Editor's Note: David Morris is the senior deputy prosecuting attorney for the Marion County Prosecutor’s Office Child Support Division and an adjunct professor at the Indiana University Robert H. McKinney School of Law.
Imagine the following scenario: A chapter 13 debtor files his bankruptcy plan that acknowledges his $10,000 pre-petition child support debt, which is consistent with the custodial parent’s claim. The plan is confirmed, and the debtor dutifully pays the $10,000 in accordance with the plan’s terms. The debtor receives a discharge, the bankruptcy case is closed and the matter is put to rest. Months later, the debtor receives a notice from a state child support enforcement agency seeking to collect $3,000 in unpaid pre-petition child support debt. The notice explains that the debtor actually owed a total of $13,000 in pre-petition child support debt. Since the debtor paid the claim as it was filed in the bankruptcy action and he received his discharge, the agency is foreclosed from pursuing the additional $3,000, right?
Wrong — at least says the majority of bankruptcy decisions that have addressed the question. In most circumstances, the agency (or the custodial parent) is free to collect the additional arrearage. In short, because child support is nondischargeable, payment of the claimed arrearage under a confirmed plan merely satisfies the claim but it does not also satisfy any unpaid arrearage that the debtor owes on the underlying obligation. Whether this is true, even when the claim was litigated or otherwise contested in the bankruptcy action, remains the subject of some controversy in the federal courts. Here is a look at several cases that have addressed the issue.
In re Diaz and In re Davis: Res Judicata and Collateral Estoppel Are Inapplicable
In In re Diaz,[1] the debtor, Miguel Diaz, filed for chapter 13 protection in 2002, listing the Florida Department of Revenue (DOR), the Florida state child support collection agency, as a priority unsecured creditor. The Florida DOR filed a proof of claim for approximately $67,000 for past-due child support. This amount represented the principal and roughly $20,000 in accrued pre-petition interest. However, the monthly statement of account that the Florida DOR submitted in support of its claim did not include interest; instead, the statement of account indicated that the total amount of overdue child support was approximately $47,750. Diaz objected to the Florida DOR's claim on the basis of the supporting monthly account statement, arguing that the statement demonstrated that he owed only $47,750 in child support arrearage. The Florida DOR did not timely respond to Diaz's objection so the bankruptcy court deemed the objection as unopposed and ordered the Florida DOR's claim reduced to $47,750. The court confirmed Diaz's plan to pay this amount over 58 months, and Diaz paid it in full ahead of schedule. On Nov. 29, 2005, the bankruptcy court granted Diaz a chapter 13 discharge and formally closed the case on April 11, 2006.
Diaz received no communications from either the Florida DOR or the Virginia Department of Social Services (DSS), which was also seeking to collect the arrearage, until 2007. Both agencies initiated a series of collection activities against Diaz in an effort to recover both the pre-petition interest on Diaz's support obligation, which the bankruptcy court had disallowed, and the interest that accrued post-petition while Diaz was paying down the principal through his chapter 13 plan. Between 2007-09, the Florida DOR sent Diaz three demand letters, garnished his wages and suspended his driver's license. In addition, the Virginia DSS intercepted Diaz's tax refunds to satisfy the arrearage.
In 2008, Diaz filed his motion for contempt and sanctions in bankruptcy court. Among other things, he alleged that both the Florida DOR and Virginia DSS repeatedly violated the discharge injunction of 11 U.S.C. § 524 by trying to collect past-due child support after the discharge.[2] He sought compensatory damages, including costs and attorneys’ fees, and punitive damages. The bankruptcy court granted Diaz's motion and held the agencies in contempt on Sept. 30, 2009. The court determined that both agencies had willfully violated the automatic stay, the discharge injunction and numerous court orders. As relief, the court awarded Diaz $42,622 in actual damages and $25,000 in punitive damages. On appeal, the district court affirmed the bankruptcy court's judgment. Both the Florida DOR and the Virginia DSS sought appellate review.
