UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: JOHN J. GENOVESE

Debtor.

A. CHARLES D'AGOSTINO,

No. 95-1984

Plaintiff-Appellee,

v.

JOHN J. GENOVESE,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of West Virginia, at Wheeling.

William M. Kidd, Senior District Judge.

(CA-94-95-5, BK-90-30945)

Argued: June 3, 1996

Decided: September 12, 1996

Before MURNAGHAN and WILLIAMS, Circuit Judges, and

MACKENZIE, Senior United States District Judge for the

Eastern District of Virginia, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Michael Shawn Santa Barbara, CAMILLETTI, OLLAR

& SANTA BARBARA, Martinsburg, West Virginia, for Appellant.
Daniel T. Booth, MARTIN & SEIBERT, L.C., Martinsburg, West

Virginia, for Appellee. ON BRIEF: Scott A. Ollar, THE LAW

OFFICE OF SCOTT A. OLLAR, Martinsburg, West Virginia, for

Appellant.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

Plaintiff-appellee Charles D'Agostino represented Michelle Genovese in lengthy divorce and custodial proceedings in New York state

against her ex-husband, defendant-appellant John Genovese. After

seven years, the New York court dismissed the divorce action, but

awarded custody and child support to Michelle Genovese. Following

the New York court's dismissal, John Genovese filed for and received

a divorce in West Virginia.

Subsequently, in a separate proceeding, D'Agostino sought to collect attorney's fees for his representation of Michelle Genovese from

John Genovese. After a trial, where John Genovese was represented

by counsel, but did not appear personally, the New York court

awarded D'Agostino attorney's fees payable by John Genovese as

necessaries for his wife and child's support during the protracted

divorce.

D'Agostino registered his judgment in West Virginia and initiated

enforcement proceedings against John Genovese. John Genovese,

however, filed for bankruptcy under Chapter 7 of the federal Bankruptcy Code in West Virginia. The bankruptcy court found that the

attorney's fee award was dischargeable under the Code. The district

court reversed, finding that the award was nondischargeable because

it was in the nature of nondischargeable alimony, maintenance, and

support under 11 U.S.C. § 523(a)(5). Further, the district court held

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that the New York state court's factual finding that the attorney's fees

were necessary for support of Michelle Genovese and her son was

entitled to deference and was binding upon the federal courts under

the doctrine of collateral estoppel. John Genovese appeals the district

court's ruling. For the following reasons, we affirm.

I

Section 523(a)(5) of the Bankruptcy Code provides that a discharge

from debt "does not discharge an individual debtor from any debt . . .

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 other order of a court

of record." Nondischargeable debt under § 523(a)(5)(B) includes debt

"in the nature of alimony, maintenance, or support."

Whether a debt is in the nature of alimony, maintenance, or support

is a question of Federal Bankruptcy law. Sylvester v. Sylvester, 865

F.2d 1164, 1166 (10th Cir. 1989) (per curiam). Thus, the bankruptcy

court has exclusive jurisdiction to make the legal conclusion as to

whether a debt is dischargeable. Grogan v. Garner, 498 U.S. 279, 289

(1991) (explaining that Congress amended Bankruptcy Act in 1970 to

make nondischargeability a question of federal law independent of the

issue of the validity of the underlying claim).

Under federal law, when an award of attorney's fees as necessaries

is at issue, the dispositive question is whether the court making the

award intended it to be in the nature of support. Matter of Long, 794

F.2d 928, 931 (4th Cir. 1986); Tilley v. Jessee , 789 F.2d 1074, 1078

n.4 (4th Cir. 1986). The New York state court awarded the fees as

necessaries, clearly indicating that they were awarded based on the

"need of the spouse." The New York court stated:

As for the necessaries, the Court finds there was a need of

the spouse, and even when the needs were there the husband

did not comply with valid orders and maneuvered his way

around so that he would not have to pay the various income

and maintenance and support he should have paid. (emphasis added).

