Johnson v. Zimmer

Summarized by Brett Weiss , The Weiss Law Group, LLC
13 years 7 months ago

Citation:

Tanya Rene Johnson v. William H. Zimmer, et al., No. 11-2034 (4th Cir. July 11, 2012).

Tag(s):

Ruling:

In this 2-1 ruling, the Fourth Circuit adopted the "economic unit" standard for determining household size under the Chapter 13 Means Test. It also held that a part-time household member, such as a child whose parents have shared custody, should be included on a fractional basis, depending on the percentage of time the child resided with the debtor. Judge J. Harvie Wilkinson, III wrote a lengthy dissenting opinion, which argued against the use of the “fractional child” approach.

Procedural context:

This case was a direct appeal under 28 U.S.C. 158(d)(2) from the United States Bankruptcy Court for the Eastern District of North Carolina. Review was de novo.

Facts:

The facts were not in dispute. The Debtor (“Johnson”) filed for Chapter 13 bankruptcy. Her ex-husband (“Zimmer”) objected to the confirmation of her Chapter 13 Plan, arguing that she over-stated her household size. At the time of her filing, Johnson and Zimmer shared custody of their two sons, who lived with her 204 days each year. Johnson’s current husband had joint custody of three children from his previous marriage, who lived with her and her husband approximately 180 days per year. Johnson’s proposed Chapter 13 plan claimed a household of seven members, including Johnson, her husband, her two children, and her three step-children. Zimmer argued that Johnson’s household was not seven, because the five children and step-children did not live with her full-time. He contended that, instead of using “heads on beds” to determine household size, an “economic unit” model would lower her monthly expenses and increase payments to the general unsecured creditors. The Bankruptcy Court noted that the Code does not define "household," there was no binding precedent on point, and that other bankruptcy courts were divided on the appropriate way to define that term. The Bankruptcy Court adopted a variation of the "economic unit" approach, first determining how many people’s income and expenses were intermingled with the Debtor’s, and then calculating how much time any part-time residents were members of the Debtor’s household. Using this approach, the Bankruptcy Court found (relying on stipulated facts) that each of the Debtor’s two sons constituted 0.56 members of the Debtor’s household (204 days out of 365), and that each of the Debtor’s three step-children constituted 0.49 members of her household (180 days out of 365), for a total of 2.59 children in her household full-time, which the Court then rounded up to three children, and a total household size of five. Johnson appealed, and the Fourth Circuit accepted a direct appeal from the Bankruptcy Court.

Judge(s):

Judge G. Steven Agee wrote the opinion of the Court affirming the Bankruptcy Court, which was joined by Judge Robert B. King. Judge J. Harvie Wilkinson, III, wrote a dissenting opinion.

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