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Balisle & Robertson, SC v. Symdon

United States District Court, W.D. Wisconsin

May 9, 2016

BALISLE & ROBERSON, S.C., Appellant,
v.
RONALD A. SYMDON, Appellee.

OPINION AND ORDER

WILLIAM M. CONLEY, DISTRICT JUDGE

Appellant Balisle & Roberson, SC (“Balisle”) appeals from an order of the Bankruptcy Court for the Western District of Wisconsin, which sustained appellee Ronald A. Symdon’s objection to a request that Balisle’s claim be given priority status under 11 U.S.C. § 507(a)(1)(A). In re Ronald Symdon, No. 13-14692 (W.D. Wis. Oct. 3, 2014) (bankr. dkt. #39). For the reasons that follow, the court will vacate the order and remand for further proceedings consistent with this opinion.

BACKGROUND

Ron Symdon and his wife Peggy Symdon divorced in 2010. As part of the divorce decree, Ron was required to pay $70, 000 in attorneys’ fees that Peggy incurred during the divorce proceedings. (Bankr. dkt. #37 at 16 (listing Ron as the “responsible party” for “cash contribution to Peggy’s attorneys’ fees” in the amount of $70, 000); see also Id. at 15 (listing one of Peggy’s assets as “Contribution to attorney’s fees in the amount of $70, 000”).) As Peggy’s divorce counsel, the Balisle law firm ultimately was to be the recipient of the payment owed by Ron.

In an order, the family court arbitrator explained that the fees were awarded, in part, in consideration of the “overall equities in the case” and Symdon’s “greater ability to pay.” (Bankr. dkt. #38 at 3-4.) To date, however, Symdon has failed to pay Balisle any of the $70, 000. As a result, Balisle represents that Peggy remains liable for those attorneys’ fees.

On January 7, 2012, Symdon filed for bankruptcy under Chapter 7, listing his obligation to pay Balisle’s fees as one of a number of debts subject to discharge. In response, Balisle commenced an adversary proceeding, seeking a determination of the nondischargeability of its attorneys’ fees award. Without opposition from Ron Symdon, the bankruptcy court issued an order finding Balisle’s debt was nondischargeable pursuant to both 11 U.S.C. § 523(a)(5) and (a)(15). Symdon received a Chapter 7 discharge on April 24, 2013.

On September 24, 2013, however, Symdon again filed for bankruptcy, this time under Chapter 13, listing Balisle as an unsecured, non-priority creditor.[1] Balisle then filed a claim seeking priority under § 507(a)(1)(A) on the basis that its claim represents a “domestic support obligation.” Unlike in the Chapter 7 proceeding, Symdon filed an objection to Balisle’s claim, arguing that it was not entitled to priority status and should be treated as a general unsecured claim. (Bankr. dkt. #30.)

The bankruptcy court held a hearing on Symdon’s objection on June 23, 2014. After the submission of post-hearing briefs, the bankruptcy court issued an order sustaining the objection on October 3, 2014. (Bankr. dkt. #40.) This appeal followed.

APPLICABLE STATUTE

Relevant to the present case, 11 U.S.C. § 507(a)(1)(A), provides in pertinent part:

(a) The following expenses and claims have priority in the following order:
(1) First:
(A) Allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition in a case under this title, are owed to or recoverable by a spouse, former spouse, or child of the debtor, or such ...

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