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2009 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

2009 Consumer Law Recent Developments (Part I)

By Hon. William Houston Brown

proceeding pro se. Melnor v. Corey (In re Corey), 394 B.R. 519 (B.A.P. 10th Cir. 2008).

Discretion abused in denial of creditor's motion to amend § 523(a)(2) complaint. Five days before trial, the creditor moved to amend her § 523(a)(2) complaint to add § 523(a)(14) count, alleging the debtor incurred a debt to pay a tax to the United States that would be nondischargeable, with the motion asserting that facts stated in the original complaint related to the § 523(a)(14) count and that the creditor had just received information from IRS to support the amended count. The motion was denied, with trial proceeding and the debtor being granted a judgment on the § 523(a)(2)(A) and (B) counts. The BAP affirmed the § 523(a)(2) rulings but remanded, holding that the bankruptcy court should have granted the motion to amend to add § 523(a)(14): "[T] fact that the proposed amendment was based in part on an allegation made in the original complaint weighs in favor of--not against--granting Peterson leave to amend the complaint. Peterson's entire complaint was premised on a belief that the Debtor had misrepresented to her that he intended to use the loan proceeds to pay a tax debt....Amendments to state a new legal theory based on allegations known to a defendant should be liberally allowed when statutes of limitation are not involved." Peterson v. Weber (In re Weber), 392 B.R. 760, 764-65 (B.A.P. 8th Cir. 2008).

Punitive sanction to force payment of alimony is not domestic support obligation. When the state court imposed on the debtor $50 for each day that his separate alimony obligation was late, that was a sanction and was not a part of the alimony for purpose of § 101(14A)'s definition of "domestic support obligation," and the sanction is not a priority claim under § 507(a)(1) for purposes of the debtor's Chapter 13 plan. Although the case does not involve discharge, its application of § 101(14A) may arise in a discharge scenario. Smith v. Pritchett (In re Smith), ___ B.R. ___, 2008 WL 5396476 (B.A.P. 1st Cir. Dec. 29, 2008).

Services by child's representative are in nature of support but not included within definition of domestic support obligation payee for § 523(a)(5). Denying a motion for default judgment by the state-court appointed representative for the debtor's child, the bankruptcy court analyzed whether the representative was a payee eligible for inclusion

©2009 Hon. William Houston Brown

 

 

 

 

 

 

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