In re: RITA KATHERINE LUETKENHAUS

Summarized by Amir Shachmurove , Brown Rudnick LLP
2 years 2 months ago

Case Type:

Consumer

Case Status:

Affirmed

Citation:

23-1085 (9th Circuit, Nov 29,2023) Not Published

Tag(s):

Ruling:

The U.S. Bankruptcy Appellate Panel of the Ninth Circuit discerned no error in the orders of the U.S. Bankruptcy Court for the District of Oregon (BC) overruling the objections of Rita K. Luetkenhaus (DR), a chapter 13 debtor, to the proofs of claim filed by her first and second husbands.

Procedural context:

On November 22, 2022, the DR filed one more chapter 13 petition. By this time, both her divorces were final, and Carey Smith (CS), her first husband, and Richard Luetkenhaus (RL), her second husband, had each recovered money judgments against her. For the second time, both men filed proofs of claim. RL's was for $88,085.99 for the “judgment for attorney fees” awarded in the Rita and Richard Dissolution and Child Custody Action. The proof of claim indicated that 80 percent of the amount ($70,468.79) was a DSO entitled to priority, in accordance with the BC's rulings in the prior bankruptcy. CS, in turn, filed a proof of claim in the amount of $38,575.85 for a “state court judgment money award," asserting that the entire amount of the claim was entitled to priority as a DSO. The supporting documents demonstrated that CS' proof of claim was comprised of a state court judgment totaling $28,601.20 ($15,000 plus $13,601.20 in accrued interest) and a state appellate judgment in the amount of $9,974.65 ($8,686.50 award plus $1,288.15 in accrued interest). On April 28, 2023, after an evidentiary hearing, the BC entered a memorandum decision overruling the DR's objections to each proof of claim

Facts:

Having married and divorced her first husband, CS, on 1993 and 2008, respectively, the DR eventually incurred debts to CS amounting to the attorneys' fees incurred in both winning primary custody of the couple's children (plus interest) and contesting the DR's unsuccessful appeal. Having the DR married again--to RL--in 2008, the couple split in 2014. There, too, the DR's ex spouse was awarded $60,000 in attorneys' fees and costs, plus interest. (RL had originally sought $80,000.) During this timeframe, the DR filed two chapter 13 cases. The first, commenced on October 24, 2012, was dismissed on September 8, 2014. In that case, the DR successfully challenged part of CS' claim, the BC eventually entering an order allowing CS' proof of claim in the amount of $15,000 as a nonpriority, unsecured claim, and while the DR did get her chapter 13 plan confirmed, it was she who sought her case's dismissal due to an inability to make plan payments as required. On September 14, 2014, the DR filed her second chapter 13 petition. Naturally, both men filed a proof of claim for their respective attorneys’ fees awards. RL filed a proof of claim in in the amount of $60,192.27 for “Attorney Fees Awarded in a Dissolution” and claimed it as a domestic support obligation (DSO) entitled to priority under § 507(a); CS filed a proof of claim for a DSO in the amount of $73,589.006 for “fees and costs from family court litigation.” Both RL and CS also filed objections to confirmation of the DR's plan; indeed, her chapter 13 plan was not confirmed, and her case was dismissed. On February 10, 2016, the DR filed her third chapter 13 bankruptcy petition, along with a proposed chapter 13 plan. Both men again filed proofs of claim. RL's was in the amount of $61,183.25 for a “judgment for attorney fees awarded in dissolution of marriage involving a child"; RL alleged that the entire amount was a DSO entitled to priority pursuant to § 507(a)(1). CS', in turn, totaled $28,163.50 for “DSO attorney fees awarded in state court concerning child welfare.” The supporting documents indicated that the claim was comprised of the state court judgment he had won, plus interest, and the state appellate judgment in his favor, plus interest, that had followed. R objected to both claims, arguing that neither claim was a DSO and, therefore, neither claim was entitled to priority. As to RL, the BC ultimately allowed his proof of claim as a DSO in the reduced amount of $48,946.60, as it had determined that 80% of the $61,183.25 was related to custody matters; as for CS, the BC determined the portion of his proof of claim related to the state appellate judgment would be allowed as a DSO, entitled to priority and full payment under the plan, as he was estopped from characterizing the trial court judgment as anything but a general unsecured claim. Given a chance to file an amended plan, the DR instead filed a motion to convert her case, which the BC granted. In the DR's post-conversion schedules, she listed both RL and CS as holding claims entitled to DSO priority. On April 12, 2017, the DR got her discharge.

Judge(s):

Frederick P. Corbit; Robert J. Faris; and Julia W. Brand

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