Brown v. Brown

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	ERIC BROWN, 	No. 13-13-10538 JA
Debtor.
ERIC BROWN,
Plaintiff,
v. 	Adversary No. 13-1025 J
BRITTANY BROWN,
Defendant.
MEMORANDUM OPINION
THIS MATTER is before the Court on the Defendant’s Motion for Summary Judgment
and Memorandum in Support Thereof (“Motion for Summary Judgment”). See Docket No. 7.
Plaintiff Eric Brown opposes the Motion for Summary Judgment. See Docket No. 8.
Defendant Brittany Brown asserts that a Minute Order entered in connection with the parties’
dissolution of marriage proceeding, Case No. D-202-DM-2011-02724 (the “State Court
Dissolution Case”) establishes that the debt at issue in this adversary proceeding is a domestic
support obligation within the meaning of 11 U.S.C. § 523(a)(5). Consequently, Brittany Brown
contends further that Eric Brown is collaterally estopped from asserting that the debt is the type
of debt referenced in 11 U.S.C. § 523(a)(15), which is dischargeable in a chapter 13 bankruptcy
case, rather than a domestic support obligation referenced in 11 U.S.C. § 523(a)(5), which is not.
After considering the Motion for Summary Judgment and the opposing response, and
being otherwise sufficiently informed, the Court finds that the Minute Order does not include
sufficient factual findings necessary to establish that the debt constitutes a domestic support
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 1 of 11

2
obligation. 	Consequently, collateral estoppel does not preclude the Plaintiff from litigating
whether the debt is of the type referred to under 11 U.S.C. § 523(a)(15) rather than a domestic
support obligation. The Court, will, therefore, deny the Motion for Summary Judgment.
SUMMARY JUDGMENT STANDARDS
Summary judgment, governed by Rule 56, Fed.R.Civ.P., will be granted when the
movant demonstrates that there is no genuine dispute as to a material fact and that the movant is
entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a), made applicable to adversary
proceedings by Rule 7056, Fed.R.Bankr.P. 	In considering a motion for summary judgment, the
Court must “examine the factual record and reasonable inferences therefrom in the light most
favorable to the party opposing summary judgment.” Wolf v. Prudential Ins. Co. of America, 50
F.3d 793, 796 (10th Cir. 1995) (quoting Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc.,
912 F2d 1238, 1241 (10th Cir. 1990)).
FACTS NOT SUBJECT TO GENUINE DISPUTE
Eric Brown does not dispute any of the material facts set forth by Brittany Brown in her
Motion for Summary Judgment. See Plaintiff’s Answer to Motion for Summary Judgment and
Memorandum in Support Thereof (“Plaintiff’s Response”) – Docket No. 8 (conceding that
“Plaintiff does not object to Defendant’s statement of undisputed material facts.”). 	The material
facts not subject to genuine dispute necessary to decide the Motion for Summary Judgment are
as follows:
1. 	Brittany Brown filed a verified petition for dissolution of marriage initiating the
State Court Dissolution Case on June 29, 2011.
2. 	Brittany Brown and Eric Brown entered into a Marital Separation Agreement
(“MSA”) which was filed in the State Court Dissolution Case on April 9, 2012.
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 2 of 11

3
3. 	The MSA contained a division of community debt.
4. 	Under the MSA, Eric Brown was responsible for the payment of several credit
card debts.
5. 	Brittany Brown was responsible under the MSA for payment of a debt on a Target
account ending in 0994.
6. 	The MSA included a statement that “[b]oth parties are self-supporting and neither
party shall bay spousal support to the other party now or at any time in the future.”
7. 	A Stipulated Order was entered in the State Court Dissolution Proceeding on
August 9, 2012, which provided that Eric Brown was to pay $1,085.84 to Brittany Brown to
compensate her for payments she made on debts that Eric Brown was assigned responsibility to
pay under the MSA.
8. 	As part of the Stipulated Order, Eric Brown also accepted liability for payment of
the debt on the Target account ending in 0994.
9. 	On January 15, 2013, the state court entered a Minute Order (the “January 15,
2013 Minute Order”), which documented the state court’s finding that Eric Brown had failed to
fulfill his obligations under the Stipulated Order, and awarded Brittany Brown judgment against
Eric Brown in the amount of $2,661.84.
10. 	The January 15, 2013 Minute Order provided further that Eric Brown’s failure to
pay Brittany Brown the judgment amount by 5:00 p.m. on April 30, 2013 would result in the
issuance of a bench warrant and cash only bond.
11. 	Eric Brown filed a voluntary petition for relief under Chapter 13 of the
bankruptcy code on February 22, 2013 as Case No. 13-13-10538 JA.
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 3 of 11