The Eleventh Circuit Court of Appeals reversed. It observed that pursuant to § 524(a)(2), a discharge under chapter 13 "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any [discharged] debt as a personal liability of the debtor."[3] Significantly, the court said, the discharge injunction "prohibits collection only with respect to dischargeable debts and does not apply to nondischargeable debts."[4] "As a result, once a discharge has been granted, holders of nondischargeable debts generally may attempt to collect from the debtor personally for such debts.”[5]
The court explained that although "[a] discharge under Chapter 13 is broader than the discharge received in any other chapter, Chapter 13 nevertheless restricts or prohibits entirely the discharge of certain types of debts."[6] Section 1328, the court noted, expressly exempts from discharge those debts specified in § 523(a).[7] “Consequently,” it added, “a child support debt is ‘not dischargeable under any circumstances' in Chapter 13 proceedings."[8]
The court opined that the bankruptcy court's discharge order did not discharge Diaz's child-support obligation. "Therefore, the Florida DOR and Virginia DSS could not have violated the discharge injunction by pursuing Diaz for child support after the discharge, and an award of sanctions for violations of the discharge injunction cannot stand."[9] In explaining the bankruptcy court's error, it said:
The bankruptcy court reached a contrary conclusion because it operated under the assumption that the disallowed portion of the Florida DOR's claim was necessarily discharged. But disallowance of a claim and nondischargeability are separate issues. Although a creditor whose claim is disallowed may not collect from the bankruptcy estate, disallowance of a claim does not necessarily discharge the underlying debt and eliminate the debtor's personal liability outside of bankruptcy. As relevant to the present case, the Code provision governing a Chapter 13 discharge compels the conclusion that a child-support debt is not discharged regardless of whether the debt is provided for by the plan or disallowed. 11 U.S.C. § 1328(a)(2). Thus, if a creditor holds a child-support debt, then whether the bankruptcy court disallows all, part, or even none of that creditor's claim has no bearing on whether any portion of the debt is discharged — no part of a child-support debt is "dischargeable under any circumstances" in a Chapter 13 case. Accordingly, the bankruptcy court was mistaken in its belief (1) that the disallowed portion of Diaz's claim was discharged and (2) that the Florida DOR's and Virginia DSS's post-discharge efforts to collect unpaid interest on Diaz's child-support obligation could constitute violations of the discharge injunction.[10]
The Court further explained as follows:
The bankruptcy court and the district court may have reasoned that if the Florida DOR and Virginia DSS were barred from relitigating the amount of the debt, then the agencies violated the discharge injunction because they tried to collect [on] a debt that was fully satisfied during the bankruptcy. But that rationale erroneously assumes that whether the child-support debt was satisfied is somehow relevant to the question whether the Florida DOR and Virginia DSS could run afoul of the discharge injunction by trying to collect that debt outside of bankruptcy. In the case of a child-support debt, whether the debt was satisfied is unrelated to the question whether the debt was discharged. Such a debt is never dischargeable in a Chapter 13 bankruptcy, regardless of whether it was paid in full through the bankruptcy plan…. this does not mean that the Florida DOR and Virginia DSS are legally entitled to collect twice on any portion of the debt that was paid during the bankruptcy. It means only that the Florida DOR and Virginia DSS could not have violated the Bankruptcy Code's discharge injunction by trying to collect child support from Diaz after the discharge, even if the agencies sought to collect portions of the debt that had already been satisfied.[11]
The Court also held that neither collateral estoppel nor res judicata precluded the Florida DOR or the Virginia DSS from collecting the arrearage. First, the Court explained, the agencies were not "relitigating" the amount of the debt, as it was never litigated during the underlying bankruptcy proceedings. The only issue before the bankruptcy court at the time of the claim objection was the amount of the child-support debt that would be paid by the bankruptcy estate through Diaz's chapter 13 plan, not the total amount of the child-support debt.[12]
Moreover, the court said, preclusion doctrines might not bar enforcement of the unpaid obligation, regardless of whether the matter was actually litigated at the time of claim objection. It found compelling the logic of appellate decisions holding that res judicata and collateral estoppel may not be used to prevent a creditor who holds a nondischargeable tax debt from arguing that the amount of the debt exceeds the payment that the creditor received during bankruptcy.[13] Further, the court said that
[a]lthough the cases cited above[14] involved nondischargeable tax obligations, the rationale of those cases applies with equal force in the context of nondischargeable child-support obligations. The holdings of those cases rested on the premise that the plain language of the Bankruptcy Code provides that a discharge "does not fix tax liabilities made nondischargeable under 11 U.S.C. § 523." In re Gurwitch, 794 F.2d at 585. The Code similarly makes [it] clear that a Chapter 13 discharge does not fix child-support liabilities made nondischargeable under 11 U.S.C. § 523. See 11 U.S.C. § 1328(a)(2). Accordingly, res judicata and collateral estoppel do not preclude the Florida DOR and Virginia DSS from arguing the extent of Diaz's personal liability for child support post-bankruptcy.[15]
