Taylor v. Taylor

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	ELOISA MARIA TAYLOR, 	No. 7-10-15832 JA
Debtor.
MATTHEW E. TAYLOR,
Plaintiff,
v. 	Adversary No. 11-1020 J
ELOISA MARIA TAYLOR,
Defendant.
MEMORANDUM OPINION
THIS MATTER is before the Court on the Debtor’s Motion to Dismiss Matthew E.
Taylor’s Complaint Objecting to Dischargeability of Debts (“Motion to Dismiss”) filed by
Defendant Eloisa Maria Taylor. The Court heard oral argument on the Motion to Dismiss on
April 7, 2011 and took the matter under advisement. 	At the final hearing on the Motion to
Dismiss, Bonnie B. Gandarilla represented the Plaintiff, Matthew E. Taylor, and Karl F. Kalm
represented the Defendant, Eloisa Maria Taylor. 	Defendant requests dismissal of Plaintiff’s
Complaint Objecting to Discharge (“Complaint”) under Rule 12(b)(6), Fed.R.Bankr.P., made
applicable to adversary proceedings by Rule 7012, Fed.R.Bankr.P., for failure to state a claim
upon which relief can be granted.
Plaintiff filed this adversary proceeding to seek a determination of non-dischargeability
of a debt consisting of an overpayment of spousal support. 	Plaintiff asserts that the debt is non-
dischargeable under one or more of the following non-dischargeability provisions: 1) 11 U.S.C.
§ 523(a)(2)(A) as a debt procured by false pretenses, a false representation or actual fraud; 2)
11 U.S.C. § 523(a)(5) as a domestic support obligation; or 3) 11 U.S.C. § 523(a)(15) as a debt
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that is not a domestic support obligation but otherwise incurred in connection with a divorce
decree or other order of a court and owed to a former spouse. 	After consideration of the
Motion to Dismiss in light of the applicable code sections and case law, and being otherwise
sufficiently informed, the Court finds that the Complaint fails to state a claim under 11 U.S.C. §
523(a)(2)(A) or 11 U.S.C. § 523(a)(5), but states a claim under 11 U.S.C. § 523(a)(15). The
Court will, therefore, grant the Motion to Dismiss in part, and deny the Motion to Dismiss as to
Plaintiff’s claim under 11 U.S.C. § 523(a)(15).
STANDARD FOR EVALUATING A MOTION TO DISMISS UNDER RULE 12(b)(6)
A motion to dismiss for failure to state a claim is governed by Rule 12(b)(6),
Fed.R.Civ.P., made applicable to adversary proceedings by Rule 7012, Fed.R.Bankr.P. 	The
purpose of a motion to dismiss under Rule 12(b)(6), Fed.R.Civ.P. is to test “the sufficiency of the
allegations within the four corners of the complaint after taking those allegations as true.”
Mobley v. McCormick, 40 F.3d 337, 340 (10 th Cir. 1994). 	In considering a motion to dismiss,
the Court must evaluate the facts alleged in the complaint in the light most favorable to the
plaintiff. 	Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006). 	To survive a motion to
dismiss under Rule 12(b)(6), Fed.R.Civ.P., the complaint must contain enough facts to state a
cause of action that is “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007). In other words, the plaintiff must “nudge [his] claims
across the line from conceivable to plausible.” Id.
In applying this standard, the trial court should “‘look to the specific allegations in the
complaint to determine whether they plausibly support a legal claim for relief.’” Alvarado v.
KOB-TV, L.L.C., 493 F.3d 1210, 1215,n.2 (10 th Cir. 2007)(quoting Miller v. Glanz, 948 F.2d
1562, 1565 (10th Cir. 1991)). The Court must not “weigh the potential evidence that the parties
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might present at trial” in order to test the sufficiency of the complaint for purposes of Rule
12(b)(6). Sutton v. Utah State Sch. For the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.