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The New York state court further found that John Genovese, who

had earned a substantial income, had been dishonest with the court

and depleted himself of every asset possible through the purchase of

boats and the like, in order to avoid paying income and maintenance

to his wife and children. The New York court further noted the disparity in income between Michelle Genovese, who did not work, and

her husband, whose earnings had fluctuated between $43,000 per year

and close to six figures, and the husband's failure to comply with

orders and to pay income and maintenance to his wife and children

that he should have paid. Disparity in earning power is a factor to be

considered when determining whether an award of attorney's fees is

in the nature of alimony, maintenance, and support. In re Joseph, 16

F.3d 86, 88 (5th Cir. 1994).

For all of those reasons, the New York court awarded $42,475.00

in attorney's fees, plus interest and cost, to D'Agostino as necessaries

under a theory of quantum meruit. The judgment was upheld on

appeal. Thus, the bankruptcy court had before it a judgment by a court

of record for attorney's fees intended by the New York court as maintenance and support for Michelle Genovese and her son. Under federal law, therefore, the judgment was nondischargeable under the

Bankruptcy Code.

II

The bankruptcy court, however, reviewed the New York trial transcript and orders and determined that the attorney's fees were not in

the nature or alimony, support, or maintenance dischargeable under

§ 523(a)(5). Collateral estoppel prevented the bankruptcy judge from

making that determination.

Under the doctrine of collateral estoppel or issue preclusion, a

judgment debtor may be precluded in bankruptcy proceedings from

relitigating an issue of fact previously decided in a state court.

Garner, 498 U.S. at 284 & 284-85 n.11; In Re McNallen, 62 F.3d

619, 624 (4th Cir. 1995). Thus, despite the bankruptcy court's exclusive jurisdiction to determine dischargeability, it does not need to

redetermine all facts underlying the legal inquiry if they were previously determined in an earlier lawsuit. Garner , 498 U.S. at 278-79

n.11. In keeping with that principle, the Fourth Circuit bars factual

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findings in state court from being relitigated in federal bankruptcy

proceedings where the requirements of collateral estoppel are met.

Combs v. Richardson, 838 F.2d 112, 114-16 (4th Cir. 1988); In re

Raynor, 922 F.2d 1146, 1148-49 (4th Cir. 1991).

In determining the preclusive effect of the New York court's findings of fact, we "must, as a matter of full faith and credit, apply the

forum state's law of collateral estoppel." In re McNallen, 62 F.3d at

624. The district court did not discuss with specificity the collateral

estoppel requirements it applied. Thus, it did not clarify whether it

applied New York or Fourth Circuit principles of collateral estoppel.

Because there is no material difference between the requirements for

collateral estoppel under New York law versus Fourth Circuit law,

that failure is immaterial. Compare Continental Casualty Co. v.

Rapid-American Corp., 609 N.E.2d 506, 510 (N.Y. 1993) with

Ramsay v. United States Immigration & Naturalization Serv., 14 F.2d

206, 210 (4th Cir. 1994).

New York law requires that an issue be precluded from being relitigated if it is: (1) identical to that litigated previously; and (2) the parties seeking to be estopped had a full and fair opportunity to litigate

the issue. Continental Casualty, 609 N.E.2d at 510. John Genovese

concedes that the elements of collateral estoppel apply, with the

exception of identity of issues litigated. He contends that the issue litigated in the New York proceeding was not identical. He asserts that

the New York court's determination that attorney's fees were among

Michelle Genovese's necessaries is a mere label which is not binding

on this court. In re Brody, 3 F.3d 35, 39 (2d Cir. 1993).

A bankruptcy court is not bound by mere labels applied in state

court. The bankruptcy court must examine the substance of the finding and the intent behind the court making the award. However, a

bankruptcy court is bound by identical sets of facts previously litigated in state court.