4
12. 	Eric Brown filed this adversary proceeding seeking a dischargeability
determination with respect to the judgment contained in the January 15, Minute Order.
13. 	Brittany Brown filed an Emergency and Expedited Motion to Establish
Respondent’s Financial Obligations as Domestic Support Obligations (“Emergency Motion”) in
the State Court Dissolution Proceeding on April 2, 2013.
14. 	Eric Brown did not file a response to the Emergency Motion.
15. 	Paragraph 6 of the Emergency Motion quotes the definition of domestic support
obligation set forth in 11 U.S.C. §101(14A) of the Bankruptcy Code, states that the reason
Brittany Brown seeks a determination that the judgment is a domestic support obligation is so
that the judgment would likely be non-dischargeable in Eric Brown’s bankruptcy case.
16. 	The state court held a hearing on the Emergency Motion in the State Court on
May 21, 2013.
17. 	Eric Brown appeared pro se at the May 21, 2013 hearing on the Emergency
Motion.
18. 	Eric Brown had a fair opportunity to present his position regarding the nature of
the judgment entered as part of the January 15, 2013 Minute Order at the hearing on the
Emergency Motion held in the State Court Dissolution Proceeding.
19. 	The state court entered a Minute Order resulting from the hearing on the
Emergency Motion (the “May 21, 2013 Minute Order”).
20. 	The May 21, 2013 Minute Order is a one-page document that includes the
following statement: “the Judgment in the amount of $2,661.84 set forth in this Court’s order of
January 15, 2013 is determined by this Court to be a domestic support obligation.”
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 4 of 11

5
DISCUSSION
Eric Brown filed this adversary proceeding against his former spouse seeking a
determination that the debt arising as a result of the parties’ dissolution of marriage proceedings
is a debt of the kind referred to in 11 U.S.C. § 523(a)(15), which is dischargeable in a Chapter 13
case, rather than a “domestic support obligation” referred to in 11 U.S.C. § 523(a)(5), which is
not. Brittany Brown asserts that collateral estoppel bars Eric Brown from asserting that the debt
is not a domestic support obligation based on the May 21, 2013 Minute Order.
A state court judgment can have collateral estoppel effect for purposes of establishing the
non-dischargeability of a particular debt under 11 U.S.C. § 523 even though the bankruptcy court
is charged with making the ultimate determination of dischargeability. See Grogan v. Garner,
498 U.S. 279, 284 n.11, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991)(acknowledging that “[v]irtually
every court of appeals has concluded that collateral estoppel is applicable in discharge exception
proceedings[ ]” and clarifying “that collateral estoppel principles do indeed apply in discharge
exception proceedings pursuant to §523(a).”)(citations omitted); Brown v. Felsen, 442 U.S. 127,
139 n. 10, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979)(acknowledging that collateral estoppel would
bar the re-litigation in bankruptcy court of factual issues determined by a state court using
standards identical to those contained in the dischargeability provisions of the former Bankruptcy
Act); Klemens v. Wallace (In re Wallace), 840 F.2d 762, 764 (10 th Cir. 1988)(“Although the
bankruptcy court in a dischargeability action under section 523(a) ultimately determines whether
or not a debt is dischargeable, . . the doctrine of collateral estoppel may be invoked to bar
relitigation of the factual issues underlying the determination of dischargeability[.]”). 	Further, it
is appropriate to apply collateral estoppel principles to dischargeability claims under 11 U.S.C. §
523(a)(5) because state courts have concurrent jurisdiction with bankruptcy courts to determine
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 5 of 11