1999)(citation omitted). 	Nevertheless, to withstand dismissal, the plaintiff must sufficiently
allege all facts necessary to support the required elements under the legal theory proposed.
Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10 th Cir. 2007).
FACTUAL ALLEGATIONS CONTAINED IN THE COMPLAINT 1
The Complaint alleges that Plaintiff and Defendant were married in 1988 and later
divorced by Final Decree of Divorce entered on September 22, 2005 by the Circuit Court of
Fairfax County, Virginia (“State Court”). See Complaint ¶¶ 4 and 5. The Final Decree of
Divorce obligated Plaintiff to pay Defendant spousal support. 	Id. at ¶ 9. In April of 2009,
Plaintiff filed a motion in State Court to terminate spousal support, which the State Court
granted. Id. at ¶ 10 and ¶ 11. The debt at issue in this adversary proceeding consists of the
judgment entered by the State Court against Defendant (“Judgment”) in the amount of
$40,660.59 representing overpayment of spousal support by Plaintiff to Defendant from May 15,
2009 through August 29, 2010, plus interest at the judgment rate for that period. 	Id. The
Judgment also awarded Defendant $10,000.00 in attorneys’ fees that Plaintiff seeks the Court to
determine is non-dischargeable. Id. 	The Defendant filed a voluntary petition under Chapter 7 of
the Bankruptcy Code on November 22, 2010.
DISCUSSION
A. 	Whether the Complaint states a cause of action under 11 U.S.C. § 523(a)(2)(A)
Plaintiff contends that Defendant knew that she was not entitled to continue to receive
spousal support payments and that, therefore, she obtained spousal support from Plaintiff by
1Additional factual allegations contained in the Complaint are addressed in the Discussion section of this
Memorandum Opinion.
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false pretenses, a false misrepresentation, or actual fraud within the meaning of 11 U.S.C. §
523(a)(2)(A).2 See Complaint, ¶¶ 14 and 15. 	To prevail on a non-dischargeability claim based
on false pretenses, a false representation or actual fraud, a plaintiff must demonstrate, by a
preponderance of the evidence, that: 	“[t]he debtor made a false representation; the debtor made
the representation with the intent to deceive the creditor; the creditor relied on the representation;
the creditor’s reliance was [justifiable]3 ; and the debtor’s representation caused the creditor to
sustain a loss.” Fowler Bros. v. Young, (In re Young), 91 F.3d 1367, 1373 (10 th Cir. 1996).
Plaintiff’s Complaint fails to allege facts sufficient to support all of the required elements for
non-dischargeability under 11 U.S.C. § 523(a)(2)(A).
Plaintiff alleges that Defendant misrepresented facts relating to her cohabitation in a
relationship analogous to marriage. 	In order to rely on a misrepresentation, Plaintiff necessarily
must first be deceived. “[A] person cannot rely on a representation if ‘he knows that it is false or
its falsity is obvious to him.’” In re Apte, 180 B.R. 223, 229 (9th Cir. BAP 1995), aff’d, 96 F.3d
1319 (9th Cir. 1996)(quoting In re Kirsch, 973 F.2d 1454, 1456 (9th Cir. 1992)(per
curiam)(quoting Restatement (Second) of Torts §§ 545A. 541 (1977)). 	Plaintiff filed a motion
in the State Court to terminate spousal support in April of 2009 on the ground that Defendant
was cohabitating in a relationship analogous to marriage, contrary to the requirements under
Virginia law for continued receipt of spousal support. The State Court entered its Judgment for
overpayment of spousal support during the period from May 15, 2001 through August 20, 2010.
2Section 523(a)(2)(A) provides, in relevant part:
A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt –
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent
obtained by –
(A) false pretenses, a false representation, or actual fraud, other than a statement
respecting the debtor’s or an insider’s financial condition[.]
11 U.S.C. § 523(a)(2)(A).
3 Field v. Mans, 516 U.S. 59, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995) changed the standard of reliance under 11
U.S.C. § 523(a)(2)(A) from “reasonable” to “justifiable.”
