Chamberlain v. Chamberlain ( 2018 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT February 20, 2018
_________________________________
Elisabeth A. Shumaker
Clerk of Court
In re: STEPHEN D.
CHAMBERLAIN,
Debtor.
------------------------------
No. 17-1121
STEPHEN D. CHAMBERLAIN, (D.C. No. 1:16-CV-01123-PAB)
(D. Colo.)
Appellant,
v.
JUDITH C. CHAMBERLAIN;
DOUGLAS B. KIEL, as Chapter 13
Trustee,
Appellees.
_________________________________
ORDER AND JUDGMENT *
_________________________________
Before LUCERO, BACHARACH, and MORITZ, Circuit Judges.
_________________________________
*
The parties do not request oral argument, and it would not materially
help us to decide this appeal. As a result, we decide the appeal based on
the briefs. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).
This order and judgment does not constitute binding precedent except
under the doctrines of law of the case, res judicata, and collateral estoppel.
But the order and judgment may be cited for its persuasive value under
Fed. R. App. P. 32.1(a) and 10th Cir. R. 32.1(A).
Mr. Stephen Chamberlain agreed to pay his children’s college
expenses as part of a divorce proceeding. When he failed to comply with
this obligation, the bankruptcy court allowed a priority claim by his
ex-wife, Ms. Judith Chamberlain, to enforce this obligation on behalf of
their children. Stephen 1 challenges this order, and we affirm.
I. Background
Stephen and Judith Chamberlain were divorced in 2009 after a
21-year marriage. During their marriage, Stephen worked for Southwest
Airlines and his wife stayed home to care for their three children, Sarah,
Kate, and John.
The divorce decree incorporated a marital settlement agreement
signed by Stephen and Judith. This agreement included a “College
Education” provision, which stated that following exhaustion of their
college savings accounts, “Husband shall pay the costs of tuition, room and
board, books, registration fees, and reasonable application fees incident to
providing each Child with an undergraduate college education for four
consecutive years of college.” R. Vol. II, at 70.
Stephen did not meet his obligations under the college education
provision, which led Judith to file a motion in Maryland state court to
enforce the marital settlement agreement. This motion was resolved in
1
Because the parties have the same last name, we will refer to them as
Stephen and Judith.
2
2011 through a consent order. In the order, Stephen reaffirmed his
obligation to pay his children’s college expenses under the marital
settlement agreement, including repayment of student loans to the two
oldest children.
Stephen later failed to pay John’s college expenses, and Judith filed
another action in state court to enforce the marital settlement agreement
and the 2011 consent order. This action was resolved by a second consent
order. There Stephen agreed to contribute up to $14,000 per academic year
toward John’s college expenses. After Stephen again failed to comply, the
state court found him in contempt and awarded judgment to Judith for
$14,000 (Stephen’s share of the first year of John’s college tuition) and the
attorney fees incurred by Judith to enforce the marital settlement
agreement. When Judith initiated collection efforts, Stephen filed
bankruptcy.
Judith filed a proof of claim, which included
 the amounts still owed on Sarah and Kate’s undergraduate
student loans and
 the amount that Stephen had agreed to pay toward John’s
college expenses.
According to Judith, these amounts constituted “domestic support
obligations” under 11 U.S.C. § 101(14A), creating priority claims that
must be fully repaid. See 11 U.S.C. § 1322(a) (requiring full payment of
priority claims). Stephen objected, arguing that
3
 his obligation to pay the children’s college expenses did not
constitute a domestic support obligation and
 Judith’s claim was invalid because she was not a proper party
and had not proven the amounts claimed.
After an evidentiary hearing, the bankruptcy court
 sustained Stephen’s objection to $8,632.85 of the amount
claimed by Judith and
 found that $108,085.08 of the debt constituted a domestic
support obligation and created a priority claim.
