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 Hon. Eddward P. Ballinger, Jr., United States Bankruptcy

Judge for the District of Arizona, sitting by designation.

 

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-13-1099-KuBaPa

 )

PATRICIA GUNNESS, ) Bk. No. SV 11-18699-VK

 )

Debtor. ) Adv. No. SV 11-01590-VK

________________________________)

 )

JEANETTE BENDETTI; DAVID KARTON,)

 )

Appellants, )

 )

v. ) OPINION

 )

PATRICIA GUNNESS, )

 )

Appellee. )

________________________________)

Argued and Submitted on November 21, 2013

at Pasadena, California

Filed – January 16, 2014

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Victoria S. Kaufman, Bankruptcy Judge, Presiding

 

Appearances: John R. Yates of Greenberg & Bass LLP argued for

appellants Jeanette Bendetti and David Karton;

Daniel B. Spitzer argued for appellee Patricia

Gunness.

 

Before: KURTZ, BALLINGER* and PAPPAS, Bankruptcy Judges.

FILED

JAN 16 2014

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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1

 Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all “Rule” references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037.

2

KURTZ, Bankruptcy Judge:

INTRODUCTION

The debtor filed an adversary proceeding against her

husband’s ex-wife and the ex-wife’s family law attorney seeking a

determination that the debt she owes to the husband’s ex-wife is

dischargeable. The bankruptcy court granted summary judgment in

favor of the debtor, holding that neither 11 U.S.C. § 523(a)(5)1

nor § 523(a)(15) apply to the debt. The ex-wife and her attorney

appealed.

Because the debt lacks the requisite connection to “a

spouse, former spouse, or child of the debtor” (emphasis added),

we agree with the bankruptcy court that § 523(a)(5) and

§ 523(a)(15) are inapplicable. We AFFIRM.

FACTS

The key facts are undisputed. At the time of her bankruptcy

filing, debtor Patricia Gunness and her husband Paul Bendetti

jointly and severally owed roughly $280,000 in attorney’s fees to

Paul’s ex-wife Jeanette Bendetti. The attorney’s fee awards were

issued pendente lite by the Los Angeles County Superior Court in

a fraudulent transfer lawsuit Jeanette filed in 2008 against both

Paul and Patricia (LASC Case No. ED 008 213). In turn, the

fraudulent transfer lawsuit was part of the dissolution

proceedings between Paul and Jeanette. Even though the
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dissolution proceedings were commenced in 1993, and a dissolution

judgment issued in 1994, the 2008 fraudulent transfer lawsuit was

filed in and connected to the dissolution proceedings because

Jeanette claimed that, unbeknownst to her at the time, Paul had

fraudulently transferred some of their community property assets

to Patricia.

Both sides have sparred over the nature of the fee awards,

in the sense of whether they are attributable to the dissolution

proceedings, the fraudulent transfer lawsuit, or both, and

whether the awards were needs based, conduct based, or both. 

These disputes are irrelevant to our resolution of this appeal.

In July 2011, Patricia commenced her chapter 7 bankruptcy

case, and in October 2011 she commenced an adversary proceeding

against Jeanette and Jeanette’s family law counsel David Karton,

to whom some of the fee awards were directly payable. In her

complaint, Patricia sought a determination that neither

§ 523(a)(5) nor § 523(a)(15) applied to the fee awards. Among

other things, Patricia asserted in the complaint that the two

statutory provisions did not apply because the fee awards were

not owed to or recoverable by “a spouse, former spouse or child

of the debtor.” See § 101(14A)(A)(i); § 523(a)(15).