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Because the Judgment awarding Plaintiff overpayment of spousal support is based solely on
spousal support payments due after Plaintiff filed his motion to terminate, he could not have
relied on Defendant’s alleged misrepresentation when continuing to make spousal support
payments after filing the motion in April of 2009. By April of 2009 Plaintiff already knew or
believed that Defendant was not entitled to receive continued spousal support payments. 	He
was not, therefore, deceived by any misrepresentation as to Defendant’s right to continue to
receive spousal support after April 1, 2009, and could not have made such payments in reliance
on any misrepresentation by Plaintiff. 	Plaintiff argued that his continued payments of spousal
support after the filing of the motion to terminate spousal support evidences reliance. 	The Court
disagrees. There simply can be no reliance when the Plaintiff has not been deceived; his belief
that Defendant misrepresented whether she was cohabitating contrary to the requirements under
Virginia law for continued receipt of spousal support is what prompted Plaintiff to seek
termination of his obligation. Similarly, because Plaintiff believed that Defendant was no longer
entitled to receive spousal support, Plaintiff’s loss was not caused by his reliance on Defendant’s
alleged deception.4 Because the allegations in the Complaint, even if accepted as true, fail to
state sufficient facts to establish all elements necessary to establish a non-dischargeability claim
based on false representations, false pretenses, or actual fraud, the Court will grant Defendant’s
motion to dismiss Plaintiff’s claim under 11 U.S.C. § 523(a)(2)(A).
4 Cf. Businger v. Storer (In re Storer), 380 B.R. 223, 232 (Bankr.D.Mont. 2007)(noting that “to prevail under 11
U.S.C. § 523(a)(2)(A), a creditor must establish that a claim sought to be discharged arose from an injury
proximately resulting from his or her reliance on a representation that was made with the intent to deceive[ ]” and
that, based on the Restatement (Second) of Torts (1976) “proximate cause entails (1) causation in fact, which
requires a defendant’s misrepresentations to be a ‘substantial factor in determining the course of conduct that results
in loss . . .’”)(quoting Restatement (Second) of Torts (1976) § 546).
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B. 	Whether the Complaint states a claim under 11 U.S.C. § 523(a)(5)
Pursuant to 11 U.S.C. § 523(a)(5), domestic support obligations are not dischargeable in
bankruptcy. “Domestic support obligation” is defined by 11 U.S.C. 101(14A), which provides:
The term ‘domestic support obligation’ means a debt that accrues before, on, or after the
date of the order for relief in a case under this title, including interest that accrues on that
debt as provided under applicable nonbankruptcy law notwithstanding any other
provision of this title, that is—
(A) owed to or recoverable by—
(i) 	a spouse, former spouse, or child of the debtor or such child’s
parent, legal guardian, or responsible relative; or
(ii) 	a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance
provided by a governmental unit) 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;
(C) established or subject to establishment before, one, or after the date of the
order for relief in a case under this title, by reason of applicable provisions of–
(i) 	a separation agreement, divorce decree, or property settlement
agreement;
(ii) 	an order of a court of record; or
(iii) 	a determination made in accordance with applicable nonbankruptcy
law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned
voluntarily by the spouse, former spouse, child of the debtor, or such child’s
parent, legal guardian, or responsible relative for the purpose of colleting the
debt.
11 U.S.C. § 101(14A).
Subsection (B) is the only requirement at issue here.
Although the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(“BAPCPA”) changed the language in 11 U.S.C. § 523(a)(5) to apply to “domestic support
obligations” as defined in 11 U.S.C. § 101(14A), this change “did not change the standard for
whether an obligation is in the nature of support.” 	Stover v. Phegley (In re Phegley), 443 B.R.
