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Forsdick v. Turgeon

decided: February 27, 1987.

THERESA FORSDICK, PLAINTIFF-APPELLEE,
v.
NORMAND TURGEON, DEFENDANT-APPELLANT



Appeal from a judgment of the United States District Court for the District of Connecticut, T. Emmet Clarie, Judge, affirming a judgment of the bankruptcy court determining that a $100,000 obligation from defendant to plaintiff was "in the nature of alimony, maintenance, or support", and was therefore a nondischargeable debt under 11 U.S.C. § 523(a)(5)(1979). Affirmed.

Author: Pratt

PRATT, Circuit Judge.

This is an appeal from a judgment of the United States District Court for the District of Connecticut, T. Emmet Clarie, Judge, affirming a judgment of the bankruptcy court holding a $100,000 obligation of defendant Turgeon (hereinafter "the husband") to his former wife plaintiff Forsdick (hereinafter "the wife"), to be nondischargeable under 11 U.S.C. § 523(a)(5)(1979). The factual determinations of the bankruptcy court are not clearly erroneous, and they support the lower courts' legal conclusions; consequently, we affirm.

BACKGROUND

After 23 years of marriage, the parties in 1981 were divorced in Connecticut Superior Court, where the referee made certain awards to the wife, including $100,000 which he termed "non-modifiable alimony", and $40,000, which was not specifically classified. The $100,000 was to be paid in monthly installments over a seven year period, with the amount of the installments decreasing each year. The $40,000 was to be paid within six months of the decree. These awards were upheld by the Connecticut Supreme Court. Turgeon v. Turgeon, 190 Conn. 269, 460 A.2d 1260 (1983).

About three years later the husband filed a voluntary Chapter 7 bankruptcy petition. Among his liabilities he listed $127,350 owed to the wife, which was the total still owed on the two divorce awards. The wife objected to discharge of this debt on the ground that it was nondischargeable alimony or support within the meaning of § 523(a)(5). On March 21, 1985, the bankruptcy court held that the $100,000 award was nondischargeable alimony, but that the $40,000 was dischargeable as a property settlement. The wife did not appeal from the discharge of the balance due on the $40,000 obligation. On the husband's appeal from the holding that the $100,000 obligation was nondischargeable, the district court affirmed and this appeal followed.

Discussion

The husband raises essentially two contentions. The first challenges the decision of the bankruptcy court that the $100,000 was "in the nature of alimony, maintenance, or support". We apply the "clearly erroneous" standard to review such a factual finding of the bankruptcy court. In re Gibraltor Amusements, Ltd., 291 F.2d 22, 24 (2d Cir. 1961). The second argues that even if the $100,000 was in the nature of alimony at the time of the divorce decree, the bankruptcy court should have considered the changed circumstances, particularly in the financial status of the parties, in determining whether to treat the obligation as dischargeable.

A. The Nature of the $100,000 Award.

The general purpose of the bankruptcy code is "to provide the bankrupt with comprehensive, much needed relief from the burden of his indebtedness by releasing him from virtually all his debts." Murphy & Robinson Investment Co. v. Cross (In re Cross), 666 F.2d 873, 879 (5th Cir. 1982). While the code therefore reflects a strong public policy of providing debtors with fresh starts, congress has also determined that certain competing public policy interests shall take precedence. These competing concerns are reflected in the exceptions that congress has enacted to the general rule that debts are dischargeable in bankruptcy. At issue in this case is the exception contained in § 523(a)(5), which provides that a discharge under the code does not discharge an individual debtor from any debt

(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree, or property settlement agreement, but not to the extent that -- * * *

(B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support * * *.

11 U.S.C. § 523(a)(5) (emphasis added).

By virtue of § 523(a)(5), congress has chosen between two competing interests -- those of bankrupts and those of their former spouses and offspring -- and it chose in favor of the latter. It is not for us on this appeal to reconsider that choice; rather, we need only determine whether the bankruptcy court was clearly erroneous in holding that the $100,000 obligation owed by the husband to the wife was "actually in the nature of alimony". In re Williams, 703 F.2d 1055, 1057 (8th Cir. 1983); Boyle v. ...


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