In June 2012, Patricia filed a summary judgment motion based

in part on the same assertions regarding the applicability of 

§ 523(a)(5) and § 523(a)(15) she made in her complaint. Jeanette

and Karton opposed the motion. They admitted that neither of

them technically was a spouse, former spouse, or child of

Patricia’s. But they pointed to a number of cases interpreting

the scope of § 523(a)(5) or § 523(a)(15) that have either
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2

See also id. at 10:6-8 (“once Patricia was joined as a

party to the dissolution action, she comes within the nondischargeability provisions of § 523(a)(15), and, presumably

§ 523(a)(5).”); id. at 9:23-24 (“the order for joinder may well

be the most significant factor in support of Defendants’

contention that the debt owed them from Patricia should not be

discharged.”)

4

downplayed or ignored the identity of the payee/creditor, instead

choosing to focus on the underlying nature of the debt and

whether the debt in substance constituted a support award

(covered by § 523(a)(5)) or a non-support domestic relations

award (covered by § 523(a)(15)). These cases, Jeanette and

Karton reasoned, demonstrated that the fee awards should be

deemed to be owed to or recoverable by a spouse, former spouse,

or child of the debtor in part because of the underlying nature

of the fee awards and in part because the state court joined

Patricia as a party to the dissolution proceedings. According to

Jeanette and Karton, this made Jeanette the equivalent of a

spouse, former spouse or child of the debtor. As they put it:

[Patricia] . . . ignores the fact that she is a party

to the divorce proceeding. As such, she is essentially

a spouse because, absent the court ordering her joined

as a party, only the husband and the wife can be

parties to a dissolution proceeding.

Defendants’ Opposition to Motion for Summary Judgment (July 24,

2012) at 9:19-22.2

The bankruptcy court disagreed with Jeanette’s and Karton’s

broad interpretation of § 523(a)(5) and § 523(a)(15). The

bankruptcy court acknowledged the decisions holding that these

two provisions do not necessarily require the payee of the debt

to be the spouse, former spouse or child of the debtor. But the

court concluded that these cases were inapposite. In reaching
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this conclusion, the bankruptcy court focused on the fact that

there was no familial relationship between Patricia and Jeanette. 

According to the court, the purpose, intent, and plain meaning of

§ 523(a)(5) and § 523(a)(15) all required the specified type of

familial relationship as a prerequisite to nondischargeability. 

Without the requisite familial relationship, the court reasoned,

the provisions simply did not apply.

On February 15, 2013, the bankruptcy court entered both an

order granting summary judgment and a separate judgment in

Patricia’s favor disposing of the adversary proceeding. Jeanette

and Karton timely filed their notice of appeal on February 27,

2013.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C.

§ 158.

ISSUE

In the process of granting summary judgment, did the

bankruptcy court incorrectly hold that § 523(a)(5) and

§ 523(a)(15) did not apply because the subject debt was not

connected to a spouse, former spouse or child of the debtor?

STANDARDS OF REVIEW

We review summary judgment rulings de novo. Bendon v.

Reynolds (In re Reynolds), 479 B.R. 67, 71 (9th Cir. BAP 2012). 

The bankruptcy court’s decision that a claim is dischargeable

also is subject to de novo review. See Miller v. United States,

363 F.3d 999, 1004 (9th Cir. 2004). So is the bankruptcy court’s

interpretation of the Bankruptcy Code. See Danielson v. Flores
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3

 Indeed, in addressing this phrase in the context of

discussing nondischargeability under § 523(a)(5), Collier on

Bankruptcy states:

Although the courts have not been consistent, the

language of the statute dictates that if the obligation

is not one owed to the spouse, former spouse, or child

of the debtor or such child’s parent, legal guardian or

responsible relative, it is dischargeable under section

523(a)(5), even though it is in the nature of support.

4 Collier on Bankruptcy ¶ 523.11[4] (Alan N. Resnick & Henry J.

Sommer eds., 16th ed., 2013).

6

(In re Flores), 735 F.3d 855, 856 n.4 (9th Cir. 2013) (en banc).