154, 157 (8th Cir. BAP 2011). 5 Consequently, it is appropriate to continue to apply the same
5 See also In re Charlton, 2008 WL 5539789, *5 (Bankr.D.Kan. Dec.3, 2008)(reasoning that even though the
language in the Bankruptcy Code defining “domestic support obligation” is not identical to the language contained
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test for determining whether a debt is in the nature of support that was applicable under 11
U.S.C. § 523(a)(5) prior to the enactment of BAPCPA.6 A debt is in the nature of support and
consequently non-dischargeable under 11 U.S.C. § 523(a)(5) only when it is “in substance
support.” In re Sampson, 997 F.2d 717, 723 (10th Cir.1993).7 This determination is made
according to federal bankruptcy law, not state law. Loper v. Loper (In re Loper), 329 B.R. 704,
708 (10th Cir.BAP 2005). The fact that the debt was denominated as spousal support for
Defendant in the Final Decree of Divorce does not conclusively establish the character of the
debt for purposes of dischargeability.8 The critical question in determining whether a debt is
truly in the nature of support is “‘the function served by the obligation at the time of the
divorce[,]’” which the Court may determine “by considering the relative financial circumstances
of the parties at the time of the divorce.” Sampson, 997 F.2d at 725-726 (quoting In re
Gianakas, 917 F.2d 759, 763 (3d Cir.1990).
Plaintiff urges that a debt to recover an overpayment of spousal support constitutes a debt
“in the nature of support” because it necessarily retains the character of the original debt from
which the repayment obligation arose. This Court disagrees. Whether a debt constitutes a non-
in 11 U.S.C. § 523(a)(5) prior to the enactment of BAPCPA, it is “consistent with the ‘actual-support’ requirement
for alimony, maintenance and support debts.”).
6 Charlton, 2008 WL 5549789 at *5 (stating that the law interpreting former 11 U.S.C. § 523(a)(5) provides
“persuasive guidance” in interpreting “domestic support obligation” as defined in 11 U.S.C. § 101(14A)).
7See also, Phegley, 443 B.R. at 157 (stating that in determining whether the obligation is truly in the nature of
support, and consequently non-dischargeable, “the crucial question is the function the award was intended to
serve.”)(citations omitted); Jones v. Jones, 9 F.3d 878, 880 (10 th Cir. 1993)(noting that the “Congressional policy
concerning §523(a)(5) ‘has always been to ensure that genuine support obligations would not be
discharged.’”)(quoting Shine v. Shine, 802 F.2d 583, 588 (1st Cir. 1986)).
8Cf. Young v. Young (In re Young), 35 F.3d 499, 500 (10 th Cir. 1994)(finding that the determination of the parties’
shared intent “is not limited to the words of the settlement agreement, even if unambiguous” and stating that “the
bankruptcy court is required to look behind the words and labels of the agreement in resolving this issue.”)(citing
Sampson, 997 F.2d at 722); In re Busch, 369 B.R. 614, 622 (10 th Cir. 2007)(stating that the Court must “make its
own determination of the character of the obligation from the facts at hand, not rely on the denomination of the
obligation in the divorce decree.”)(citation omitted). See also Charlton, 2008 WL 5539789 at * 4 (noting that
“while the language of former §523(a)(5)(B) might have been read only to permit the discharge of a debt that had
been called ‘alimony, maintenance, or support’ because it was not actually such a debt, the Tenth Circuit also
interpreted the provision to mean that a debt that had not been called ‘alimony, maintenance, or support’ might be
excepted from discharge because it actually was a support debt.”)(citations omitted).
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dischargeable domestic support obligation requires a determination that the debt is in the nature
of support with respect to the party seeking to have the debt excepted from discharge, in this
case, the creditor-spouse.
