Michael S. Mahoney, PC v. Sanders-Davenport (In re Sanders-Davenport)

641 B.R. 157

IN RE: Jacquelyn B. SANDERS-DAVENPORT, Debtor.

Michael S. Mahoney, PC, Plaintiff,

v.Jacquelyn B. Sanders-Davenport, Defendant.

Case No. GL 21-02705-jtg

Adv. Proc. No. 22-80023-jtg

United States Bankruptcy Court, W.D. Michigan.

Signed July 20, 2022

Andrew J. Gerdes, Esq., ANDREW J. GERDES, PLC, Lansing, Michigan, for Jacquelyn B. Sanders-Davenport;

Michael S. Mahoney, Esq., MICHAEL S. MAHONEY, PC, Lansing, Michigan, for Michael S. Mahoney, PC.

OPINION REGARDING MOTION TO DISMISS PURSUANT TO FED. R. BANKR. P. 7012

John T. Gregg, United States Bankruptcy Judge

Michael S. Mahoney, PC, the plaintiff in this adversary proceeding (the "Attorney"), filed a complaint [Adv. Dkt. No. 1] (the "Complaint") seeking a determination that the debt owed by Jacquelyn B. Sanders-Davenport, its former client in a prepetition divorce action and the debtor in the underlying bankruptcy case (the "Debtor"), is non-dischargeable pursuant to section 523(a)(5) of the Bankruptcy Code.¹ In response to the Complaint, the Debtor filed a motion to dismiss and brief in support thereof [Adv. Dkt. No. 4] (the "Motion") under Bankruptcy Rule 7012. The Debtor argues that because the debt is not a "domestic support obligation" as defined in section 101(14A) and incorporated by reference into section 523(a)(5), the Complaint fails to state a claim upon which relief can be granted. For the following reasons, the court shall grant the Motion.

JURISDICTION

The court has jurisdiction pursuant to 28 U.S.C. § 1334(a). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(I).

BACKGROUND

The facts set forth herein are taken from the Complaint and this court's docket. Prior to the petition date, the Attorney agreed to represent the Debtor in connection with a divorce proceeding pursuant to the terms of a retention agreement. (Compl. at ¶ 9, Ex. 1.) With assistance from the Attorney, the Debtor commenced a civil action for the dissolution of marriage in the Circuit Court for the County of Ingham, Michigan, which ultimately entered a judgment of divorce awarding the Debtor (i.e. , the obligee) support from her former spouse (i.e. , the obligor). (Compl. at ¶¶ 10-12, Ex. 3.) The judgment of divorce provided, among other things, that "neither party is obligated to pay the attorney fees of the other party, in whole or in part." (Compl. at Ex. 3.) Beyond that provision, the judgment of divorce makes no mention of attorney's fees.

When the Debtor failed to satisfy the Attorney's legal bills from the divorce proceeding, the Attorney commenced a civil action in the 54-A District Court, County of Ingham, Michigan. (Compl. at ¶ 14.) The state district court entered a default judgment in the amount of approximately $4,400 in favor of the Attorney and against the Debtor. (Compl. at ¶ 15, Ex. 4.)

On December 15, 2021, the Debtor filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code in this court. Thereafter, the Attorney timely commenced this adversary proceeding by filing its Complaint seeking relief under section 523(a)(5). In lieu of answering the Complaint, the Debtor filed her well-written Motion in which she argues that the debt she owes to the Attorney is nothing more than a debt for breach of a contract, not a debt that can in any way be characterized as a domestic support obligation. The Attorney filed a response [Adv. Dkt. No. 5] (the "Response") contending that it has properly set forth a claim upon which relief can be granted because "[a]ttorney's fees incurred in seeking an award of support, are excepted from discharge." (Resp. at p. 6.)

At the conclusion of a hearing, the court decided to grant the Motion for the reasons set forth on the record.² This Opinion is intended to supplement the court's bench opinion.

LEGAL STANDARD

Rule 12 is incorporated by Bankruptcy Rule 7012 and provides, in pertinent part, that a party may seek dismissal of a complaint for the "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, the complaint "must contain either direct or inferential allegations with respect to all material elements necessary to sustain a recovery under some viable legal theory." Bickerstaff v. Lucarelli , 830 F.3d 388, 396 (6th Cir. 2016) (quotation omitted). In determining a motion to dismiss under Rule 12(b)(6), a court must accept all factual allegations as true and construe all inferences from those allegations in favor of the plaintiff. Gavitt v. Born , 835 F.3d 623, 639-40 (6th Cir. 2016) (citation omitted); see Bassett v. Nat'l Collegiate Athletic Ass'n , 528 F.3d 426, 430 (6th Cir. 2008) (citation omitted) (court may consider documents attached to pleadings for purposes of motion to dismiss).

A court must determine whether a complaint contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Handy-Clay v. City of Memphis , 695 F.3d 531, 538 (6th Cir. 2012). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The plausibility standard is not akin to a "probability requirement," but instead requires more than a "sheer possibility" that the defendant has committed the misconduct. Id. If the complaint pleads only facts that are merely "consistent with" a defendant's liability, the complaint has fallen short and has merely alleged, but not shown, that the plaintiff is entitled to relief. Id.

DISCUSSION

Section 523(a) provides, in pertinent part, that a discharge under section 727 "does not discharge an individual debtor for any debt — ... for a domestic support obligation." 11 U.S.C. § 523(a)(5). Section 101(14A) in turn defines a "domestic support obligation" as:

a debt ... 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

(ii) a governmental unit;

(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) a separation agreement, divorce decree, or property settlement agreement;

(ii) an order of a court of record; or

(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; 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) (emphasis added). Section 101(14A) is written in the conjunctive, meaning a party asserting a domestic support obligation must satisfy each of subsections (A) through (D). See, e.g ., Logan v. Basic Distrib. Corp. (In re Fred Hawes Org., Inc.) , 957 F.2d 239, 243-44 (6th Cir. 1992) (the term "and" establishes "separate, discrete, and independent requirements").

As concisely explained by another court:

[T]hree 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 section 101(14A) ... is excepted from discharge. The first line of authority follows the "plain meaning" approach. This approach maintains that the dischargeability of the debt turns on whether it is ... payable to or recoverable by a person/entity described in § 101(14A). 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. Under this approach, the nature of the debt rather than the identity of the payee is controlling. 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 Corson , 629 B.R. 1, 5-6 (Bankr. D. N.H. 2021) (internal citations and quotations omitted).

Section 101(14A)(A) provides that a debt for a domestic support obligation must be "owed to or recoverable by a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative ... or a governmental unit." When the plain meaning of the statute is applied, it is fairly obvious that the Attorney is not any of the entities listed. See, e.g ., Conn. Nat'l Bank v. Germain , 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992) (citations omitted). Instead, the Attorney is simply the Debtor's former attorney and now a judgment creditor. Because the Attorney cannot satisfy the first subsection of section 101(14A)(A) due to its plain meaning, this court's inquiry is arguably complete.

Implicitly conceding that it is not technically one of the entities identified in section 101(14A)(A), the Attorney contends that the "nature of the debt," not the identity of the domestic support obligee, should control. (Resp. at p. 8.) In other words, the Attorney argues that section 101(14A)(A) can be diluted so long as section 101(14A)(B) is satisfied.

Section 101(14A)(B) provides that a debt constituting a domestic support obligation must be "in the nature of alimony, maintenance, or support..." The Sixth Circuit Court of Appeals has explained that in order to establish that a debt is "in the nature of support," two conditions must be satisfied. Thomas v. Clark (In re...