DISCUSSION

This appeal hinges on a single question of law regarding the

meaning and effect of the phrase “spouse, former spouse or child

of the debtor” as applicable to both § 523(a)(5) and

§ 523(a)(15). Given the plain meaning of the language and the

context in which it is used, the phrase appears to limit the

scope of debt nondischargeable under both provisions. Generally

speaking, § 523(a)(5) covers claims in the nature of alimony,

maintenance, or support, while § 523(a)(15) covers other, nonsupport obligations arising from domestic relations proceedings. 

As to each provision, the phrase “spouse, former spouse or child

of the debtor” on its face appears to specify to whom the debt

must be owed for nondischargeability to apply.3

 

Prior to enactment of the Bankruptcy Abuse Prevention and

Consumer Protection Act of 2005, Pub.L. No. 109–8, 119 Stat. 23

(“BAPCPA”), the above-referenced phrase appeared directly in

§ 523(a)(5), which at the time read in relevant part as follows:

(a) A discharge under section 727, 1141, 1228(a), 1228(b),

or 1328(b) of this title does not discharge an individual
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4 BAPCPA added to the end of the phrase “spouse, former

spouse, or child of the debtor” the following supplemental

phrase: “or such child’s parent, legal guardian, or responsible

relative.” The supplemental phrase is not at issue in this

appeal because it is undisputed here that we are not in any way

dealing with a child of the debtor.

7

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 other order of a court of

record, determination made in accordance with State or

territorial law by a governmental unit, or property

settlement agreement . . . .

(Emphasis added.)

BAPCPA restructured § 523(a)(5) by simply declaring

nondischargeable a debt “for a domestic support obligation” and

moving and refining the detail of what constitutes a domestic

support obligation into a new definitional provision, § 101(14A),

which specifies that:

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;4 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
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5

 See 2 Collier on Bankruptcy, supra, at ¶ 101.14A for a

listing of Bankruptcy Code sections in which the term “domestic

support obligation” is used; see also Deemer v. Deemer (In re

Deemer), 360 B.R. 278, 280-81 (Bankr. N.D. Iowa 2007) (noting the

numerous areas of bankruptcy law that the definition affects).

8

under this title, by reason of applicable provisions

of--

(i) a separation agreement, divorce decree, or

property settlement agreement;

(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 collecting the debt . . . .

(Emphasis added.)

This restructuring enabled Congress to utilize a uniform and

detailed definition of the term “domestic support obligation” in

several different sections of the bankruptcy code.5

 Regardless,

both before and after BAPCPA, the phrase “spouse, former spouse

or child of the debtor” was and is part and parcel of

§ 523(a)(5), either directly in the text of the statute or

indirectly by application of § 101(14A)’s definition of the term

“domestic support obligation.”

BAPCPA also significantly altered § 523(a)(15). Before

BAPCPA, a debt otherwise covered by § 523(a)(15) nonetheless was

dischargeable if the debtor was financially unable to repay the

debt or the benefit to the debtor associated with discharge

outweighed the detriment therefrom to the spouse, former spouse

or child of the debtor. See Ashton v. Dollaga (In re Dollaga),
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260 B.R. 493, 495 (9th Cir. BAP 2001). But BAPCPA removed both

the financial capacity criterion and the weighing of debtor’s

benefit against the creditor’s detriment. After BAPCPA,

§ 523(a)(15) renders nondischargeable any debt:

(15) to a spouse, former spouse, or child of the debtor and

not of the kind described in paragraph (5) that is incurred

by the debtor in the course of a divorce or separation or in

connection with a separation agreement, divorce decree or

other order of a court of record, or a determination made in

accordance with State or territorial law by a governmental

unit; . . . .

(Emphasis added.)

Thus, both § 523(a)(5) and § 523(a)(15) are subject to the

same limiting phrase, which references debts to “a spouse, former

spouse, or child of the debtor.” Even so, many cases, both

before and after BAPCPA, have de-emphasized or ignored this

phrase, instead choosing to focus on the “nature” of the

underlying debt as determining the applicability of the statute. 