In Norbut v. Norbut (In re Norbut), 387 B.R. 199 (Bankr.S.D.Ohio 2008), the bankruptcy
court considered whether a judgment that liquidated an overpayment of alimony or spousal
support constituted a non-dischargeable debt under 11 U.S.C. § 523(a)(5). In holding that the
debt was non-dischargeable, the Norbut court considered whether the overpayments were, in
fact, support to the creditor-spouse. Id. at 208. The Norbut court expressly declined to hold that
“a debt on account of an overpayment of a support obligation is per se support for purposes of 11
U.S.C. § 523(a)(5).” Id. at 211. The Norbut court was persuaded by evidence that the creditor-
spouse at best lived a frugal existence, that his overpayment of alimony came from his share of a
pension that was necessary to his subsistence, and that return of the overpayment restored him to
the standard of living anticipated for him when the original divorce decree was entered. Id. at
208.
This Court agrees that 11 U.S.C. § 523(a)(5) requires consideration of whether an
obligation to return the overpayment of spousal support is itself, in substance, in the nature of
support for the creditor-spouse entitled to reimbursement, taking into account the relative
financial circumstances of the parties at the time of the divorce. This approach balances the
policy that exceptions to discharge should be construed narrowly to effectuate the fresh start
purpose of bankruptcy with the policy underlying 11 U.S.C. § 523(a)(5) that favors enforcement
of familial support obligations.9
9 See Miller v. Gentry (In re Miller), 55 F.3d 1487, 1489 (10 th Cir. 1995)(describing the competing “fresh start”
purpose of bankruptcy and the policy underlying § 523(a)(5) that “favors enforcement of familial support
obligations over a ‘fresh start’ for the debtor.”)(citation omitted).
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This approach finds support in In re Vanhook, 426 B.R. 296 (Bankr.N.D.Ill. 2010). In
that case the bankruptcy court considered whether an overpayment of child support constituted a
“domestic support obligation” for purposes of determining whether the claim was entitled to
priority status under 11 U.S.C. § 507(a)(1)(A). The creditor in Vanhook had obtained a
judgment against the debtor in state court in the amount of $55,000 for wrongfully paid child
support. Id. at 298. 	The Vanhook court rejected the argument that an award for overpayment of
child support necessarily retains the character the debt represented when originally paid, finding
that the debt was “merely a money judgment awarded to the Creditor for his wrongful payment
of child support to the Debtor.” Id. at 301. Consequently, the Vanhook court concluded that the
creditor’s claim was not entitled to priority status under 11 U.S.C. § 507(a)(1)(A) because the
creditor failed to establish that the debt was truly in the nature of support. 	Id. at 302.
Plaintiff relies upon Wisconsin Dep’t of Workforce Dev. v. Ratliff, 390 B.R 607, 617
(E.D.Wis. 2008), which found that the claim of Wisconsin Department of Workforce
Development (“Department”) based on an overpayment of food stamps should be afforded first
priority treatment under 11 U.S.C. § 507(a)(1)(B). The Ratliff court found that the food stamp
overpayment was “in the nature of support” because the food stamps were, in fact, used to
support the debtor’s children. Id. at 615. The overpayment thus met all the requirements for a
“domestic support obligation” under 11 U.S.C. §101(14A), including the requirement that the
amount is owed to a governmental unit.10 Id. at 616.
In re Baker, 294 B.R. 281 (Bankr.N.D.Ohio 2002) also supports Plaintiff’s position. In
Baker, the bankruptcy court determined that the debt represented by overpayments of child
support nevertheless retained its character as a child support obligation; consequently, the Baker
court held that the debt was non-dischargeable under 11 U.S.C. §523(a)(5). Id. at 288. In
10 See 11 U.S.C. §101(14)(A)(ii)(providing that the debt is “owed to or recoverable by . . . a governmental unit.”).
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reaching this conclusion, the Baker court reasoned, in part, that applicable Ohio law provided
that an overpayment of child support retains its character as a support obligation, and that
because 11 U.S.C. § 523(a)(5) excepts from discharge obligations “for . . . support of such . . .
child” a debt for overpayments that were made under an original order for child support is non-
dischargeable “whenever there is any legal duty to pay such an obligation.” Id. at 287 and 288.