We must determine whether the identical issue was actually litigated "with particular care." In re Raynor , 922 F.2d at 1149 (citing

Combs, 838 F.2d at 113). The question of necessaries under New

York law inquires as to whether the fees or services where incurred

for "protection" and "support" and whether the lawsuit on behalf of

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the wife was "rendered reasonable and proper" by the conduct of the

husband. Levine v. Raymond, 3 A.D.2d 36, 38 (N.Y. App. Div. 1956);

see also Weidlich v. Richards, 276 A.D. 383 (N.Y. App. Div. 1950)

(attorney's fees as necessaries are merited where (1) the husband is

at fault; and (2) the wife has a right to a separate living). Under

§ 523(a)(5), the question asked is whether the court making the award

did so in a judicial order and intended the award as maintenance or

support owed to the spouse or child. The New York court's necessaries inquiry as to whether the attorney's fees were needed as support and maintenance and the relative fault of the parties answers

essentially the same factual inquiry the bankruptcy court must make:

did the state court intend the award as support and maintenance?

The bankruptcy court, however, discounted the New York state

court's factual findings. The bankruptcy court stated: "The Court is

unpersuaded by the Westchester County Supreme Court's analysis in

arriving at its conclusion that the debtor's payment of plaintiff's attorney fees would constitute `necessaries' to Mrs. Genovese." The Bankruptcy Court looked to the record in the New York court proceeding

and rejected the factual findings because it perceived them to be

based solely on "the unsubstantiated, self-serving testimony of

[D'Agostino] himself concerning [John Genovese's] net worth." The

Bankruptcy Court further found that "it [was] untenable that no

inquiry was made by the Westchester court into Mrs. Genovese's

need in arriving at its conclusion." The bankruptcy court, therefore,

ignored the factual findings of the state court and determined that

D'Agostino's fees were not necessary as support or maintenance for

Michelle Genovese and her son.

Whether the fees were in the nature of support for Michelle Genovese and her son, as a factual matter, however, was and is entitled to

preclusive effect. Collateral estoppel precludes a separate and independent examination by the Bankruptcy Court of the facts as found

by the New York court. Thus, we must treat the attorney's fees

awarded by another court of record as being in the nature of support

and maintenance of Michelle Genovese and her son. The fees, therefore, fall under the category of nondischargeable debt.*

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*John Genovese makes two further arguments. First, he contends that

the debt should be discharged because the fees were not imposed in the

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Accordingly, the judgment of the district court is

AFFIRMED.

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divorce proceeding, but rather in a separate proceeding. The statute

states, however, that the nondischargeable debts may be imposed "in

connection with a separation agreement, divorce decree, or other order

of a court of record." Thus, the fact that the award stems from a proceeding separate from the actual divorce proceeding is irrelevant under the

plain terms of the statute. Furthermore, as the district court found, the

award was "to recompense [D'Agostino] for the attorney fees he

expended in representing [Michelle] Genovese during the divorce and

custody proceedings against [John] Genovese. The primary debt is the

child custody and support obligation with the subsequent award of attorney fees directly related thereto."

Second, John Genovese argues that because the attorney's fees are

owed to D'Agostino and not to his wife or child directly that they are not

recoverable under § 523(a)(5). John Genovese failed to make this argument to the bankruptcy court. Generally, new arguments cannot be made

on appeal for the first time except "in a very limited number of circumstances, such as where refusal to consider the newly raised issue would

be plain error or would result in a fundamental miscarriage of justice."

Muth v. United States, 1 F.3d 246, 250 (4th Cir. 1993). No such error

would result here because the Fourth Circuit has expressly found that

fees payable directly to an attorney under a divorce agreement may be

considered nondischargeable under § 523(a)(5). In re Silansky, 897 F.2d

743, 744 (4th Cir. 1990); see also In re Spong , 661 F.2d 6, 10-11 (2d Cir.

1981). We see no reason to treat fees awarded in a divorce agreement

separately from those awarded by a court in a separate subsequent proceeding.

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