Stephen appealed in district court, which affirmed. He now appeals to our
court. 2
II. Standard of Review
In an appeal from a final decision of a bankruptcy court, “we
independently review the bankruptcy court’s decision, applying the same
standard as the . . . district court.” Aviva Life & Annuity Co. v. White (In re
Millennium Multiple Emp’r Welfare Benefit Plan), 772 F.3d 634, 638
(10th Cir. 2014) (internal quotation marks and brackets omitted). In
applying this standard, we conduct de novo review of the bankruptcy
court’s legal conclusions and clear-error review of the court’s factual
findings. Id. at 639. In conducting this review, we do not defer to the
district court’s analysis, though it informs our review. Paul v. Iglehart (In
re Paul), 534 F.3d 1303, 1310 (10th Cir. 2008).
2
Because Stephen is appearing pro se, we construe his filings liberally
but do not act as his advocate. See Yang v. Archuleta, 525 F.3d 925, 927
n.1 (10th Cir. 2008).
4
III. Domestic Support Obligation
The primary question is whether Stephen’s obligation to pay his
children’s college expenses qualifies as a “domestic support obligation.”
The bankruptcy court answered “yes,” and we uphold this determination.
The requirements of a domestic support obligation. A debt
constitutes a “domestic support obligation” if it meets four requirements:
1. It is “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.
2. It is “in the nature of alimony, maintenance, or support . . . 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.”
3. It arises from “a separation agreement, divorce decree, or
property settlement agreement,” “an order of a court of record,”
or a lawful determination by a governmental unit.
4. It has not been assigned to a nongovernmental entity unless for
collection purposes.
11 U.S.C. § 101(14A); see Taylor v. Taylor (In re Taylor), 737 F.3d 670,
678 (10th Cir. 2013). As the party challenging discharge, Judith bore the
burden of proving that the debt entailed a domestic support obligation. See
Taylor, 737 F.3d at 677.
The arguments in bankruptcy court and the court’s finding. In
bankruptcy court, Stephen argued that his obligation to pay his children’s
college expenses did not constitute a domestic support obligation because
it was not “in the nature of alimony, maintenance, or support” (the second
5
requirement). 11 U.S.C. § 101(14A)(B). This argument involves a factual
question subject to the clear-error standard of review. Taylor, 737 F.3d
at 674. Under this standard, we must affirm the bankruptcy court’s factual
finding unless it lacks “factual support in the record or if, after reviewing
all of the evidence, we are left with the definite and firm conviction that a
mistake has been made.” 3 Gillman v. Ford (In re Ford), 492 F.3d 1148,
1153 (10th Cir. 2007) (internal quotation marks omitted).
The bankruptcy court disagreed with Stephen, finding that his
obligation comprised domestic support. We conclude that the bankruptcy
court did not commit clear error. The court properly conducted a dual
inquiry to determine whether these obligations involved support, “looking
first to the intent of the parties at the time they entered into their
agreement, and then to the substance of the obligation.” Taylor, 737 F.3d
at 676.
Intent of the parties when entering into the agreement. With respect
to the initial issue of intent, the court appropriately considered
 the language and structure of the college expense obligation in
the marital settlement agreement and
3
In bankruptcy court, Stephen also argued that Congress had intended
the term “support” to cover only what was necessary to provide for the
family’s daily living expenses. The bankruptcy court rejected this
argument, and Stephen has not challenged this aspect of the court’s ruling.
6
 the parties’ testimony regarding surrounding circumstances,
including the disparity in Stephen and Judith’s financial
circumstances at the time of the divorce.
See Sampson v. Sampson (In re Sampson), 997 F.2d 717, 723, 725
(10th Cir. 1993). 4
The bankruptcy court found that the parties had intended Stephen’s
college expense obligation to constitute support because
 this obligation was located in the part of the marital settlement
agreement that addressed child support, alimony, and related
matters,
 the evidence established that Stephen and Judith had viewed a
college education as an important part of their children’s
upbringing,
 the couple had long intended to provide for the children’s
education, and
 this intent could not be carried out at the time of the divorce,
given the couple’s relative financial capabilities, without
Stephen assuming this obligation.