The court noted that a contrary conclusion could be especially problematic in the context of child-support obligations. If bankruptcy courts can be seen to fix a debtor's child-support liability through rulings on a claim objection or confirmation of a chapter 13 plan, this would often result in de facto modification of state child-support orders, excessively embroiling federal bankruptcy courts in domestic-relations cases.[16] Summarizing, the court said that
Congress has drafted the Bankruptcy Code such that child-support debts are never dischargeable in a Chapter 13 proceeding. This reflects Congress's policy decision that payment of child support is more important than a debtor's financial "fresh start." Bankruptcy courts are not free to override the plain language of the Code and Congress's policy choice by using a ruling on a debtor's claim objection or doctrines of preclusion to transform a nondischargeable child-support obligation into a dischargeable debt. Therefore, Diaz's child-support obligation was not discharged, and the bankruptcy court and the district court erred in determining that the Florida DOR and Virginia DSS violated the discharge injunction by attempting to collect child-support arrearages from Diaz after the discharge.[17]
Relying on Diaz, the Eleventh Circuit in In re Davis[18] affirmed the district court's holding that neither res judicata nor collateral estoppel barred the custodial mother or Florida DOR from its post-discharge collection of Davis's $180,000 child-support arrearage. In this case, the Florida DOR failed to timely file its claim for the child-support arrearage and the bankruptcy court disallowed the claim. After receiving his chapter 11 discharge, the Florida DOR sought to enforce the arrearage in state court. Davis then reopened his bankruptcy case seeking injunctive relief. The bankruptcy court granted the relief, and the district court, relying on In re Diaz, supra, reversed.
Affirming the district court, the Eleventh Circuit Court of Appeals held that the holding and rationale of Diaz squarely applied.[19] It was immaterial that Davis had filed for chapter 11 relief while Diaz filed under chapter 13. The court stated that
we see no reason to apply a different rule to Chapter 11 cases than we do to Chapter 13 cases. Both Chapter 11 and Chapter 13 prohibit the discharge of domestic support obligations, see 11 U.S.C. § 523, and … In re Diaz did not hinge on any procedural difference between Chapter 11 and Chapter 13. The issue before the In re Diaz panel, as here, was whether the bankruptcy court's decision as to liability on a nondischargeable child-support debt can preclude a creditor from pursuing any unpaid amount of that claim post-bankruptcy.[20]
The court also found unpersuasive Davis's attempt to distinguish Diaz on grounds that in Davis, the court awarded injunctive relief for violation of the confirmed plan, rather than of the discharge injunction, as was the case in Diaz. "Even if Mr. Davis had always asserted that the Department's actions constituted a violation of the plan and not of the discharge injunction, the ultimate legal issue before us would be the same … the bankruptcy court based its ruling on its determination that the Department was precluded from enforcing the child-support obligation due to collateral estoppel and res judicata," the court said.[21]
Hutchens and Owsley: Payment under a Bankruptcy Plan Does Not Discharge the Domestic-Support Obligation
Two bankruptcy court decisions, In re Hutchens[22] and In re Owsley,[23] paralleled the logic and rationale of Diaz and Davis. In Hutchens, the debtor’s former wife instituted a state court action for contempt to collect unpaid support after Hutchens’ chapter 13 plan had been confirmed. The bankruptcy court agreed with Hutchens that because his plan had been confirmed, his former wife was bound by its terms. Therefore, her state court contempt action was improper.[24] However, the court also held that Hutchens’ payments under the plan would not foreclose his former wife from later seeking to collect the unpaid amounts, saying that
the Court holds that the unpaid arrearage for back alimony and child support established under the July 2008 Order (less $78,000 to account for the payments made under the plan) projected at $61,199.06, is nondischargeable under [§] 523(a)(5). Whatever discharge the Debtor receives will not absolve him of the duty to pay the balance on this obligation and the interest that accrues on it under the applicable New Hampshire law at some later time.[25]
In Owsley, the West Virginia Bureau of Child Support Enforcement (CSE) sought to enforce Owsley’s remaining child-support arrearage through a wage assignment after the court had issued its chapter 13 discharge order and closed the bankruptcy case in 2010. Thereafter, Owsley filed a motion to reopen his bankruptcy case for the purpose of holding the CSE Bureau in contempt for violating the discharge injunction. Owsley based his contempt allegation on grounds that neither the CSE Bureau nor the mother had objected to the trustee’s 2009 motion to convert the CSE Bureau’s priority child-support claim to a general unsecured claim. Thus, he argued that since the debt was no longer child support, the discharge order vitiated his debt.