The Baker court also reasoned that because children do not generally have an interest in their
parents’ property, “an obligation labeled as child support would rarely, if ever, be a division of
property” so that there would be no need for the court to consider whether the obligation was
truly in the nature of support, as opposed to a dischargeable property division under former 11
U.S.C. § 523(a)(5). Id.at 285.
The Court declines to apply the reasoning of Ratliff or Baker to this case. The Ratliff and
Baker courts determined that debts owed for the overpayment of support necessarily retained
their character as support obligations regardless of the financial circumstances of the creditor-
spouse at the time of the divorce. Because 11 U.S.C. §523(a)(5) requires that the debt, to be
non-dischargeable, must in substance function as support, the Court finds that Plaintiff cannot
solely rely on the original character of the debt owed by him to his former spouse to state a claim
that a debt owed to him by his former spouse for overpayment of spousal support is non-
dischargeable.
The Complaint filed in this adversary proceeding fails to allege any facts from which a
trier of fact could determine that the recovery of the overpayment from Defendant, plus the
attorneys’ fees awarded in connection with the Judgment, is in the nature of support for the
Plaintiff as creditor-spouse. Plaintiff argues that because the average consumer spends a
substantial percentage of his or her annual paycheck on food, housing, and transportation, it is
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“highly probable” that Plaintiff will be able to prove that he needed the funds to make the
overpayment to maintain his daily necessities. See Plaintiff’s Response to Debtor’s Motion to
Dismiss Complaint Under Fed.R.Civ.P. 12(b)(6) and Fed. R. Bank. P. 7012(b) (“Response”), pp.
4 – 5 (Docket No. 6). However, no such allegations are made in the Complaint, and generalities
and national averages are insufficient to establish that the overpayment functions as support for
Plaintiff. 	Absent any factual allegations regarding Plaintiff’s financial condition and needs at
the time the obligation arose, it is impossible to determine that the Judgment, including the
award of attorneys’ fees, is in the nature of support. Consequently, Plaintiff has failed to state a
plausible cause of action under 11 U.S.C. § 523(a)(5). 	The Court will, therefore, dismiss
Plaintiff’s claim of non-dischargeability under that section.
C. 	Whether the Complaint states a claim under 11 U.S.C. § 523(a)(15)
Pursuant to 11 U.S.C. §523(a)(15), debts, other than domestic support obligations, owing
to a former spouse that arise out of a divorce proceeding are not dischargeable. 	That section
provides, in relevant part:
A discharge under section 727 . . . of this title does not discharge an individual
debtor from any debt—
(15) to a spouse, former spouse, or child of the debtor and not of the kind
described in paragraph (5) that is incurred by the debtor in the course of a
divorce or separation or in connection with a separation agreement,
divorce decree or other order of a court of record, or a determination made
in accordance with State or territorial law by a governmental unit.
11 U.S.C. § 523(a)(15).
The Complaint alleges that the debt at issue representing overpayment of spousal support is a
debt owing to a former spouse that was incurred in connection with a separation agreement,
divorce decree, or other order of a court. 	See Complaint ¶ 12. 	Because the Complaint included
a request for non-dischargeability under both 11 U.S.C. § 523(a)(5) and § (a)(15), the Court will
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consider Plaintiff’s claim under 11 U.S.C. § 523(a)(15) as an alternative request for relief that
necessarily includes an allegation that the debt is not a domestic support obligation. 	Taking
these allegations as true, the Complaint states a claim under 11 U.S.C. § 523(a)(15). 	The
Complaint alleges that 1) Defendant is a former spouse; 2) the debt for reimbursement of an
overpayment of spousal support arose in connection with a divorce decree; and 3) the debt is not
of a kind found in 11 U.S.C. § 523(a)(5).