These considerations support the bankruptcy court’s finding that the
parties had intended Stephen’s college expense obligation to constitute
support. See, e.g., Boyle v. Donovan, 724 F.2d 681, 683 (8th Cir. 1984)
(affirming the bankruptcy court finding that the debtor’s obligation to fund
4
Congress amended the definition of “domestic support obligation” in
the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
Pub. L. No. 109-8, 119 Stat. 23. But both before and after this amendment,
the definitions of “domestic support obligations” required that the debt be
“in the nature of support.” As a result, we consider case law preceding the
amendment when determining whether an obligation involves support. See
Taylor, 737 F.3d at 676 n.4.
7
college and post-graduate education involved support based on the parties’
relative financial capabilities, the parties’ view that “[c]ollege and post
graduate education were part of the family pattern of life,” and the debtor’s
initiative to assume this obligation); Gianakas v. Gianakas (In re
Gianakas), 917 F.2d 759, 763-64 (3d Cir. 1990) (concluding that the
bankruptcy court had reasonably found an intent for the ex-husband’s
mortgage debt to constitute support based on evidence that the couple had
wanted to maintain the marital home for the former wife and children and
only the ex-husband had the financial ability to do so).
Stephen disputes the bankruptcy court’s conclusions, relying on his
testimony and consent to a modification of the marital settlement
agreement. This reliance is misguided. 5
The bankruptcy court considered Stephen’s testimony but “[did not]
give [it] much credence” in light of the other evidence of the parties’
intent at the time of the divorce. R. Vol. II, at 269. This assessment of
credibility fell within the bankruptcy court’s purview because the intent
determination “does not turn on one party’s post hoc explanation as to his
5
Stephen is also mistaken in claiming that few courts have previously
found college expense obligations to be in the nature of support. See, e.g.,
Boyle, 724 F.2d at 683 (affirming the bankruptcy court’s finding that the
debtor’s obligation to fund children’s college and post-graduate education
was in the nature of support); Harrell v. Sharp (In re Harrell),
754 F.2d 902, 904-05 (11th Cir. 1985) (concluding that the debtor’s
obligation to pay his son’s post-majority educational expenses was in the
nature of support); In re Crosby, 229 B.R. 679, 681-82 (Bankr. E.D. Va.
1998) (same).
8
or her state of mind at the time of the agreement, even if uncontradicted.”
Sampson, 997 F.2d at 723.
Stephen also argues that his obligation originated in the 2011 and
2014 consent orders rather than the marital settlement agreement. For this
argument, Stephen points out that he consented to a modification of terms
between entry into the marital settlement agreement and the consent
orders. For example, in the consent orders, he agreed to pay Sarah and
Kate’s college loans and then cap his obligation to pay John’s college
expenses at $14,000 per year. As a result, Stephen argues, the bankruptcy
court should have assessed his intent at the time of the consent orders
rather than at the time of divorce.
We are not persuaded. Stephen’s obligation had already been
established by the college expense provision in the marital settlement
agreement, which was then included in the two consent orders. The
bankruptcy court therefore properly considered the parties’ intent as of
their entry into the marital settlement agreement.
The substance of the obligation. In determining whether Stephen’s
obligation involved support, the bankruptcy court also considered the
substance of Stephen’s obligation. “The critical question in determining
whether the obligation is, in substance, support is the function served by
the obligation at the time of the divorce.” Sampson, 997 F.2d at 725(internal quotation marks omitted). In turn, the function of the obligation
9
is affected by the parties’ relative financial circumstances at the time of
the divorce. See id. at 726 & n.7.
Here, the bankruptcy court reasonably determined that Stephen was
the only parent financially able to pay for the children’s college education.
Thus, the court was justified in regarding Stephen’s obligation, in
substance, as support. 6
* * *
For the foregoing reasons, we affirm the bankruptcy court’s
conclusion that Stephen’s college expense obligation was “in the nature of
support” as required for a domestic support obligation under the
Bankruptcy Code.