The bankruptcy court rejected Owsley’s assertions and dismissed his motion to reopen. First, specifying Owsley’s child-support debt as “a general unsecured debt” under the plan did not render it dischargeable.[26] On this point, the court opined that the law prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),[27] child support became dischargeable in only two circumstances: where the debt (1) is not child support and (2) is assigned to an entity other than a governmental entity. As Owsley’s obligation was in fact child support and was owed partly to the mother and partly to the state, neither exception was applicable.[28] In other words, merely assigning a different term to Owsley’s child-support debt in his bankruptcy plan did nothing to alter what it really was — child support — and thus did not alter its nondischargeability. Second, the discharge injunction was inapplicable to Owsley’s child-support obligation because
under the law as it existed pre-BAPCPA, just as it does presently, debts for child support are nondischargeable, irrespective that it was not treated in or paid through the Debtors' Confirmed Plan as priority, and the [CSE Bureau’s] actions to recover on that debt — which has not been discharged and is still owed — are not contemptuous.
[T]he Debtors' argument that the Confirmed Plan and the Order Resolving Chapter 13 Trustee Objection to Proof of Claim Filed by Boone Co. BCSE somehow served to discharge the Debtor's child-support obligation is flawed and fails. "The provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan[,]" 11 U.S.C. § 1327(a) (2004), and following confirmation, the plan is treated as the exclusive and transcendent relationship between the debtor and the creditor. Nevertheless, disallowance of a claim and nondischargeability are separate issues, and there is nothing inconsistent with 11 U.S.C. § 523(a)(5) for a debt to be nondischargeable and also nonpriority. When read together, §§ 362(b)(2), 1328(a)(2), and 523(a)(5) manifested a [c]ongressional intent to except child-support obligations from the reach of § 1327 and therefore from the effects of a chapter 13 plan. Accordingly, a debtor's personal liability for unpaid back child-support arrearages — domestic-support obligations — are not affected by a Chapter 13 discharge and cannot be discharged in bankruptcy.[29]
Hann: Nature of the Claim Objection Dictates Claim Preclusion, Res Judicata Applies
Expressing the opposite view, in In re Hann,[30] Barbara Hann filed her voluntary chapter 13 petition on Nov. 2, 2004. She listed in her Schedule F a disputed claim of $55,000 in nondischargeable student loan debt. The creditor, Educational Credit Management Corp. (ECMC), filed a proof of claim for $53,000, to which Hann objected. The bankruptcy court set the disputed claim for an evidentiary hearing and provided ECMC with notice. ECMC neither objected to the claim nor attended the hearing. Consequently, the bankruptcy court litigated the matter in ECMC's absence. Hann asserted both that ECMC failed to adequately document the claim, and that, in any event, she had already paid more than what was due under her educational loans. Accordingly, in her prayer for relief, she asked the court to disallow the claim or allow it in an amount proved by ECMC's payment history records.