Section 523(a)(15) was amended by BAPCPA to make irrelevant the debtor’s ability to
pay and to eliminate the balancing test that weighs the detriment to the former spouse if the debt
is discharged against the benefit to the debtor if the debt is discharged.11 Even prior to
BAPCPA, the non-dischargeability protections afforded by 11 U.S.C. §§ 523(a)(5) and (a)(15)
evidence Congress’ determination to temper the policy of protecting and favoring the debtor’s
fresh start when the debt at issue arises in connection with a divorce. In re Crosswhite, 148 F.3d
879, 881-882 (7th Cir. 1998)(citing Lawrence P. King, Collier on Bankruptcy ¶¶ 523.05,
523.11[2] (15th ed. rev. 1998)). 	That policy, which views the payment of family obligations to
be of “‘paramount societal importance’” was both reinforced and expanded by BAPCPA in
11See Burkhalter v. Burkhalter (In re Burkhalter), 389 B.R. 185, 188 (Bankr.D.Colo. 2008)(acknowledging that after
BAPCPA, the two affirmative defenses to 11 U.S.C. § 523(a)(15) no longer apply); Valentine v. Valentine (In re
Valentine), 2011 WL 830621, *2 (Banrk.D.N.M. March 3, 2011)(“After BAPCPA, the balancing test and the
debtor’s ability to pay were eliminated from 11 U.S.C. § 523(a)(15).”)(citations omitted). Pre-BAPCPA, 11 U.S.C.
§ 523(a)(15) provided, in relevant part:
A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt—
not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce
or separation or in connection with a separation agreement, divorce decree or other order of a
court of record a determination made in accordance with State or territorial law by a governmental
unit unless—
(A) the debtor does not have the ability to pay such debt from income or property of
the debtor not reasonably necessary to be expended for the maintenance or
support of the debtor or a dependent of the debtor, and if the debtor is engaged
in a business, for the payment of expenditures necessary for the continuation,
preservation, and operation of such business; or
(B) discharging such debt would result in a benefit to the debtor that outweighs the
detrimental consequences to a spouse, former spouse, or child of the debtor[.]
11 U.S.C. § 523(a)(15)(A) and (B).
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chapter 7 cases. In re Johnson, __ B.R. __ , 2011 WL 1060373, *8-*9 (Bankr.D.Mass. Mar. 21,
2011), amended in part by 2011 WL 1467913 (Bankr.D.Mass. Apr. 18, 2011)(quoting Macy v.
Macy (In re Macy), 200 B.R. 467, 470-71 (Bankr.D.Mass. 1996), aff’d, 114 F.3d 1 (1st Cir.
1997)(quoting H.R.Rep. No. 835, 103d Cong., 2nd Sess. 33, reprinted in 1994 U.S.C.C.A.N.
3340, 3342)). 	“[U]nder BAPCPA, all debts owed to a former spouse, or child of a debtor are
nondischargeable [in a chapter 7 case] if incurred in the course of a divorce proceeding,
notwithstanding the debtor’s ability to pay the debt or the relative benefits and detriments to the
parties.” Tarone v. Tarone (In re Tarone), 434 B.R. 41, 48 (Bankr.E.D.N.Y. 2010).
Defendant argues that Plaintiff’s claim fails as a matter of law because the statute was not
intended to include the recovery of an overpayment of spousal support by the paying spouse
from a dependant spouse as a non-dischargeable obligation; to do so “turns the statute on its
head.” See Memorandum in Support of Debtor’s Motion to Dismiss Matthew E. Taylor’s
Complaint Objecting to Dischargeability of Debts (“Defendant’s Brief”), p. 6 (Docket No. 4).
This Court disagrees.
Defendant relies upon Neavear v. Schweiker (In re Neavear), 674 F.2d 1201 (7th Cir.
1982) to illustrate his argument that Plaintiff should not be allowed to recover under 11 U.S.C. §
523(a)(15) when he is not the statute’s intended beneficiary. 	In Neavear, the Seventh Circuit
considered whether a debt owed to the Social Security Administration (“SSA”) for overpayment
of Social Security benefits was exempt from operation of the Bankruptcy Code by operation of
section 207 of the Social Security Act, 42 U.S.C. §407 (1976)12 regardless of whether the debt
falls within one of the enumerated exceptions to discharge found in 11 U.S.C. § 523(a).