See In re Bub, 494 B.R. 786, 795-96 (Bankr. E.D.N.Y. 2013)

(listing cases); Kassicieh v. Battisti (In re Kassicieh), 425

B.R. 467, 474-77 (Bankr. S.D. Ohio 2010) (same).

Of these cases, Beaupied v. Chang (In re Chang), 163 F.3d

1138 (9th Cir. 1998), is the only published Ninth Circuit Court

of Appeals decision directly addressing the issue. In In re

Chang, the unmarried father and mother of a minor child were

fighting over custody of the child. The mother accused the

father of sexually abusing the child, which led to the state

court’s appointment of a guardian ad litem and a host of neutral

experts and the accrual of nearly $100,000 in expert and guardian

ad litem fees. Id. at 1140. The father paid most of these fees

during the course of the litigation, but the state court
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ultimately apportioned liability for the fees such that it

ordered the mother to reimburse the father for a portion of the

fees he paid and further ordered the mother to pay the guardian

ad litem directly for a portion of his fees remaining unpaid. 

Id.

On appeal from a decision of the bankruptcy court declaring

both these debts nondischargeable, this Panel reversed, holding

that neither debt was owed to a spouse, former spouse or child of

the debtor. Chang v. Beaupied (In re Chang), 210 B.R. 578, 582-

83 (9th Cir. BAP 1997). But the Court of Appeals reversed this

Panel and reinstated the bankruptcy court’s nondischargeability 

judgment. In re Chang, 163 F.3d at 1141-42. The court of

appeals held that “the identity of the payee is less important

than the nature of the debt,” id. at 1141, and explained that,

even though the fees were not directly payable to a child of the

debtor – a person explicitly covered by § 523(a)(5) – it was

sufficient that the fees were incurred for that child’s benefit

and were in the nature of support for that child. See id. at

1141 & n.1.

Some decisions discussing Chang and other, similar cases 

have broken down the cases into two distinct lines of authority. 

See, e.g., In re Kassicieh, 425 B.R. at 474-77 (listing and

categorizing cases); Simon, Schindler & Sandberg, LLP v.

Gentilini (In re Gentilini), 365 B.R. 251, 254-56 (Bankr. S.D.

Fla. 2007) (same). The first line focuses on whether the debt

arose from goods, services or other benefits or relief provided

to the spouse, former spouse or child of the debtor in

conjunction with domestic relations proceedings. Sometimes, the
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goods, services, benefits or relief provided have been referred

to as the “bounty” of the debt. See In re Kassicieh, 425 B.R. at

476 (citing Levin v. Greco, 415 B.R. 663, 666-67 (N.D. Ill.

2009)). And the second line of cases focuses on the economic

impact discharge of the debt would have on the spouse, former

spouse or child of the debtor, and whether the state court

presiding over the domestic relations proceedings had provided

for that impact to fall on the debtor. See, e.g., Holliday v.

Kline (In re Kline), 65 F.3d 749, 751 (8th Cir. 1995); Pauley v.

Spong (In re Spong), 661 F.2d 6, 10-11 (2d Cir. 1981).

One thing is clear from all of these cases. Even when the

debt was not directly payable or owed to the spouse, former

spouse or child of the debtor, the bounty of that debt had flowed

to one of those family members explicitly covered by the statute,

or the discharge of the debt would have adversely impacted the

finances of one of those explicitly-covered family members.

Relying on Chang and other, similar cases, Jeanette and

Karton ask us to hold that the fee awards Patricia owes them are

nondischargeable under either § 523(a)(5) or § 523(a)(15). And

yet they admit that neither of them is a spouse, former spouse,

or child of Patricia’s. Additionally, it is uncontroverted that

the bounty of the debt – the benefit of Karton’s attorney’s

services – did not flow to a spouse, former spouse, or child of

Patricia’s. Nor would the discharge of this debt in Patricia’s

bankruptcy case adversely affect the finances of a spouse, former

spouse, or child of Patricia’s.

