Koch v. Olsson, No. 6:2014cv01686 - Document 9 (D. Or. 2015)
Court Description: OPINION AND ORDER. The decision of the Bankruptcy Court is AFFIRMED. See formal OPINION AND ORDER. Signed on 6/17/2015 by Chief Judge Ann L. Aiken. (rh)
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Koch v. Olsson Doc. 9 UNITED STATES DISTRICT COURT DISTRICT OF OREGON Case No. 6:14-cv-01686-AA Bankr. Case. No. 13-62080-tmr-7 Adv. Pro. No. 13-06132-tmr In re: NELS E G OLSSON MAURA HELENA OLSSON OPINION AND ORDER Debtor. BRIAN S. KOCH, Plaintiff-Appellant, v. MAURA H. OLSSON, Defendant-Appellee. AIKEN, Chief Judge: Plaintiff-Appellant Brian Koch appeals a decision of the United States Bankruptcy Court that ruled an attorney fee award entered against the defendant-appellee was not in the nature of child support and dischargeable. 1 After review of the Bankruptcy - OPINION AND ORDER Dockets.Justia.com Court's decision and the parties' I arguments, affirm the decision. BACKGROUND Prior to 2010, of her father. minor defendant-appellee Maura Olsson had custody child; plaintiff-appellant Brian Koch is Koch was obligated to pay monthly child support, fell behind in his payments. the minor child, to pay support. support arrearage, awarded However, Olsson's and he In 2010, Koch filed for custody of and Koch was ordered the due monthly custody and Olsson was to his payments previous were child- applied as offs" against the amount of child support Koch owed Olsson. Pl.'s Suppl. Excerpt of Record at 33-34 (doc. 8). In or around December 2011, Olsson filed a Motion for Order to Show Cause why the operative parenting plan modified. Olsson's motion was denied, that motion the and supporting should not and the state court found affidavit were meritless misleading. Def. 's Suppl. Excerpt of Record at 12-14 Subsequently, the finding fees that state court should be awarded awarded bringing similar motions to show cause. attorney to deter Notably, against the amount of child support owed by Koch. - OPINION AND ORDER and (doc. 5-1). fees to others Koch, from the court did not order that the attorney fee award be applied as a 2 be off" On under May 30, Chapter 2013, Olsson filed for 7 of the Bankruptcy Code. dischargeability of the attorney bankruptcy attorney· fees fell within the fee Koch award, ndomestic protection objected arguing support to the that the obligations" exception to dischargeability. 11 U.S.C. § 523(a) (5) Bankruptcy Judge Renn entered judgment in favor of Olsson, finding that discharge. the debt Judge Renn was a general unsecured debt reasoned that the attorney-fee subject to award was entered for the purpose of penalizing Olsson and was not issued not for purposes of domestic or child support obligations. Koch now appeals to this court. DISCUSSION Section discharge U.S. C. 523 (a) (5) any debt 523 (a) ( 5) . § of nfor the a Bankruptcy domestic Code support excepts from obligation." 11 Koch argues that the bankruptcy court erred in determining that the attorney fee judgment was not a support obligation and dischargeable. As he did before the Bankruptcy Court, disputed because child attorney it was would discharge be this fee debt incurred in a adversely debt. is a domestic support obligation custody proceeding and the minor affected Olsson Koch argues that the argues if Olsson that the was permitted Bankruptcy to Court correctly found that the disputed debt is not in the nature of 3 - OPINION AND ORDER support not maintains a domestic that the support debt does obligation. not fall Therefore, within the Olsson "domestic support obligation" exception to discharge and is dischargable in the bankruptcy proceeding. "Domestic support obligation" is defined as a debt: (A) owed to or recoverable by . a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative. (B) in the nature of alimony, maintenance, or support 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 . an order of a court of record; . and (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. 