- BAP No. NC-12-1425-JuTaPa, appealed from Bk. No. 12-42231-WJL
- BAP affirmed bankruptcy court ruling that ex-wife creditor's $245,000 claim against her Chapter 13 Debtor ex-husband was not entitled to priority under 11 USC section 507(a)(1)(A), but rather was a general unsecured claim since it was classified as an equalization payment and not as support. Notably, the court affirmed the lower court on the basis that the appellant had not provided the court with a transcript of the lower court's factual findings, and therefore the BAP could not make any determination on whether the bankruptcy court’s findings of fact were clearly erroneous with respect to their findings as to whether a debt is actually in the nature of support, which is a “factual determination made by the bankruptcy court as a matter of federal bankruptcy law.” In re Chang, 163 F.3d at 1140. “In determining whether a debtor’s obligation is in the nature of support, the intent of the parties at the time the settlement agreement is executed is dispositive.” In re Sternberg, 85 F.3d at 1405." The appellant was warned of the consequences of not filing an appendix or record with the BAP but she failed to heed the warning and the Court therefore had no choice but to affirm the lower court's ruling against her.
- Procedural context:
- Appeal to 9th Circuit BAP from bankruptcy court for the Northern District of California.
- Debtor Adalberto was married to Olivia for approximately ten years. In December 2012, they divorced and entered into a martial settlement agreement (MSA). Both parties were represented by counsel. Under the MSA, each party gave up the right to receive spousal support from the other. The MSA also contained an equalizing payment of $245,000 whereby Adalberto would pay Olivia that amount by making monthly payments ranging from $750 to $1,300 until the amount was paid. Adalberto made some payments under the agreement. On March 12, 2012, Adalberto filed his chapter 13 petition. He listed Olivia on Schedule E as a creditor holding a domestic support obligation and asserted that he was current on the payments. Debtor’s chapter 13 plan was a stepped-up five-year plan with a 4% dividend to general unsecured claims. It also paid priority claimants under § 507 in full. The chapter 13 trustee objected to debtor’s plan because he could not complete it within sixty months if Olivia’s $245,000 claim was entitled to priority. Debtor then objected to Olivia’s POC on the grounds that it failed to take into consideration the amounts he had paid and that the MSA made clear that (1) no spousal support payments were due and (2) the $245,000 amount was an equalizing payment. In response, Olivia argued that although the MSA indicated there were no further spousal obligations, that provision was not determinative on the issue under the holding in Friedkin v. Sternberg (In re Sternberg), 85 F.3d 1400 (9th Cir. 1996), overruled on other grounds by Murray v. Bammer (In re Bammer), 131 F.3d 788, 792 (9th Cir. 1997) (en banc). Olivia also submitted a declaration stating that at the time of her separation from debtor, she had not worked for three years and that debtor’s payments to her pursuant to the MSA were intended to assist her in getting back on her feet. On July 18, 2012, the bankruptcy court heard the matter and sustained debtor’s objection. Olivia filed her notice of appeal on August 14, 2012. On November 29, 2012, the bankruptcy court entered the order sustaining debtor’s objection to Olivia’s POC. Accordingly, Olivia’s appeal was timely.
- JURY, TAYLOR, and PAPPAS
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2 Being Processed