Because the familial relationships explicitly covered by the

statute are not implicated in the same manner they were
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implicated in any of the above-referenced decisions, § 523(a)(5)

and § 523(a)(15) are inapplicable. We are not aware of any cases

extending the coverage of these nondischargeability provisions as

far as Jeanette and Karton have asked us to, nor have they cited

us to any such cases.

Jeanette and Karton attempt to bridge the gap between them

and Patricia by asserting that the state court effectively

created the missing familial relationship by joining Patricia in

the dissolution proceedings as a party to the fraudulent transfer

lawsuit. In essence, Jeanette and Karton contend that, by

joining Patricia as a party in the dissolution proceedings, the

state court effectively made Jeanette Patricia’s spouse or former

spouse for purposes of § 523(a)(5) and § 523(a)(15). We

disagree. The California procedural rule governing joinder on

which they rely, Rule 5.24 of the California Rules of Court, is

there to ensure that interested third parties are joined into 

dissolution proceedings when their rights, duties and/or property

interests are at issue in the those proceedings. See Hogoboom &

King, CAL. PRACTICE GUIDE: FAMILY LAW ¶¶ 3:440-3:443 (Rutter Group

2013). The cited procedural rule does not purport to create a

new familial relationship where none previously existed.

Alternately, Jeanette and Karton argue that the requisite

familial relationship can be “imputed” to Patricia. According to

Jeanette and Karton, because Patricia’s current husband Paul used

to be married to Jeanette and because Patricia allegedly

participated in Paul’s scheme to fraudulently transfer community

assets belonging to both Paul and Jeanette, Paul’s familial

status as Jeanette’s former husband can and should be imputed to
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Patricia. Once again, Jeanette’s and Karton’s contention, while

creative, lacks merit. The nondischargeability decisions

addressing imputed conduct, intent and liability are based on

long-established principles of agency and vicarious liability.

See Tsurukawa v. Nikon Precision, Inc. (In re Tsurukawa), 287

B.R. 515, 524-26 (9th Cir. BAP 2002)(discussing the historical

development of the law in this area). None of these decisions

and none of these legal principles in any way would support our

imputing a familial relationship between two unrelated parties.

On a broader level, Jeanette and Karton contend that the

policy favoring the enforcement of domestic relations obligations

overrides the policy favoring a fresh start for debtors to such

an extent that § 523(a)(5) and § 523(a)(15) should be liberally

construed, unlike other exceptions to discharge. We admit that

some decisions have suggested as much. See In re Kline, 65 F.3d

at 750-51; Shine v. Shine, 802 F.2d 583, 585 (1st Cir. 1986). 

But we disagree with these cases on this point. All exceptions

to discharge are to be construed narrowly so that they are

confined to their plainly-expressed terms. See Bullock v.

BankChampaign, N.A., 133 S.Ct. 1754, 1760-61 (2013); Kawaauhau v.

Geiger, 523 U.S. 57, 62 (1998). And the structure of § 523

indicates that all discharge exceptions are subject to the same

general standards, like the applicable burden of proof and scope

of their construction. See Grogan v. Garner, 498 U.S. 279, 287-

88 (1991). 

Put another way, each exception to discharge represents

Congress’ attempt to balance the debtor’s entitlement to a fresh

start against strong competing policy concerns. See Bullock, 133
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S.Ct. at 1761; see also Ghomeshi v. Sabban (In re Sabban), 600

F.3d 1219, 1222 (9th Cir. 2010); In re Chang, 163 F.3d at 1140. 

To the extent Congress has not adequately balanced the competing

policies, Congress will need to amend the discharge exceptions. 

It is not up to the courts to expand the coverage of the

exceptions under the guise of an improper and unwarranted liberal

construction of the exceptions.

CONCLUSION

For the reasons set forth above, we AFFIRM the bankruptcy

court’s summary judgment in favor of Patricia.