11 U.S.C. § 101(14A). The parties dispute only the requirement, that the debt be "in the nature of second support." To determine whether a debt is in the "nature of support," courts may consider the following factors: 1) intent that the debt be in the nature of support; given to the payments; 3) the parties' 2) the label the recipient's need for the support, generally determined by an imbalance of income; 4) the manner in which the payments are 4 - OPINION AND ORDER to be made; and 5) the ability of the payments to terminate when the recipient dies or remarries. re Nelson, 451 B.R. Leppaluoto v. Combs B.A.P. 918, Upon 1989). (In 921-22 re review (Bankr. Combs), of D. 101 Judge Or. B.R. Renn's 2011); 609, see also 615-16 ruling, In I (9th find no error. I agree that the attorney fee award is not in the nature of support under reflect that the above either factors. Olsson or award to be considered support. testimony, the attorneys. Pl.'s (describing award was Suppl. financial First, Koch intended Rather, intended Excerpt the to of the does not attorney-fee as reflected by Koch's pay the Record repercussions record of fees at of 32 attorney Second, the fee award was not labeled as support, Koch's (doc. fee 8) bill) . and the state court did not order that the attorney fee award be applied to the amount of child support owed by Koch (as respect to Olsson's child support payments). it ordered with Third, no findings were made with respect to Koch's need for the attorney's fees or Olsson's ability to pay; rather, the state court imposed the fee award as similar a punitive conduct. In explicitly stated: not reasonable measure fact, the intended state to court's "the Court finds that and attorney fees - OPINION AND ORDER others opinion [Olsson's] would asserting meritless claims." Def.'s Suppl. 5 deter deter from letter claims were others from Excerpt of Record at 30. Thus, the purpose of the fee award was to "punish" Olsson for bringing the Motion to Show Cause and deter others from bringing similar motions; it was not for the purpose of support. Finally, the state court did not order the fee award to be made on a monthly or similar basis. In other words, nothing about the fee award suggests that it was in the nature of support. Nonetheless, domestic Koch support argues obligation that the because it disputed arose out debt of is a custody proceedings and involved the best interests and welfare of the child. In so arguing, 2006 WL 6811011 Koch (9th Cir. relies primarily on BAP August 17, 2006), In Re Rehkow, aff' d 239 Fed. Appx. 341 (9th Cir. Jun. 29, 2007). However, this case. I find the facts of Rehkow distinguishable from Rehkow involved attorney fees arising from disputes over the services of a mental health expert appointed to provide an opinion regarding custody and visitation. 2006 WL 6811011, at *1. The BAP held that "attorneys' fees incurred in child custody proceedings in which issues involving the best interests of the child are in dispute are in the nature of support and, thus, non-dischargeable in bankruptcy." Id. at *4. Because "all of the attorneys' fees determine custody child," 6 and "were awarded of [] arose and visits incurred - OPINION AND ORDER in to the from the best the former proceedings couple's interests of to minor and to support the minor child," the BAP held that the non-dischargeable under Here, to award was 523 (a) (5). Id. § the attorney fee award did not arise from proceedings determine Rather, fee it custody, arose from visitation the denial rights of or child Olsson's support. motion to show cause and the state court's finding that the motion was without merit; custody proceedings were never reopened or reevaluated. The fact that the fee award arose in the context of a custody dispute does not automatically render it a support obligation. Indeed, "[t] he legal question is not whether repayment of the debt will benefit the children, but whether the basis of the debt 803 the benefitted the children." In re Leibowitz, 217 F.3d 799, (9th Cir. 2000). Here, the record reflects that the basis of debt was to punish Olsson and deter similar conduct. Therefore, it was not in the nature of support and does not fall within the "domestic support obligation" exception to discharge. CONCLUSION The decision of the Bankruptcy Court is AFFIRMED. IT IS SO ORDERED. Dated this day of June, 2015. a.(FCLJ Ann Aiken United States District Judge 7 - OPINION AND ORDER
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