On June 9, 2006, after due consideration of Hann's testimony and other evidence that she introduced, the bankruptcy court entered an order that provided, without explanation, that the "[d]ebtor's objection to Claim … filed by ECMC is sustained. This Court allows the claim of ECMC in the amount of $0.00." ECMC did not appeal the June 2006 order. On March 2, 2010, Hann received a discharge after completion of her confirmed chapter 13 plan. The discharge order specifically provided, in pertinent part, that the “chapter 13 discharge order eliminates a debtor's legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt is provided for by the chapter 13 plan or is disallowed by the court pursuant to [§] 502 of the Bankruptcy Code.”[31]
The discharge order further indicated that "[d]ebts for most student loans" are excepted from discharge. Shortly thereafter, on May 28, 2010, the court entered an order closing Hann's chapter 13 case. Subsequently, ECMC sent Hann demand letters seeking to enforce the debt. Hann reopened her bankruptcy case and filed an adversary complaint seeking a declaratory judgment that the discharge order precluded ECMC from enforcing the debt, as well as injunctive relief and damages for violating the discharge injunction. Following a hearing, the bankruptcy court awarded Hann $9,134.72, the full amount requested, "as a remedial sanction for [ECMC's] violation of the Bankruptcy Code's discharge injunction."[32]
ECMC appealed, arguing that (1) the disallowance of a student loan claim does not preclude later collection of the full amount of the subject debt and (2) a sustained claim objection does not discharge student loan debts. Accordingly, ECMC maintained that it remained legally entitled to seek to collect the full amount of Hann's alleged student loan debt. Hann, on the other hand, contended, inter alia, that: (1) the June 2006 order means what it says — that ECMC is owed $0, and (2) the 2006 order precludes relitigation of the amount of ECMC's claim under principles of collateral estoppel. In rejecting ECMC's argument, the Bankruptcy Appellate Panel expressly rejected the holding of Diaz and other cases that held similarly, stating:
We respectfully disagree with the cases upon which ECMC relies, to the extent that they hold, or rely for their holding on the proposition that in the context of claims allowance, the bankruptcy court determines only what the estate will pay and cannot bind creditors post-discharge. Those courts have concluded that where § 523(a) precludes discharge of the debt, disallowance of the claim has no effect on the debtor's personal liability post-discharge….
By merging disallowance and dischargeability, the cases relied on by ECMC miss a subtle distinction. The issue is not whether a nondischargeable debt can be discharged by virtue of its disallowance, but whether there is a debt at all where the claim has been disallowed on the grounds of pre-petition payment in full. By definition, where there is no claim, there is no debt and nothing is discharged. See 11 U.S.C. § 101(5)(A) and (12).[33]
The Court explained that § 502(b) requires the bankruptcy court to undertake a two-part analysis. First, the court must determine the amount of a creditor's claim as of the date of filing of the petition. This figure then forms the basis for the second part of the analysis, wherein the court determines how much of the claim should be allowed. Disallowance of a claim negates its validity and existence. A claim should be rejected and disallowed when it has no basis in fact or law, is non-existent or illegal.[34] The court opined that the nature of the claim objection dictates whether the claimant may attempt to collect the debt after the discharge injunction has been granted:
By filing the claim objection, Hann invoked the appropriate procedural mechanism provided by the Bankruptcy Code to obtain a determination of both the validity and amount of the Claim. The record reflects that the bankruptcy court conducted a thorough review of the Claim Objection and the Claim, which review included consideration of Hann's testimony as well as the 2006 Hann Affidavit. This process yielded a ruling that the amount of the Claim on the date of Hann's bankruptcy petition was zero. Accordingly, the court allowed the Claim in that amount, which we conclude is tantamount to disallowance. In light of the nature of her objection, namely, that the Claim had been paid pre-petition, we are unpersuaded by ECMC's contention that the June 2006 Order lacks sufficient specific factual findings to support the conclusion that the bankruptcy court found that there was no obligation. The court having concluded that there is no extant claim, there can be no liability on a claim and hence no debt within the meaning of § 101(12). Thus, the June 2006 Order which is the subject of this appeal effectively precluded any further attempt by ECMC to collect on the alleged student loan debt.[35]
Moreover, the court said that the bankruptcy court's June 2006 order was entitled to preclusive effect under the doctrine of res judicata.[36] The court explained that res judicata requires (1) an entry of a final judgment, (2) an identity of the parties and (3) an identity of causes of action. In this case, the first two elements were clearly established while the third remained at issue. ECMC argued that claim allowance and discharge are separate issues, and therefore neither res judicata nor collateral estoppel applied. In other words, ECMC contended that Hann's objection to the claim concerned only whether the debt was collectable in the bankruptcy action because what ECMC was alleged to have committed — violating the discharge injunction — was something completely different. Thus, ECMC argued, there was no identity of causes of action and therefore, res judicata and collateral estoppel did not apply.
