Littleton v. Littleton (In Re Littleton)

United States Court of Appeals
Fifth Circuit
F I L E D
In the June 20, 2006
United States Court of Appeals Charles R. Fulbruge III
for the Fifth Circuit Clerk
_______________
m 05-41854
Summary Calendar
_______________
IN THE MATTER OF:
BRYAN L. LITTLETON, JR
Debtor.
***************
BRYAN L. LITTLETON, JR
Appellant,
VERSUS
DEBRA L. LITTLETON,
Appellee.
____________________________________
Appeal from the United States District Court
for the Eastern District of Texas
m 4:04-CV-211
_____________________________________
Before SMITH, GARZA, and PRADO, either party dies before the contractual ter-
Circuit Judges. mination date.
PER CURIAM:* Bryan adhered to the terms of the agree-
ment until July 2003, when he stopped making
Bryan Littleton appeals the district court’s the required payments. In November 2003 he
ruling that a debt he owes his ex-wife, Debra filed for chapter 7 bankruptcy, listing
Littleton, is in the nature of alimony, mainte- $167,439 he owed to Debra as a dischargeable
nance, or support, and accordingly is nondis- general unsecured debt. Debra challenges that
chargeable in bankruptcy proceedings under characterization, arguing that Bryan’s indebt-
11 U.S.C. § 523(a)(5). We affirm. edness to her is in the nature of “alimony to,
maintenance for, or support of” a former
I. spouse and accordingly, pursuant to 11 U.S.C.
The Littletons were divorced in March § 523(a)(5), is nondischargeable.
2001 and negotiated a settlement agreement
that was incorporated by the state court into Bryan counters that although the payments
its final decree of divorce. Under the heading underlying the debt are labeled as alimony in
of “Alimony,” the agreement states that the agreement, they are more accurately con-
sidered as part of the couple’s property settle-
[i]t is the mutual desire of the parties to ment. He bases this argument on the fact that
provide a continuing measure of support under the terms of the agreement governing
for Debra L. Littleton, Respondent, after property division, Debra was to receive only
the divorce. These payments undertaken $140,000 from a business of Bryan’s that had
by Petitioner, Bryan Littleton, are intended an appraised value of $500,000. Bryan claims
to qualify as contractual alimony as that that Debra was entitled to half of the value of
term is defined in section 71(a) of the In- the business ($250,000) and that he agreed to
ternal Revenue Code of 1986 (“the code”), categorize $110,000 of that amount as alimo-
as amended . . . . All provisions of this ny, instead of as a portion of the property set-
article will be interpreted in a manner con- tlement, to get her to sign the agreement.1
sistent with this intention.
After considering the terms of the settle-
The agreement goes on to specify that “Bryan ment agreement and hearing the testimony of
Littleton will pay to Debra L. Littleton both Bryan and Debra, the bankruptcy court
$1,100.00 per month as and for alimony.” Be- found that $101,200 of the debt Bryan owes
ginning on March 1, 2001, and ending on Feb- Debra is in the nature of alimony, maintenance,
ruary 1, 2011, payments under the agreement
are to be made on the first day of every month.
1
The obligation lapses immediately, however, if Bryan testified that “[Debra’s] attorney want-
ed in the event that [the business] went broke or we
didn’t make it or something, you know, that there
would still be a factor of $110,000” available to
*
Pursuant to 5TH CIR. R. 47.5, the court has de- Debra. The alimony provision in the settlement
termined that this opinion should not be published agreement actually calls for Bryan to pay Debra
and is not precedent except under the limited $1,100 per month for ten years, a total of
circumstances set forth in 5TH CIR. R. 47.5.4. $132,000.
2
or support, and accordingly is nondischarge- [u]nder bankruptcy law, the intent of the
able. The court found that the remaining parties at the time a separation agreement is
$66,239 is a dischargeable general unsecured executed determines whether a payment
debt. The district court affirmed the bank- pursuant to the agreement is alimony, sup-
ruptcy court’s findings, and Bryan appeals. port or maintenance within the meaning of
section 523(a)(5). See generally In re Da-
II. vidson, 947 F.2d 1294, 1296-97 (5th Cir.
The district court’s “[f]indings of fact are 1991); In re Gianakas, 917 F.2d 759, 762
reviewed under the ‘clearly erroneous’ stan- (3d Cir. 1990). A written agreement be-
dard; conclusions of law are subject to de novo tween the parties is persuasive evidence of
review.” In re Evert, 342 F.3d 358, 363 (5th their intent. Tilley v. Jessee, 789 F.2d
Cir. 2003). 1074, 1077 (4th Cir. 1986). Thus, if the
agreement between the parties clearly
III. shows that the parties intended the particu-
Bryan contends that the district court erred lar debt in question to reflect either support
in resting its findings exclusively on the lan- or a property settlement, then that charac-
guage of the settlement agreement and by terization will normally control. In re
foregoing an evaluation of the factors articu- Yeates, 807 F.2d 874 (10th Cir. 1986). On
lated in In re Nunnally, 506 F.2d 1024 (5th the other hand, if the agreement is ambigu-
Cir. 1994), as a means for determining wheth- ous, then the court must determine the par-
er a divorce-related obligation constitutes ali- ties’ intentions by looking to extrinsic evi-
mony, maintenance, or support, or is more dence. Id.
appropriately considered as part of a property
settlement.2 He further asserts that “consider- Evert, 342 F.3d at 368.
ation of the Nunnally factors would show that
Debra failed to introduce any evidence that the We found no ambiguity in the agreement at
[relevant] payments were actually necessary issue in Evert, and thus no need to consider
for her support,” and accordingly that the dis- extrinsic evidence such as the Nunnally fac-
trict court should have found that his monthly tors, because “both the labels given to the ob-
obligation under the settlement agreement ligation at issue in the agreement and the sub-
could not be characterized as alimony. stantive characteristics of the obligation clearly
reflect it is part of a property settlement.” Id.
We do not agree that consideration of the The presence of an “explicit, separate pro-
Nunnally factors is necessary in this case. We vision for nontrivial alimony in the agreement”
held in Evert that further established that “there is no basis for
judiciallyrefashioning the note contained in the
property settlement portion of the agreement
2
The Nunnally factors “include the disparity of as alimony.” Id. at 368-69.
the earning power of the parties, as well as their
business opportunities, the physical condition of Similarly, the settlement agreement in this
the parties, probable future need for support, . . .
case unambiguously categorizes the relevant
educational background, the fault in breaking up
payments as alimony and contains an explicit,
the marriage and the benefits [the] innocent spouse
would have received from a continuation of the
separate provision for the division of property.
marriage.” Nunnally, 506 F.2d at 1026-27. As the district court asserted, the statements in
3
the agreement “demonstrate that both the label
and the substantive characteristics of the pay-
ments underlying Bryan’s $101,200.00 debt
are indisputably in the nature of alimony as
opposed to a property settlement . . . .” Ac-
cordingly, the district court did not err in
deciding, without looking to extrinsic evi-
dence, “that Bryan and Debra did in fact intend
for the payments underlying the debt to oper-
ate as such.”
AFFIRMED.
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