IV. New Arguments on Appeal
In bankruptcy court, Stephen did not dispute satisfaction of the three
other statutory requirements for a domestic support obligation. R. Vol. II,
at 286 (bankruptcy court notes the lack of a dispute regarding three of the
four requirements); see Taylor, 737 F.3d at 678 (summarizing the four
statutory requirements). In district court and our court, however, Stephen
6
Stephen disputes this conclusion, arguing that Maryland law does not
include post-secondary educational expenses in the definition of “child
support.” This argument is immaterial because characterization of a debt as
a domestic support obligation involves a matter of federal law. See
Sampson, 997 F.2d at 721, 722; Gianakas, 917 F.2d at 762. As a result, a
debt may be “in the nature of support . . . even though it would not legally
qualify as alimony or support under state law.” Yeates v. Yeates (In re
Yeates), 807 F.2d 874, 878 (10th Cir. 1986); accord Sampson, 997 F.2d
at 722; Richardson v. Edwards, 127 F.3d 97, 100-01 (D.C. Cir. 1997).
10
challenges two of the other requirements, arguing that (1) Congress
intended the term “child” as used in 11 U.S.C. § 101(14A)(A) to refer only
to minor children, not children older than 18 (like his children during their
college years) and (2) this obligation was established by the consent orders
rather than “a separation agreement, divorce decree, or property settlement
agreement.” 11 U.S.C. § 101(14A)(C).
Because Stephen did not raise these arguments in bankruptcy court,
they are forfeited. Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1128
(10th Cir. 2011). For arguments that are forfeited, we ordinarily consider
reversal only upon a showing of plain error. 7 See id.; Fed. Deposit Ins.
Corp. v. Kan. Bankers Sur. Co., 840 F.3d 1167, 1171-72 (10th Cir. 2016).
But Stephen has not argued plain error. As a result, we decline to consider
the possibility of plain error on Stephen’s two new arguments. Richison,
634 F.3d at 1131.
V. Judith’s Right to Assert a Claim
Stephen concedes that Judith can enforce his college expense
obligations on behalf of their children. 8 See Kirby v. Kirby, 741 A.2d 528,
7
“To show plain error, a party must establish the presence of (1) error,
(2) that is plain, which (3) affects substantial rights, and which
(4) seriously affects the fairness, integrity or public reputation of judicial
proceedings.” Fed. Deposit Ins. Corp., 840 F.3d at 1172.
8
Stephen and Judith are the only parties to the marital settlement
agreement and the 2011 and 2014 consent orders. The judgment based on
11
529, 533 (Md. App. 1999) (allowing the mother to enforce a consent decree
that had required the father to pay the college expenses for the adult
children). Courts have uniformly held that the party with the right to
enforce a note or other agreement has standing to assert the related
bankruptcy claim. See, e.g., Allen v. US Bank, NA (In re Allen),
472 B.R. 559, 565 (B.A.P. 9th Cir. 2012); In re Walker, 466 B.R. 271, 281
(Bankr. E.D. Pa. 2012).
Stephen nonetheless argues that Judith cannot assert this claim
because the bankruptcy court’s order would allow her to receive the
payments without a corresponding obligation to apply these payments to
the children’s college loans or college expenses. We reject this argument
for two reasons.
First, Stephen has not presented any evidence suggesting that Judith
would fail to apply these funds to her children’s college loans and
expenses. In fact, Judith has already incurred repayment obligations to
finance John’s college expenses after Stephen had failed to pay them.
Second, the bankruptcy court awarded the educational expenses to
Judith “for the benefit of her children,” adding that “any recovery for such
amounts ultimately must be used only for the claimed educational
the 2014 consent order also lists Judith as the party entitled to collect the
$14,000 that Stephen then owed for John’s college expenses.
12
expenses.” R. Vol. II, at 302. As a result, Stephen lacks any basis to fear
that Judith would improperly profit from the required payments.
For both reasons, we reject Stephen’s challenge to Judith’s right to
assert a claim.
VI. Kate’s Loan Amount
Stephen also argues that the bankruptcy court erred in finding that he
had owed $24,093.73 on Kate’s undergraduate loans. Judith presented loan
summaries obtained from the loan servicers in support of this amount, and
Stephen relied on his own testimony about his payments. The bankruptcy
court carefully examined this evidence and found the amount due on Kate’s
loans. This finding was not clearly erroneous.
Affirmed.
Entered for the Court
Robert E. Bacharach
Circuit Judge
13