In re Corson

629 B.R. 1

IN RE: Keith Michael CORSON, Debtor

Bk. No. 18-10191-PGC

United States Bankruptcy Court, D. New Hampshire.

Signed May 21, 2021

Olga L. Gordon, Murtha Cullina LLP, Boston, MA, Pro Se.

MEMORANDUM OPINION AND ORDER SUSTAINING CLAIM OBJECTION

Peter G. Cary, United States Bankruptcy Judge

I. INTRODUCTION

This dispute involves the question of whether a claim by a guardian ad litem against a debtor is entitled to priority treatment under 11 U.S.C. § 507(a)(1)(A) or (a)(1)(B).¹ Here, chapter 7 trustee Olga L. Gordon (the "Trustee") objects to the priority treatment of Ms. Rebecca S. McBeath, Esq.'s unsecured proof of claim in the amount of $4,076.25 (the "Claim") (Claim No. 10). Ms. McBeath is an attorney who provided guardian ad litem services for the children of debtor Keith Michael Corson (the "Debtor") during his divorce proceeding. After considering the submissions of the parties and the applicable law, I hereby sustain the Trustee's objection to the priority treatment of the Claim for the reasons set forth below.

II. BACKGROUND

Before filing for bankruptcy relief in 2018, the Debtor and his then-wife were involved in a divorce action in the New Hampshire State Court.² In December of 2015, the state court appointed Ms. McBeath as a guardian ad litem for the Debtor's minor children under New Hampshire law and ordered her to investigate and make recommendations about any issues that she deemed relevant to the children's best interests, including the Debtor and his wife's residential responsibilities for them; the Debtor and his wife's physiological conditions; and the influence of any companions of the Debtor and his wife on their children.³ See Appointment Order, at 31-34. The Appointment Order also required the Debtor to pay 75% of the total guardian ad litem fees accrued during the proceeding. The Debtor owes Ms. McBeath $4,076.25 for her services.

Initially, the Debtor challenged the Claim, scheduling it as a disputed, unsecured, priority claim. (D.E. 19; D.E. 35-3). However, by May of 2018, he filed a proof of claim on Ms. McBeath's behalf pursuant to Rule 3004, asserting that the Claim was entitled to priority treatment as a domestic support obligation under § 507(a)(1)(A) or (a)(1)(B) because it constituted his share of the guardian ad litem expenses ordered to be paid by the state court.⁴ See Fed. R. Bankr. P. 3004 ; 11 U.S.C. § 507(a)(1)(A) and (a)(1)(b).

Approximately one year later, the Trustee filed a one-page objection to the Claim. (D.E. 139). While the Trustee took no issue with the amount of the Claim, she asserted that it was not entitled to priority treatment and should be treated as a general, unsecured claim. She did not cite any legal authority or provide any evidence supporting her position. Ms. McBeath disagreed, maintaining that her Claim is entitled to priority treatment because it arises from legal services that she provided while serving as the state court-appointed guardian ad litem in the Debtor's divorce proceeding. She further argued that the Appointment Order approved the payment obligation of $4,076.25. In support, Ms. McBeath cited Kassicieh v. Battisti (In re Kassicieh), 482 B.R. 190 (B.A.P 6th Cir. 2012) for the proposition that guardian ad litem fees constitute domestic support obligations that are entitled to priority treatment under the Code. See 482 B.R. at 191 (affirming the bankruptcy court's finding that the guardian ad litem fees owed were nondischargeable domestic support obligations).

III. DISCUSSION

Under the Code, a claim filed pursuant to § 501 "is deemed allowed[ ] unless a party in interest ... objects." 11 U.S.C. § 502(a). A properly filed proof of claim constitutes "prima facie evidence of the validity and amount of the claim." Fed. R. Bankr. P. 3001(f). The First Circuit has observed that merely objecting to a claim "does not deprive the proof of claim of presumptive validity unless the objection is supported by substantial evidence. " Juniper Dev. Grp. v. Kahn (In re Hemingway Transp., Inc.), 993 F.2d 915, 925 (1st Cir. 1993).