The court disagreed, stating that by filing her claim objection, Hann challenged the student loan debt in its entirety. Under these circumstances, the court said, "ECMC was not free blithely to forgo its full and fair opportunity to defend the Claim on the grounds of an alleged distinction between claim allowance and claim discharge … a creditor who disregards a procedurally proper and plain notice that its interests are in jeopardy does so at its own risk."[37]
Diaz, Davis, Hutchens and Owsley Win the Day
The holdings of Diaz, Davis, Hutchens and Owsley are far more sensible — and practical — than that of Hann. The essential purpose of an evidentiary hearing on a claim objection of a nondischargeable debt is not really to determine whether the debtor actually owes the debt; it is to determine whether and to what extent the bankruptcy court, trustee and others will have to administer it in the bankruptcy case. In those instances where the debtor fails to report a nondischargeable debt and the creditor files no claim, the bankruptcy court, in a sense, could not possibly care less. Yet the debt remains collectable because Congress has decided that it may not be discharged.
Along these lines, Diaz correctly seized on an important matter of public policy: Federal bankruptcy courts are badly suited to resolve state claims — especially those involving domestic relations. Domestic relations law has long been held to be the province of the states[38] and quite frankly, federal judges often regard squabbles regarding direct payments, de facto custody changes, effective dates of emancipations, etc., as “below” their exalted status as federal judges, even though resolving such disputes might be necessary to determine a child-support arrearage. Thus, it is hardly surprising that bankruptcy courts will almost never decline a party’s motion to defer arrearage adjudication to state court, and then incorporate that judgment in the bankruptcy case, rather than litigate the matter in federal court.
Moreover, a creditor facing a claim objection could rationally choose to forego inclusion of his/her claim in a bankruptcy action, wait out the automatic stay and then seek enforcement of the debt in a court more familiar with the law and/or facts of the particular dispute, and it should be the creditor's choice. After all, Congress has already decided that child support is important enough to escape discharge. If bankruptcy court determinations made pursuant to claim objections are subject to res judicata or collateral estoppel as to the entire obligation, a debtor has every incentive to forum-shop. Stated differently, by objecting to a child-support claim in a bankruptcy action, a debtor could force a creditor to defend the entire debt in a foreign court that may be ill suited to hear it.
The Diaz court correctly opined that Congress simply considers nondischargeability more important than a debtor's financial fresh start with respect to certain debts. It sensibly concluded that "bankruptcy courts are not free to override the plain language of the [Bankruptcy] Code and Congress's policy choice by using a ruling on a debtor's claim objection or doctrines of preclusion to transform a nondischargeable child-support obligation into a dischargeable debt."[39] Thus, Hutchens and Owsley correctly held that a debtor's personal liability for unpaid back child support “are not affected by a Chapter 13 discharge and cannot be discharged in bankruptcy."[40]
[1] 647 F.3d 1073 (11th Cir. 2011).
[2] Diaz also alleged that the Florida DOR violated the § 362 stay by sending demand letters during the pendency of the bankruptcy case.
[3] In re Diaz, 647 F.3d at 1088.
[4] Id. (citing United States v. White, 466 F.3d 1241, 1246 (11th Cir. 2006)).
[5] Id. at 1245-46.
[6] Id. (quoting United Student Aid Funds Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 1376, 176 L.Ed.2d 158 (2010) (internal citation and quotation marks omitted)).
[7] In re Diaz, 647 F.3d at 1089.
[8] Id. at 1090, quoting Espinoza, 130 S. Ct. at 1379, n. 10.
[9] Id. at 1090.
[10] In re Diaz, 647 F.3d at 1091 (citations and quotations omitted).
[11] Id. at 1091, n.15.
[12] Id. at 1091 (emphasis in original) (citations omitted).