6
whether an obligation is in the nature of support. See Lewis v. Trump (In re Trump), 309 B.R.
585, 589 n.3 (Bankr.D.Kan. 2004)(“The state court has concurrent jurisdiction to determine
dischargeability of obligations under § 523(a)(5).”); Milford v. Milford (In re Milford), 281 B.R.
742, 744 (Bankr.M.D.Fla. 2002)(“state courts have concurrent jurisdiction with bankruptcy
courts to determine whether an obligation is in the nature of alimony or support for § 523(a)(5)
purposes.”)(citations omitted). Ultimately, however, whether a debt is non-dischargeable under
11 U.S.C. § 523(a)(5) is resolved according to federal bankruptcy law, not state law. Loper v.
Loper (In re Loper), 329 B.R. 704, 707 (10 th Cir. BAP 2005)(citing Sampson v. Sampson (In re
Sampson), 997 F.2d 717, 721 (10 th Cir. 1993)).
In determining whether collateral estoppel bars re-litigation of elements necessary to
determine dischargeability under 11 U.S.C. § 523, the Court applies the collateral elements
required under the law of the state in which the judgment was entered. In re Fordu, 201 F.3d
693, 703 (6th Cir. 1999)(“When a federal court is asked to give preclusive effect to a state court
judgment, the federal court must apply the law of the state in which the prior judgment was
rendered in determining whether and to what extent the prior judgment should be given
preclusive effect in a federal action.”)(citations omitted).1 The requirements for collateral
estoppel under New Mexico law are:
(1) the party to be estopped was a party to the prior proceeding, (2) the cause of
action in the case presently before the court is different from the cause of action in the
prior adjudication, (3) the issue was actually litigated in the prior adjudication, and
(4) the issue was necessarily determined in the prior litigation.
Shovelin v. Central New Mexico Elec. Co-op, Inc., 115 N.M. 293, 297, 850 P.2d 996,
1000 (citing Silva v. State, 106 N.M. 472, 474-76, 745 P.2d 380, 832-84 (1987)).
1See also, Doe v. Martinez (In re Martinez), 2012 WL 1641926, *5 (Bankr.D.N.M. May 10, 2012)(“When applying
principles of collateral estoppel based on a judgment entered in state court, the bankruptcy court must look to the
applicable requirements of the state in which the judgment was entered.”)(citing Gonzales v. Hernandez, 175 F.3d
1202, 1204 (10th Cir. 1999)); Missouri ex rel. Nixon v. Audley (In re Audley), 268 B.R. 279, 284 (Bankr.D.Kan.
2001)(“the applicable collateral estoppel law is that of the state entering the judgment at issue.”)(citation omitted).
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 6 of 11

7
Once the moving party has established these four elements, the Court must determine whether
the non-moving party “had a full and fair opportunity to litigate the issue in the prior litigation.”
Id.
The facts not subject to genuine dispute identified by Brittany Brown are sufficient to
establish elements (1), (2), and (3): 	Eric Brown was a party to the State Court Dissolution
Proceeding; this adversary proceeding is different from the State Court Dissolution Proceeding;
and Brittany Brown’s Emergency Motion raised and presented the issue of whether the debt
represented by the January 15, 2013 Minute Order is a domestic support obligation to the state
court for consideration at the hearing held in the State Court Dissolution Proceeding on May 21,
2013. 	Eric Brown also appears to concede that he had a full and fair opportunity to litigate the
issue during the hearing on the Emergency Motion. 	However, the May 21, 2013 Minute Order
is insufficient to establish that the question of whether the judgment entered as part of the
January 15, 2013 Minute Order constitutes a domestic support obligation was necessarily
determined as part of the State Court Dissolution Proceeding.
“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, on, 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;
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 7 of 11

8
(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).
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.” Sampson, 997 F.2d at 723 (citing Grogan v.
Garner, 498 U.S. at 290). 2 In determining whether an obligation is in the nature of support, the
Court must not rely on labels the parties or the state court give to an obligation. See Young v.
Young (In re Young), 35 F.3d 499, 500 (10 th Cir. 1994)(“the bankruptcy court is required to look
behind the words and labels of the agreement” to resolve the issue of whether an obligation is, in
fact, in the nature of support)(citation omitted); In re Evert, 342 F.3d 358, 364 (5th Cir. 2003)(“in
interpreting §523(a)(5) courts will generally look beyond labels which state court—and even the
parties themselves—give obligations which debtors seek to have discharged.”); Busch v.
Hancock (In re Busch), 369 B.R. 614, 622 (10 th Cir. BAP 2007)(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.”)(citations omitted); In re Seixas, 239 B.R.
398, 402 (9th Cir. BAP 1999)(recognizing that the labels used by the state court to describe
2Sampson was decided before 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). The different language in 11 U.S.C. § 523(a)(5) after BAPCPA “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
(8 th Cir. 2011). 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 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.”). Thus, the standard set forth in Sampson remains
applicable to dischargeability actions seeking a determination of whether a debt constitutes a domestic support
obligation for purposes of 11 U.S.C. § 523(a)(5).
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 8 of 11