Neavear, 674 F.2d at 1205. 	In rejecting the SSA’s argument that section 207 provides the SSA
12 Section 207 of the Social Security Act provided that a person’s right to future payment under Social Security Act
is not transferable, or assignable, and is not “subject to execution, levy, attachment . . . or to the operation of any
bankruptcy or insolvency law.” 42 U.S.C. § 407 (1976).
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with an exemption from the operation of the bankruptcy laws to the discharge of the debt, the
Neavear court reasoned that the SSA’s interpretation of section 207 “would transform a
provision designed to protect social security recipients from creditors into a provision conferring
super-creditor status on the SSA.” Id. at 1206.
Here, the claim for recovery of the overpayment is by the debtor’s former spouse. 	A
debtor’s former spouse is one of the parties the statute expressly intends to protect. See 11
U.S.C. § 523(a)(15)(“to a spouse, former spouse, or child of the debtor . . .”). 	Allowing a
former spouse to assert a non-dischargeability claim for a debt that arose in connection with a
divorce decree or other order of a court does not run contrary to the plain language and intended
purpose of 11 U.S.C. § 523(a)(15). Defendant’s construction of the statute requires the Court to
read the word “dependent” into the statute, such that a debt is non-dischargeable under 11 U.S.C.
§ 523(a)(15) only when the former creditor-spouse is also a dependent spouse. 	The plain
language of 11 U.S.C. § 523(a)(15) is not so limited. Further, BAPCPA’s amendment of 11
U.S.C. § 523(a)(15) eliminated from consideration the debtor’s ability to pay and the hardship on
the former creditor-spouse arising from a discharge of the debt.13 Thus, for purposes of
evaluating the sufficiency of Plaintiff’s Complaint, the Court cannot find, as a matter of law, that
Plaintiff’s Complaint fails to state a claim of non-dischargeability under 11 U.S.C. § 523(a)(15).
13 Cf. Ginzl v. Ginzl (In re Ginzl), 430 B.R. 702, 707 (Bankr.M.D. Fla. 2010)(stating that “BAPCPA removed the
balancing test from Section 523(a)(15) and made the distinction between domestic support obligations and other
obligations arising from a divorce immaterial in a dischargeability analysis” and finding that the debtor’s obligations
under a marital settlement agreement were nondischargeable “pursuant to the plain and unambiguous language of 11
U.S.C. § 523(a)(15) as enacted by BAPCPA.”)(citing 4 Collier on Bankruptcy, ¶ 523.23, at 523-124 (16th ed.
2009)); Sears v. Sears (In re Sears), 2008 WL 111231, *3 (Bankr.N.D.Ohio Jan. 8, 2008)(stating that “[t]he plain
language of the statute [§523(a)(15)] provides that all such debts owed to a former spouse that are not support
obligations are nondischargeable.”); Damschroeder v. Williams (In re Williams), 398 B.R. 464, 468
(Bankr.N.D.Ohio 2008)(observing that BAPCPA “entirely eliminated these affirmative defenses [under former §
523(a)(15)], thus making any debt falling with[in] the scope of § 523(a)(15) absolutely nondischargeable.”).
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Based on the foregoing, the Court will grant, in part, and deny, in part, Defendant’s
Motion to Dismiss. The Court will enter an order consistent with this Memorandum Opinion.
______________________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: 	May 5, 2011
COPY TO:
Bonnie B. Gandarilla 	Karl F. Kalm
Koo Im S. Tong 	Attorney for Defendant-Debtor
Attorneys for Plaintiff 	8605 Avenales Ave. NE
PO Box 7459 	Albuquerque, NM 87111
Albuquerque, NM 87194
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