[13] See, e.g., In re Gurwitch, 794 F.2d 584, 585 (11th Cir. 1986) (rejecting debtor's argument that IRS's proof-of-claim filing and bankruptcy court's confirmation of plan that provided for payment in full of that claim amounted to final determination of debtor's tax liabilities, thereby preventing IRS from collecting pre-petition tax delinquencies after discharge; explaining that res judicata did not apply because Bankruptcy Code made it clear that taxes were not dischargeable regardless of whether bankruptcy claim was filed or allowed); In re DePaolo, 45 F.3d 373, 376 (10th Cir. 1995) ("While principles of res judicata apply generally to bankruptcy proceedings, the plain language of [the Bankruptcy Code] forbid[s] the application of those principles to the facts of this case. By expressly providing that the described taxes are not discharged ‘whether or not a claim for such taxes was filed or allowed,’ Congress has determined that the IRS may make a claim for taxes for a particular year in a bankruptcy proceeding, accept the judgment of the bankruptcy court, then audit and make additional claims for that same year, even though such conduct may seem inequitable or may impair the debtor's fresh start."); In re Fein, 22 F.3d 631, 633 (5th Cir. 1994) ("[Debtor] contends that the discharge of claims in bankruptcy serves as res judicata, barring the government's claim [for pre-petition tax delinquencies]. Because the Bankruptcy Code specifically makes this claim nondischargeable, however, res judicata does not bar it." (citing In re Gurwitch)). Id. at 1091-92 (internal citations omitted).
[14] See fn 13, supra.
[15] Id. at 1092.
[16] Id. at n.16.
[17] Id. at 1092.
[18] 481 Fed. App’x. 492 (C.A.11 2012).
[19] Id. at 494.
[20] Id. at 495.
[21] Id.
[22] 480 B.R. 374 (Bankr. M.D. Fla 2012).
[23] 494 B.R. 321 (Bankr. E.D. Tenn. 2013).
[24] Id. at 384-85.
[25] In re Hutchens, 480 B.R. at 383-85.
[26] Id. at 326.
[27] Owsley filed his case on Oct. 14, 2005, three days before BAPCPA became effective. Pub. L. 109-08, 119 Stat. 23 (2005).
[28]Id. at 327. The mother’s assignment of support rights for past welfare that she had received for the subject child also did not transmute the obligation into a dischargeable debt. The court said that “[u]nquestionably, the assignment by Ms. White to the State of West Virginia is being serviced by an entity of the State, the [CSE Bureau], pursuant to West Virginia Code § 48-18-110, which provides that “[a]ttorneys employed by the bureau for child support enforcement may represent this state ... in an action brought under the authority of federal law of this chapter ... [and a]n attorney ... represents the interest of the state or the bureau and not the interest of any other party.” W. Va. Code § 48-18-110(a), (b) (2001). Accordingly, the Debtors' argument that Ms. White's assignment of the child-support obligation removed the nondischargeability protections of § 523(a)(5) is without merit.” Id. at 328.
[29] Id. at 326-28 (citing In re Hutchens, 480 B.R. at 383 (other internal citations and quotations omitted)).
[30] 476 B.R. 344 (B.A.P. 1st Cir. 2012).
[31] In re Hann, 476 B.R. 344 at 348.
[32] Id. at 352.
[33] Id. at 356.
[34] Id. at 355 (citations and quotations omitted).
[35] Id. at 357.
[36] The Court paused to distinguish collateral estoppel from res judicata:
Traditionally, res judicata was the umbrella term for both claim preclusion and collateral estoppel. In modern nomenclature, collateral estoppel is now referred to as issue preclusion and res judicata as claim preclusion. The two terms replace a more confusing lexicon but may continue to be collectively referred to as "res judicata." Claim preclusion generally refers to the effect of a prior judgment in foreclosing successive litigation. Issue preclusion generally refers to the effect of a prior judgment in foreclosing successive litigation of an issue actually litigated and resolved in a valid court determination essential to the prior judgment.
Id. at 358 (citations and quotations omitted).
[37] Id. at 359 (citations and quotations omitted).
[38] See, e.g., Ankenbrandt v. Richards, 504 U.S. 689 (1992) (affirming, generally, domestic-relations exception to federal jurisdiction).
[39] In re Diaz, 647 F.3d at 1092.
[40] In re Owsley, 494 B.R. at 326-28, citing In re Hutchens, 480 B.R. at 383.