9
obligations resulting from a separation or divorce agreement are not binding with respect to
whether an obligation is nondischargeable under § 523(a)(5))(citations omitted).
A spouse’s debt to a former spouse resulting from dissolution of marriage proceedings is
nondischargeable under 11 U.S.C. § 523(a)(5) when the evidence establishes “that the parties
intended the obligation as support and that the obligation was, in substance, support.” Sampson,
997 F.2d at 723 (citation omitted). 	An obligation is, in substance, support if it functions to
provide support to the former spouse given the “relative financial circumstances of the parties at
the time of the divorce.” Id. at 726.
Here, the state court denominated the judgment as a “domestic support obligation” in the
May 21, 2013 Minute Order, but did not make any findings that would indicate that the judgment
is, in fact, in the nature of support. 	Collateral estoppel effect should be given to state court
judgments for purposes of establishing dischargeability in bankruptcy “only if, inter alia, the
first court has made specific, subordinate, factual findings on the identical dischargeability issue
in question—that is, an issue which encompasses the same prima facie elements as the
bankruptcy issue—and the facts supporting the court’s findings are discernible from that court’s
record.” Hutton v. Ferguson (In re Hutton), 463 B.R 819, 825-26 (Bankr.W.D.Tex.
2011)(quoting Dennis v. Dennis (In re Dennis), 25 F.3d 274, 278 (5th Cir. 1994)).
Some of the elements identified in 11 U.S.C. § 101(14A) can be inferred from the May
21, 2013 Minute Order: the debt accrued before, on or after the petition date; the debt is owed to
a former spouse; and the debt was established by reason of a court order. Further, there is no
evidence before the Court that the debt has been assigned to a nongovernmental entity for the
purpose of collecting the debt. However, nothing in the May 21, 2013 Minute Order specifically
addresses the elements necessary to a determination that the debt embodied in the January 15,
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 9 of 11

10
2013 Minute Order is truly in the nature of support. To make such a determination the state
court would have had to determine the parties’ mutual intent by assessing “‘the function served
by the obligation at the time of the divorce,’ . . . by considering the relative financial
circumstances of the parties at the time of the divorce.” Sampson, 997 F.2d at 725-726 (quoting
Gianakas v. Gianakas (In re Gianakas), 917 F.2d 759, 763 (3 rd Cir. 1990)).3
The fact that Brittany Brown directed the state court to the Bankruptcy Code’s definition
of domestic support obligation in her Emergency Motion makes no difference. The May 21,
2013 Minute Order merely labels the obligation as a “domestic support obligation” without
making any specific, subordinate findings of fact with respect to the nature of the obligation from
which this Court could give collateral estoppel effect for purposes of 11 U.S.C. § 523(a)(5). Cf.
Cobb v. Lewis (In re Lewis), 271 B.R. 877, 886 (10 th Cir. BAP 2002)(concluding that the
collateral estoppel requirement for actual and necessary determination was not satisfied where
state court judgment did not include a sufficient finding necessary to establish the specific intent
element required under § 523(a)(2)(A)’s non-dischargeability provision based on fraud).
Based on the foregoing, the Court concludes that collateral estoppel does not bar Eric
Brown from litigating the dischargeability of the debt arising from the January 15, 2013 Minute
Order as embodied in the May 21, 2013 Minute Order. 	The Court will, therefore, deny the
Motion for Summary Judgment.
_________________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: September 25, 2013
3“[T]he critical inquiry is the shared intent of the parties at the time the obligation arose.” Sampson, 997 F.2d at 723
(citing Tilley v. Jessee, 789 F.2d 1074, 1078 (4 th Cir. 1986)).
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 10 of 11

11
COPY TO:
Christopher L Trammell
Attorney for Plaintiff
3900 Juan Tabo NE
Albuquerque, NM 87111-3984
Christopher M Gatton
Law Office of George Dave Giddens, PC
Attorney for Defendant
10400 Academy Rd., #350
Albuquerque, NM 87111
Case 13-01025-j Doc 13 Filed 09/25/13 Entered 09/25/13 08:52:50 Page 11 of 11