nondischargeable pursuant to § 523(a)(15) the
1
The parties point to no portion of the record where the circuit court made additional findings
about the nature of defendant’s attorney fee obligation, and our review of the record has
uncovered no additional information related to this question.
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husband’s obligation in a divorce judgment to pay $30,000 of attorney fees incurred by his
former wife to the wife’s divorce counsel).2
We conclude that defendant’s court-ordered attorney fee debt to plaintiff, his former
spouse, would have constituted a nondischargeable obligation had defendant himself sought
relief under the bankruptcy code. Moreover, irrespective whether plaintiff may have discharged
her own debt to her divorce counsel in her Chapter 7 proceeding, defendant’s distinct attorney
fee obligation to plaintiff remains entirely intact notwithstanding her Chapter 7 discharge.
II. Interpretation of Consent Judgment of Divorce
We additionally reject defendant’s insistence that plaintiff’s pursuit of Chapter 7 relief
violated the terms of the parties’ consent judgment of divorce. Defendant invokes the following
highlighted sentence of a paragraph that appears at the conclusion of the property settlement
provisions in the January 2003 consent judgment:
2
In this case, plaintiff commenced her Chapter 7 proceeding in 2007, after the October 17, 2005
enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub L No
109-8, 199 Stat 23 (BAPCA). The treatise Collier, Bankruptcy Manual (3d ed, 2009), p 523.10,
summarizes the effect of the BAPCA on §§ 523(a)(5) and (15) as follows:
Since its enactment, for purposes of dischargeability, the Code has drawn
a distinction between an obligation that is in the nature of alimony, maintenance
and support and other types of obligations arising out of a marital relationship,
more specifically, a debt arising in the course of a divorce or separation or in
connection with a separation agreement or divorce decree. The latter type of debt
is commonly referred to as a property settlement obligation.
It is not always simple to distinguish whether an obligation is alimony,
maintenance or support as opposed to a property settlement. Nevertheless, before
the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act
of 2005, the distinction between the two types of debts was critical in evaluating
the dischargeability of a domestic relations related obligation under section
523(a). A debt in the nature of alimony, maintenance and support was
nondischargeable under section 523(a)(5). A property settlement debt was subject
to a dischargeability balancing test then set forth in section 523(a)(15).
As part of the 2005 Act, the balancing test previously set forth in former
subsections (A) and (B) of section 523(a)(15) was deleted. Rather, section
523(a)(15) now provides unqualifiedly that a debt encompassed by section
523(a)(15) is nondischargeable. Thus, with respect to dischargeability in cases
under chapters 7, 11 and 12, all of which base dischargeability on section 523(a),
the distinction between a domestic support obligation and other types of
obligations arising out of a marital relationship is of no practical consequence.
[Emphasis added, footnotes omitted.]
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Other than as specifically set forth above, Plaintiff shall assume
responsibility for, and be liable for, any debt in her name alone and shall hold
Defendant harmless thereon, and Defendant shall assume responsibility for, and
be liable for any debt in his name alone, as well as for any joint debt, and shall
hold Plaintiff harmless thereon. These assumptions of debt are considered to be
for the support and maintenance of both of the parties and as such, shall not be
dischargeable in bankruptcy to the other party’s detriment; however, this shall
not prohibit the filing of a Chapter XIII Reorganization. [Emphasis added.]
Contrary to defendant’s interpretation, the highlighted language does not purport to forbid a
party’s filing for debt relief under Chapter 7. The highlighted sentence unambiguously
proclaims only that the debts assumed by the parties in the consent judgment would amount to
nondischargeable obligations in any future federal bankruptcy proceeding. Gramer v Gramer,
207 Mich App 123, 125; 523 NW2d 861 (1994) (instructing that consent judgments “are of the
nature of a contract,” and that “[i]nterpretation of unambiguous and unequivocal contracts is a
question of law”).
III. Merits of Circuit Court’s Attorney Fee Award
In defendant’s brief on appeal, he fails to explain how the circuit court erred in any
respect in fashioning the award of attorney fees in September 2007 or the attorney fee payment
schedule ordered in November 2008. MCL 552.13(1); MCR 3.206(C); Unthank, 282 Mich App
at 66. Because defendant essentially has abandoned the propriety of the attorney fees awarded in
this case and the payment schedule the circuit court entered in November 2008, we decline to
consider this issue further, and we uphold the circuit court’s November 2008 order. Korth v
Korth, 256 Mich App 286, 294; 662 NW2d 111 (2003).
Affirmed.
/s/ Kathleen Jansen
/s/ Elizabeth L. Gleicher
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