Here, there is no dispute that the Claim was properly filed and that the Trustee filed an objection to it. Her objection, however, is essentially limited to one conclusory sentence: "As grounds for this objection, the Trustee states that the claim is not entitled to priority and should be allowed as a general unsecured claim." (D.E 139). Though the Trustee did not provide any evidence or substantive law supporting her position and consequently has not done enough to divest the Claim of its presumptive validity, Ms. McBeath, as the party seeking priority treatment of the Claim, carries the ultimate burden of establishing that she is so entitled. See Mason v. Official Comm. of Unsecured Creditors (In re FBI Distribution Corp.), 330 F.3d 36, 41-42 (1st Cir. 2003) (stating that the granting of priority status to a claim "is contrary to the fundamental principle of bankruptcy law that the debtor's limited resources are to be distributed equally among similarly situated creditors .... [T]hus, statutory priorities are narrowly construed, and the burden of proving entitlement rests with the party seeking it.") (citations omitted); Woburn Assocs. v. Kahn (In re Hemingway Transp., Inc. ), 954 F.2d 1, 5 (1st Cir. 1992) ("The burden of proving entitlement to priority payment as an administrative expense therefore rests with the party requesting it."); In re Plourde, 418 B.R. 495, 507 (B.A.P. 1st Cir. 2009) ("[E]ach creditor must demonstrate its entitlement to distribution at a particular level .... Otherwise, a claimant may be provided priority at a higher level than that to which it is entitled, watering down the dividend provided to creditors the legislation prefers. This would be contrary to the predominant goal of the Bankruptcy Code ‘to secure equal distribution among [similarly situated] creditors.’ ") (citation omitted); In re Coco Beach Golf & Cty. Club SE, 2020 WL 1503528, at *6 (Bankr. D.P.R. Mar. 27, 2020) (stating that "[a] party seeking priority treatment has the burden of proving entitlement to statutory priority."), reconsideration denied sub nom. In re Coco Beach Golf & Cty. Club, SE, 2020 WL 4728366 (Bankr. D.P.R. July 24, 2020).

Determining whether a claim is a domestic support obligation entitled to priority treatment is a question of federal law. See Smith v. Pritchett (In re Smith), 586 F.3d 69, 73 (1st Cir. 2009).⁵ Since the enactment of BAPCPA, two sections of the Code establish the framework through which courts evaluate these claims. Section 507(a)(1)(A) grants priority treatment to certain allowed unsecured claims for "domestic support obligations" if, "as of the date of the filing of the petition in a case under [the Code], [they] are owed to or recoverable by a spouse, former spouse, or child of the debtor, or such child's parent, legal guardian, or responsible relative, without regard to whether the claim is filed by such person ...." 11 U.S.C. § 507(a)(1)(A). Section 101(14A) defines a "domestic support obligation" as a debt:

(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 (ii) a governmental unit;

(B) in the nature of alimony, maintenance, or support ... of such spouse, former spouse, or child of the debtor or such child's parent ...;

(C) established ... [by] a separation agreement, divorce decree, or property settlement agreement; [or] an order of the 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)(A)-(D) (emphasis added).

Not all courts agree on how to best analyze § 101(14A). As one court observed regarding the related issue of examining the dischargeability of domestic support obligations:

A review of both pre-and post-BAPCPA case law interpreting former and current § 523(a)(5) reveals that three lines of authority have emerged on the question of whether a debt that is in the nature of support and owed directly to a third party not listed among the entities identified in § 101(14A) (or former § 523(a)(5) ) is excepted from discharge.

Kassicieh v. Battisti (In re Kassicieh), 425 B.R. 467, 472 (Bankr. S.D. Ohio 2010). The first line of authority follows the "plain meaning" approach. Id. This approach maintains "that the dischargeability of the debt turns on whether it is owed to a person/entity described in § 523(a)(5) (pre-BAPCPA) or payable to or recoverable by a person/entity described § 101(14A) (post-BAPCPA)[.]" Id. The second line of authority reasons that "if a debt is in the nature of support, it is nondischargeable even if payable directly to a third party and even if the debtor's spouse, former spouse or parent of his/her child would not be financially harmed if the debtor discharged the obligation[.]" Id. Under this approach, "the nature of the debt rather than the [identity of] the payee is controlling ...." Kassicieh v. Battisti (In re Kassicieh), 467 B.R. 445, 450 (Bankr. S.D. Ohio), aff'd, 482 B.R. 190 (B.A.P. 6th Cir. 2012). A third line of authority, which is more limited, "requires some ongoing liability of the debtor's spouse, former spouse, or parent of the debtor's child on the support obligation owing to a third party ...." In re Kassicieh, 425 B.R. at 472. This approach focuses on whether "non-payment [of the ongoing liability] might have a financial impact on th[e] part[y] before [the debt] may be excepted from discharge." Id.

I am uncomfortable with the second approach because it reads subsection (A), the list of people to whom the obligation is payable, out of the statute notwithstanding the conjunctive structure of § 101(14A). See 11 U.S.C. § 101(14A)(A). The third approach is not applicable here because neither the Appointment Order nor the...